<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1997
SECURITIES ACT FILE NO. 33-63795
INVESTMENT COMPANY ACT FILE NO. 811-7389
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-2
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] PRE-EFFECTIVE AMENDMENT NO. 4
[ ] POST-EFFECTIVE AMENDMENT NO.
AND/OR
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] AMENDMENT NO. 4
(check appropriate box or boxes)
NEXTEL STRYPES TRUST*
(Exact Name of Registrant as Specified in Charter)
C/O PUGLISI & ASSOCIATES
850 LIBRARY AVENUE
SUITE 204
NEWARK, DELAWARE 19715
(Address of Principal Executive Offices)
(302) 738-6680
(Registrant's Telephone Number, including Area Code)
DONALD J. PUGLISI
PUGLISI & ASSOCIATES
850 LIBRARY AVENUE
SUITE 204
NEWARK, DELAWARE 19715
(Name and Address of Agent for Service)
COPIES TO:
<TABLE>
<S> <C>
NORMAN D. SLONAKER, ESQ. WILLIAM J. PHILLIPS, ESQ.
BROWN & WOOD LLP DEWEY BALLANTINE
ONE WORLD TRADE CENTER 1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10048-0557 NEW YORK, NEW YORK 10019
</TABLE>
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the
effective date of this Registration Statement.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, as amended, other than securities offered in connection with a dividend
reinvestment plan, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
* Formerly ABC STRYPES Trust.
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<PAGE> 2
CROSS-REFERENCE SHEET*
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-2 CAPTION IN PROSPECTUS
- ------------------------------------------------- -------------------------------------------
<S> <C>
PART A -- INFORMATION REQUIRED IN A PROSPECTUS
1. Outside Front Cover........................ Front Cover Page
2. Inside Front and Outside Back Cover Page... Front Cover Page; Inside Front Cover Page;
Underwriting
3. Fee Table and Synopsis..................... Prospectus Summary; Fee Table
4. Financial Highlights....................... Not Applicable
5. Plan of Distribution....................... Front Cover Page; Prospectus Summary; Net
Asset Value; Underwriting
6. Selling Shareholders....................... Not Applicable
7. Use of Proceeds............................ Use of Proceeds; Investment Objective and
Policies
8. General Description of the Registrant...... Front Cover Page; Prospectus Summary; The
Trust; Investment Objective and Policies;
Investment Restrictions; Risk Factors;
Dividends and Distributions; Additional
Information
9. Management................................. Trustees; Management Arrangements
10. Capital Stock, Long-Term Debt and Other
Securities............................... Description of the STRYPES
11. Defaults and Arrears on Senior
Securities............................... Not Applicable
12. Legal Proceedings.......................... Not Applicable
13. Table of Contents of the Statement of
Additional Information................... Not Applicable
PART B -- INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
14. Cover Page................................. Not Applicable
15. Table of Contents.......................... Not Applicable
16. General Information and History............ Not Applicable
17. Investment Objective and Policies.......... Prospectus Summary; Investment Objective
and Policies; Investment Restrictions
18. Management................................. Trustees; Management Arrangements
19. Control Persons and Principal Holders of
Securities............................... Management Arrangements
20. Investment Advisory and Other Services..... Management Arrangements; Underwriting;
Legal Matters; Experts
21. Brokerage Allocation and Other Practices... Investment Objective and Policies
22. Tax Status................................. Certain United States Federal Income Tax
Considerations
23. Financial Statements....................... Experts; Independent Auditors' Report;
Statement of Assets, Liabilities and
Capital
</TABLE>
PART C -- OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
- ---------------
* Pursuant to the General Instructions to Form N-2, all information required to
be set forth in Part B: Statement of Additional Information has been included
in Part A: The Prospectus.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
LOGO(R)
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED FEBRUARY 28, 1997
PROSPECTUS
- ----------------
7,168,587 STRYPES(SM)
NEXTEL STRYPES TRUST
(EXCHANGEABLE FOR SHARES OF CLASS A COMMON STOCK OF NEXTEL COMMUNICATIONS, INC.)
------------------------
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 $ , and will be exchanged for
between % 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 , 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 $ per
STRYPES is payable quarterly on each , , and , commencing
, 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 $ 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
$ (the "Threshold Appreciation Price"), % 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 $ , which amount is equal to the
last reported sale price of the Nextel Common Stock on the Nasdaq National
Market ("NASDAQ") on , 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.
------------------------
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)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per STRYPES................................. $ $ $
- -----------------------------------------------------------------------------------------------------------
Total(3).................................... $ $ $
===========================================================================================================
</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 1,075,288 STRYPES
(subject to decrease as a result of the issuance and sale of STRYPES in
connection with the formation of the Trust) 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 $ , $ and $ , respectively. See
"Underwriting."
------------------------
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 , 1997.
- ---------------
(SM) Service mark of Merrill Lynch & Co., Inc.
------------------------
<TABLE>
<S> <C>
MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
</TABLE>
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
(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 % over the Initial Price. In
addition, because each STRYPES will entitle the holder to receive only % 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 % 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.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE STRYPES OR THE
NEXTEL COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE
(WITH RESPECT TO THE STRYPES), THE NASDAQ NATIONAL MARKET (WITH RESPECT TO THE
NEXTEL COMMON STOCK), IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 5
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
, 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 $ per STRYPES (which is equal to the last reported sale price of the
Nextel Common Stock on NASDAQ on , 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
1,075,288 additional STRYPES (subject to decrease as a result of the issuance
and sale of STRYPES in connection with the formation of the Trust) 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 $ per STRYPES
(which amount equals the pro rata portion of the
3
<PAGE> 6
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 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 $ (the
"Threshold Appreciation Price"), % of each type of Reference Property, (ii)
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 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"). 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 $ per annum, or $ per quarter, payable quarterly on each
, , and (or, if any such date is not a
Business Day, on the next succeeding Business Day) to Holders of record as of
each , , and , respectively. The first
distribution (in respect of the period from , 1997 until
, 1997) will be payable on , 1997 to Holders
of record as of , 1997, and will equal $ per STRYPES.
See "Investment Objective and Policies -- Trust Assets."
On the Exchange Date, each outstanding STRYPES will be exchanged for
between % 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 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
4
<PAGE> 7
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 % of the initial assets of the Trust, and
(ii) the Contract with the Contracting Stockholders relating to the Reference
Property, comprising approximately % 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 $ 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
, 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 % 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 % over the Initial Price). Moreover, each
STRYPES will entitle the Holder to receive on the Exchange Date only % (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."
5
<PAGE> 8
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."
6
<PAGE> 9
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 % over the Initial Price. Moreover, because
each STRYPES will entitle the Holder to receive only % 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 % 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> 10
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 0.122% of the Trust's average 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> 11
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 , 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 $ (or
approximately $ , 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 $ 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, % 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> 12
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"). 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 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.
10
<PAGE> 13
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 % 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 $ and
the Threshold Appreciation Price of $ , 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>
</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................................... $ $ $ $
1998...................................
1999...................................
2000...................................
</TABLE>
The annual distribution of $ per STRYPES is payable quarterly on
each , , and , commencing ,
1997. Quarterly distributions on the STRYPES will
11
<PAGE> 14
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 % of the Initial Price. Moreover, because each STRYPES will
entitle the Holder to receive only % 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
% (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 February 27, 1997)................................ $15.750 $13.375
</TABLE>
12
<PAGE> 15
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
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<PAGE> 16
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> 17
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> 18
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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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
$ in the aggregate and is payable to the Contracting Stockholders by
the Trust on or about , 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
% 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> 23
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 % over the Initial Price).
Moreover, each STRYPES will entitle the Holder to receive on
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the Exchange Date only % (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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<PAGE> 25
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> 28
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 , 1997
until , 1997, will be made on , 1997 to Holders of record
as of , 1997, and will equal $ per STRYPES. Thereafter,
distributions will be made on , , , and of each
year to Holders of record as of each , , , and
, 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> 29
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. It is currently anticipated that approximately %
and approximately % 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> 30
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)
28
<PAGE> 31
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> 32
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> 33
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> 34
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, 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...............................................
Donaldson, Lufkin & Jenrette Securities Corporation.....................
---------
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 $ per STRYPES. Such
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ 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 $ per STRYPES is equal to % of the initial public offering
price. Investors must pay for any STRYPES purchased in the initial public
offering on or before , 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 1,075,288
additional STRYPES (subject to decrease by the number of STRYPES resulting from
the split of the initial STRYPES described below) 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
32
<PAGE> 35
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.
In connection with the formation of the Trust, each of ML IBK Positions,
Inc., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
Donaldson, Lufkin & Jenrette Securities Corporation has subscribed for and
purchased one STRYPES for a purchase price of $50,000. Prior to the Offering,
the initial 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. 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.
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.
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.
33
<PAGE> 36
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
34
<PAGE> 37
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.
35
<PAGE> 38
======================================================
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................ 33
Independent Auditors' Report.......... 34
Statement of Assets, Liabilities
and Capital......................... 35
</TABLE>
PROSPECTUS RELATING TO CLASS A COMMON STOCK
OF NEXTEL COMMUNICATIONS, INC.
------------------------
UNTIL , 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
LOGO(R)
Nextel Communications, Inc.
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1997
(SM) Service mark of Merrill Lynch & Co., Inc.
======================================================
<PAGE> 39
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
Independent Auditors' Report
Statement of Assets, Liabilities and Capital as of February 26, 1997
2. EXHIBITS
<TABLE>
<C> <S> <C>
(a) (1) Trust Agreement*
Form of Amended and Restated Trust Agreement
(2)
Certificate of Trust*
(3)
Restated Certificate of Trust
(4)
(b) Not applicable
(c) Not applicable
(d) (1) Form of Specimen certificate for STRYPES (included in Exhibit 2(a)(2))
Portions of the Amended and Restated Trust Agreement of the Registrant defining
the rights of Holders of STRYPES(a)
(2)
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h) (1) Form of Purchase Agreement
Form of Registration Agreement
(2)
(i) Not applicable
(j) Form of Custodian Agreement
(k) (1) Form of Administration Agreement
Form of Paying Agent Agreement
(2)
Form of Forward Purchase Contract
(3)
Form of Security and Pledge Agreement
(4)
Form of Fund Expense Agreement
(5)
Form of Fund Indemnity Agreement
(6)
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust
(m) Not applicable
(n) (1) Tax Opinion and Consent of Brown & Wood LLP, counsel to the Trust
Consent of Deloitte & Touche LLP, independent auditors for the Trust
(2)
(o) Not applicable
(p) Form of Subscription Agreement
(q) Not applicable
(r) Financial Data Schedule
</TABLE>
- ---------------
(a) Reference is made to Article III (Section 3.2), Article IV, Article V and
Article VIII (Sections 8.1 and 8.6) of the Trust's Amended and Restated
Trust Agreement filed as Exhibit (a)(2) to this Registration Statement.
* Previously filed.
C-1
<PAGE> 40
ITEM 25. MARKETING ARRANGEMENTS
See Exhibits (h)(1) and (h)(2) to this Registration Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be incurred in connection with the offering described in
this Registration Statement will be paid by the Contracting Stockholders.
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Trust will be internally managed and will not have an investment
adviser. The information in the Prospectus under the caption "Management
Arrangements" is incorporated herein by reference.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
There will be one record holder of the STRYPES as of the effective date of
this Registration Statement.
ITEM 29. INDEMNIFICATION
Section 7.6 of the Amended and Restated Trust Agreement, Section 6 of the
Purchase Agreement and Section 4 of the Registration Agreement provide for
indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "1933 Act"), may be permitted to trustees, officers and
controlling persons of the Registrant, pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The Trust is internally managed and does not have an investment adviser.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder are maintained at the offices of the Registrant (850
Library Avenue, Suite 204, Newark, Delaware 19715), its custodian (101 Barclay
Street, New York, New York 10286) and its paying agent (101 Barclay Street, New
York, New York 10286).
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(a) The Registrant hereby undertakes to suspend the offering of the shares
covered hereby until it amends its prospectuses contained herein if (1)
subsequent to the effective date of this Registration Statement, its net asset
value per share declines more than 10 percent from its net asset value per share
as of the effective date of the Registration Statement or (2) the net asset
value per share increases to an amount greater than its net proceeds as stated
in the prospectuses contained herein.
C-2
<PAGE> 41
(b) The Registrant hereby undertakes that (i) for purpose of determining
any liability under the 1933 Act, the information omitted from the form of
prospectuses filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant under Rule
497(h) under the 1933 Act shall be deemed to be part of this registration
statement as of the time it was declared effective; (ii) for the purpose of
determining any liability under the 1933 Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering thereof.
C-3
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Newark, State of
Delaware, on the 28th day of February, 1997.
Nextel STRYPES TRUST
(REGISTRANT)
By: /s/ DONALD J. PUGLISI
------------------------------------
Donald J. Puglisi
Managing Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons, in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- --------------------------- ------------------
<C> <S> <C>
/s/ DONALD J. PUGLISI Managing Trustee February 28, 1997
- ---------------------------------------------
(Donald J. Puglisi)
WILLIAM R. LATHAM III* Trustee
- ---------------------------------------------
(William R. Latham III)
JAMES B. O'NEILL* Trustee
- ---------------------------------------------
(James B. O'Neill)
*By: /s/ DONALD J. PUGLISI February 28, 1997
- ---------------------------------------------
(Donald J. Puglisi, Attorney-in-Fact)
</TABLE>
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
--------- ------------------------------------------------------------------------ ----
<C> <S> <C> <C>
(a) (1) Trust Agreement*
Form of Amended and Restated Trust Agreement
(2)
Certificate of Trust*
(3)
Restated Certificate of Trust
(4)
(b) Not applicable
(c) Not applicable
(d) (1) Form of Specimen certificate for STRYPES (included in Exhibit 2(a)(2))
Portions of the Amended and Restated Trust Agreement of the Registrant
defining the rights of Holders of STRYPES(a)
(2)
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h) (1) Form of Purchase Agreement
Form of Registration Agreement
(2)
(i) Not applicable
(j) Form of Custodian Agreement
(k) (1) Form of Administration Agreement
Form of Paying Agent Agreement
(2)
Form of Forward Purchase Contract
(3)
Form of Security and Pledge Agreement
(4)
Form of Fund Expense Agreement
(5)
Form of Fund Indemnity Agreement
(6)
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust
(m) Not applicable
(n) (1) Tax Opinion and Consent of Brown & Wood LLP, counsel to the Trust
Consent of Deloitte & Touche LLP, independent auditors for the Trust
(2)
(o) Not applicable
(p) Form of Subscription Agreement
(q) Not applicable
(r) Financial Data Schedule
</TABLE>
- ---------------
(a) Reference is made to Article III (Section 3.2), Article IV, Article V and
Article VIII (Sections 8.1 and 8.6) of the Trust's Amended and Restated
Trust Agreement filed as Exhibit (a)(2) to this Registration Statement.
* Previously filed.
<PAGE> 1
Exhibit
(a)(2)
Amended & Restated
Trust Agreement
AMENDED AND RESTATED
TRUST AGREEMENT
CONSTITUTING
NEXTEL STRYPES TRUST
Dated as of February 27, 1997
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS...............................................2
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
SECTION 2.1 NAME......................................................6
SECTION 2.2 OFFICE....................................................6
SECTION 2.3 RATIFICATION AND APPROVAL OF ACTION OF EITHER OR
BOTH OF THE DEPOSITOR AND THE INITIAL TRUSTEE.............6
SECTION 2.4 DECLARATION OF TRUST; PURPOSES OF THE TRUST...............6
SECTION 2.5 GENERAL POWERS AND DUTIES OF THE TRUSTEES................ 6
SECTION 2.6 PORTFOLIO ACQUISITION.................................... 8
SECTION 2.7 PORTFOLIO ADMINISTRATION................................. 8
SECTION 2.8 MANNER OF SALES..........................................10
SECTION 2.9 LIMITATIONS ON TRUSTEE'S POWERS..........................11
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 THE TRUST ACCOUNT........................................11
SECTION 3.2 DISTRIBUTIONS TO HOLDERS.................................12
SECTION 3.3 SEGREGATION..............................................12
SECTION 3.4 INVESTMENTS..............................................12
ARTICLE IV
REDEMPTION
SECTION 4.1 REDEMPTION...............................................12
ARTICLE V
ISSUANCE OF CERTIFICATES;
REGISTRY; TRANSFER OF STRYPES
SECTION 5.1 FORM OF CERTIFICATE......................................13
i
<PAGE> 3
SECTION 5.2 TRANSFER OF STRYPES; ISSUANCE, TRANSFER AND
INTERCHANGE OF CERTIFICATES...............................13
SECTION 5.3 REPLACEMENT OF CERTIFICATES...............................14
SECTION 5.4 LIMITATION ON LIABILITY...................................14
SECTION 5.5 GENERAL PROVISIONS REGARDING THE STRYPES..................14
ARTICLE VI
ISSUANCE OF THE CONTRACT
SECTION 6.1 EXECUTION OF THE CONTRACT.................................15
ARTICLE VII
TRUSTEES
SECTION 7.1 TRUSTEES..................................................15
SECTION 7.2 VACANCIES.................................................15
SECTION 7.3 POWERS....................................................15
SECTION 7.4 MEETINGS..................................................16
SECTION 7.5 RESIGNATION AND REMOVAL...................................16
SECTION 7.6 LIABILITY.................................................16
SECTION 7.7 COMPENSATION..............................................17
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 MEETINGS OF HOLDERS.......................................17
SECTION 8.2 BOOKS AND RECORDS; REPORTS................................17
SECTION 8.3 DISSOLUTION...............................................18
SECTION 8.4 AMENDMENT AND WAIVER......................................19
SECTION 8.5 ACCOUNTANTS...............................................20
SECTION 8.6 NATURE OF HOLDER'S INTEREST...............................20
SECTION 8.7 DELAWARE LAW TO GOVERN....................................21
SECTION 8.8 NOTICES...................................................21
SECTION 8.9 SEVERABILITY..............................................21
SECTION 8.10 COUNTERPARTS..............................................21
SECTION 8.11 SUCCESSORS AND ASSIGNS....................................21
ii
<PAGE> 4
AMENDED AND RESTATED TRUST AGREEMENT
This Amended and Restated Trust Agreement, dated as of February 27,
1997 (the "Trust Agreement"), by and among ML IBK Positions, Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as sponsors (the "Sponsors"), Donald
J. Puglisi, William R. Latham III and James B. O'Neill, as trustees (the
"Trustees"), and the Holders (as defined herein), constituting Nextel STRYPES
Trust (the "Trust").
W I T N E S S E T H:
WHEREAS, Paul A. Pepe, as depositor (the "Depositor") and Douglas R.
Robinson, as trustee (the "Initial Trustee"), have previously entered into a
Trust Agreement dated as of October 25, 1995 (the "Original Agreement"),
creating ABC STRYPES Trust;
WHEREAS, the Depositor has transferred his interest in ABC STRYPES
Trust to the Sponsors;
WHEREAS, the Trustees hereby ratify and approve the transfer of the
interest of the Depositor in ABC STRYPES Trust to the Sponsors;
WHEREAS, pursuant to an Instrument of Appointment, Acceptance, and
Resignation, dated as of February 7, 1997 (the "Instrument"), the Initial
Trustee appointed the Trustees as successor trustees to the Initial Trustee, the
Trustees accepted such appointment, and the Initial Trustee thereupon resigned
as trustee of the Trust;
WHEREAS, the Sponsors hereby waive the thirty (30) day notice
requirement of Section 5 of the Original Agreement and ratify and approve the
actions taken pursuant to the Instrument;
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in certain respects; and
WHEREAS, the Trust has previously issued one STRYPES to each of the
Sponsors in consideration of the aggregate purchase price therefor of $100,000,
or $50,000 per STRYPES, in satisfaction of the requirements of Section 14(a)(1)
under the Investment Company Act (as hereinafter defined);
NOW, THEREFORE, the parties hereto agree to amend and restate the
Original Agreement as provided herein. Upon the execution and delivery of
counterpart signature pages hereto by the parties hereto, the Original Agreement
will be automatically amended and restated in its entirety to read as provided
herein.
<PAGE> 5
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Whenever used in this Trust Agreement, the
following words and phrases shall have the meanings listed below. Any reference
to any agreement shall be a reference to such agreement as supplemented or
amended from time to time.
"ACCELERATION AMOUNT NOTICE" - An Acceleration Amount Notice as defined
in the Contract.
"ACCELERATION VALUE" - The Acceleration Value as defined in the
Contract.
"AGGREGATE ACCELERATION VALUE" - The Aggregate Acceleration Value as
defined in the Contract.
"ADMINISTRATION AGREEMENT" - The Administration Agreement, dated as of
March , 1997, between the Administrator and the Trust, and any substitute
agreement therefor entered into pursuant to Section 2.5(a) hereof.
"ADMINISTRATOR" - The Bank of New York or its successor as permitted
under Section 6.1 of the Administration Agreement or appointed pursuant to
Section 2.5(a) hereof.
"BUSINESS DAY" - Any day that is not a Saturday, a Sunday or a day on
which the New York Stock Exchange, NASDAQ National Market, or banking
institutions or trust companies in The City of New York are authorized or
obligated by law or executive order to close.
"CASH SETTLEMENT OPTION" - The option of each Contracting Stockholder
described in Section 2.5 of the Contract.
"CERTIFICATE" - Any certificate evidencing the ownership of STRYPES
substantially in the form of Exhibit A hereto.
"CLOSING" - The Closing as defined in the Contract.
"CODE" - The Internal Revenue Code of 1986, as amended from time to
time; each reference herein to any section of the Code or any regulation
thereunder shall constitute a reference to any successor provision thereto.
"COLLATERAL AGENT" - The Bank of New York or its successor as permitted
under the Security and Pledge Agreement.
"COMMENCEMENT DATE" - The day on which the Purchase Agreement is
executed.
2
<PAGE> 6
"COMMISSION" - The United States Securities and Exchange Commission.
"COMPANY" - Nextel Communications, Inc., a Delaware corporation.
"COMPANY SUCCESSOR" - Any surviving entity or subsequent surviving
entity of the Company.
"CONTRACT" - The forward purchase contract entered into by the Trust
and the Contracting Stockholders, substantially in the form of Exhibit C hereto.
"CONTRACTING STOCKHOLDER" - Each person named as a "Seller" in the
Contract.
"CUSTODIAN" - The Bank of New York or its successor as permitted under
paragraph 11 of the Custodian Agreement or appointed pursuant to Section 2.5(a)
hereof.
"CUSTODIAN AGREEMENT" - The Custodian Agreement, dated as of March ___,
1997, between the Custodian and the Trust, and any substitute agreement therefor
entered into pursuant to Section 2.5(a) hereof.
"DATE OF DELIVERY" - A Date of Delivery as defined in the Contract.
"DEPOSITARY" - The Depository Trust Company, or any successor thereto.
"DISTRIBUTION DATE" - Each ________, ________, ________ and ________ of
each year, commencing ________, 1997, to and including __________, 2000 or if
any such date is not a Business Day, then the first Business Day thereafter.
"EXCHANGE DATE" - , 2000.
_____________
"EVENT OF DEFAULT" - An Event of Default as defined in the Security and
Pledge Agreement.
"EXCHANGE" - The delivery by the Trustees to the Holders of Reference
Property (or, if one or more of the Contracting Stockholders elects to exercise
the Cash Settlement Option under the Contract, the amount of cash, or
combination of cash and Reference Property, specified in the Contract as payable
in respect thereof) in mandatory exchange for the STRYPES on the Exchange Date.
"FIRM CONSIDERATION AMOUNT" - The Firm Consideration Amount as defined
in the Contract.
"FIRM PAYMENT DATE" - The Firm Payment Date as defined in the Contract.
3
<PAGE> 7
"HOLDER" - The registered owner of any STRYPES as recorded on the books
of the Paying Agent.
"INDEPENDENT DEALERS" - Independent Dealers as defined in the Contract.
"INDEMNITY AGREEMENT" - The Fund Indemnity Agreement dated as of March
__, 1997, between the Trust and Merrill Lynch substantially in the form of
Exhibit D hereto.
"INVESTMENT COMPANY ACT" - The Investment Company Act of 1940, as
amended from time to time; each reference herein to any section of such Act or
any rule or regulation thereunder shall constitute a reference to any successor
provision thereto.
"MANAGING TRUSTEE" - The Trustee designated the Managing Trustee by
resolution of the Trustees.
"MERRILL LYNCH" - Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"OPTION CONSIDERATION AMOUNT" - The Option Consideration Amount as
defined in the Contract.
"ORIGINAL AGREEMENT" - The meaning specified in the recitals hereof.
"PARTICIPANT" - A Person having an account with the Depositary.
"PAYING AGENT" - The Bank of New York or its successor as permitted
under Section 6.6 of the Paying Agent Agreement or appointed pursuant to Section
2.5(a) hereof.
"PAYING AGENT AGREEMENT" - The Paying Agent Agreement, dated as of
March __, 1997, between the Paying Agent and the Trust, and any substitute
agreement therefor entered into pursuant to Section 2.5(a) hereof.
"PERSON" - An individual, a partnership, a corporation, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency or political subdivision thereof.
"PROSPECTUS" - The prospectus of the Trust relating to the offering of
the STRYPES and constituting a part of the Registration Statement, as first
filed with the Commission pursuant to Rule 497(b) or (h) under the Securities
Act, and as subsequently amended or supplemented by the Trust.
"PURCHASE AGREEMENT" - The Purchase Agreement as described in the
Prospectus.
"QUARTERLY DISTRIBUTION" - $______ per STRYPES paid to each Holder on
each Distribution Date.
4
<PAGE> 8
"RECORD DATE" - Each ________, ________, ________, and ________ of each
year, commencing ________, 1997.
"REFERENCE PROPERTY" - The Reference Property as defined in the
Contract.
"REFERENCE SECURITY" - A Reference Security as defined in the Contract.
"REGISTRATION STATEMENT" - The Registration Statement on Form N-2
(Registration Nos. 33-63795; 811-7389) of the Trust, as amended.
"REORGANIZATION EVENT" - A Reorganization Event as defined in the
Contract.
"SECURITIES ACT" - The Securities Act of 1933, as amended.
"SECURITY AND PLEDGE AGREEMENT" - The Security and Pledge Agreement
among the Collateral Agent, the Contracting Stockholders and the Trust, securing
the obligations of the Contracting Stockholders under the Contract,
substantially in the form of Exhibit B hereto.
"STRYPES" - Structured Yield Product Exchangeable for Stock(sm)
representing a proportionate share of beneficial ownership in the Trust
evidencing a Holder's undivided interest in the Trust and right to receive a pro
rata distribution upon liquidation of the Trust Estate.
"TEMPORARY INVESTMENTS" - Direct short-term U.S. government
obligations, as specified from time to time by the Trustees or through standing
instructions from the Trustees to the Administrator or the Paying Agent.
"TRANSFER AGENT AND REGISTRAR" - With respect to any Reference Security
at any time, the Person then acting as Transfer Agent and Registrar for such
Reference Security.
"TRUST ACCOUNT" - The account created pursuant to Section 3.1 hereof.
"TRUST ESTATE" - The Contract and the U.S. Treasury Securities held at
any time by the Trust, together with any Temporary Investments held at any time
pursuant to Section 3.4 hereof, and any proceeds thereof or therefrom and any
other moneys held at any time in the Trust Account.
"UNDERWRITERS" - The several Underwriters named in the Purchase
Agreement.
"U.S. TREASURY SECURITIES" - The meaning specified in Section 2.6(b)
hereof.
- ------------------
(sm)Service mark of Merrill Lynch & Co., Inc.
5
<PAGE> 9
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
SECTION 2.1 NAME. The Trust is named "Nextel STRYPES Trust," as such
name may be modified from time to time by the Trustees following written notice
to the Holders. The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Trustees.
SECTION 2.2 OFFICE. The address of the principal office of the Trust is
c/o Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19715.
On ten Business Days written notice to the Holders the Trustees may designate
another principal office.
SECTION 2.3 RATIFICATION AND APPROVAL OF ACTION OF EITHER OR BOTH OF
THE DEPOSITOR AND THE INITIAL TRUSTEE. The Sponsors and the Trustees hereby
ratify and approve any and all actions taken by either or both of the Depositor
and the Initial Trustee on behalf of the Trust on or prior to the date hereof.
SECTION 2.4 DECLARATION OF TRUST; PURPOSES OF THE TRUST. The Sponsors
hereby create the Trust in order that it may acquire the U.S. Treasury
Securities, enter into the Contract, issue and sell to the Sponsors and the
several Underwriters the STRYPES, hold the Trust Estate in trust for the use and
benefit of all present and future Holders and otherwise carry out the terms and
conditions of this Trust Agreement, all for the purpose of achieving the
investment objectives set forth in the Prospectus. The Trustees hereby declare
that they will accept and hold the Trust Estate in trust for the use and benefit
of all present and future Holders. The Depositor has heretofore deposited with
the Initial Trustee the sum of $1 to accept and hold in trust hereunder until
the issuance and sale of the STRYPES to the several Underwriters, whereupon such
sum shall be donated to an organization satisfying the requirements of Section
170(c)(2) of the Code selected by unanimous consent of the Trustees.
SECTION 2.5 GENERAL POWERS AND DUTIES OF THE TRUSTEES. In furtherance
of the provisions of Section 2.4 hereof, the Sponsors authorize and direct the
Trustees, on behalf of the Trust:
(a) to enter into and perform (and, in accordance with Section
8.4(a) hereof, amend), the Contract, the Security and Pledge Agreement,
the Purchase Agreement, the Indemnity Agreement, the Custodian
Agreement, the Administration Agreement and the Paying Agent Agreement
and to perform all obligations of the Trustees (including the
obligation to provide indemnity hereunder and thereunder) and enforce
all rights and remedies of the Trust under each of such agreements; and
if any of the Custodian Agreement, the Administration Agreement, the
Security and Pledge Agreement and the Paying Agent Agreement
terminates, or the agent of the Trust thereunder resigns or is
discharged, to appoint a substitute agent and enter into a new
6
<PAGE> 10
agreement with such substitute agent containing provisions
substantially similar to those contained in the agreement being
terminated; provided that in any such new agreement (i) the Custodian
and the Paying Agent shall each be a commercial bank or trust company
organized and existing under the laws of the United States of America
or any state therein, shall have full trust powers and shall have
minimum capital, surplus and retained earnings of not less than
$100,000,000; and (ii) the Administrator and the Collateral Agent shall
each be a reputable financial institution eligible and qualified in all
respects to carry out its obligations under the Administration
Agreement or the Security and Pledge Agreement, as the case may be;
(b) to hold the Trust Estate in trust, to create and
administer the Trust Account, to direct payments received by the Trust
to the Trust Account and to make payments out of the Trust Account as
set forth in Article III hereof;
(c) to issue and sell to the Underwriters an aggregate of up
to 8,243,875 STRYPES (including those STRYPES subject to the
over-allotment option of the several Underwriters provided for in the
Purchase Agreement) pursuant to the Purchase Agreement and as
contemplated by the Prospectus; provided, however, that subsequent to
the determination of the public offering price per STRYPES and related
underwriting discount for the STRYPES to be sold to the several
Underwriters but prior to the sale of the STRYPES to the several
Underwriters, the STRYPES originally issued to the Sponsors shall be
split into a greater number of STRYPES so that immediately following
such split the value of each STRYPES held by the Sponsors will equal
the aforesaid public offering price per STRYPES;
(d) to select independent public accountants and, subject to
the provisions of Section 8.5 hereof, to engage such independent public
accountants;
(e) to engage legal counsel and, to the extent required by
Section 2.7 hereof, to engage professional advisors and pay reasonable
compensation thereto;
(f) to defend any action commenced against the Trustees or the
Trust and to prosecute any action which the Trustees deem necessary to
protect the Trust and the rights and interests of Holders, and to pay
the costs thereof;
(g) to delegate any or all of its powers and duties hereunder
as contemplated by the Custodian Agreement, the Paying Agent Agreement
and the Administration Agreement, to the extent permitted by applicable
law; and
(h) to adopt and amend a code of regulations, and take any and
all such other actions as necessary or advisable to carry out the
purposes of the Trust, subject to the provisions hereof and applicable
law, including, without limitation, the Investment Company Act.
7
<PAGE> 11
SECTION 2.6 PORTFOLIO ACQUISITION. In furtherance of the provisions of
Section 2.4 hereof, the Sponsors further specifically authorize and direct the
Trustees, acting on behalf of the Trust:
(a) to enter into the Contract with respect to the Reference
Property with the Contracting Stockholders on the Commencement Date for
settlement on the date or dates provided thereunder and, subject to
satisfaction of the conditions set forth in the Contract, to pay to
each Contracting Stockholder the Firm Consideration Amount and any
Option Consideration Amount thereunder with the proceeds of the sale of
the STRYPES, net of the underwriting discount and net of the purchase
price paid for the U.S. Treasury Securities as provided in paragraph
(b) below; and, subject to the adjustments and exceptions set forth in
the Contract, the Contract shall entitle the Trust to receive from each
Contracting Stockholder on the date of Closing a specified number or
amount of each type of Reference Security and other property
constituting part of the Reference Property (or, if such Contracting
Stockholder elects to exercise the Cash Settlement Option under the
Contract, an amount of cash, or combination of cash and Reference
Property, with an equal value) so that the Trust may execute the
Exchange with the Holders; and
(b) to purchase for settlement on the Firm Payment Date, and
on any Date of Delivery, as appropriate, with the proceeds of the sale
the STRYPES, net of the underwriting discount, U.S. Treasury securities
from such brokers or dealers as the Trustees shall designate in writing
to the Administrator having the terms set forth on Schedule I hereto
("U.S. Treasury Securities").
SECTION 2.7 PORTFOLIO ADMINISTRATION. In furtherance of the provisions
of Section 2.4 hereof, the Sponsors further specifically authorize and direct
the Trustees:
(a) DETERMINATION OF REFERENCE PROPERTY ADJUSTMENTS. Upon
receipt of any notice pursuant to Section 6.5(a) of the Contract of an
event requiring an adjustment to the Reference Property, or upon
otherwise acquiring knowledge of such an event, to calculate the
required adjustment and furnish notice thereof to the Collateral Agent
and the Administrator or to request from the Administrator such further
information as may be necessary to calculate or effect the required
adjustment;
(b) SELECTION OF INDEPENDENT INVESTMENT BANK. At such times
and for such purposes provided in the Contract, to select and retain a
nationally recognized investment banking firm to determine the market
value of any Reference Property as provided in the Contract, including,
without limitation, Reference Property consisting of property other
than cash or Reference Securities, and to deliver to the Contracting
Stockholders notice pursuant to Section 8.1 of the Contract identifying
the firm proposed to be selected and retained, and to consult with the
Contracting Stockholders on such selection and retention as provided in
such Section 8.1;
8
<PAGE> 12
(c) ACCELERATION. Upon receipt of any notice pursuant to
Section 6.5(b) of the Contract that an Event of Default has occurred,
or upon otherwise acquiring notice that an Event of Default has
occurred, to request quotations from Independent Dealers, compute
Acceleration Value and Aggregate Acceleration Value and deliver an
Acceleration Amount Notice, in each case with respect to the Contract,
all as described in Article 7 of the Contract;
(d) DETERMINATION OF CONTRACT CONSIDERATION. To calculate, on
the date of Closing, the aggregate number or amount of each type of
Reference Security and other property constituting part of the
Reference Property (or, if the Cash Settlement Option under the
Contract is exercised, the amount of cash, or combination of cash and
Reference Property, with an equal value) required to be delivered by
each Contracting Stockholder under Sections 2.1, 2.4 and 2.5 of the
Contract or, if a Reorganization Event with respect to the Company or
any Company Successor shall have occurred, 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 by each Contracting Stockholder under the Contract if the
Exchange Date were redefined to be the Early Settlement Date, all as
provided in Section 7.2 of the Contract; and to furnish notice of the
amounts so determined to the Collateral Agent and the Contracting
Stockholders;
(e) DISTRIBUTION OF CONTRACT CONSIDERATION. Unless an Event of
Default or a Reorganization Event with respect to the Company or any
Company Successor shall have occurred (in which event distribution of
proceeds shall be governed by Section 8.3 below) or one or more of the
Contracting Stockholders elects to exercise the Cash Settlement Option
with respect to all or a part of the Reference Property otherwise
deliverable under the Contract (in which event the cash received in
respect thereof shall be distributed pro rata to the Holders of
STRYPES);
(i) DETERMINATION OF FRACTIONAL UNITS OR
INTERESTS. To determine, on the Exchange Date: (A) for each
Holder of STRYPES, such Holder's pro rata share of the total
amount of each type of Reference Security and other property
constituting part of the Reference Property delivered to the
Trust at the Closing under the Contract; and (B) the amount in
cash equal to the value of the fractional units or interests
of any type of Reference Property, if any, allocable to each
Holder (including, in the case of the Depositary, the cash
amount allocable to beneficial owners of STRYPES who own
through Participants) and in the aggregate;
(ii) CASH FOR FRACTIONAL UNITS OR INTERESTS. To
sell, in the principal market therefor, on 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 aggregate number of fractional units or
interests of such type of Reference Property, if any,
determined pursuant to clause (i)(B) above, rounded down to
the nearest integral number;
9
<PAGE> 13
(iii) DELIVERY OF REFERENCE SECURITIES. To
deliver the remaining units of any Reference Security to the
Transfer Agent and Registrar on the Exchange Date, with
instructions that such units be re-registered and re-issued as
follows:
(A) for and in the name of each Holder
(other than the Depositary) who holds STRYPES in
definitive form, the Transfer Agent and Registrar
shall be instructed to issue definitive certificates
representing a number of units of such Reference
Security equal to such Holder's pro rata share of the
total number of units of such Reference Security
delivered to the Trust at the Closing under the
Contract, rounded down to the nearest integral
number;
(B) the Transfer Agent and Registrar shall
be instructed to transfer all remaining units of such
Reference Security to the account of the Custodian
held through the Depositary, who shall then be
instructed to transfer and credit such units of such
Reference Security to each Participant who holds
STRYPES, with each Participant receiving its pro rata
share of the total number of units of such Reference
Security delivered to the Trust at the Closing under
the Contract, reduced by the aggregate cash value of
any fractional units of such Reference Security
allocable to such Participant;
(iv) DELIVERY OF OTHER REFERENCE PROPERTY. To
distribute on the Exchange Date to each Holder of STRYPES such
Holder's pro rata share of the total number or amount of each
type of Reference Property consisting of cash or property
other than cash or a Reference Security delivered to the Trust
at the Closing under the Contract, rounded down to the nearest
integral number;
(v) DISTRIBUTION OF CASH IN RESPECT OF FRACTIONAL
UNITS OR INTERESTS. To distribute on the Exchange Date to each
Holder of STRYPES to which a fractional unit or interest of
any particular type of Reference Property is allocable as
determined pursuant to clause (i)(B) above such Holder's pro
rata portion of the proceeds obtained from the liquidation of
all fractional units or interests of such type of Reference
Property pursuant to clause (ii) above (net of any brokerage
or related expenses); and
(vi) RECORD DATE. The distributions described
in this paragraph (e) shall be made to Holders of record as of
the close of business on the Business Day preceding the
Exchange Date.
SECTION 2.8 MANNER OF SALES. Any sale of Trust property permitted under
Section 8.3(c) hereof shall be made through such executing brokers or to such
dealers as the Trustees, seeking best price and execution for the Trust, shall
designate in writing to
10
<PAGE> 14
the Paying Agent, taking into account such factors as price, commission, size of
order, difficulty of execution and brokerage skill required.
SECTION 2.9 LIMITATIONS ON TRUSTEES' POWERS. The Trustees,
acting on behalf of the Trust, are not permitted:
(a) to purchase or hold any securities or instruments
except for the U.S. Treasury Securities, the
Contract, any Reference Security received pursuant to
the Contract, and the Temporary Investments
contemplated by Section 3.4 hereof;
(b) to dispose of the Contract prior to the Exchange
Date;
(c) to issue any securities or instruments except for the
STRYPES, or to issue any STRYPES other than the
STRYPES sold to the Sponsors and the STRYPES to be
sold pursuant to the Purchase Agreement and until
such STRYPES have been so purchased and paid for in
full;
(d) to make short sales or purchases on margin;
(e) to write put or call options;
(f) to borrow money;
(g) to underwrite securities;
(h) to purchase or sell real estate, commodities or
commodities contracts;
(i) to purchase restricted securities;
(j) to make loans; or
(k) to take any action, or direct or permit the
Administrator, the Paying Agent or the Custodian to
take any action, that would vary the investment of
the Holders within the meaning of Treasury Regulation
Section 301.7701-4(c), or otherwise take any action
or direct or permit any action to be taken that would
or could cause the Trust not to be a "grantor trust"
under the Code.
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 THE TRUST ACCOUNT. The Trustees shall, upon issuance of the
STRYPES, establish with the Paying Agent an account to be called the "Trust
Account". All moneys received by the Trustees in respect of the Contract, the
U.S. Treasury Securities
11
<PAGE> 15
and any Temporary Investments held pursuant to Section 3.4 hereof, all moneys
received from the sale of the STRYPES to the Sponsors, and any proceeds from the
sale of the STRYPES to the Underwriters after the purchase of the Contract and
the U.S. Treasury Securities shall be credited to the Trust Account.
SECTION 3.2 DISTRIBUTIONS TO HOLDERS. On or shortly after each
Distribution Date the Trustees shall distribute to each Holder of record at the
close of business on the preceding Record Date, at the post office address of
the Holder appearing on the books of the Trust or Paying Agent or by any other
means mutually agreed upon by the Holder and the Trustees, an amount equal to
such Holder's pro rata share of the Quarterly Distribution computed as of the
close of business on such Distribution Date.
SECTION 3.3 SEGREGATION. All moneys and other assets deposited or
received by the Trustees hereunder shall be held by them in trust as part of the
Trust Estate until required to be disbursed or otherwise disposed of in
accordance with the provisions of this Trust Agreement, and the Trustees shall
handle such moneys and other assets in such manner as shall constitute the
segregation and holding in trust within the meaning of the Investment Company
Act.
SECTION 3.4 INVESTMENTS. To the extent necessary to enable the Paying
Agent to make the next succeeding Quarterly Distribution, any moneys deposited
with or received by the Trustees in the Trust Account shall be invested as soon
as possible by the Paying Agent in Temporary Investments maturing no later than
the Business Day preceding the next following Distribution Date. Except as
otherwise specifically provided herein or in the Paying Agent Agreement, the
Paying Agent shall not have the power to sell, transfer or otherwise dispose of
any Temporary Investment prior to the maturity thereof, or to acquire additional
Temporary Investments. The Paying Agent shall hold any Temporary Investment to
its maturity and shall apply the proceeds thereof upon maturity to the payment
of the next succeeding Quarterly Distribution. All such Temporary Investments
shall be selected from time to time by the Trustees or pursuant to standing
instructions from the Trustees to the Administrator, and the Administrator
and/or Paying Agent shall have no liability to the Trust or any Holder or any
other Person with respect to any such Temporary Investment. Any interest or
other income received on any moneys in the Trust Account shall, upon receipt
thereof, be deposited into the Trust Account. Notwithstanding the foregoing, not
more than 5% of the assets of the Trust may be held at any time in the form of
cash and Temporary Investments, and the Trustees shall distribute cash, or
liquidate Temporary Investments and distribute the proceeds thereof, if, when
and to the extent needed to maintain compliance with the foregoing restriction.
ARTICLE IV
REDEMPTION
SECTION 4.1 REDEMPTION. The Trustees shall have no right or obligation
to redeem STRYPES.
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ARTICLE V
ISSUANCE OF CERTIFICATES;
REGISTRY; TRANSFER OF STRYPES
SECTION 5.1 FORM OF CERTIFICATE. Each Certificate evidencing STRYPES
shall be countersigned manually or in facsimile by the Managing Trustee and
executed manually by the Paying Agent in substantially the form of Exhibit A
hereto with the blanks appropriately filled in, shall be dated the date of
execution and delivery by the Paying Agent and shall represent a fractional
undivided interest in the Trust, the numerator of which fraction shall be the
number of STRYPES set forth on the face of such Certificate and the denominator
of which shall be the total number of STRYPES outstanding at that time. All
STRYPES shall be issued in registered form and shall be numbered serially.
Pending the preparation of definitive Certificates, the Trustees may execute and
the Paying Agent shall authenticate and deliver temporary Certificates (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Paying Agent). Temporary Certificates shall be issuable as
registered Certificates substantially in the form of the definitive Certificates
but with such omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Trustees with the
concurrence of the Paying Agent. Every temporary Certificate shall be executed
by the Managing Trustee and be authenticated by the Paying Agent upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Certificates. Without unreasonable delay the Managing Trustee shall
execute and shall furnish definitive Certificates and thereupon temporary
Certificates may be surrendered in exchange therefor without charge at each
office or agency of the Paying Agent and the Paying Agent shall authenticate and
deliver in exchange for such temporary Certificates definitive Certificates for
a like aggregate number of STRYPES. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits hereunder as definitive
Certificates.
SECTION 5.2 TRANSFER OF STRYPES; ISSUANCE, TRANSFER AND INTERCHANGE OF
CERTIFICATES. STRYPES may be transferred by the Holder thereof by presentation
and surrender of properly endorsed Certificates at the office of the Paying
Agent, accompanied by such documents executed by the Holder or his authorized
attorney as the Paying Agent deems necessary to evidence the authority of the
person making the transfer. Certificates issued pursuant to this Trust Agreement
are interchangeable for one or more other Certificates in an equal aggregate
number of STRYPES and all Certificates issued as may be requested by the Holder
and deemed appropriate by the Paying Agent shall be issued in denominations of
one STRYPES or any multiple thereof. The Paying Agent may deem and treat the
person in whose name any STRYPES shall be registered upon the books of the
Paying Agent as the owner of such STRYPES for all purposes hereunder and the
Paying Agent shall not be affected by any notice to the contrary. The transfer
books maintained by the Paying Agent for the purposes of this Section 5.2 hereof
shall include the name and address of the record owners of the STRYPES and shall
be closed in connection with the termination of the Trust pursuant to Section
8.3 hereof. A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer shall be paid to the Paying
Agent by the Holder. A Holder may be required to pay a fee for each new
Certificate to be issued pursuant to the preceding paragraph in such
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<PAGE> 17
amount as may be specified by the Paying Agent and approved by the Trustees. All
Certificates cancelled pursuant to this Trust Agreement may be voided by the
Paying Agent in accordance with the usual practice of the Paying Agent or in
accordance with the instructions of the Trustees; provided, however, that the
Paying Agent shall not be required to destroy cancelled Certificates. The Paying
Agent may adopt other reasonable rules and regulations for the registration,
transfer and tender of STRYPES as it may, in its discretion, deem necessary.
SECTION 5.3 REPLACEMENT OF CERTIFICATES. In case any Certificate shall
become mutilated or be destroyed, stolen or lost, the Paying Agent shall execute
and deliver a new Certificate in exchange and substitution therefor upon the
Holder's furnishing the Paying Agent with proper identification and satisfactory
indemnity, complying with such other reasonable regulations and conditions as
the Paying Agent may prescribe and paying such expenses and charges, including
any bonding fee, as the Paying Agent may incur or reasonably impose; provided
that if the Trust has dissolved or is in the process of dissolving, the Paying
Agent, in lieu of issuing such new Certificate, may, upon the terms and
conditions set forth herein, make the distributions set forth in Section 8.3(c)
hereof. Any mutilated Certificate shall be duly surrendered and cancelled before
any duplicate Certificate shall be issued in exchange and substitution therefor.
Upon issuance of any duplicate Certificate pursuant to this Section 5.3 hereof,
the original Certificate claimed to have been lost, stolen or destroyed shall
become null and void and of no effect, and any bona fide purchaser thereof shall
have only such rights as are afforded under Article 8 of the Uniform Commercial
Code to a Holder presenting a Certificate for transfer in the case of an
overissue.
SECTION 5.4 LIMITATION ON LIABILITY. Pursuant to Section3803(a) of the
Delaware Business Trust Act, 12 Del. C. Section3801, et seq., the Holders of the
STRYPES shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION 5.5 GENERAL PROVISIONS REGARDING THE STRYPES.
(A) The consideration received by the Trust for the issuance
of the STRYPES shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(B) Upon issuance of the STRYPES as provided in this Trust
Agreement, the STRYPES so issued shall be deemed to be validly issued, fully
paid and non-assessable.
(C) Every person, by virtue of having become a Holder in
accordance with the terms of this Trust Agreement, shall be deemed to have
expressly assented and agreed to the terms of, and shall be bound by, this Trust
Agreement.
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ARTICLE VI
ISSUANCE OF THE CONTRACT
SECTION 6.1 EXECUTION OF THE CONTRACT. The Contract shall be
countersigned manually or in facsimile by the Managing Trustee and executed
manually by the Contracting Stockholders and shall be dated the date of
execution and delivery by the Contracting Stockholders.
ARTICLE VII
TRUSTEES
SECTION 7.1 TRUSTEES. The Trust shall have three Trustees who shall
initially be elected by the Initial Trustee. One Trustee shall be the Managing
Trustee and, as such, is authorized to execute documents and instruments on
behalf of the Trust. The Managing Trustee will be appointed by resolution of the
Trustees. Each Trustee shall serve until the next regular annual or special
meeting of Holders called for the purpose of electing Trustees and, then, until
such Trustee's successor is duly elected and qualified. Holders may not cumulate
their votes in the election of Trustees. Each Trustee shall not be considered to
have qualified for the office unless such Trustee shall agree to be bound by the
terms of this Trust Agreement and shall evidence his consent by executing this
Trust Agreement or a supplement hereto.
SECTION 7.2 VACANCIES. Any vacancy in the office of a Trustee may be
filled in compliance with Sections 10 and 16 of the Investment Company Act by
the vote, within 30 days, of the remaining Trustees; provided that if required
by Section 16 of the Investment Company Act, the Trustees shall forthwith cause
to be held as promptly as possible and in any event within 60 days (unless the
Commission by order shall extend such period) a meeting of Holders for the
purpose of electing Trustees in compliance with Sections 10 and 16 of the
Investment Company Act. Until a vacancy in the office of any Trustee is filled
as provided above, the remaining Trustees in office, regardless of their number,
shall have the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Trust Agreement. Election shall be by the
affirmative vote of Holders of a majority of the STRYPES entitled to vote
present in person or by proxy at a special meeting of Holders called for the
purpose of electing any Trustee. Each individual Trustee shall be at least 21
years of age and shall not be under any legal disability. No Trustee who is an
"interested person", as defined in the Investment Company Act, may assume office
if it would cause the composition of the Trustees of the Trust not to be in
compliance with the percentage limitations on interested persons in Section 10
of the Investment Company Act. Trustees need not be Holders. Notice of the
appointment or election of a successor Trustee shall be mailed promptly after
acceptance of such appointment by the successor Trustee to each Holder.
SECTION 7.3 POWERS. The Trust will be managed solely by the Trustees,
who will, subject to the provisions of Article II hereof, have complete and
exclusive control over the management, conduct and operation of the Trust's
business, and shall have the
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rights, powers and authority of a board of directors of a corporation organized
under Delaware law. The Trustees shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Trust and shall not employ,
or permit another to employ, such funds or assets in any manner except for the
exclusive benefit of the Trust and except in accordance with the terms of this
Trust Agreement. Subject to the continuing supervision of the Trustees and as
permitted by applicable law, the functions of the Trust shall be performed by
the Custodian, the Paying Agent, the Administrator and such other entities
engaged to perform such functions as the Trustees may determine, including,
without limitation, any or all administrative functions.
SECTION 7.4 MEETINGS. Meetings of the Trustees shall be held from time
to time upon the call of any Trustee on not less than 48 hours' notice (which
may be waived by any or all of the Trustees in writing either before or after
such meeting or by attendance at the meeting unless the Trustee attends the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting has not been lawfully called or convened). The
Trustees shall act either by majority vote of the Trustees present at a meeting
at which at least a majority of the Trustees then in office are present or by a
unanimous written consent of the Trustees without a meeting. Except as otherwise
required under the Investment Company Act, all or any of the Trustees may
participate in a meeting of the Trustees by means of a conference telephone call
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting pursuant to
such communications equipment shall constitute presence in person at such
meeting.
SECTION 7.5 RESIGNATION AND REMOVAL. Any Trustee may resign and be
discharged of the trust created by the Trust Agreement by executing an
instrument in writing resigning as Trustee, filing the same with the
Administrator and sending notice thereof to the remaining Trustees, and such
resignation shall become effective immediately unless otherwise specified
therein. Any Trustee may be removed in the event of incapacity by vote of the
remaining Trustees and for any reason by written declaration or vote of the
Holders of more than 66 2/3% of the outstanding STRYPES, notice of which vote
shall be given to the remaining Trustees and the Administrator. The resignation,
removal or failure to reelect any Trustee shall not cause the termination of the
Trust.
SECTION 7.6 LIABILITY. The Trustees shall not be liable to the Trust or
any Holder for any action taken or for refraining from taking any action except
in the case of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties of their office. Specifically, without limitation, the
Trustees shall not be responsible for or in respect of the recitals herein or
the validity or sufficiency of this Trust Agreement or for the due execution
hereof by any other Person, or for or in respect of the validity or sufficiency
of STRYPES or certificates representing STRYPES and shall in no event assume or
incur any liability, duty or obligation to any Holder or to any other Person,
other than as expressly provided for herein. The Trustees may employ agents,
attorneys, administrators, accountants and auditors, and shall not be answerable
for the default or misconduct of any such Persons if such Persons shall have
been selected with reasonable care. Action in good faith may include action
taken in good faith in accordance with an opinion of counsel. In no event
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shall any Trustee be personally liable for any expenses with respect to the
Trust. Each Trustee shall be indemnified from the Trust Account with respect to
any claim, liability, loss or expense incurred in acting as Trustee of the
Trust, including the costs and expenses of the defense against any such claim or
liability, except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties of his office.
SECTION 7.7 COMPENSATION. Each Trustee, other than a Trustee who is a
director, officer or employee of the Sponsors, any Underwriter, or the
Administrator or any affiliate thereof, shall receive a one-time, up-front fee
of $10,800, in respect of its annual fee and anticipated out-of-pocket expenses.
In addition, the Managing Trustee shall receive an additional one-time, up-front
fee of $3,600 for serving in such capacity. The Trustees will not receive any
pension or retirement benefits. In the event of the resignation or removal of a
Trustee, such Trustee shall remit to the Trust the portion of its fee ratable
for the period from the day of such resignation or removal through the Exchange
Date.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 MEETINGS OF HOLDERS. The Trustees shall not hold annual or
regular meetings of Holders except as set forth herein. A special meeting may be
called at any time by the Trustees or upon petition of Holders of not less than
51% of the STRYPES outstanding (unless substantially the same matter was voted
on during the preceding 12 months), and shall be called as provided in Section
7.2 hereof (or as otherwise required by the Investment Company Act and the rules
and regulations thereunder, including, without limitation, when requested by the
Holders of not less than 10% of the STRYPES outstanding for the purposes of
voting upon the question of the removal of any Trustee or Trustees). The
Trustees shall establish, and notify the Holders in writing of, the record date
for each such meeting which shall be not less than 10 nor more than 50 days
before the meeting date. Holders at the close of business on the record date
will be entitled to vote at the meeting. The Administrator shall, as soon as
possible after any such record date (or prior to such record date if
appropriate), mail by first class mail to each Holder a notice of meeting and a
proxy statement and form of proxy in the form approved by the Trustees and
complying with the Investment Company Act and the rules and regulations
thereunder. Except as otherwise specified herein or in any provision of the
Investment Company Act and the rules and regulations thereunder, any action may
be taken by vote of Holders of a majority of the STRYPES outstanding present in
person or by proxy if Holders of a majority of STRYPES outstanding on the record
date are so represented. Each STRYPES shall have one vote and may be voted in
person or by duly executed proxy. Any proxy may be revoked by notice in writing,
by a subsequently dated proxy or by voting in person at the meeting, and no
proxy shall be valid after eleven months following the date of its execution.
SECTION 8.2 BOOKS AND RECORDS; REPORTS. (a) The Trustees shall keep a
certified copy or duplicate original of this Trust Agreement on file at the
office of the Trust and the office of the Administrator available for inspection
at all reasonable times during its usual business hours by any Holder. The
Trustees shall keep proper books of
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record and account for all the transactions under this Trust Agreement at the
office of the Trust and the office of the Administrator, and such books and
records shall be open to inspection by any Holder at all reasonable times during
usual business hours. The Trustees shall retain all books and records in
compliance with Section 31 of the Investment Company Act and the rules and
regulations thereunder.
(b) With each payment to Holders the Paying Agent shall set forth,
either in the instruments by means of which payment is made or in a separate
statement, the amount being paid from the Trust Account expressed as a dollar
amount per STRYPES and the other information required under Section 19 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file or distribute reports as required by Section 30 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file such reports as may from time to time be required to be
filed or distributed to Holders under any applicable state or Federal statute or
rule or regulation thereunder, and shall file such tax returns as may from time
to time be required under any applicable state or Federal statute or rule or
regulation thereunder. One of the Trustees shall be designated by resolution of
the Trustees to make the filings and give the notices required by Rule 17g-1
under the Investment Company Act.
(c) In calculating the net asset value of the Trust as required by the
Investment Company Act, (i) the U.S. Treasury Securities 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 Trustees, (ii) short-term
investments having a maturity of 60 days or less will be valued at cost with
accrued interest or discount earned included in interest receivable and (iii)
the Contract will be valued at the mean of the bid prices received by the
Administrator from at least three independent broker-dealer firms unaffiliated
with the Trust to be named by the Trustees who are in the business of making
bids on financial instruments similar to the Contract and with terms comparable
thereto.
SECTION 8.3 DISSOLUTION. (a) The Trust created hereby shall dissolve,
and its affairs be wound up, upon the earliest of (i) the date 90 days after the
execution of this Trust Agreement if (x) the STRYPES have not theretofore been
issued or (y) the net worth of the Trust is not at least $100,000 at such time,
(ii) the date of the repayment, sale or other disposition, as the case may be,
of all of the Contract, the U.S. Treasury Securities and any other securities
held hereunder, (iii) the date 10 Business Days after the Exchange Date (or, if
the Contract shall be accelerated pursuant to Article 7 thereof, 10 Business
Days after the date on which the Trust shall receive the Reference Property then
required to be delivered by the Contracting Stockholders, or the proceeds of any
sale of collateral pursuant to Section 6(c) of the Security and Pledge
Agreement), and (iv) the date which is 21 years less 91 days after the death of
the last survivor of all of the descendants of Joseph P. Kennedy living on the
date hereof. The Trust is irrevocable, the Sponsors have no right to withdraw
any assets constituting a portion of the Trust Estate, and the dissolution of
the Sponsors shall not operate to dissolve the Trust. The death or incapacity of
any Holder shall not operate to terminate this Trust Agreement, nor entitle his
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or
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winding up of the Trust, and shall not otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) Written notice of any dissolution shall be sent to Holders
specifying the record date for any distribution to Holders and the time of
dissolution as determined by the Trustees, upon which the books maintained by
the Paying Agent pursuant to Section 5.2 hereof shall be closed.
(c) Subject to any applicable provisions of law, for purposes of
dissolution under Sections 8.3(a)(ii), (iii) and (iv) hereof, within five
Business Days after such dissolution, the Trustees shall, effect the sale of any
remaining property of the Trust, and the Paying Agent shall distribute pro rata
as soon as practicable thereafter to each Holder, upon surrender for
cancellation of its Certificates, its interest in the Trust Estate. Together
with the distribution to the Holders, the Trustees shall furnish the Holders
with a final statement as of the date of the distribution of the amount
distributable with respect to each STRYPES.
SECTION 8.4 AMENDMENT AND WAIVER. (a) This Trust Agreement, and any of
the agreements referred to in Section 2.5(a) hereof, may be amended from time to
time by the Trustees for any purpose prior to the issuance and sale to the
Underwriters of the STRYPES and thereafter without the consent of any of the
Holders (i) to cure any ambiguity or to correct or supplement any provision
contained herein or therein which may be defective or inconsistent with any
other provision contained herein or therein; (ii) to change any provision hereof
or thereof as may be required by applicable law or the Commission or any
successor governmental agency exercising similar authority; or (iii) to make
such other provisions in regard to matters or questions arising hereunder or
thereunder as shall not materially adversely affect the interests of the Holders
(as determined in good faith by the Trustees, who may rely on an opinion of
counsel).
(b) This Trust Agreement may also be amended from time to time by the
Trustees (or the performance of any of the provisions of the Trust Agreement may
be waived) with the consent by the required vote of the Holders in accordance
with Section 8.1 hereof; provided that this Trust Agreement may not be amended
(i) without the consent by vote of the Holders of all STRYPES then outstanding,
so as to increase the number of STRYPES issuable hereunder above the number of
STRYPES specified in Section 2.5(c) hereof or such lesser number as may be
outstanding at any time during the term of this Trust Agreement, (ii) to reduce
the interest in the Trust represented by STRYPES without the consent of the
Holders of such STRYPES, (iii) if such amendment is prohibited by the Investment
Company Act or other applicable law, (iv) without the consent by vote of the
Holders of all STRYPES then outstanding, if such amendment would effect a change
in the voting requirements set forth in Section 8.1 hereof or this Section 8.4,
or (v) without the consent by vote of the Holders of the lesser of (x) 67% or
more of the STRYPES represented at a special meeting of Holders, if more than
50% of the STRYPES outstanding are represented at such meeting, and (y) more
than 50% of the STRYPES outstanding, if such amendment would effect a change in
Section 2.4 or 2.9 hereof.
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(c) Promptly after the execution of any amendment, the Trustees shall
furnish written notification of the substance of such amendment to each Holder.
(d) Notwithstanding subsections (a) and (b) of this Section 8.4, no
amendment hereof shall permit the Trust, the Trustees, the Administrator, the
Paying Agent or the Custodian to take any action or direct or permit any Person
to take any action that (i) would vary the investment of Holders within the
meaning of Treasury Regulation Section 301.7701-4(c), or (ii) would or could
cause the Trust, or direct or permit any action to be taken that would or could
cause the Trust, not to be a "grantor trust" under the Code.
SECTION 8.5 ACCOUNTANTS. (a) The Trustees shall, in accordance with
Section 30 of the Investment Company Act, file annually with the Commission such
information, documents and reports as investment companies having securities
registered on a national securities exchange are required to file annually
pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations issued thereunder. The Trustees shall transmit to
the Holders, at least semi-annually, the reports required by Section 30(d) of
the Investment Company Act and the rules and regulations thereunder, including,
without limitation, a balance sheet accompanied by a statement of the aggregate
value of investments on the date of such balance sheet, a list showing the
amounts and values of such investments owned on the date of such balance sheet,
and a statement of income for the period covered by the report. Financial
statements contained in such annual reports shall be accompanied by a
certificate of independent public accounts based upon an audit not less in scope
or procedures than that which independent public accountants would ordinarily
make for the purpose of presenting comprehensive and dependable financial
statements and shall contain such information as the Commission may prescribe.
Each such report shall state that such independent public accountants have
verified investments owned, either by actual examination or by receipt of a
certificate from the Custodian.
(b) The independent public accountants referred to in subsection (a)
above shall be selected at a meeting held within 30 days before or after the
beginning of the fiscal year by the vote, cast in person, of a majority of the
Trustees who are not "interested persons" as defined in the Investment Company
Act and such selection shall be submitted for ratification at the first meeting
of Holders to be held as set forth in Section 8.1 hereof, and thereafter as
required by the Investment Company Act and the rules and regulations thereunder.
The employment of any independent public accountant for the Trust shall be
conditioned upon the right of the Holders by a vote of the lesser of (i) 67% or
more of the STRYPES present at a special meeting of Holders, if Holders of more
than 50% of STRYPES outstanding are present or represented by proxy at such
meeting or (ii) more than 50% of the STRYPES outstanding to terminate such
employment at any time without penalty.
(c) The foregoing provisions of this Section 8.5 are in addition to any
applicable requirements of the Investment Company Act and the rules and
regulations thereunder.
SECTION 8.6 NATURE OF HOLDER'S INTEREST. Each Holder holds at any given
time a beneficial interest in the Trust Estate, but does not have any right to
take title or possession of any portion of the Trust Estate. Each Holder
expressly waives any
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right he may have under any rule of law, or the provisions of any statute, or
otherwise, to require the Trustees at any time to account, in any manner other
than as expressly provided in this Trust Agreement, for the Reference Property,
the Contract, the U.S. Treasury Securities or other assets or moneys from time
to time received, held and applied by the Trustees hereunder. No Holder shall
have any right except as provided herein to control or determine the operation
and management of the Trust or the obligations of the parties hereto. Nothing
set forth herein or in the certificates representing STRYPES shall be construed
to constitute the Holders from time to time as partners or members of an
association.
SECTION 8.7 DELAWARE LAW TO GOVERN. This Trust Agreement is executed
and delivered in the State of Delaware, and all laws or rules of construction of
the State of Delaware, without regard to principles of conflict of laws, shall
govern the rights of the parties hereto and the Holders and the construction,
validity and effect of the provisions hereof.
SECTION 8.8 NOTICES. Any notice, demand, direction or instruction to be
given to the Sponsors hereunder shall be in writing and shall be duly given if
mailed or delivered to the Trust c/o Puglisi & Associates, 850 Library Avenue,
Suite 204, Newark, Delaware 19715, Attention: Donald J. Puglisi, Managing
Trustee, or at such other address as shall be specified by the Sponsors to the
other parties hereto in writing. Any notice, demand, direction or instruction to
be given to the Trust and the Trustees hereunder shall be in writing and shall
be duly given if mailed or delivered to the Trust at 101 Barclay Street, New
York, New York 10286 and to each Trustee at such Trustee's address set forth
beneath its signature below, or such other address as shall be specified to the
other parties hereto by such party in writing. Any notice to be given to a
Holder shall be duly given if mailed, first class postage prepaid, or by such
other substantially equivalent means as the Trustees may deem appropriate, or
delivered to such Holder at the address of such Holder appearing on the registry
of the Paying Agent.
SECTION 8.9 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Trust Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
and terms of this Trust Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Trust Agreement or of the
Certificates, or the rights of the Holders thereof.
SECTION 8.10 COUNTERPARTS. This Trust Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 8.11 SUCCESSORS AND ASSIGNS. Whenever in this Trust Agreement
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Trust Agreement by the Sponsors and Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
ML IBK Positions, Inc.
By___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By___________________________
Name:
Title:
TRUSTEES:
___________________________________
Name: Donald J. Puglisi
Address: 850 Library Avenue, Suite 204
Newark, Delaware 19715
___________________________________
Name: William R. Latham III
Address: 850 Library Avenue, Suite 204
Newark, Delaware 19715
___________________________________
Name: James B. O'Neill
Address: 850 Library Avenue, Suite 204
Newark, Delaware 19715
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Schedule I
U.S. TREASURY SECURITIES
All terms specified are for stripped principal or interest components
of U.S. Treasury debt obligations.
Aggregate Face Amount, per Security, Payable at
STRIPS Payment Date Payment Date
- ------------ -------------- --------------------------------------------------
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<PAGE> 27
EXHIBIT A
NEXTEL STRYPES TRUST
NO. ____________________ STRYPES CUSIP NO. _______
THIS CERTIFIES THAT ________ IS THE RECORD OWNER OF _______ FULLY PAID AND
NON-ASSESSABLE STRYPES, PAR VALUE $.10 PER STRYPES, OF NEXTEL STRYPES TRUST
CONSTITUTING FRACTIONAL UNDIVIDED BENEFICIAL INTERESTS IN NEXTEL STRYPES TRUST,
A TRUST CREATED UNDER THE LAWS OF THE STATE OF DELAWARE PURSUANT TO AN AMENDED
AND RESTATED TRUST AGREEMENT (THE "TRUST AGREEMENT") BETWEEN ML IBK POSITIONS,
INC. AND DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION AND THE TRUSTEES
NAMED THEREIN AND THE HOLDERS (AS DEFINED THEREIN). THIS CERTIFICATE IS ISSUED
UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND CONDITIONS OF THE TRUST
AGREEMENT, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, TO WHICH THE HOLDER OF
THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS BOUND, A COPY
OF WHICH TRUST AGREEMENT IS AVAILABLE AT THE OFFICE OF THE TRUST'S ADMINISTRATOR
AND PAYING AGENT, THE BANK OF NEW YORK, 101 BARCLAY STREET, NEW YORK, NEW YORK
10286. THIS CERTIFICATE IS TRANSFERABLE AND INTERCHANGEABLE BY THE REGISTERED
OWNER IN PERSON OR BY HIS DULY AUTHORIZED ATTORNEY AT THE OFFICE OF THE PAYING
AGENT UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED OR ACCOMPANIED BY A
WRITTEN INSTRUMENT OF TRANSFER AND ANY OTHER DOCUMENTS THAT THE PAYING AGENT MAY
REQUIRE FOR TRANSFER, IN FORM SATISFACTORY TO THE PAYING AGENT AND PAYMENT OF
THE FEES AND EXPENSES PROVIDED IN THE TRUST AGREEMENT.
THIS CERTIFICATE IS NOT VALID UNLESS MANUALLY COUNTERSIGNED
BY THE PAYING AGENT.
WITNESS THE FACSIMILE SIGNATURE OF THE MANAGING TRUSTEE.
DATED:
NEXTEL STRYPES TRUST
By______________________________
Donald J. Puglisi
Managing Trustee
COUNTERSIGNED:
THE BANK OF NEW YORK,
as Paying Agent
By______________________________
Authorized Signature
A-1
<PAGE> 28
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE AMENDED AND RESTATED TRUST AGREEMENT BETWEEN ML IBK POSITIONS,
INC. AND DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION AND THE TRUSTEES
NAMED THEREIN AND THE HOLDERS (AS DEFINED THEREIN) TO WHICH THE HOLDER OF THIS
CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS BOUND.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--___Custodian___
TEN ENT--as tenants by the entireties (Cust) (Minor)
JT TEN-- as joint tenants with right under Uniform Gifts to
of survivorship and not as Minors Act _________
tenants in common (State)
Additional abbreviations also may be used though not in the above list.
For value received, _______________________ hereby sell, assign
and transfer unto
Please insert social securities or
other identifying number of assignee
[ ]
________________________________________________________________________________
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)
STRYPES of fractional undivided beneficial interest represented by the within
Certificate, and do hereby irrevocably constitute and appoint _________ Attorney
to transfer the said STRYPES on the books of the within-named Trust with full
power of substitution in the premises.
Dated: ______________________
__________________________________________
NOTICE: The Signature to this assignment must correspond
with the name as written upon the face of the
Certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed: __________________________________________
The Signature(s) should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with
membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15.
A-2
<PAGE> 1
EXHIBIT (a)(4)
RESTATED
CERTIFICATE OF TRUST OF ABC STRYPES TRUST
This Restated Certificate of Trust of ABC STRYPES Trust (the "Trust"),
dated as of February 7, 1997, is being duly executed and filed by the
undersigned Trustees of the Trust to amend and restate the original Certificate
of Trust of ABC STRYPES Trust which was filed on October 25, 1995, with the
Secretary of State of the State of Delaware under the Delaware Business Trust
Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust is Nextel STRYPES Trust.
2. Registered Office: Registered Agent. The business address of
the registered office of the Trust in the State of Delaware is One Rodney
Square, 10th Floor, Tenth and King Streets in the City of Wilmington, County of
New Castle, 19801. The name of the Trust's registered agent at such address is
RL&F Service Corp.
3. Effective Date. This Certificate of Trust shall be effective
upon the date and time of filing.
IN WITNESS WHEREOF, the undersigned trustees of the Trust have executed
this Restated Certificate of Trust as of the date first above-written.
By: /s/ Donald J. Puglisi
--------------------------------------
Donald J. Puglisi, as Managing Trustee
By: /s/ William R. Latham III
--------------------------------------
William R. Latham III, as Trustee
By: /s/ James B. O'Neill
--------------------------------------
James B. O'Neill, as Trustee
<PAGE> 1
EXHIBIT (h)(l)
FORM OF PURCHASE AGREEMENT
NEXTEL STRYPES TRUST
(a Delaware business trust)
PURCHASE AGREEMENT
Dated: March __, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. Representations and Warranties................................... 4
(a) Representations and Warranties by the Trust...................... 4
(i) Compliance with Registration Requirements................... 4
(ii) Independent Accountants..................................... 5
(iii) Financial Statement....................................... 5
(iv) No Material Adverse Change in Business..................... 5
(v) Good Standing of the Trust; No Subsidiaries................. 5
(vi) Registration Under the 1940 Act............................ 6
(vii) Outstanding STRYPES....................................... 6
(viii) Authorization of Agreement............................... 6
(ix) Authorization and Description of the Securities............ 6
(x) Authorization of Fundamental Agreements..................... 6
(xi) Compliance with Acts....................................... 7
(xii) Description of Trust Agreement and Fundamental
Agreements.............................................. 7
(xiii) Absence of Defaults and Conflicts........................ 7
(xiv) Absence of Proceedings.................................... 7
(xv) No Investment Restrictions, etc............................ 8
(xvi) Exhibits.................................................. 8
(xvii) Absence of Further Requirements.......................... 8
(xviii) Title to Property....................................... 8
(xix) Compliance with Cuba Act.................................. 8
(b) Representations and Warranties by the Contracting
Stockholders..................................................... 8
(i) Authority.................................................. 9
(ii) Delivery of Nextel Common Stock............................ 9
(iii) Authorization of Agreement................................. 9
(iv) Authorization of the Forward Purchase Contract and the
Security and Pledge Agreement............................. 9
(v) Absence of Defaults and Conflicts.......................... 10
(vi) Absence of Further Requirements............................ 10
(vii) Trust Registration Statement and Prospectus................ 11
(viii)Nextel Registration Statement and Prospectus............... 11
(ix) Security and Pledge Agreement.............................. 12
(c) Officer's Certificates........................................... 12
SECTION 2. Sale and Delivery to Underwriters; Closing....................... 12
(a) Initial Securities............................................... 12
(b) Option Securities................................................ 12
(c) Payment.......................................................... 13
(d) Denominations; Registration...................................... 13
SECTION 3. Covenants........................................................ 13
(a) Covenants of the Trust........................................... 13
(i) Compliance with Securities Regulations and Commission
Requests................................................ 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(ii) Filing of Amendments................................. 14
(iii) Delivery of Trust Registration Statements............ 14
(iv) Delivery of Trust Prospectuses....................... 14
(v) Continued Compliance with Securities Laws............ 15
(vi) Blue Sky Qualifications.............................. 15
(vii) Rule 158............................................. 15
(viii) Use of Proceeds...................................... 16
(ix) Listing.............................................. 16
(x) Reporting Requirements............................... 16
(b) Covenants of the Contracting Stockholders..................... 16
(i) Restriction on Sale of Securities.................... 16
(ii) Purpose Statement.................................... 16
SECTION 4. Payment of Expenses........................................... 16
(a) Expenses Payable by the Contracting Stockholders.............. 16
(b) Termination of Agreement...................................... 17
(c) Allocation of Expenses........................................ 17
SECTION 5. Conditions.................................................... 17
(a) Conditions of Underwriters' Obligations.............. 17
(1) Effectiveness of Trust Registration Statement........ 17
(2) Effectiveness of Nextel Registration Statement....... 18
(3) Opinion of Counsel for Underwriters and Trust........ 18
(4) Opinion of Special Delaware Counsel for the Trust.... 18
(5) Opinion of Counsel for Nextel........................ 18
(6) Opinion of Counsel for the Contracting Stockholders.. 18
(7) Trustee's Certificate................................ 18
(8) Nextel Officers' Certificate......................... 19
(9) Certificates of Contracting Stockholders............. 19
(10) Nextel Accountant's Comfort Letter................... 19
(11) Nextel Bring-down Comfort Letter..................... 20
(12) Maintenance of Rating................................ 20
(13) Approval of Listing.................................. 20
(14) No Objection......................................... 20
(15) Lock-up Agreements................................... 20
(16) Fundamental Agreements............................... 20
(17) Conditions to Purchase of Option Securities.......... 20
(18) Additional Documents................................. 21
(b) Termination of Agreement...................................... 22
SECTION 6. Indemnification............................................... 22
(a) Indemnification of the Underwriters and the Trust by the
Contracting Stockholders...................................... 22
(b) Indemnification of the Trust.................................. 23
(c) Actions against Parties; Notification......................... 24
(d) Settlement without Consent if Failure to Reimburse............ 24
SECTION 7. Contribution.................................................. 24
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery...................................................... 26
</TABLE>
ii
<PAGE> 4
SECTION 9. Termination of Agreement........................ 26
(a) Termination; General............................ 26
(b) Liabilities..................................... 26
SECTION 10. Default be One or More Underwriters............. 26
SECTION 11. Notices......................................... 27
SECTION 12. Parties......................................... 27
SECTION 13. GOVERNING LAW AND TIME.......................... 28
SECTION 14. Effect of Headings.............................. 28
iii
<PAGE> 5
Nextel STRYPES Trust
(a Delaware business trust)
STRYPES(SM)
Exchangeable for Shares of Class A Common Stock of Nextel Communications, Inc.
PURCHASE AGREEMENT
March __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Nextel STRYPES Trust (such trust and the trustees thereof acting in
their capacities as such being referred to herein as the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Act") of
the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del.
(Sections 3801 et seq.)), and Cherrywood Holdings, Inc. and Vernon Investors,
L.L.C. (each, a "Contracting Stockholder" and, collectively, the "Contracting
Stockholders"), confirm their respective agreements with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Donaldson,
Lufkin & Jenrette Securities Corporation and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters", which term shall
also include any underwriter substituted as provided in Section 10 hereof), for
whom Merrill Lynch and Donaldson, Lufkin & Jenrette Securities Corporation are
acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the issue and sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of the
Trust's STRYPES* (each, a
- --------
(SM) Service mark of Merrill Lynch & Co., Inc.
1
<PAGE> 6
"STRYPES") set forth in Schedule A hereto, and (ii) the grant by the Trust to
the Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of ___________ additional
STRYPES to cover over-allotments, if any. The aforesaid 7,168,587 STRYPES (the
"Initial Securities") to be purchased by the Underwriters pursuant to this
Agreement and all or any part of the ___________ STRYPES subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities." The Securities are to be issued pursuant
to an Amended and Restated Trust Agreement, dated as of February 27, 1997, among
the trustees of the Trust (the "Trustees") and ML IBK Positions, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation, as Sponsors (the "Trust
Agreement").
The STRYPES will be exchanged for a specified number or amount of each
type of security and other property constituting part of the Reference Property
(as defined in the Trust Agreement) 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 ___________ __, 2000 (the "Exchange Date") or upon
earlier dissolution of the Trust in certain circumstances. The Trust, Nextel
Communications, Inc., a Delaware corporation ("Nextel"), and the Underwriters
are concurrently entering into an agreement, dated the date hereof (the
"Registration Agreement"), relating to the registration of shares of common
stock, par value $.001 per share (the "Nextel Common Stock"), of Nextel
deliverable upon exchange of the STRYPES.
The Trust and the Contracting Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Trust has filed with the Securities and Exchange Commission (the
"Commission") (i) a notification on Form N-8A (the "Notification") of
registration of the Trust as an investment company; and (ii) a registration
statement on Form N-2 (Nos. 33-63795 and 811-7389) for the registration of the
Securities under the Securities Act of 1933, as amended (the "1933 Act"), and
Pre-Effective Amendments No. 1, No. 2, No. 3 and No. 4 thereto, including a
preliminary prospectus relating to the offering of the Securities. Promptly
after execution and delivery of this Agreement, the Trust will either (i)
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (h) of Rule 497 ("Rule 497(h)") of
the 1933 Act Regulations or (ii) if the Trust has elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Trust Term Sheet") in accordance with the provisions of Rule 434 and Rule
497(h). The information included in such prospectus or in such Trust Term Sheet,
as the case may be, that was omitted from such registration statement (as so
amended) at the time it became effective but that is deemed to be part of such
registration statement (as so amended) at the time it became effective (i)
pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information"
or (ii) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Any prospectus relating to the offering of the Securities used
before such registration statement (as so amended) became effective, and any
prospectus relating to the offering of the Securities that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, in each case excluding any Nextel Prospectus (as
2
<PAGE> 7
defined below) attached thereto, is herein called a "Trust preliminary
prospectus." Such registration statement (as so amended), including the exhibits
thereto and the schedules thereto, if any, at the time it became effective and
including the Rule 430A Information and the Rule 434 Information, as applicable,
is herein called the "Trust Registration Statement." Any registration statement
filed by the Trust pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Trust Rule 462(b) Registration Statement," and after such
filing the term "Trust Registration Statement" shall include the Trust Rule
462(b) Registration Statement. The final prospectus relating to the offering of
the Securities, excluding any Nextel Prospectus attached thereto, in the form
first furnished to the Underwriters for use in connection with the offering of
the Securities is referred to herein as the "Trust Prospectus." If Rule 434 is
relied on, the term "Trust Prospectus" shall refer to the Trust preliminary
prospectus dated February 14, 1997 together with the Trust Term Sheet and all
references in this Agreement to the date of the Trust Prospectus shall mean the
date of the Trust Term Sheet. For purposes of this Agreement, all references to
the Trust Registration Statement, any Trust preliminary prospectus, the Trust
Prospectus or any Trust Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
Nextel has filed with the Commission a registration statement on Form
S-3 (No. 333-21171), covering the resale under the 1933 Act of the shares of
Nextel Common Stock deliverable upon exchange of the Securities, and
Pre-Effective Amendment No. 1 thereto, including the related preliminary
prospectus or prospectuses. Each prospectus used before such registration
statement became effective is herein called a "Nextel preliminary prospectus."
Such registration statement, including the exhibits thereto, the schedules
thereto, if any, and the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the 1933 Act, at the time it became effective, is
herein called the "Nextel Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Nextel Prospectus." For purposes of this Agreement, all references to the
Nextel Registration Statement, any Nextel preliminary prospectus, the Nextel
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to EDGAR.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the Nextel
Registration Statement, any Nextel preliminary prospectus or the Nextel
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Nextel Registration Statement, any Nextel
preliminary prospectus or the Nextel Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Nextel
Registration Statement, any Nextel preliminary prospectus or the Nextel
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Nextel Registration Statement, such Nextel
preliminary prospectus or the Nextel Prospectus, as the case may be.
3
<PAGE> 8
Prior to the closing under this Agreement, the Trust and the
Contracting Stockholders will enter into a forward purchase contract (the
"Forward Purchase Contract"), pursuant to which the Contracting Stockholders
will agree to sell and the Trust will agree to purchase, immediately prior to
the Exchange Date, the Reference Property required by the Trust to exchange all
of the Securities on the Exchange Date as described in the Trust Prospectus,
subject to Contracting Stockholders' rights, to the extent permitted by
applicable law, to satisfy their respective obligations thereunder in whole or
in part through cash payment in lieu of delivery of all or a part of the
Reference Property (the "Forward Purchase"). Each Contracting Stockholder's
obligations under the Forward Purchase Contract will be secured by a pledge of
collateral pursuant to the terms of a security and pledge agreement among the
Contracting Stockholders, the Trust and The Bank of New York, as collateral
agent (the "Security and Pledge Agreement") thereunder for the benefit of the
Trust.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Trust. The Trust represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Trust Registration Statement and any Trust Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Trust Registration Statement or any
Trust Rule 462(b) Registration Statement pursuant to Section 8(d) of
the 1933 Act, or order pursuant to Section 8(e) of the Investment
Company Act of 1940, as amended (the "1940 Act"), has been issued and
no proceedings for either such purpose have been instituted or are
pending or, to the knowledge of the Trust, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Trust Registration Statement, any
Trust Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), the
Notification, the Trust Registration Statement, the Trust Rule 462(b)
Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and the 1940 Act and the
rules and regulations of the Commission under the 1940 Act (the "1940
Act Regulations"), and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Trust Prospectus nor any amendments or
supplements thereto, at the time the Trust Prospectus or any such
amendment or supplement was issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Trust will comply with the
4
<PAGE> 9
requirements of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Trust
Registration Statement (or any amendments or supplements thereto) or
the Trust Prospectus (or any amendments or supplements thereto) made in
reliance upon and in conformity with information furnished to the Trust
in writing by any Underwriter through Merrill Lynch expressly for use
in the Trust Registration Statement (or any amendments or supplements
thereto) or Trust Prospectus (or any amendments or supplements
thereto).
Each Trust preliminary prospectus and the prospectus relating
to the offering of the Securities filed as part of the Trust
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations
and the 1940 Act Regulations, and, if applicable, each Trust
preliminary prospectus and the Trust Prospectus delivered to the
Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
certain financial statements and supporting schedules included in the
Trust Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statement. The statement of assets,
liabilities and capital included in the Trust Registration Statement
and the Trust Prospectus, together with the notes thereto, present
fairly the financial position of the Trust at the date indicated; said
financial statement has been prepared in conformity with generally
accepted accounting principles.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Trust
Registration Statement and the Trust Prospectus, except as otherwise
stated therein or contemplated thereby, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, business prospects, management, investment
objectives or investment policies of the Trust, whether or not arising
in the ordinary course of business (a "Material Adverse Effect") and
(B) there have been no transactions entered into by the Trust, other
than those in the ordinary course of business, which are material with
respect to the Trust.
(v) Good Standing of the Trust; No Subsidiaries. The Trust has
been duly created and is validly existing as a business trust in good
standing under the Delaware Act with power and authority to own its
properties and to conduct its business as described in the Trust
Prospectus and to enter into and perform its obligations under this
Agreement, the Trust Agreement and the Forward Purchase Contract; the
Trust is and will, under current law, be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and the Trust has no
subsidiaries.
5
<PAGE> 10
(vi) Registration Under the 1940 Act. The Trust is registered
with the Commission as a non-diversified, closed-end management
investment company under the 1940 Act. No order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or, to the knowledge of the Trust, threatened by the
Commission. No person is serving or acting as an officer or trustee of
the Trust, except in accordance with the provisions of the 1940 Act.
(vii) Outstanding STRYPES. All of the outstanding STRYPES have
been duly and validly authorized and issued and are fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust; and the form of certificate used to evidence the STRYPES is in
due and proper form and complies with all provisions of applicable law.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Trust.
(ix) Authorization and Description of the Securities. The
Securities have been duly authorized by the Trust for issuance and sale
to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Trust pursuant to this Agreement against payment of
the purchase price therefor as provided herein, will be validly issued
and fully paid and non-assessable undivided beneficial interests in the
assets of the Trust; the STRYPES conform to all statements relating
thereto contained in the Trust Prospectus and such description conforms
to the rights set forth in the instruments defining the same; no holder
of the Securities will be subject to personal liability by reason of
being such a holder; and the issuance of the Securities is not subject
to the preemptive or other similar rights of any securityholder of the
Trust.
(x) Authorization of Fundamental Agreements. Each of the
Forward Purchase Contract, the Security and Pledge Agreement, the
Administration Agreement, dated March __, 1997, between the Trust and
The Bank of New York ("BONY") (the "Administration Agreement"), the
Custodian Agreement, dated February __, 1997, between the Trust and
BONY (the "Custodian Agreement"), the Paying Agent Agreement, dated
March __, 1997, between the Trust and BONY (the "Paying Agent
Agreement") and the Fund Indemnity Agreement, dated March __, 1997,
between the Trust and Merrill Lynch & Co., Inc. (the "Fund Indemnity
Agreement"), (the Forward Purchase Contract, the Security and Pledge
Agreement, the Administration Agreement, the Custodian Agreement, the
Paying Agent Agreement and the Fund Indemnity Agreement are
collectively referred to herein as the "Fundamental Agreements"), has
been duly authorized by the Trust and, at the Closing Time, will have
been duly executed and delivered by the Trust and (assuming the due
authorization, execution and delivery by the other parties thereto)
will constitute a valid and binding agreement of the Trust, enforceable
against the Trust in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject
6
<PAGE> 11
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) Compliance with Acts. The Trust Agreement and the
Fundamental Agreements comply with all applicable provisions of the
1933 Act and the 1940 Act, and all approvals of such documents required
under the 1940 Act by the holders of the STRYPES and the Trustees have
been obtained and are in full force and effect.
(xii) Description of Trust Agreement and Fundamental
Agreements. The Trust Agreement and the Fundamental Agreements will
conform in all material respects to the respective statements relating
thereto contained in the Trust Prospectus and, to the extent forms
thereof were filed as exhibits to the Trust Registration Statement,
will be in substantially the respective forms so filed.
(xiii) Absence of Defaults and Conflicts. The execution,
delivery and performance by the Trust of this Agreement and each
Fundamental Agreement and the consummation of the transactions
contemplated herein, therein and in the Trust Registration Statement
(including the issuance and sale of the Securities and the delivery of
the Reference Property in exchange therefor, the consummation of the
Forward Purchase and the use of the proceeds from the sale of the
Securities as described in the Trust Prospectus under the caption "Use
of Proceeds") and compliance by the Trust with its obligations
hereunder, under the Securities and under each Fundamental Agreement do
not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Trust pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Trust is a party or by which it
may be bound, or to which any of the property or assets of the Trust is
subject (collectively, "Agreements and Instruments") (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the Trust Agreement or the
restated trust certificate of the Trust filed with the State of
Delaware on February __, 1997 or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Trust or any of its assets or properties. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness of
the Trust (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Trust.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Trust, threatened, against or affecting the Trust,
which is required to be disclosed in the Trust Registration Statement
(other than as disclosed therein), or which might, individually or in
the aggregate,
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reasonably be expected to result in a Material Adverse Effect, or which
might, individually or in the aggregate, reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
Fundamental Agreements (including the issuance and sale of the
Securities and the delivery of the Reference Property in exchange
therefor and the consummation of the Forward Purchase) or the
performance by the Trust of its obligations hereunder or thereunder;
the aggregate of all pending legal or governmental proceedings to which
the Trust is a party or of which any of its property or assets is the
subject which are not described in the Trust Registration Statement,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xv) No Investment Restrictions, etc. There are no material
restrictions, limitations or regulations with respect to the ability of
the Trust to invest its assets as described in the Trust Prospectus,
other than as described therein.
(xvi) Exhibits. There are no contracts or documents which are
of a character required to be described in the Trust Registration
Statement or the Trust Prospectus or to be filed as exhibits thereto
which have not been so described or filed as required.
(xvii) Absence of Further Requirements. No declaration or
filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the Trust to own and
use its assets and to conduct its business in the manner described in
the Trust Prospectus or for the performance by the Trust of its
obligations under this Agreement, the Trust Agreement or any
Fundamental Agreement or the consummation by the Trust of the
transactions contemplated herein or therein (including the issuance and
sale of the Securities and the delivery of the Reference Property in
exchange therefor and the consummation of the Forward Purchase), except
such as have been already obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.
(xviii) Title to Property. The Trust has good title to all
properties owned by it, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (A) are described in the Trust
Prospectus or (B) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Trust.
(xix) Compliance with Cuba Act. The Trust has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulation thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(b) Representations and Warranties by the Contracting Stockholders.
Each Contracting Stockholder severally represents and warrants to each of the
Underwriters and the
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<PAGE> 13
Trust as of the date hereof, as of the Closing Time referred to in Section 2(c)
hereof, and as of each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agrees with each of the Underwriters and the Trust, as follows:
(i) Authority. Such Contracting Stockholder has the full
right, power and authority to enter into this Agreement, the Forward
Purchase Contract and the Security and Pledge Agreement, to pledge and
assign the shares of Nextel Common Stock to be pledged and assigned by
such Contracting Stockholder pursuant to the Security and Pledge
Agreement, and to sell, transfer and deliver the shares of Nextel
Common Stock to be sold by such Contracting Stockholder pursuant to the
Forward Purchase Contract.
(ii) Delivery of Nextel Common Stock. Such Contracting
Stockholder is the sole registered owner of and has, and at the Closing
Time (and, if any Option Securities are purchased, at the Date of
Delivery) will have, all rights in and to the shares of Nextel Common
Stock to be pledged and assigned by such Contracting Stockholder
pursuant to the Security and Pledge Agreement, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity, other than those created pursuant to the Security and Pledge
Agreement. If immediately prior to the Exchange Date such Contracting
Stockholder delivers to the Trust shares of Nextel Common Stock
pursuant to the Forward Purchase Contract, upon delivery by such
Contracting Stockholder to the Trust of the shares of Nextel Common
Stock to be sold by such Contracting Stockholder pursuant to the
Forward Purchase Contract, assuming the Trust purchased for value in
good faith and without notice of any adverse claim, the Trust will have
acquired all rights in and to such shares of Nextel Common Stock, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. The sale, transfer and delivery of shares
of Nextel Common Stock by such Contracting Stockholder to the Trust as
contemplated by the Forward Purchase Contract is not, and at the time
of delivery of such shares will not be, subject to any right of first
refusal or similar rights of any person pursuant to any contract to
which such Contracting Stockholder or any subsidiary of such
Contracting Stockholder is a party or by which any of them is bound.
(iii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by such Contracting Stockholder.
(iv) Authorization of the Forward Purchase Contract and the
Security and Pledge Agreement. Each of the Forward Purchase Contract
and the Security and Pledge Agreement has been duly authorized by such
Contracting Stockholder and, at the Closing Time, will have been duly
executed and delivered by such Contracting Stockholder and (assuming
the due authorization, execution and delivery by the other parties
thereto) will constitute a valid and binding agreement of such
Contracting Stockholder, enforceable against such Contracting
Stockholder in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law). Amounts received by such
Contracting
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Stockholder at Closing Time and at each Date of Delivery, if any,
pursuant to the Forward Purchase Contract will not be used by such
Contracting Stockholder for the purpose, whether immediate, incidental
or ultimate, of buying or carrying a margin stock, as such terms are
defined in Regulation G promulgated by the Board of Governors of the
Federal Reserve System.
(v) Absence of Defaults and Conflicts. The execution, delivery
and performance by such Contracting Stockholder of this Agreement, the
Forward Purchase Contract and the Security and Pledge Agreement and the
consummation by such Contracting Stockholder of the transactions
contemplated herein and therein and compliance by such Contracting
Stockholder with its obligations hereunder and thereunder do not and
will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Stockholder Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of such Contracting Stockholder or any subsidiary of
such Contracting Stockholder pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument to which such Contracting Stockholder or
any subsidiary of such Contracting Stockholder is a party or by which
it or any of them may be bound, or to which any of the property or
assets of such Contracting Stockholder or any subsidiary of such
Contracting Stockholder is subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not, singly or
in the aggregate, materially and adversely affect the ability of such
Contracting Stockholder to perform its obligations under this
Agreement, the Forward Purchase Contract or the Security and Pledge
Agreement), nor will such action result in any violation of any
applicable law, statute, rule or regulation of any government or
government instrumentality having jurisdiction over such Contracting
Stockholder or any subsidiary of such Contracting Stockholder or any of
their assets, properties or operations (other than any state securities
or "blue sky" law, statute, rule or regulation, as to which no
representation and warranty is made), or any applicable judgment,
order, writ or decree of any government, government instrumentality or
domestic court having jurisdiction over such Contracting Stockholder or
any subsidiary of such Contracting Stockholder or any of their assets,
properties or operations (except in all cases for such violations that
would not, singly or in the aggregate, materially and adversely affect
the ability of such Contracting Stockholder to perform its obligations
under this Agreement, the Forward Purchase Contract or the Security and
Pledge Agreement). As used herein, a "Stockholder Repayment Event" with
respect to any Contracting Stockholder means any event or condition
which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by such Contracting Stockholder or any subsidiary
of such Contracting Stockholder.
(vi) Absence of Further Requirements. No declaration or filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the execution,
delivery or performance by such Contracting Stockholder of this
Agreement, the Forward
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<PAGE> 15
Purchase Contract or the Security and Pledge Agreement or the
consummation by such Contracting Stockholder of the transactions
contemplated herein or therein, except such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws.
(vii) Trust Registration Statement and Prospectus. At the
respective times the Trust Registration Statement, any Trust Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Notification, the Trust
Registration Statement, the Trust Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1940 Act and the 1940 Act Regulations, and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the
Trust Prospectus nor any amendments or supplements thereto, at the time
the Trust Prospectus or any such amendment or supplement was issued and
at the Closing Time (and, if any Option Securities are purchased, at
the Date of Delivery), included or will include an untrue statement of
a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Trust Registration Statement (or
any amendments or supplements thereto) or the Trust Prospectus (or any
amendments or supplements thereto) made in reliance upon and in
conformity with information furnished to the Trust in writing by any
Underwriter through Merrill Lynch expressly for use in the Trust
Registration Statement (or any amendments or supplements thereto) or
Trust Prospectus (or any amendments or supplements thereto).
Each Trust preliminary prospectus and the prospectus relating
to the offering of the Securities filed as part of the Trust
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations
and the 1940 Act Regulations.
(viii) Nextel Registration Statement and Prospectus. The
Nextel Registration Statement and any post-effective amendments
thereto, at the respective times the Nextel Registration Statement and
any post-effective amendments thereto became effective, did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Nextel Prospectus or any amendment or
supplement thereto, at the time the Nextel Prospectus was issued, at
the time any such amended or supplemented prospectus was issued or at
the Closing Time (and, if any Option Securities are purchased, at the
Date of Delivery), did not and will not include an untrue statement of
a material fact and did not and will not omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall apply only to
statements in or
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<PAGE> 16
omissions from the Nextel Registration Statement (or any amendment
thereto) or the Nextel Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information
furnished to Nextel in writing by such Contracting Stockholder
expressly for use in the Nextel Registration Statement (or any
amendment thereto) or the Nextel Prospectus (or any amendment or
supplement thereto).
(ix) Security and Pledge Agreement. The representations and
warranties of such Contracting Stockholder set forth in Section 8(a) of
the Security and Pledge Agreement are true and correct on and as of the
date hereof with the same effect as though such representations and
warranties had been set forth in full in this Agreement.
(c) Officer's Certificates. Any certificate signed by any Trustee of
the Trust delivered to the Representatives or counsel for the Underwriters shall
be deemed a representation and warranty by the Trust to the Underwriters as to
the matters covered thereby. Any certificate signed by or on behalf of any
Contracting Stockholder delivered to the Representatives or counsel to the
Underwriters or to the Trust or counsel to the Trust shall be deemed a
representation and warranty by such Contracting Stockholder to the Underwriters
or the Trust, as the case may be, as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Trust, at the price per STRYPES set forth in Schedule B, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Trust hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional _________ STRYPES at the price per
STRYPES set forth in Schedule B. The option hereby granted will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by the
Representatives to the Trust setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than seven full business days (or, in the case of any
exercise of said option by notice given after the Closing Time (as hereinafter
defined), earlier than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time. If the option is exercised
as to all or any portion of the Option Securities, each of the Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of Option Securities then being purchased which the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter bears
to the total number of Initial
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<PAGE> 17
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Brown &
Wood LLP, One World Trade Center, New York, New York 10048, or at such other
place as shall be agreed upon by the Representatives and the Trust, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof, or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Trust (such time and date of payment and
delivery being herein called "Closing Time"). In addition, in the event that any
or all of the Option Securities are purchased by the Underwriters, payment of
the purchase price for, and delivery of certificates for, such Option Securities
shall be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Representatives and the Trust, on each Date of Delivery as
specified in the notice from the Representatives to the Trust.
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) Covenants of the Trust. The Trust covenants with each Underwriter
as follows:
(i) Compliance with Securities Regulations and Commission
Requests. The Trust, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representatives immediately, and confirm the notice in writing, (A)
when any post-effective amendment to the Trust Registration Statement
shall become effective, or any supplement to the Trust Prospectus or
any amended Trust Prospectus shall have been filed, (B) of the receipt
of any comments from the Commission, (C) of any request by the
Commission for any amendment to the Trust
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<PAGE> 18
Registration Statement or any amendment or supplement to the Trust
Prospectus or for additional information, and (D) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Trust Registration Statement or of any order preventing or suspending
the use of any Trust preliminary prospectus or any order pursuant to
Section 8(e) of the 1940 Act, or of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Trust will promptly effect the filings necessary pursuant to Rule
497(h) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under
Rule 497(h) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Trust will
make every reasonable effort to prevent the issuance of any stop order
pursuant to Section 8(d) of the 1933 Act or any order pursuant to
Section 8(e) of the 1940 Act and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. The Trust will give the
Representatives notice of its intention to file or prepare any
amendment to the Trust Registration Statement (including any filing
under Rule 462(b)), any Trust Term Sheet or any amendment, supplement
or revision to either the prospectus relating to the offering of the
Securities included in the Trust Registration Statement at the time it
became effective or to the Trust Prospectus, whether pursuant to the
1933 Act, the 1940 Act or otherwise, will furnish the Representatives
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object.
(iii) Delivery of Trust Registration Statements. The Trust has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Trust Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy
of the Trust Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. If
applicable, the copies of the Trust Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(iv) Delivery of Trust Prospectuses. The Trust has delivered
to each Underwriter, without charge, as many copies of each Trust
preliminary prospectus as such Underwriter reasonably requested, and
the Trust hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Trust will furnish to each Underwriter,
without charge, during the period when the Trust Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Trust Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. If applicable, the Trust Prospectus
and any amendments or supplements thereto furnished
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<PAGE> 19
to the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to
the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. The Trust will
comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and
the 1934 Act Regulations, and the 1940 Act and the 1940 Act Regulations
so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Trust Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Trust, to amend the
Trust Registration Statement or amend or supplement the Trust
Prospectus in order that the Trust Prospectus will not include any
untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of either such
counsel, at any such time to amend the Trust Registration Statement or
amend or supplement the Trust Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations or the 1940
Act or the 1940 Act Regulations, the Trust will promptly prepare and
file with the Commission, subject to Section 3(a)(ii), such amendment
or supplement as may be necessary to correct such statement or omission
or to make the Trust Registration Statement or the Trust Prospectus
comply with such requirements, and the Trust will furnish to the
Underwriters such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
(vi) Blue Sky Qualifications. The Trust will use its best
efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as the
Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Trust Registration Statement and any Trust Rule
462(b) Registration Statement; provided, however, that the Trust shall
not be obligated to file any general consent to service of process or
to qualify as a foreign trust or association or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Trust
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period
of not less than one year from the effective date of the Trust
Registration Statement and any Trust Rule 462(b) Registration
Statement.
(vii) Rule 158. The Trust will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
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<PAGE> 20
(viii) Use of Proceeds. The Trust will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Trust Prospectus under "Use of Proceeds."
(ix) Listing. The Trust will use its best efforts to effect
and maintain the listing of the Securities on the American Stock
Exchange.
(x) Reporting Requirements. The Trust, during the period when
the Trust Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations and all documents required to
be filed with the Commission pursuant to the 1940 Act within the time
periods required by the 1940 Act and the 1940 Act Regulations.
(b) Covenants of the Contracting Stockholders. Each Contracting
Stockholder covenants with each Underwriter and the Trust as follows:
(i) Restriction on Sale of Securities. During a period of 90
days from the date of the Trust Prospectus, such Contracting
Stockholder will not, without the prior written consent of the Merrill
Lynch, (x) offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any shares of Nextel Common Stock, securities
convertible into, exchangeable for or repayable with shares of Nextel
Common Stock, or rights or warrants to acquire shares of Nextel Common
Stock, or (y) cause to be filed any registration statement under the
1933 Act with respect to any shares of Nextel Common Stock, securities
convertible into, exchangeable for or repayable with shares of Nextel
Common Stock, or rights or warrants to acquire shares of Nextel Common
Stock. The foregoing sentence shall not apply to the execution and
delivery by such Contracting Stockholder of the Forward Purchase
Contract or the consummation by such Contracting Stockholder of the
transactions contemplated therein.
(ii) Purpose Statement. At or prior to Closing Time, such
Contracting Stockholder will deliver to the Trust a duly executed
purpose statement on Form F. R. G-3 of the Board of Governors of the
Federal Reserve System.
SECTION 4. Payment of Expenses. (a) Expenses Payable by the Contracting
Stockholders. The Contracting Stockholders, jointly and severally, will pay all
expenses incident to the performance by the Trust and each Contracting
Stockholder of their respective obligations under this Agreement and the
Registration Agreement, including (i) the preparation, printing and filing of
the Notification and the Trust Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, printing and delivery to the Underwriters of this Agreement,
the Forward Purchase Contract and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, (iv) the fee's and disbursements of the
Trust's counsel, accountants and other advisors, (v) the fees and disbursements
of the Contracting Stockholders' counsel and other advisors, (vi) the
qualification of the Securities under securities laws in
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accordance with the provisions of Section 3(a)(vi) hereof, including filing fees
and the reasonable fees and disbursements of the counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vii) the printing and delivery to the
Underwriters of copies of each Trust preliminary prospectus, any Trust Term
Sheets and of the Trust Prospectus and any amendments or supplements thereto,
(viii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supplement thereto, (ix) the fees and expenses of
any transfer agent or registrar for Securities, (x) the filing fees incident to,
and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, securing any required review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities
and (xi) the fees and expenses incurred in connection with the listing of the
Securities on the American Stock Exchange.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Contracting Stockholders, jointly and severally, shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
(c) Allocation of Expenses. The provisions of this Section 4 shall not
affect any agreement that the Contracting Stockholders may make for the sharing
of the costs and expenses to be borne by them pursuant to this Section 4.
SECTION 5. Conditions.
(a) Conditions of Underwriters' Obligations. The obligations
of the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Trust and the Contracting Stockholders
contained in Sections 1(a) and 1(b) hereof, respectively, to the accuracy of the
representations and warranties of Nextel contained in the Registration
Agreement, to the accuracy of the statements in certificates of any Trustee of
the Trust, any officer of Nextel or by or on behalf of any Contracting
Stockholder delivered pursuant to the provisions hereof, to the performance by
the Trust and the Contracting Stockholders of their respective covenants and
other obligations hereunder, to the performance by Nextel of its covenants and
other obligations under the Registration Agreement, and to the following further
conditions:
(1) Effectiveness of Trust Registration Statement. The Trust
Registration Statement, including any Trust Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Trust Registration Statement
pursuant to Section 8(d) of the 1933 Act, or order pursuant to Section
8(e) of the 1940 Act, shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of counsel
to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule
497(h) (or a post-effective amendment providing such information shall
have been filed and declared effective in
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accordance with the requirements of Rule 430A) or, if the Trust has
elected to rely upon Rule 434, a Trust Term Sheet shall have been filed
with the Commission in accordance with Rule 497(h).
(2) Effectiveness of Nextel Registration Statement. The Nextel
Registration Statement has become effective and at Closing Time no stop
order suspending the effectiveness of the Nextel Registration Statement
shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Underwriters.
(3) Opinion of Counsel for Underwriters and Trust. At Closing
Time, the Representatives shall have received the favorable opinion,
dated as of Closing Time, of Brown & Wood LLP, counsel for the
Underwriters and the Trust, together with signed or reproduced copies
of such letter for each of the other Underwriters, with respect to such
matters as the Representatives may reasonably request. In giving such
opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of public officials.
(4) Opinion of Special Delaware Counsel for the Trust. At
Closing Time, the Representatives shall have received the favorable
opinion, dated as of Closing Time, of Richards, Layton & Finger,
special Delaware counsel for the Trust, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters.
(5) Opinion of Counsel for Nextel. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Jones, Day, Reavis & Pogue, counsel for Nextel, in
form and substance reasonably satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters.
(6) Opinion of Counsel for the Contracting Stockholders. At
Closing Time, the Representatives shall have received the favorable
opinion, dated as of Closing Time, of Dewey Ballantine, counsel for the
Contracting Stockholders, in form and substance reasonable satisfactory
to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters.
(7) Trustee's Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Trust Prospectus, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, business prospects, management, investment
objectives or investment policies of the Trust, whether or not arising
in the ordinary course of business, and the Representatives shall have
received a certificate of the Trust
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Administrator, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same
force and effect as though expressly made at and as of Closing Time,
(iii) the Trust has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of
the Trust Registration Statement pursuant to Section 8(d) of the 1933
Act, or order pursuant to Section 8(e) of the 1940 Act, has been issued
and no proceedings for that purpose have been instituted or are pending
or are contemplated by the Commission.
(8) Nextel Officers' Certificate. At Closing Time, there shall
not have been, since the date hereof or since the respective dates as
of which information is given in the Nextel Prospectus, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of Nextel and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of Nextel
and of the chief financial or chief accounting officer of Nextel, dated
as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties of
Nextel contained in Section 1(a) of the Registration Agreement are true
and correct with the same force and effect as though expressly made at
and as of Closing Time, (iii) Nextel has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time pursuant to the Registration Agreement, and
(iv) no stop order suspending the effectiveness of the Nextel
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the best of their knowledge, are
pending or are contemplated by the Commission.
(9) Certificates of Contracting Stockholders. At Closing Time,
the Representatives shall have received a certificate by or on behalf
of each Contracting Stockholder, dated as of Closing Time, to the
effect that (i) the representations and warranties of such Contracting
Stockholder contained in Section 1(b) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing
Time and (ii) such Contracting Stockholder has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time.
(10) Nextel Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Representatives shall have received
from Deloitte & Touche LLP a letter dated such date, in form and
substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Nextel Registration Statement and the
Nextel Prospectus.
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<PAGE> 24
(11) Nextel Bring-down Comfort Letter. At Closing Time, the
Representatives shall have received from Deloitte & Touche LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to Section
5(a)(10) hereof, except that the "specified date" referred to shall be
a date not more than three business days prior to Closing Time.
(12) Maintenance of Rating. Since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to
any of Nextel's debt securities or preferred stock by any "nationally
recognized statistical rating agency," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no
such organization shall have publicly announced that it has under
surveillance or review its rating of any of Nextel's debt securities or
preferred stock.
(13) Approval of Listing. At Closing Time, the Securities
shall have been approved for listing on the American Stock Exchange,
subject only to official notice of issuance.
(14) No Objection. The NASD shall not have raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(15) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the
form of Exhibit A hereto signed by each of the persons and entities
listed on Schedule C hereto.
(16) Fundamental Agreements. Each Fundamental Agreement shall
have been executed and delivered by all parties thereto, and each
Contracting Stockholder shall have delivered to the Collateral Agent
the number of shares of Nextel Common Stock required by the Security
and Pledge Agreement to be initially pledged and assigned by such
Contracting Stockholder thereunder in accordance with the requirements
of the Security and Pledge Agreement.
(17) Conditions to Purchase of Option Securities. In the event
that the Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Trust and the Contracting
Stockholders contained herein, the representations and warranties of
Nextel contained in the Registration Agreement and the statements in
any certificates furnished by the Trust, Nextel or the Contracting
Stockholders hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(A) Trustee's Certificate. A certificate, dated such Date of
Delivery, of the Trust Administrator confirming that the
certificate delivered at Closing Time pursuant to Section
5(a)(7) hereof is true and correct as of such Date of
Delivery.
(B) Nextel Officers' Certificate. A certificate, dated such
Date of Delivery, of the President or a Vice President of
Nextel and of the chief financial or chief
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accounting officer of Nextel confirming that the certificate
delivered at Closing Time pursuant to Section 5(a)(8) hereof
is true and correct as of such Date of Delivery.
(C) Certificates of Contracting Stockholders. Certificates,
dated such Date of Delivery, by or on behalf of each
Contracting Stockholder confirming that the certificate
delivered at Closing Time pursuant to Section 5(a)(9) hereof
is true and correct as of such Date of Delivery.
(D) Opinion of Counsel for Underwriters and Trust. The
favorable opinion of Brown & Wood LLP, counsel for the
Underwriters and the Trust, in form and substance satisfactory
to the Representatives, dated such Date of Delivery, relating
to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
delivered pursuant to Section 5(a)(3) hereof.
(E) Opinion of Special Delaware Counsel for the Trust. The
favorable opinion of Richards, Layton & Finger, special
Delaware counsel for the Trust, in form and substance
satisfactory to counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as
the opinion delivered pursuant to Section 5(a)(4) hereof.
(F) Opinion of Counsel for Nextel. The favorable opinion of
Jones, Day, Reavis & Pogue, counsel for Nextel, in form and
substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, to the same effect as the opinion
delivered pursuant to Section 5(a)(5) hereof.
(G) Opinion of Counsel for the Contracting Stockholders. The
favorable opinion of Dewey Ballantine, counsel for the
Contracting Stockholders, in form and substance satisfactory
to counsel for the Underwriters, dated such Date of Delivery,
to the same effect as the opinion delivered pursuant to
Section 5(a)(6) hereof.
(H) Nextel Bring-down Comfort Letter. A Letter from Deloitte &
Touche LLP, in form and substance satisfactory to counsel for
the Underwriters and dated such Date of Delivery,
substantially the same in form and substance as the letter
furnished to the Underwriters pursuant to Section 5(a)(11)
hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(18) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, contained
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herein or in the Registration Agreement; and all proceedings taken by
the Trust in connection with the issuance and sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(b) Termination of Agreement. If any condition specified in subsection
(a) of this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase of
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the Underwriters to purchase the relevant Option Securities, may
be terminated by the Representatives by notice to the Trust and the Contracting
Stockholders at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4 and except that Sections 1,
6, 7 and 8 shall survive any such termination and remain in full force and
effect.
SECTION 6. Indemnification.
(a) Indemnification of the Underwriters and the Trust by the
Contracting Stockholders. The Contracting Stockholders, jointly and severally,
agree to indemnify and hold harmless each Underwriter, the Trust and each
person, if any, who controls any Underwriter or the Trust within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Trust
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Trust preliminary
prospectus or the Trust Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Nextel
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Nextel preliminary prospectus or the
Nextel Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, referred to
under (i) or (ii) above; provided that (subject to Section 6(d) below)
any such settlement is effected with the written consent of the
Contracting Stockholders; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Representatives), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, referred to under (i) or
(ii) above, to the extent that any such expense is not paid under (i),
(ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with (A) written information furnished to the Trust by
any Underwriter through Merrill Lynch expressly for use in the Trust
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any Trust
preliminary prospectus or the Trust Prospectus (or any amendment or supplement
thereto) or (B) written information furnished to the Nextel by any Underwriter
through Merrill Lynch expressly for use in the Nextel Registration Statement (or
any amendment thereto) or any Nextel preliminary prospectus or the Nextel
Prospectus (or any amendment or supplement thereto).
(b) Indemnification of the Trust and the Contracting Stockholders. Each
Underwriter severally agrees to indemnify and hold harmless the Trust, each
Contracting Stockholder, each person, if any, who controls the Trust or any
Contracting Stockholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a)(i) or (a)(ii)
of this Section, as incurred, but only with respect to (A) untrue statements or
omissions, or alleged untrue statements or omissions, made in the Trust
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any Trust
preliminary prospectus or the Trust Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Trust by such Underwriter through Merrill Lynch expressly for use in the
Trust Registration Statement (or any amendment thereto) or such Trust
preliminary prospectus or the Trust Prospectus (or any amendment or supplement
thereto) or (B) untrue statements or omissions, or alleged untrue statements or
omissions, made in the Nextel Registration Statement (or any amendment thereto)
or any Nextel preliminary prospectus or the Nextel Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to Nextel by such Underwriter through Merrill Lynch
expressly for use in the Nextel Registration Statement (or any amendment
thereto) or any Nextel preliminary prospectus or the Nextel Prospectus (or any
amendment or supplement thereto).
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(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder which it may have otherwise than
on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Contracting Stockholders. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Trust and the
Contracting Stockholders on the one hand and the Underwriters on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Trust and the
Contracting Stockholders on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which
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<PAGE> 29
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Trust and the Contracting
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be such that the Underwriters shall be responsible for that portion
of the aggregate amount of such losses, liabilities, claims, damages and
expenses represented by the percentage that the total underwriting discount
received by the Underwriters as set forth on the cover of the Trust Prospectus,
or, if Rule 434 is used, the corresponding location on the Trust Term Sheet,
bears to the aggregate initial public offering price of the Securities as set
forth on such cover and the Contracting Stockholders jointly shall be
responsible for the balance. The relative fault of the Trust and the Contracting
Stockholders on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Trust or the
Contracting Stockholders on the one hand or by the Underwriters on the other
hand and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
The Trust, the Contracting Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Trust or any Contracting Stockholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Trust or such Contracting
Stockholder, as the case may be. The Underwriters' respective obligations to
contribute
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pursuant to this Section 7 are several in proportion to the number of Securities
set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of the Trust, Nextel or any Contracting Stockholder
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or
controlling persons, or by or on behalf of the Trust or the Contracting
Stockholders, and shall survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Trust and the Contracting Stockholders, at any time
at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is given
in the Trust Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs, business prospects,
management, investment objectives or investment policies of the Trust, whether
or not arising in the ordinary course of business, or (ii) if there has been,
since the time of execution of this Agreement, or since the respective dates as
of which information is given in the Nextel Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of Nextel and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (iii)
if there has occurred any material adverse change in the financial markets in
the United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iv) if trading in the Securities or in the
Nextel Common Stock has been suspended or limited by the Commission or the
Nasdaq Stock Market, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental authority, or
(v) if a banking moratorium has been declared by either federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More Underwriters. If one or more of the
Underwriters shall fail at Closing Time or a Date of Delivery to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not
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less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Trust
to sell the Option Securities to be purchased and sold on such Date of
Delivery, shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Trust to sell the relevant Option Securities,
as the case may be, either the Representatives or the Trust shall have the right
to postpone Closing Time or the relevant Date of Delivery, as the case may be,
for a period not exceeding seven days in order to effect any required changes in
the Trust Registration Statement or Trust Prospectus or in any other documents
or arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281, attention Julie Richardson; notices
to the Trust shall be directed to it c/o Puglisi & Associates, 850 Library
Avenue, Suite 204, Newark, Delaware 19715, attention of Donald J. Puglisi, and
notices to the Contracting Stockholders shall be directed to them c/o Telcom
Ventures, L.L.C., 2300 Clarendon Boulevard, Suite 800, Arlington, Virginia
22201, attention of [__________].
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Trust and the Contracting Stockholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their
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respective successors, and said controlling persons and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
28
<PAGE> 33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust and the Contracting Stockholders
a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the Underwriters, the Trust and the
Contracting Stockholders in accordance with its terms.
Very truly yours,
NEXTEL STRYPES TRUST
____________________________________________
Donald J. Puglisi, as Managing Trustee
CHERRYWOOD HOLDINGS, INC.
By _________________________________________
Name:
Title:
VERNON INVESTORS, L.L.C.
By _________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By__________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
29
<PAGE> 34
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial
Name of Underwriter Securities
------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................
Donaldson, Lufkin & Jenrette Securities Corporation....
---------
Total .................................. 7,168,587
=========
</TABLE>
Sch A - 1
<PAGE> 35
SCHEDULE B
NEXTEL STRYPES TRUST
STRYPES(SM)
1. The initial public offering price of the Securities shall be $ per
STRYPES.
2. The purchase price for the Securities to be paid by the Underwriters
shall be $ per STRYPES, being an amount equal to the initial public offering
price set forth above less $ per STRYPES.
3. The "Threshold Appreciation Price" with respect to the Securities
shall be $ .
_________________________________
(SM) Service mark of Merrill Lynch & Co., Inc.
Sch B - 1
<PAGE> 36
SCHEDULE C
Rajendra Singh
Neera Singh
The HRS Education Trust
The SRS Education Trust
Sch C - 1
<PAGE> 37
[FORM OF LOCK-UP PURSUANT TO SECTION 5(a)(15)]
Exhibit A
_______ __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering of STRYPES by the Underwriters
Ladies and Gentlemen:
The undersigned, a beneficial owner of shares of Class A Common Stock,
par value $.001 per share (the "Nextel Common Stock"), of Nextel Communications,
Inc., a Delaware corporation (the "Company"), understands that Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
Donaldson, Lufkin & Jenrette Securities Corporation propose to enter into an
Purchase Agreement (the "Purchase Agreement") with Nextel STRYPES Trust, a
Delaware business trust (the "Trust"), Cherrywood Holdings, Inc. and Vernon
Investors, L.L.C. providing for the public offering of the Trust's STRYPESSM,
which are exchangeable on __________, 2000 or upon earlier dissolution of the
Trust for shares of Nextel Common Stock. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with each underwriter to be named in the Purchase Agreement that, during
a period of 90 days from the date of the Purchase Agreement, the undersigned
will not, without the prior written consent of Merrill Lynch, offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any shares of
Nextel Common Stock or any securities convertible into, exchangeable for or
repayable with shares of Nextel Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, or cause to be filed any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing.
Very truly yours,
Signature: ________________________
Print Name: _______________________
A-1
<PAGE> 1
EXHIBIT (h)(2)
FORM OF REGISTRATION AGREEMENT
NEXTEL COMMUNICATIONS, INC.
(a Delaware corporation)
REGISTRATION AGREEMENT
Dated: March __, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
REGISTRATION AGREEMENT.......................................................................................... 1
SECTION 1. Representations and Warranties.................................................... 3
(a) Representations and Warranties by the Company..................................... 3
(i) Compliance with Registration Requirements................................ 3
(ii) Incorporated Documents................................................... 4
(iii) Independent Accountants.................................................. 4
(iv) Financial Statements..................................................... 4
(v) No Material Adverse Change in Business................................... 5
(vi) Good Standing of the Company............................................. 5
(vii) Good Standing of Subsidiaries............................................ 5
(viii) Capitalization........................................................... 6
(ix) Description of Common Stock.............................................. 6
(x) Authorization of Agreement............................................... 6
(xi) Absence of Defaults and Conflicts........................................ 6
(xii) Absence of Labor Dispute................................................. 7
(xiii) Absence of Proceedings................................................... 7
(xiv) Accuracy of Exhibits..................................................... 7
(xv) Possession of Intellectual Property...................................... 7
(xvi) Absence of Further Requirements.......................................... 8
(xvii) Possession of Licenses and Permits....................................... 8
(b) Officer's Certificates............................................................ 8
SECTION 2. Covenants of the Company.......................................................... 8
(a) Compliance with Securities Regulations and Commission
Requests.......................................................................... 8
(b) Filing of Amendments.............................................................. 9
(c) Delivery of Nextel Registration Statements........................................ 9
(d) Delivery of Nextel Prospectuses................................................... 9
(e) Continued Compliance with Securities Laws......................................... 9
(f) Blue Sky Qualifications........................................................... 10
(g) Reporting Requirements............................................................ 10
SECTION 2A. Covenants of Underwriters......................................................... 10
SECTION 3. Payment of Expenses............................................................... 11
(a) Expenses.......................................................................... 11
(b) Allocation of Expenses............................................................ 11
SECTION 4. Indemnification................................................................... 11
(a) Indemnification of Underwriters and the Trust..................................... 11
(b) Indemnification of Company, Directors, Officers................................... 13
(c) Actions against Parties; Notification............................................. 13
(d) Settlement without Consent if Failure to Reimburse................................ 14
SECTION 5. Contribution...................................................................... 14
SECTION 6. Representations, Warranties and Agreements to
Survive Delivery.................................................................. 15
SECTION 7. Termination....................................................................... 16
SECTION 8. Notices........................................................................... 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 9. Parties........................................................................... 16
SECTION 10. GOVERNING LAW..................................................................... 16
SECTION 11. Effect of Headings................................................................ 16
SCHEDULE A
Exhibit 1(a)(vii)
Schedule 1(a)(xvii)
Schedule 1(a)(xv)
</TABLE>
ii
<PAGE> 4
NEXTEL COMMUNICATIONS, INC.
(a Delaware corporation)
REGISTRATION AGREEMENT
March __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281
NEXTEL STRYPES TRUST
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Nextel Communications, Inc., a Delaware corporation (the "Company"),
confirms its agreement with NEXTEL STRYPES Trust, a Delaware business trust (the
"Trust"), and with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities
Corporation and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as provided in Section 10 of the Underwriting Agreement (as defined
below)), for whom Merrill Lynch and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as representatives (in such capacity, the
"Representatives"), in connection with a transaction
1
<PAGE> 5
characterized by the Representatives as involving the proposed issue and sale by
the Trust to the Underwriters, acting severally and not jointly, pursuant to a
purchase agreement, dated the date hereof (the "Purchase Agreement"), among the
Trust, Cherrywood Holdings, Inc. and Vernon Investors, L.L.C. (each, a
"Contracting Stockholder" and, together with Rajendra Singh, Neera Singh, The
HRS Education Trust and The SRS Education Trust, a "Shareholder" and,
collectively, the "Shareholders"), and the Underwriters, of an aggregate of of
the Trust's STRYPES(SM) (each, a "STRYPES"), exchangeable for shares of common
stock, par value $.001 per share (the "Nextel Common Stock"), of the Company
upon conclusion of the term of the Trust on , 2000 (the "Exchange Date"), and,
at the option of the Underwriters, all or any part of ____________ additional
STRYPES to cover over-allotments, if any. The aforesaid ____________ STRYPES
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the ____________ STRYPES subject to the option described in Section 2(b)
of the Purchase Agreement (the "Option Securities") are hereinafter called,
collectively, the "Securities." Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Purchase Agreement.
The Company has been advised that the Underwriters propose to make a
public offering of the Securities as soon as the Representatives deem advisable
after this Agreement and the Purchase Agreement have been executed and delivered
and following compliance with certain procedures set forth in a letter agreement
dated February __, 1997, by and between the Company and Merrill Lynch, as
Representative (the "Letter Agreement"). The Company acknowledges that it has
been advised that the execution and delivery of this Agreement is a condition to
the execution and delivery of the Purchase Agreement by the Underwriters and the
Trust, and the Company acknowledges that it is required to enter into this
Agreement by the terms of Section 5.20 of the Merger Agreement (as defined
herein) and that, in consideration of the Company's obligations under Section
5.20 of the Merger Agreement and the execution and delivery of the Purchase
Agreement by the Underwriters and the Trust, the Company is willing to make the
representations, warranties and covenants herein contained.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-21171) covering the
resale under the Securities Act of 1933, as amended (the "1933 Act") of the
shares of Nextel Common Stock deliverable upon exchange of the Securities,
including the related preliminary prospectus or prospectuses. Each prospectus
used before such registration statement became effective is herein called a
"Nextel preliminary prospectus." Such registration statement, including the
exhibits thereto, the schedules thereto, if any, and the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it became effective, is herein called the "Nextel Registration Statement."
The final prospectus, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first furnished
to the Underwriters for use in connection with the offering of the Securities is
herein called the "Nextel Prospectus." For purposes of this Agreement, all
references to the Nextel Registration Statement, any Nextel preliminary
prospectus, the Nextel Prospectus or any amendment or supplement to
- --------
(SM) Service mark of Merrill Lynch & Co., Inc.
2
<PAGE> 6
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the Nextel
Registration Statement, any Nextel preliminary prospectus or the Nextel
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Nextel Registration Statement, any Nextel
preliminary prospectus or the Nextel Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Nextel
Registration Statement, any Nextel preliminary prospectus or the Nextel
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Nextel Registration Statement, such Nextel
preliminary prospectus or the Nextel Prospectus, as the case may be.
Prior to the closing under the Purchase Agreement, the Representatives
have indicated that the Trust will enter into a forward purchase contract (the
"Forward Purchase Contract") with the Contracting Shareholders pursuant to which
the Contracting Shareholders will agree to sell and the Trust will agree to
purchase, immediately prior to the Exchange Date, the Reference Property
required by the Trust to exchange all of the Securities on the Exchange Date as
described in the Trust Prospectus, subject to the Contracting Shareholders'
rights, to the extent permitted by applicable law, to satisfy their respective
obligations thereunder in whole or in part through a cash payment in lieu of
delivery of all or a part of the Reference Property.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter and to the Trust as of the date
hereof, as of the Closing Time referred to in Section 2(c) of the Purchase
Agreement, and as of each Date of Delivery (if any) referred to in Section 2(b)
of the Purchase Agreement, and agrees with each Underwriter and the Trust as
follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for the use of Form S-3 under the 1933 Act. The
Nextel Registration Statement has become effective under the 1933 Act
and, to the knowledge of the Company, no stop order suspending the
effectiveness of the Nextel Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Nextel Registration Statement and
any post-effective amendments thereto became effective and at the
Closing Time (and, if any Option Securities are purchased, at the Date
of Delivery), the Nextel Registration Statement and
3
<PAGE> 7
any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Nextel Prospectus nor any amendments or supplements
thereto, at the time the Nextel Prospectus or any such amendment or
supplement was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Nextel
Registration Statement or Nextel Prospectus made in reliance upon and
in conformity with (x) information furnished to the Company in writing
by the Underwriters expressly for use in the Nextel Registration
Statement or Nextel Prospectus, (y) information furnished to the
Company in writing by the Trust expressly for use in the Nextel
Registration Statement or Nextel Prospectus and (z) information
furnished by the Shareholders for use in the Nextel Registration
Statement or the Nextel Prospectus.
Each Nextel preliminary prospectus and the Nextel Prospectus
filed as part of the Nextel Registration Statement as originally filed
or as part of any amendment thereto complied when so filed in all
material respects with the 1933 Act Regulations and, if applicable,
each Nextel preliminary prospectus and the Nextel Prospectus delivered
to the Underwriters for use in connection with the offering of the
Securities was identical in all material respects to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Nextel Registration
Statement and the Nextel Prospectus, when they became effective or at
the time they were or hereafter are filed with the Commission
(including and giving effect to any filed amendments and/or supplements
to such documents), complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations").
(iii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules of the Company
included in the Nextel Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements of the
Company included in the Nextel Registration Statement and the Nextel
Prospectus, together with the related schedules and notes, present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
4
<PAGE> 8
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified, except as otherwise stated in
the Nextel Registration Statement or the Nextel Prospectus and except
for the pro forma financial information included therein (which comply
as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X of the 1933 Act
Regulations); said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Nextel Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data included in
the Nextel Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Nextel Registration Statement.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Nextel
Registration Statement and the Nextel Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Nextel Prospectus and to enter into and
perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each of the subsidiaries
of the Company listed on Schedule 1(a)(vii) (each, a "Subsidiary" and,
collectively, the "Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Nextel Prospectus and is duly qualified as
a foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse
5
<PAGE> 9
Effect; except as otherwise disclosed in the Nextel Registration
Statement, all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity (other than the pledges
related to the secured credit facility arranged by Chase Securities,
Inc., J.P. Morgan Securities Inc. and Toronto Dominion Securities
(USA), Inc. (the "Bank Credit Agreement") and the agreements related to
financing arrangements with Motorola, Inc. and NTFC Capital Corporation
(the "Vendor Credit Facility"); none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
The Subsidiaries directly or indirectly hold all material assets
relating to the conduct of the Company's digital mobile business in the
United States.
(viii) Capitalization. The shares of outstanding capital stock
of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; none of the shares of Nextel Common
Stock issued to the Shareholders pursuant to the Merger Agreement was
issued in violation of the preemptive rights of any securityholder of
the Company.
(ix) Description of Common Stock. The Nextel Common Stock
conforms to all statements relating thereto contained in the Nextel
Prospectus and such description conforms to the rights set forth in the
instruments defining the same.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company
nor any of its Subsidiaries is in violation of its charter or bylaws;
neither the Company nor any of its subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or bylaws of
the
6
<PAGE> 10
Company or any subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness of the Company or any subsidiary (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary, except for any
indebtedness as to which the occurrence of a Repayment Event would not
result in a Material Adverse Effect.
(xii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit or
proceeding, or, to the knowledge of the Company, any inquiry or
investigation, before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Nextel
Registration Statement (other than as disclosed therein), or which
might, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, or which might, individually or in
the aggregate, reasonably be expected to materially and adversely
affect the properties or assets thereof or the performance by the
Company of its obligations hereunder; the aggregate of all pending
legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Nextel
Registration Statement, including ordinary routine litigation
incidental to the business, are not reasonably expected to result in a
Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or
documents of the Company which are required to be filed as exhibits to
the Nextel Registration Statement by the 1933 Act which have not been
so filed.
(xv) Possession of Intellectual Property. Except as set forth
on Schedule 1(a)(xv), and except for rights associated with equipment
acquired from Motorola, Inc., the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now
operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of
7
<PAGE> 11
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xvi) Absence of Further Requirements. No filing with,
authorization, approval, consent or registration of any court or
governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder, except such as
has been already obtained or as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws.
(xvii) Possession of Licenses and Permits. Except as described
in the Nextel Prospectus, the Company and its subsidiaries possess such
waivers, permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and except
as listed on Schedule 1(a)(xvii) hereto neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company and delivered to the Representatives or counsel for the Underwriters
or to the Trust or counsel for the Trust in connection with the offering of the
Securities shall be deemed a representation and warranty by the Company to each
Underwriter and to the Trust, as the case may be, as to the matters covered
thereby.
SECTION 2. Covenants of the Company. The Company covenants with each
Underwriter and with the Trust as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 2(b), will notify the Representatives and the Trust
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Nextel Registration Statement shall become effective, or any
supplement to the Nextel Prospectus or any amended Nextel Prospectus shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Nextel Registration
Statement or any amendment or supplement to the Nextel Prospectus or for
additional information, and
8
<PAGE> 12
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Nextel Registration Statement or of any order preventing or
suspending the use of any Nextel preliminary prospectus, or of the suspension of
the qualification of the shares of Nextel Common Stock deliverable upon exchange
of the Securities for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceedings for any of such purposes.
(b) Filing of Amendments. The Company will give the Representatives and
the Trust notice of its intention to file or prepare any amendment to the Nextel
Registration Statement including any amendment, supplement or revision to either
the prospectus included in the Nextel Registration Statement at the time it
became effective or to the Nextel Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish the Representatives and the Trust with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters or the Trust or
counsel for the Trust shall reasonably object.
(c) Delivery of Nextel Registration Statements. The Company has
furnished or will deliver to the Representatives, counsel for the Underwriters,
the Trust and counsel for the Trust, without charge, signed copies of the Nextel
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts. If applicable, the
copies of the Nextel Registration Statement and each amendment thereto furnished
to the Underwriters and the Trust will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T. The provisions of this Section 2(c)
in no way affect the agreement of the Shareholders to pay costs as described in
the Merger Agreement.
(d) Delivery of Nextel Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each Nextel preliminary
prospectus as such Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period when
the Nextel Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Nextel Prospectus (as amended or supplemented)
as such Underwriter may reasonably request. If applicable, the Nextel Prospectus
and any amendments or supplements thereto furnished to the Underwriters and the
Trust will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T. The provisions of this Section 2(d) in no way affect the
agreement of the Shareholders to pay costs as described in the Merger Agreement.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in the Purchase Agreement,
subject to the applicable provisions of the Letter Agreement. Subject to the
applicable provisions of the Letter Agreement, if at any time
9
<PAGE> 13
when a prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Underwriters,
counsel for the Trust or counsel for the Company, to amend the Nextel
Registration Statement or amend or supplement the Nextel Prospectus in order
that the Nextel Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of any
such counsel, at any such time to amend the Nextel Registration Statement or
amend or supplement the Nextel Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 2(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Nextel Registration Statement or the Nextel Prospectus
comply with such requirements, and the Company will furnish to the Underwriters
and the Trust such number of copies of such amendment or supplement as the
Underwriters and the Trust may reasonably request (it being the Company's
understanding that the Shareholders are paying the relevant costs).
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the shares of Nextel Common Stock
deliverable upon exchange of the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Representatives may designate and to maintain such qualifications
in effect through the Exchange Date; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
Subject to the preceding proviso, in each jurisdiction in which the shares of
Nextel Common Stock deliverable at maturity of the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect
through the Exchange Date.
(g) Reporting Requirements. The Company, for the period ending March
31, 1998, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the rules and regulations of the Commission thereunder.
SECTION 2A. Covenants of Underwriters. The Representatives, on their
own behalf and on behalf of the other Underwriters, acknowledge that they have
received a copy of the Letter Agreement and will conduct their underwriting
activities, including the offering of any Securities, in compliance with the
applicable terms of the Letter Agreement. The Representatives have furnished to
the Company a true, complete and correct copy of the Purchase Agreement, and
will promptly deliver to the Company any amendment or supplement thereto when
entered into.
10
<PAGE> 14
SECTION 3. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation and filing of the Nextel Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation and delivery to the Underwriters and the Trust of this
Agreement, and (iii) the fees and disbursements of the Company's counsel,
accountants and other advisors.
(b) Allocation of Expenses. The provisions of this Section 3 shall not
affect any agreement that the Company and the Shareholders may make for the
sharing of such costs and expenses.
SECTION 4. Indemnification.
(a) Indemnification of Underwriters and the Trust. Subject to the
provisions set forth in this Section 4(a), the Company agrees to indemnify and
hold harmless each Underwriter, the Trust and each person, if any, who controls
any Underwriter or the Trust within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Nextel
Registration Statement (or any amendment thereto) or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Nextel preliminary prospectus or the
Nextel Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, referred to
under (i) above; provided that (subject to Section 4(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriters or the Trust, as the case may be), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission,
11
<PAGE> 15
or any such alleged untrue statement or omission, referred to under (i)
above, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with (A) written information furnished to the Company by
any Underwriter through Merrill Lynch expressly for use in the Nextel
Registration Statement (or any amendment thereto), or any Nextel preliminary
prospectus or the Nextel Prospectus (or any amendment or supplement thereto),
(B) written information furnished to the Company by the Trust expressly for use
in the Nextel Registration Statement (or any amendment thereto), or any Nextel
preliminary prospectus or the Nextel Prospectus (or any amendment or supplement
thereto) or (C) written information furnished to the Company by the Shareholders
expressly for use in the Nextel Registration Statement (or any amendment
thereto), or any Nextel preliminary prospectus or the Nextel Prospectus (or any
amendment or supplement thereto).
In the event that any claim for indemnification under this Section 4(a)
or contribution under Section 5 hereof is made against the Company, the
indemnified parties acknowledge that in accordance with the agreements contained
in the Agreement and Plan of Merger by and among the Company, Dial Call
Indimich, Inc., wholly-owned subsidiary of the Company, and Wireless Ventures of
Brazil, Inc. ("WVB") dated as of October 28, 1996, as amended by Amendment No. 1
thereto dated December 19, 1996 (the "Merger Agreement"), and the related
agreements between the Shareholders and the Company dated February 5, 1997 (the
"Indemnity Agreement") and the Joinder Agreement dated February __, 1997 (the
"Joinder Agreement"), the Shareholders are required to indemnify the Company,
among other things, for claims made under this Section 4(a) or Section 5 by the
indemnified parties except in the circumstances specified in the Indemnity
Agreement. Accordingly, in the event that the indemnified parties are entitled
to seek indemnity or contribution hereunder against any loss, liability, claim,
damage and expense under this Section 4(a) or Section 5 hereof (each such
circumstance or event, a "Loss") the indemnified parties shall seek to satisfy
the Loss in full from the Shareholders by making a written demand upon the
Shareholders for such satisfaction, and shall copy the Company on each such
written demand. Only if such Loss shall remain unsatisfied in whole or in part
20 days following the date of receipt by the Shareholders of the relevant demand
shall any indemnified party have the right to take action to satisfy such Loss
by making demand directly on the Company (but only if and to the extent that the
Shareholders have not already satisfied (and do not thereafter satisfy) such
Loss, whether by settlement, release or otherwise). In the case of reimbursement
of expenses pursuant to this Section 4(a) or Section 5 hereof, the indemnified
parties shall first seek to obtain such reimbursement in full from the
Shareholders by making a written demand upon the Shareholders for such
reimbursement and shall copy the Company on each such written demand. Only in
the event such expenses shall remain unreimbursed in full or in part 20 days
following the date of receipt by the Shareholders of such demand shall the
indemnified party have the right to receive reimbursement of such expenses from
the Company by making written demand directly on the Company (but only to the
extent the Shareholders have not already
12
<PAGE> 16
satisfied (and do not thereafter satisfy) the demand for reimbursement, whether
by settlement, release or otherwise).
In the event that the Company shall be required to satisfy a Loss under
this Section 4(a) or Section 5 hereof after the indemnified party or parties
involved have served written demand on the Shareholders, the Company shall be
entitled to recover from the Shareholders the entire amount of such Loss (other
than in the case of a Loss in respect to which the Company is not entitled to
indemnification by the Selling Stockholders under the Indemnity Agreement). The
Company has delivered to the Representatives a true, correct and complete copy
of each of the Merger Agreement, the Indemnity Agreement and the Joinder
Agreement.
(b) Indemnification of Company, Directors, Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Nextel Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Nextel
Registration Statement (or any amendment thereto), or any Nextel preliminary
prospectus or the Nextel Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the Nextel
Registration Statement (or any amendment thereto) or such Nextel preliminary
prospectus or the Nextel Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 4(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch; and, in
the case of parties indemnified pursuant to Section 4(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 or Section
5 hereof (whether or not the
13
<PAGE> 17
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 4(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 5. Contribution. If the indemnification provided for in Section
4 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then the parties hereto intend that the Company
and the Shareholders, on the one hand and the Underwriters and the Trust on the
other hand, in accordance with the applicable provisions of Section 4(a) hereof,
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Shareholders on the one hand and the Underwriters and the
Trust on the other hand from the offering of the Securities pursuant to the
Purchase Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Shareholders on the one hand and the Underwriters
and the Trust on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the offering of the Securities
pursuant to the Purchase Agreement shall be deemed to be such that the
Underwriters and the Trust shall be responsible for that portion of the
aggregate amount of such losses, liabilities, claims, damages and expenses
represented by the percentage that the total underwriting discount received by
the Underwriters, as set forth on the cover of the Trust Prospectus, or, if Rule
434 is used, the corresponding location on the Trust Term Sheet, bears to the
aggregate initial public offering price of the Securities as set forth on such
cover and the Company and the Shareholders shall be responsible for the balance.
The relative fault of the Company and the Shareholders on the one hand
and the Underwriters and the Trust on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or
14
<PAGE> 18
alleged omission to state a material fact relates to information supplied by the
Company or the Shareholders on the one hand or by the Underwriters or the Trust
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 5, the Underwriters and
the Trust shall not be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by the
Underwriters and distributed to the public were offered to the public exceeds
the amount of any damages which the Underwriters and the Trust have otherwise
been required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
The Company, the Underwriters and the Trust agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 5. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 5 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 5, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter; each
person, if any, who controls the Trust within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Trust; and each
director of the Company, each officer of the Company who signed the Nextel
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 5 are several in
proportion to the number of Securities set forth opposite their respective names
on Schedule A hereto and not joint.
SECTION 6. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant to
the Purchase Agreement, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or
controlling persons, or by or on behalf of the Trust or controlling persons or
by or on behalf of the Company, and shall survive delivery of the Securities to
the Underwriters pursuant to the Purchase Agreement.
15
<PAGE> 19
SECTION 7. Termination. In the event that the Underwriters terminate
the Purchase Agreement as provided in Section 5, Section 9 or Section 10
thereof, the Underwriters shall promptly give the Company notice thereof and
this Agreement shall simultaneously terminate, except that the provisions of
Section 3, the indemnity agreements set forth in Section 4, the contribution
provisions set forth in Section 5, and the provisions of Section 6 shall remain
in effect.
SECTION 8. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Representatives shall be directed to: Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, North Tower, World Financial Center, New
York, New York 10281, attention of Julie Richardson; notices to the Trust shall
be directed to it c/o Puglisi & Associates, 850 Library Avenue, Suite 204,
Newark, Delaware 19715, attention of Donald J. Puglisi; notices to the Company
shall be directed to it at Nextel Communications, Inc., 1505 Farm Credit Drive,
McLean, Virginia 22102, attention of General Counsel.
SECTION 9. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Trust and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Trust and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 4 and 5
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Trust and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
the Underwriters shall be deemed to be a successor by reason merely of such
purchase.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
16
<PAGE> 20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters, the Trust and the Company in accordance with its terms.
Very truly yours,
NEXTEL COMMUNICATIONS, INC.
By____________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By________________________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
NEXTEL STRYPES TRUST
By ___________________________
Donald J. Puglisi,
as Managing Trustee
17
<PAGE> 21
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial
Name of Underwriter Securities
------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................
Donaldson, Lufkin & Jenrette
Securities Corporation.........................
---------------
Total.............................................. 7,168,587
===============
</TABLE>
Sch A - 1
<PAGE> 1
EXHIBIT (j)
Form of Custodian
Agreement
CUSTODIAN AGREEMENT
This CUSTODIAN AGREEMENT dated as of this 25th day of March, 1997, by
and between The Bank of New York, a New York banking corporation (the
"Custodian"), and Nextel STRYPES Trust (such trust and the trustees thereof
acting in their capacity as such being referred to herein as the "Trust"), a
trust organized under the laws of the State of Delaware, under and by virtue of
an Amended and Restated Trust Agreement, dated as of February 27, 1997 (the
"Trust Agreement").
W I T N E S S E T H
WHEREAS, the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain zero-coupon U.S.
Government securities (the "U.S. Treasury Securities"), to enter into and hold a
forward contract with certain existing stockholders (the "Contracting
Stockholders") of Nextel Communications, Inc. (the "Contract") and to issue
Structured Yield Product Exchangeable for Stock(SM) (the "STRYPES") in
accordance with the terms and conditions of the Trust Agreement;
WHEREAS, the Trust desires to engage the services of the Custodian to
perform certain custodial duties for the Trust; and
WHEREAS, the Custodian is willing to assume such duties, on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the respective meanings specified in the Trust Agreement.
- --------------
(SM) Service mark of Merrill Lynch & Co., Inc.
<PAGE> 2
2. APPOINTMENT OF CUSTODIAN; TRANSFER OF ASSETS. The Trust hereby
constitutes and appoints the Custodian, and the Custodian accepts such
appointment, as agent of the Trust and as custodian of all of the property,
including but not limited to, the Contract, the U.S. Treasury Securities, the
Temporary Investments, any cash and any other property at any time owned or held
by the Trust (collectively, the "Assets"). The Trust hereby deposits the Assets
with the Custodian and the Custodian hereby accepts such into its custody, and
the Trust shall deliver to the Custodian all of the Assets, including all
monies, securities and other property received by the Trust at any time during
the period of this Agreement, subject to the following terms and conditions. The
Custodian hereby agrees that it shall hold the Assets in a segregated custody
account, separate and distinct from all other accounts, in accordance with
Section 17(f) of, and in such manner as shall constitute the segregation and
holding in trust within the meaning of, the Investment Company Act and the rules
and regulations thereunder. The Trust authorizes the Custodian, for any Assets
held hereunder, to use the services of any United States securities depository
permitted to perform such services for registered investment companies and their
custodians under Rule 17f-4 under the Investment Company Act and which has been
approved by the Trust, including but not limited to, The Depository Trust
Company and the Federal Reserve Book Entry System.
3. ASSET DISPOSITION; EXAMINATIONS. The Custodian shall have no power
or authority to assign, hypothecate, pledge or otherwise dispose of the Assets,
except pursuant to a written direction in accordance with paragraph 4 below and
then only for the account of the Trust. The Assets shall be subject to no lien
or charge of any kind in favor of the Custodian for itself or for any other
Person claiming through the Custodian. The Custodian shall permit actual
examination of the Assets by the Trust's independent public accountant at the
end of each annual and semi-annual fiscal period of the Trust and at least one
other time during the fiscal year of the Trust chosen by such independent public
accountant and shall permit the inspection of the Assets by the Commission
through its employees or agents during the normal business hours of the
Custodian upon reasonable request.
4. AUTHORIZED ACTIONS. The Custodian shall take such actions with
respect to the Assets as directed in writing by the Trust or by any officer of
the Administrator duly authorized by the Trustees to give written instructions
on behalf of the Trust and named in such certified resolutions of the Trustees,
as may be received by the Custodian from time to time.
5. CUSTODIAN'S ACTIONS TAKEN IN GOOD FAITH. In connection with the
performance of its duties under this Agreement, the Custodian shall be under no
liability to the Trust or any Holder for any action taken in good faith in
reliance on any paper, order, certification, list, demand, request, consent,
affidavit, notice, opinion, direction, endorsement, assignment, resolution,
draft or other document, prima facie properly executed, or for the disposition
of the Assets pursuant to the Trust Agreement or in respect of any action taken
or suffered under the Trust Agreement in good faith, in accordance with an
opinion of counsel or at the direction of the Trust pursuant hereto; provided
that this
2
<PAGE> 3
provision shall not protect the Custodian against any liability to which it
would otherwise be subject by reason of its reckless disregard of its
obligations and duties hereunder.
Notwithstanding any other provision of this Agreement, the Custodian
shall under no circumstances be liable for any indirect or consequential
damages.
6. TRUST AGREEMENT VALIDITY. The Custodian shall not be responsible for
the validity or sufficiency of the Trust Agreement or the due execution thereof,
or for the form, character, genuineness, sufficiency, value or validity of any
of the Assets and the Custodian shall in no event assume or incur any liability,
duty or obligation to any Holder or to the Trust, other than as expressly
provided for herein. The Custodian shall not be responsible for or in respect of
the validity of any signature by or on behalf of the Trust.
7. LITIGATION OBLIGATIONS, COSTS AND INDEMNITY. The Custodian shall not
be under any obligation to appear in, prosecute or defend any action which in
its opinion may involve it in expense or liability, unless it shall be furnished
with such reasonable security and indemnity against such expense or liability as
it may require, and any pecuniary costs of the Custodian from such actions shall
be expenses which are reimbursable pursuant to paragraph 13 hereof.
8. TAXES; TRUST EXPENSES. In no event shall the Custodian be personally
liable for any taxes or other governmental charges imposed upon or in respect of
the Assets or upon the monies, securities or other properties included therein.
The Custodian shall be reimbursed and indemnified by the Trust for all such
taxes and charges, for any tax or charge imposed against the Trust and for any
expenses, including counsel fees, interest, penalties and additions to tax which
the Custodian may sustain or incur with respect to such taxes or charges.
9. CUSTODIAN RESIGNATION, SUCCESSION. 2. The Custodian may resign by
executing an instrument in writing resigning as Custodian and delivering the
same to the Trust, not less than 60 days before the date specified in such
instrument when, subject to clause (b) of this paragraph 9, such resignation is
to take effect. Upon receiving such notice of resignation, the Trust shall use
its reasonable efforts promptly to appoint a successor Custodian in the manner
and meeting the qualifications provided in the Trust Agreement, by written
instrument or instruments delivered to the resigning Custodian and the successor
Custodian.
(b) In case no successor Custodian shall have been appointed within 30
days after notice of resignation has been received by the Trust, the resigning
Custodian may forthwith apply to a court of competent jurisdiction for the
appointment of a successor Custodian. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribed, appoint a successor
Custodian.
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10. CUSTODIAN REMOVAL. The Trust may remove the Custodian upon 60 days
prior written notice to the Custodian and appoint a successor Custodian. In case
at any time the Custodian shall not meet the requirements set forth in the Trust
Agreement or shall become incapable of acting or if a court having jurisdiction
shall enter a decree or order for relief in respect of the Custodian in an
involuntary case, or the Custodian shall commence a voluntary case, under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect, or any receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Custodian or for any substantial part of its
property shall be appointed, or the Custodian shall make any general assignment
for the benefit of creditors, or shall generally fail to pay its debts as they
become due, the Trust may remove the Custodian immediately and appoint a
successor Custodian. The termination of the Administration Agreement or the
Paying Agent Agreement shall cause the removal of the Custodian simultaneously
therewith.
11. TRANSFERS TO SUCCESSOR CUSTODIAN. Upon the request of any successor
Custodian, the Custodian hereunder shall, upon payment of all amounts due it,
execute and deliver an instrument acknowledged by it transferring to such
successor Custodian all the rights and powers of the resigning Custodian; and
the resigning Custodian shall transfer, deliver and pay over to the successor
Custodian the Assets at the time held by it hereunder, if any, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records or copies
thereof maintained by the resigning Custodian in the administration hereof as
may be requested by the successor Custodian, and shall thereupon be discharged
from all duties and responsibilities hereunder. Any resignation or removal of
the Custodian shall become effective upon such acceptance of appointment by the
successor Custodian. The indemnification of the resigning Custodian provided for
hereunder shall survive any resignation, discharge or removal of the Custodian
hereunder.
12. CUSTODIAN MERGER, CONSOLIDATION. Any corporation into which the
Custodian may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, shall be the successor Custodian hereunder and
under the Trust Agreement without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto, provided
that such corporation meets the requirements set forth in the Trust Agreement
and provided further that the Trust has given its prior written consent to the
Custodian with respect to any such merger, conversion or consolidation.
13. COMPENSATION; EXPENSES. The Custodian shall receive compensation
for performing the usual, ordinary, normal and recurring services under this
Custodian Agreement and, with the prior written approval of the Trust,
reimbursement for any and all expenses and disbursements incurred hereunder, as
provided in Section 3.1 of the Administration Agreement.
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14. SECTION 17(f) QUALIFICATION. The Custodian hereby represents that
it is qualified to act as a custodian under Section 17(f) of the Investment
Company Act.
15. CUSTODIAN'S LIMITED LIABILITY. The Trust shall indemnify and hold
the Custodian harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Custodian by the Trust, or any act or
omission in the course of, connected with or arising out of any services to be
rendered hereunder, provided that the Custodian shall not be indemnified and
held harmless from and against any such loss, damages, cost, expense, liability
or claim arising from its willful misfeasance, bad faith or gross negligence in
the performance of its duties, or its reckless disregard of its duties and
obligations hereunder. Neither the Federal Reserve Book Entry System nor The
Depository Trust Company shall be deemed to be agents of the Custodian.
16. RIGHTS OF SET-OFF; BANKER'S LIEN. The Custodian hereby waives all
rights of set-off or banker's lien it may have with respect to the Assets held
by it as Custodian hereunder.
17. TERMINATION. This Agreement shall terminate upon the earlier of the
dissolution of the Trust or the appointment of a successor Custodian.
18. CHOICE OF LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York applicable
to agreements made and to be performed wholly within such State.
19. NOTICES. Any notice to be given to the Trust hereunder shall be in
writing and shall be duly given if mailed or delivered to Nextel STRYPES Trust,
c/o Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19715
and to the Custodian if mailed or delivered to The Bank of New York, 101 Barclay
Street, New York, New York 10286, Attention: Christopher T. Nicholls or at such
other address as shall be specified by the addressee to the other party hereto
in writing.
20. NO THIRD PARTY BENEFICIARIES. Nothing herein, express or implied,
shall give to any Person, other than the Trust, the Custodian and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim hereunder.
21. AMENDMENTS; TRUST AGREEMENT CHANGES; WAIVER. This Agreement shall
not be deemed or construed to be modified, amended, rescinded, cancelled or
waived, in whole or in part, except by a written instrument signed by a duly
authorized representative of the party to be charged. The Trust shall notify the
Custodian of any change in the Trust Agreement prior to the effective date of
any such change. Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the
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<PAGE> 6
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.
22. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NEXTEL STRYPES TRUST
By
----------------------------------
Donald J. Puglisi
Managing Trustee
THE BANK OF NEW YORK
By
----------------------------------
Name:
Title:
<PAGE> 1
Exhibit (k)(1)
Form of Administration
Agreement
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT dated as of this ____ day of March, 1997, by
and between The Bank of New York, a New York banking corporation (the
"Administrator"), and Nextel STRYPES Trust (such trust and the trustees thereof
acting in their capacity as such being referred to herein as the "Trust"), a
trust organized under the laws of the State of Delaware under and by virtue of
an Amended and Restated Trust Agreement, dated as of February 27, 1997 (the
"Trust Agreement").
W I T N E S S E T H
WHEREAS, the Trust is a non-diversified, closed-end management investment
company, as defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), formed to purchase and hold certain zero-coupon U.S.
Government securities (the "U.S. Treasury Securities"), to enter into and hold a
forward purchase contract (the "Contract") with Cherrywood Holdings, Inc. and
Vernon Investors, L.L.C. (the "Contracting Stockholders"), each being a
stockholder of Nextel Communications, Inc., and to issue Structured Yield
Product Exchangeable for Stock(SM) (the "STRYPES") in accordance with the
terms and conditions of the Trust Agreement;
WHEREAS, the Trust desires to engage the services of the Administrator to
assume certain duties and responsibilities of the Trustees under the Trust
Agreement and the Investment Company Act and to undertake certain services on
behalf of and subject to the supervision of the Trust as provided herein; and
WHEREAS, the Administrator is qualified and willing to assume such duties
and responsibilities and to undertake to render such services, subject to the
supervision of the Trust, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:
- --------
(SM) Service mark of Merrill Lynch & Co., Inc.
<PAGE> 2
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the respective meanings specified in the Trust Agreement.
ARTICLE II
ENGAGEMENT OF ADMINISTRATOR
2.1 ENGAGEMENT. The Trust hereby engages the Administrator, and the
Administrator hereby agrees to be so engaged, to provide the services
hereinafter enumerated.
2.2 SERVICES OF ADMINISTRATOR. Subject to the supervision of the Trust,
the Administrator shall effect the matters set forth further in Sections 2.6,
2.7 and 2.8 of the Trust Agreement, to the extent such responsibilities can
lawfully be delegated to the Administrator; provided, however, that the
Administrator shall not (i) render investment advisory services to the Trust as
defined in the Investment Company Act or the Investment Advisers Act of 1940, as
amended; (ii) have the power of the Trustees to sell the Contract or the U.S.
Treasury Securities except as provided in Section 2.8 of the Trust Agreement; or
(iii) have the power to select the independent public accountants for the Trust.
Additionally, the Administrator shall be responsible for rendering the following
services:
(a) pay, or cause the Paying Agent to pay, out of moneys paid to the
Administrator pursuant to the Fund Expense Agreement dated the date hereof among
the Contracting Stockholders, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and the Administrator (the "Fund Expense Agreement"), but in
no event out of any assets of the Trust, the fees and expenses of the Trust
incurred in connection with the offering of the STRYPES as specified in Schedule
I hereto;
(b) pay, or cause the Paying Agent to pay, out of moneys paid to the
Administrator pursuant to the Fund Expense Agreement, but in no event out of any
assets of the Trust, the fees and expenses of the Trust incurred in connection
with the organization of the Trust as specified in Schedule II hereto;
(c) instruct the Paying Agent to effect the transactions set forth
in Sections 2.6, 2.7 and 2.8 of the Trust Agreement and to otherwise perform the
duties of the Paying Agent referred to in the Trust Agreement;
(d) with the approval of the Trustees, engage legal and other
professional advisors, subject to clause 2.2 (iii) above;
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(e) receive all demands, bills and invoices for expenses incurred by
or on behalf of the Trust and pay the same, or cause the Paying Agent to pay the
same, out of moneys paid to the Administrator pursuant to the Fund Expense
Agreement, but in no event out of any assets of the Trust;
(f) (i) prepare and mail, file or publish, or, as appropriate,
direct the Paying Agent to prepare and mail, file or publish, any notices,
proxies, reports and other communications required to be mailed or published
pursuant to the Trust Agreement and the Investment Company Act,
(ii) keep all the books and records of the Trust (other than
those to be kept by the Paying Agent), and
(iii) prepare (or cause to be prepared) and, as necessary,
file (or cause to be filed) any and all reports, returns and other documents as
required under the Investment Company Act, the Securities Exchange Act of 1934,
as amended, or the Internal Revenue Code of 1986, as amended (the "Code"), or,
as reasonably requested by the Trustees, under any other applicable laws, rules
or regulations or otherwise; provided, however, that responsibility for the
adequacy and accuracy of any such reports, returns, etc. shall be that of the
Trustees and provided, further, that the Administrator shall have no liability
for the adequacy or accuracy of such reports, returns, etc.;
(g) at the request of the Trust and upon being furnished with such
reasonable security and indemnity against any related expense or liability as
the Administrator may require, institute and prosecute, in accordance with the
instructions of the Trust, legal or other appropriate proceedings to enforce any
and all rights and remedies of the Trust;
(h) receive and review on behalf of the Trust all notices, reports,
certificates and other documents regarding the Contract and the U.S. Treasury
Securities;
(i) make all necessary arrangements with respect to meetings of
Trustees and meetings of Holders, including, without limitation, the preparation
of notices, proxies and minutes, subject to the approval of Trust; and
(j) in conjunction with the Trust, determine and publish, in such
manner as the Trust shall direct in writing, the Trust's net asset value in
accordance with the Trust's policy as set forth in the Prospectus.
2.3 CERTAIN RIGHTS OF THE ADMINISTRATOR. In connection with the
performance of its duties under this Agreement, the Administrator shall not be
liable to the Trust, the Trustees or any Holder (i) for any action taken or for
refraining from taking any action hereunder except in the case of its willful
misfeasance, bad faith, gross negligence or the reckless disregard of its duties
hereunder, (ii) with respect to any action taken or omitted
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to be taken by it in good faith in accordance with the directions of the Trust
or of any Trustee or (iii) in connection with the performance of its duties
under Section 2.2(j) hereof, for good faith reliance upon information furnished
by third parties selected by the Administrator with due care. The Administrator
shall under no circumstances be liable for any indirect or consequential
damages. The Administrator may consult with counsel and the written advice of
such counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon. The Administrator may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys appointed
with due care by it but shall be liable for the acts and omissions of such
persons to the same extent as if the functions had been performed by the
Administrator itself.
ARTICLE III
COMPENSATION OF ADMINISTRATOR
3.1 COMPENSATION. For services to be rendered by the Administrator
pursuant to this Agreement, as custodian under the Custodian Agreement, dated as
of March 25, 1997, between the Administrator, as custodian, and the Trust, as
paying agent under the Paying Agent Agreement, dated as of March __, 1997,
between the Administrator, as paying agent, and the Trust, and as collateral
agent under the Security and Pledge Agreement, dated as of March __, 1997, among
the Administrator, as collateral agent, the Contracting Stockholders and the
Trust, and for the payment of Trust expenses pursuant to Section 2.2(a), (b) and
(e) hereof, the Administrator shall receive only such fees and expenses as shall
be paid to it pursuant to the terms of the Fund Expense Agreement and shall have
no recourse to the assets of the Trust for the payment of any such amounts.
3.2 ADDITIONAL SERVICES. If and to the extent that the Trust shall request
the Administrator to render services for the Trust, other than those to be
rendered by the Administrator hereunder, and if the Administrator agrees to
render such services, such additional services shall be compensated separately
on terms to be agreed upon between the Administrator and the Trust from time to
time.
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<PAGE> 5
ARTICLE IV
TERMINATION
4.1 TERMINATION.
(a) This Agreement shall terminate immediately upon written notice
of termination from the Trust to the Administrator if any of the following
events shall occur:
(i) If the Administrator shall violate any provision of this
Agreement, the Trust Agreement, or the Investment Company Act, and after notice
of such violation, shall not cure such default within 30 days; or
(ii) If the Administrator shall be adjudged bankrupt or
insolvent by a court of competent jurisdiction, or an order shall be made by a
court of competent jurisdiction for the appointment of a receiver, liquidator,
or trustee of the Administrator, or of all or substantially all of its property
by reason of the foregoing, or approving any petition filed against the
Administrator for its reorganization, and such adjudication or order shall
remain in force or unstayed for a period of 30 days; or
(iii) If the Administrator shall institute proceedings for
voluntary bankruptcy, or shall file a petition seeking reorganization under the
Federal bankruptcy laws, or for relief under any law for the relief of debtors,
or shall consent to the appointment of a receiver of the Administrator or of all
or substantially all of its property, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability to pay its
debts generally as they become due; or
(iv) Upon the voluntary or involuntary dissolution of the
Administrator, or unless the Trust shall have given its prior written consent
thereto, the merger or consolidation of the Administrator with any other entity.
If any of the events specified in clauses (ii), (iii) or (iv) of this
Section 4.1(a) shall occur, the Administrator shall give immediate written
notice thereof to the Trust.
(b) Notwithstanding anything to the contrary contained herein, this
Agreement shall terminate immediately (i) upon termination of the Trust
Agreement, (ii) upon termination of the Paying Agent Agreement, (iii) upon
termination of the Security and Pledge Agreement, (iv) upon termination of the
Custodian Agreement or (v) upon the resignation or removal of the Custodian.
(c) This Agreement may be terminated by either party hereto without
penalty upon 60 days prior written notice to the other party hereto; provided
that neither party hereto may terminate this Agreement pursuant to this Section
4.1(c) unless a successor Administrator shall have been appointed and shall have
accepted the duties of the Administrator. If, within
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30 days after notice by the Administrator to the Trust of termination of this
Agreement, no successor Administrator shall have been selected and accepted the
duties of the Administrator, the Administrator may apply to a court of competent
jurisdiction for the appointment of a successor Administrator.
4.2 EFFECT OF TERMINATION. The Administrator shall forthwith upon
termination of this Agreement deliver to the Trust any records or other property
of the Trust then in the possession or custody of the Administrator. Any
obligation to indemnify the Administrator pursuant to Section 6.6 shall survive
the termination of this Agreement.
ARTICLE V
RECORDS AND REPORTS
5.1 BOOKS AND RECORDS; INSPECTION AND COPYING. The Administrator shall
keep appropriate, and reasonably detailed and accurate, books and records of all
its activities pursuant to this Agreement. The Trust shall have the right to
inspect such books and records during the Administrator's normal business hours
upon reasonable request, and to make copies of the same at the expense of the
Trust.
5.2 ACCESS TO INFORMATION. The Administrator shall make available to the
Trust all information it receives and compiles with respect to the Contract and
the U.S. Treasury Securities, the moneys available to the Trust, the financial
condition of the Trust and all other relevant matters concerning the Trust.
ARTICLE VI
MISCELLANEOUS
6.1 BINDING EFFECT. Any corporation into which the Administrator may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Administrator shall be a party, shall be the successor Administrator hereunder
and under the Trust Agreement without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto, provided
that such corporation meets the requirements set forth in the Trust Agreement
and provided further that the Trust has given its prior written consent to the
Administrator with respect to any such merger, conversion or consolidation. This
Agreement shall be binding on and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties with respect to the matters contained herein and supersedes all
prior
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agreements or understandings, whether oral or written. This Agreement shall not
be amended, changed, modified, or discharged, in whole or in part, except by an
instrument in writing signed by both parties hereto, or their respective
successors or permitted assigns.
6.3 NOTICES. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing, and shall, unless some
other method of giving such notice, report or other communication is accepted by
the party to whom it is to be given or is required by the Trust Agreement or the
Investment Company Act, be given by being mailed by U.S. first class mail,
certified or registered, return receipt requested, postage prepaid, to the
following addresses of the parties hereto:
The Trust: Nextel STRYPES Trust
c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19716
Telephone: (302) 738-6680
Telecopier: (302) 738-7210
The Administrator: The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Christopher T. Nicholls
Telephone: (212) 635-7128
Telecopier: (212) 635-7141
Any party may at any time give written notice to the other party that it
wishes to change its address for the purposes of this Section 6.3.
6.4 APPLICABLE LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State.
6.5 NON-ASSIGNABILITY. This Agreement and the rights and obligations of
the parties hereunder may not be assigned or delegated by either party without
the prior written consent of the other party.
6.6 INDEMNIFICATION. The Trust shall indemnify and hold the Administrator
harmless from and against any loss, damages, cost or expense (including the
costs of investigation, preparation for and defense of legal and/or
administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Administrator by the Trustees, or any
act or omission in the course of, connected with or arising out of any services
to be rendered hereunder, provided that the Administrator shall not be
indemnified and held harmless from and against any such loss, damages, cost,
expense, liability or claim
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incurred by reason of its willful misfeasance, bad faith, or gross negligence in
the performance of its duties, or its reckless disregard of its duties and
obligations hereunder.
6.7 PROVISIONS OF LAW TO CONTROL. This Agreement shall be subject to the
applicable provisions of the Investment Company Act and the rules and
regulations of the Commission thereunder. To the extent that any provisions
herein contained conflict with any applicable provisions of the Investment
Company Act or such rules and regulations, the latter shall control.
6.8 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument.
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<PAGE> 9
IN WITNESS WHEREOF the parties have hereunto executed this Administration
Agreement as of the day and year first above written.
NEXTEL STRYPES TRUST
By:
-------------------------------
Donald J. Puglisi,
as Managing Trustee
THE BANK OF NEW YORK
By:
-------------------------------
Name:
Title:
9
<PAGE> 1
EXHIBIT (k)(2)
Form of Paying
Agent Agreement
PAYING AGENT AGREEMENT
This PAYING AGENT AGREEMENT dated as of this ___ day of March, 1997, by
and between The Bank of New York, a New York banking corporation (the "Paying
Agent"), and Nextel STRYPES Trust (such trust and the trustees thereof acting in
their capacity as such being referred to herein as the "Trust"), a trust
organized under the laws of the State of Delaware under and by virtue of an
Amended and Restated Trust Agreement, dated as of February 27, 1997 (the "Trust
Agreement").
W I T N E S S E T H
WHEREAS, the Trust is a non-diversified, closed-end management investment
company, as defined in the Investment Company Act of 1940 (the "Investment
Company Act"), formed to purchase and hold the certain zero-coupon U.S.
Government securities (the "U.S. Treasury Securities"), to enter into and hold a
forward purchase contract with certain existing stockholders (the "Contracting
Stockholders") of Nextel Communications, Inc. (the "Contract") and to issue
Structured Yield Product Exchangeable for Stock(sm) (the "STRYPES") to the
public in accordance with the terms and conditions of the Trust Agreement;
WHEREAS, the Trust desires to engage the services of the Paying Agent to
assume certain responsibilities and to perform certain duties as the transfer
agent, registrar and paying agent with respect to the STRYPES upon the terms and
conditions of this Agreement; and
WHEREAS, the Paying Agent is qualified and willing to assume such
responsibilities and to perform such duties, subject to the supervision of the
Trust, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:
- ----------
(sm)Service mark of Merrill Lynch & Co., Inc.
<PAGE> 2
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the respective meanings specified in the Trust Agreement.
ARTICLE II
PAYING AGENT
2.1 APPOINTMENT OF PAYING AGENT AND ACCEPTANCE. The Trust
Agreement provides that The Bank of New York shall act as the initial Paying
Agent. The Bank of New York accepts such appointment and agrees to act in
accordance with its standard procedures and the provisions of the Trust
Agreement and the provisions set forth in this Article 2 as Paying Agent with
respect to the STRYPES. Without limiting the generality of the foregoing, The
Bank of New York, as Paying Agent, agrees that it shall establish and maintain
the Trust Account, subject to the provisions of Section 2.3 hereof.
2.2 CERTIFICATES AND NOTICES. The Trust shall deliver to the Paying Agent
the certificates and notices required to be delivered to the Paying Agent
pursuant to the Trust Agreement, and the Paying Agent shall mail or publish such
certificates or notices as required by the Trust Agreement, but the Paying Agent
shall have no responsibility to confirm or verify the accuracy of certificates
or notices of the Trust so delivered.
2.3 PAYMENTS AND INVESTMENTS. The Paying Agent shall make payments out of
the Trust Account as provided for in Section 3.2 of the Trust Agreement. The
Paying Agent shall effect the transactions set forth in Sections 2.6, 2.7, 2.8
and 8.3 of the Trust Agreement upon instructions to do so from the Administrator
(except that with respect to its obligations under Section 8.3 of the Trust
Agreement, the Paying Agent shall act without instructions from the
Administrator) and shall invest moneys on deposit in the Trust Account in
Temporary Investments in accordance with Section 3.4 of the Trust Agreement.
Except as otherwise specifically provided herein or in the Trust Agreement, the
Paying Agent shall not have the power to sell, transfer or otherwise dispose of
any Temporary Investment prior to the maturity thereof, or to acquire additional
Temporary Investments. The Paying Agent shall hold any Temporary Investment to
its maturity and shall apply the proceeds thereof paid upon maturity to the
payment of the next succeeding Quarterly Distribution. All such Temporary
Investments shall be selected by the Trust from time to time or pursuant to
standing instructions from the Trust, and the Paying Agent shall have no
liability to the Trust or any Holder or any other Person with respect to any
such Temporary Investment.
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2.4 INSTRUCTIONS FROM ADMINISTRATOR. The Paying Agent shall receive and
execute all instructions from the Administrator, except to the extent they
conflict with or are contrary to the terms of the Trust Agreement or this
Agreement.
ARTICLE III
TRANSFER AGENT AND REGISTRAR
3.1 ORIGINAL ISSUE OF CERTIFICATES. On the date the STRYPES sold pursuant
to the Purchase Agreement are originally issued, certificates for the STRYPES
shall be issued by the Trust, and, at the request of the Trust, registered in
such names and such denominations as the Underwriters shall have previously
requested of the Trust, executed manually or in facsimile by the Managing
Trustee and countersigned by the Paying Agent. At no time shall the aggregate
number of STRYPES represented by such countersigned certificates exceed the
number of then outstanding STRYPES.
3.2 REGISTRY OF HOLDERS. The Paying Agent shall maintain a registry of the
Holders of the STRYPES.
3.3 REGISTRATION OF TRANSFER OF THE STRYPES. The STRYPES shall be
registered for transfer or exchange, and new certificates shall be issued, in
the name of the designated transferee or transferees, upon surrender of the old
certificates in form deemed by the Paying Agent properly endorsed for transfer
with (a) all necessary endorsers' signatures guaranteed in such manner and form
as the Paying Agent may require by a guarantor reasonably believed by the Paying
Agent to be responsible, (b) such assurances as the Paying Agent shall deem
necessary or appropriate to evidence the genuineness and effectiveness of each
necessary endorsement and (c) satisfactory evidence of compliance with all
applicable laws relating to the collection of taxes or funds necessary for the
payment of such taxes.
3.4 LOST CERTIFICATES. The Paying Agent shall issue and register
replacement certificates for certificates represented to have been lost, stolen
or destroyed, upon the fulfillment of such requirements as shall be deemed
appropriate by the Trust and the Paying Agent, subject at all times to
provisions of law, the Trust Agreement and resolutions adopted by the Trustees
with respect to lost securities. The Paying Agent may issue new certificates in
exchange for and upon the cancellation of mutilated certificates. Any request by
the Trust to the Paying Agent to issue a replacement or new certificate pursuant
to this Section 3.4 shall be deemed to be a representation and warranty by the
Trust to the Paying Agent that such issuance will comply with such provisions of
law and the Trust Agreement and resolutions of the Trustees.
3.5 TRANSFER BOOKS. The Paying Agent shall maintain the transfer books
listing the Holders of the STRYPES. In case of any written request or demand for
the
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inspection of the transfer books of the Trust or any other books in the
possession of the Paying Agent, the Paying Agent will notify the Trust and
secure instructions as to permitting or refusing such inspection. The Paying
Agent reserves the right, however, to exhibit the transfer books or other books
to any person in case it is advised by its counsel that its failure to do so
would be unlawful.
3.6 DISPOSITION OF CANCELLED CERTIFICATES; RECORDS. The Paying Agent shall
retain certificates which have been cancelled in transfer or in exchange and
accompanying documentation in accordance with applicable rules and regulations
of the Securities and Exchange Commission (the "Commission") for six calendar
years from the date of such cancellation, and shall make such records available
during this period at any time, or from time to time, for reasonable periodic,
special, or other examinations by representatives of the Commission and the
Board of Governors of the Federal Reserve System. Thereafter such records shall
not be destroyed by the Paying Agent but will be safely stored for possible
future reference. In case of any request or demand for the inspection of the
register of the Trust or any other books in the possession of the Paying Agent,
the Paying Agent will notify the Trust and seek to secure instructions as to
permitting or refusing such inspection. The Paying Agent reserves the right,
however, to exhibit the register or other records to any person in case it is
advised by its counsel that its failure to do so would (i) be unlawful, or (ii)
expose it to liability, unless the Trust shall have offered indemnification
satisfactory to the Paying Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEES
The Trust represents and warrants to the Paying Agent that:
(a) the Trust is a validly existing trust under the laws of the
State of Delaware and has full power under the Trust Agreement to execute and
deliver this Agreement and to authorize, create and issue the STRYPES;
(b) this Agreement has been duly and validly authorized, executed
and delivered by the Trust and constitutes the valid and binding agreement of
the Trust, enforceable against the Trust in accordance with its terms, subject
as to such enforceability to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equitable principles;
(c) the form of the certificate evidencing the STRYPES complies with
all applicable laws of the State of Delaware and the State of New York;
(d) the STRYPES have been duly and validly authorized, executed and
delivered by the Trust and are validly issued;
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<PAGE> 5
(e) the offer and sale of the STRYPES has been registered under the
Securities Act of 1933 and the Trust has been registered under the Investment
Company Act and no further action by or before any governmental body or
authority of the United States or of any state thereof is required in connection
with the execution and delivery of this Agreement or the issuance of the
STRYPES;
(f) the execution and delivery of this Agreement and the issuance
and delivery of the STRYPES do not and will not conflict with, violate, or
result in a breach of, the terms, conditions or provisions of, or constitute a
default under, the Trust Agreement, any law or regulation, any order or decree
of any court or public authority having jurisdiction over the Trust, or any
mortgage, indenture, contract, agreement or undertaking to which the Trust is a
party or by which it is bound; and
(g) no taxes are payable upon or in respect of the execution of this
Agreement or the issuance of the STRYPES.
ARTICLE V
DUTIES AND RIGHTS
5.1 DUTIES. (a) The Paying Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.
(b) In the absence of bad faith, gross negligence or willful misfeasance
on its part in the performance of its duties hereunder or its reckless disregard
of its duties and obligations hereunder, the Paying Agent shall not be liable
for any action taken, suffered, or omitted in the performance of its duties
under this Agreement. The Paying Agent shall under no circumstances be liable
for any indirect or consequential damages hereunder.
5.2 RIGHTS. (a) The Paying Agent may rely and shall be protected in acting
or refraining from acting upon any communication authorized hereby and upon any
written instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document reasonably believed by
it to be genuine. The Paying Agent shall not be liable for acting upon any
telephone communication authorized hereby which the Paying Agent believes in
good faith to have been given by the Managing Trustee.
(b) The Paying Agent may consult with legal counsel and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Paying Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
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<PAGE> 6
(d) The Paying Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys appointed with
due care by it hereunder.
5.3 DISCLAIMER. The Paying Agent makes no representation as to (a) the
first two recitals of this Agreement or (b) the validity or adequacy of the
STRYPES.
5.4 COMPENSATION, EXPENSES AND INDEMNIFICATION. (a) The Paying Agent shall
receive for all services rendered by it under this Agreement and, upon the prior
written approval of the Trust, for all expenses, disbursements and advances
incurred or made by the Paying Agent in accordance with any provision of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), the compensation set forth in Section
3.1 of the Administration Agreement.
(b) The Trust shall indemnify the Paying Agent for and hold it
harmless against any loss, liability, claim or expense (including the costs of
investigation, preparation for and defense of legal and/or administrative
proceedings relating to a claim against it and reasonable attorneys' fees and
disbursements) arising out of or in connection with the performance of its
obligations under this Agreement, provided such loss, liability or expense is
not the result of gross negligence, willful misfeasance or bad faith on its part
in the performance of its duties hereunder or its reckless disregard of its
duties or obligations hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with its exercise or
performance of any of its duties or obligations hereunder and thereunder. The
indemnification provided by this Section 5.4(b) shall survive the termination of
this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 TERM OF AGREEMENT. (a) The term of this Agreement is unlimited unless
terminated as provided in this Section 6.1 or unless the Trust is terminated, in
which case this Agreement shall terminate ten days after the date of termination
of the Trust. This Agreement may be terminated by either party hereto without
penalty upon 60 days prior written notice to the other party hereto; provided
that neither party hereto may terminate this Agreement pursuant to this Section
6.1(a) unless a successor Paying Agent shall have been appointed and shall have
accepted the duties of the Paying Agent. The termination of the Trust Agreement,
the Collateral Agreement, the Administration Agreement or the Custodian
Agreement or the resignation or removal of the Custodian shall cause the
termination of this Agreement simultaneously therewith. If, within 30 days after
notice by the Paying Agent of termination of this Agreement, no successor Paying
Agent shall have been selected and accepted the duties of the Paying Agent, the
Paying Agent may apply to a court of competent jurisdiction for the appointment
of a successor Paying Agent.
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<PAGE> 7
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Trust and the Paying Agent under this
Agreement shall cease upon termination of this Agreement. The Trust's
representations, warranties, covenants and obligations to the Paying Agent under
Article IV and Section 5.4 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Paying Agent shall, at the Trust's request,
promptly deliver to the Trust or to any successor Paying Agent as requested by
the Trust (i) copies of all books and records maintained by it and (ii) any
funds deposited with the Paying Agent by the Trust.
6.2 COMMUNICATIONS. Except for communications authorized to be made by
telephone pursuant to this Agreement, all notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and given to such person at its address or telecopy number set
forth below:
If to the Trust,
addressed: Nextel STRYPES Trust
c/o Puglisi & Associates
850 Library Avenue
Suite 204
Newark, Delaware 19715
Telephone: (302) 738-6680
Telecopier: (302) 738-7210
with a copy to the Administrator if the duties of the Administrator are being
performed by a Person other than the Person performing the obligations of the
Paying Agent.
If to the Paying Agent,
addressed: The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Christopher T. Nicholls
Telephone: (212) 635-7128
Telecopier: (212) 635-7141
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given by the Trust (or by the Administrator, provided
that the Trust shall not have delivered to the Paying Agent an instrument in
writing revoking the authorization of the Administrator to act for it pursuant
hereto) and on behalf of the Paying Agent by a Senior Vice President or Vice
President of the Paying Agent assigned to its Corporate Trust Department.
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<PAGE> 8
6.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties relating to the subject matter hereof.
6.4 NO THIRD PARTY BENEFICIARIES. Nothing herein, express or implied,
shall give to any Person, other than the Trust, the Paying Agent and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim hereunder.
6.5 AMENDMENT; WAIVER. (a) This Agreement shall not be deemed or construed
to be modified, amended, rescinded, cancelled or waived, in whole or in part,
except by a written instrument signed by a duly authorized representative of the
party to be charged. The Trust shall notify the Paying Agent of any change in
the Trust Agreement prior to the effective date of any such change.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
6.6 SUCCESSORS AND ASSIGNS. Any corporation into which the Paying Agent
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Paying Agent shall be a party, shall be the successor Paying Agent hereunder and
under the Trust Agreement without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto, provided
that such corporation meets the requirements set forth in the Trust Agreement,
provided further that the Trust has given its prior written consent to the
Paying Agent with respect to any such merger, conversion or consolidation. This
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the respective successors of each of the Trust and the Paying Agent. This
Agreement shall not be assignable by either the Trust or the Paying Agent,
without the prior written consent of the other party.
6.7 SEVERABILITY. If any clause, provision or section hereof shall be
ruled invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof.
6.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
6.9 GOVERNING LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
NEXTEL STRYPES TRUST
By:
-----------------------------
Donald J. Puglisi,
as Managing Trustee
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
9
<PAGE> 1
EXHIBIT (k) (3)
FORM OF PURCHASE
FORWARD CONTRACT
FORWARD PURCHASE CONTRACT
THIS AGREEMENT is made as of this ____ day of March, 1997 among Nextel
STRYPES Trust (such trust and the trustees thereof acting in their capacity as
such being referred to herein as the "Purchaser"), a statutory business trust
organized under the Business Trust Act of the State of Delaware (Chapter 38,
Title 12, of the Delaware Code, 12 Del. (Sections 3801 et seq.)), and Cherrywood
Holdings, Inc. and Vernon Investors, L.L.C. (each, a "Seller" and collectively,
the "Sellers").
WHEREAS, the Purchaser has filed with the Securities and Exchange
Commission a registration statement on Form N-2 (File Nos. 33-63795 and
811-7389) and pre-effective amendments No. 1, No. 2, No. 3 and No. 4 thereto
contemplating the offering of up to 8,243,875 of its STRYPES(SM) (the
"STRYPES"), the terms of which contemplate that, on ________ __, 2000 (the
"Exchange Date"), each such STRYPES will be mandatorily exchanged for a
specified number or amount of each type of Reference Security (as defined
herein) and other property constituting part of the Reference Property (as
defined herein) (or, in certain circumstances, cash, or a combination of cash
and Reference Property, with an equal value).
WHEREAS, the Purchaser has agreed, pursuant to an underwriting
agreement dated the date hereof (the "Underwriting Agreement") among the
Purchaser, the Sellers and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation and each of the other
Underwriters named in Schedule A thereto (collectively, the "Underwriters",
which term shall also include any underwriter substituted as provided in Section
10 of the Underwriting Agreement), for whom Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Donaldson Lufkin & Jenrette Securities
Corporation are acting as representatives, to issue and sell to the
Underwriters, acting severally and not jointly, an aggregate of 7,168,587
STRYPES (the "Initial STRYPES") and, at the Underwriters' option, all or any
part of additional STRYPES (the "Option STRYPES") to cover
over-allotments, if any.
WHEREAS, the STRYPES are to be issued pursuant to an Amended and
Restated Trust Agreement, dated as of February 27, 1997 (the "Trust Agreement"),
among the trustees of the Purchaser and ML IBK Positions, Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as Sponsors.
- --------
(SM) Service mark of Merrill Lynch & Co., Inc.
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<PAGE> 2
WHEREAS, in exchange for certain consideration to be paid by the
Purchaser hereunder, the Purchaser and the Sellers desire to provide for the
future acquisition, sale and delivery of the aggregate number or amount of each
type of Reference Security and other property constituting part of the Reference
Property required by the Purchaser in order to exchange all of the STRYPES on
the Exchange Date, at a price to be established under this Agreement.
WHEREAS, the Sellers collectively own 8,243,875 shares of the Class A
Common Stock, par value $.001 per share (the "Nextel Common Stock"), of Nextel
Communications, Inc., a Delaware corporation ("Nextel").
WHEREAS, the Purchaser and each Seller desire that, to the extent
permitted by applicable law, at the option of each Seller, the future sale and
delivery obligations of such Seller can be settled in whole or in part through
cash payment in lieu of delivery of all or a part of such Seller's Contract
Consideration (as defined herein).
WHEREAS, pursuant to a Security and Pledge Agreement dated as of March
__, 1997 (the "Security and Pledge Agreement"), among the Purchaser, the
Sellers, and The Bank of New York, as collateral agent (the "Collateral Agent")
for the benefit of the Purchaser, an aggregate of 7,168,587 shares of Nextel
Common Stock initially will be pledged by the Sellers to secure their respective
obligations hereunder.
WHEREAS, the Sellers and the Purchaser desire that ownership of the
Contract Consideration (including, without limitation, voting rights and rights
to receive any dividends, interest, distributions and other payments in respect
thereof, provided that, to the extent constituting part of the Reference
Property, such dividends, interest, distributions and other payments and the
proceeds of any sale required by the provisions hereof shall be retained by the
Collateral Agent in accordance with the provisions hereof or of the Security and
Pledge Agreement) remain in the Sellers unless and until delivery, if any, of
such Contract Consideration to the Purchaser pursuant to the provisions of this
Agreement.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
1.
Definitions
1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article 1 have the meanings assigned to them in this Article.
"Acceleration Amount" has the meaning specified in Section
7.1.
"Acceleration Amount Notice" has the meaning specified in
Section 7.1.
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<PAGE> 3
"Acceleration Date" has the meaning specified in Section 7.1.
"Acceleration Value" has the meaning specified in Section 7.1.
"Administrator" means The Bank of New York, the Trust
Administrator for the Purchaser under the Administration Agreement
dated as of March __, 1997, or any successor thereto.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a partner in, or a director or officer
of, such Person.
"Aggregate Acceleration Value" has the meaning specified in
Section 7.1.
"Aggregate Number" has the meaning specified in Section
3.1(b).
"Bankruptcy Code" has the meaning specified in Section 8.9.
"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.
"Cash Payment Amount" has the meaning specified in Section
2.5.
"Closing Price" means, with respect to any Reference Security
on any date of determination, 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
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.
"Contract Commitment" means, with respect to any Seller, the
sum of such Seller's Firm Contract Commitment and each additional
Option Contract Commitment of such Seller.
"Contract Consideration" means, with respect to any Seller,
the aggregate number or amount of each type of Reference Security and
other property constituting part of the Reference Property deliverable
by such Seller at the Closing in respect of such Seller's Contract
Commitment as provided in Section 2.1, assuming that such Seller has
not
3
<PAGE> 4
elected to exercise the option described in Section 2.5 to deliver cash
in lieu of Reference Property.
"control" (including the terms "controlled by" or "under
common control with") means, as to any Person, the possession, direct
or indirect, of the power to vote ten percent or more of the securities
having ordinary voting power for the election of directors of such
Person or to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting securities
or by contract or otherwise.
"Date of Delivery" has the meaning specified in Section
2.1(b).
"Distributed Assets" has the meaning specified in Section
3.1(c).
"Early Settlement Date" has the meaning specified in Section
7.2.
"Exchange Amount" has the meaning specified in Section 2.1(a).
"Exchange Date" has the meaning specified in the first recital
in this Agreement.
"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 shall 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.
"Firm Consideration Amount" has the meaning specified in
Section 2.2(a).
"Firm Contract Commitment" has the meaning specified in
Section 2.1(a).
"Independent Dealers" has the meaning specified in Section
7.1.
"Initial Price" has the meaning specified in Section 2.1(a).
"Initial STRYPES" has the meaning specified in the second
recital in this Agreement.
"Maximum Contract Consideration" has the meaning specified in
Section 6.1(a).
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<PAGE> 5
"Nextel" has the meaning specified in the fifth recital in
this Agreement.
"Nextel Common Stock" has the meaning specified in the fifth
recital in this Agreement.
"Nextel Successor" means any surviving entity or subsequent
surviving entity of Nextel.
"NASDAQ" means the Nasdaq National Market.
"Option Consideration Amount" has the meaning specified in
Section 2.2(b).
"Option Contract Commitment" has the meaning specified in
Section 2.1(b).
"Option STRYPES" has the meaning specified in the second
recital in this Agreement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Purchaser" has the meaning specified in the introductory
paragraph of this Agreement.
"Receipt Date" has the meaning specified in Section 3.1(b).
"Reference Property" has the meaning specified in Section 2.1.
"Reference Property Value" means, subject to the provisions of
Section 3.1(b), 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
(including Nextel Common Stock), 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 Security" means, at any time, any security (as
defined in Section 2(1) of the Securities Act of 1933, as amended) then
constituting part of the Reference Property.
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<PAGE> 6
"Reorganization Event" has the meaning specified in Section
3.1(d).
"Seller" and "Sellers" have the meanings specified in the
introductory paragraph of this Agreement.
"Seller Repayment Event" has the meaning specified in Section
4.
"STRYPES" has the meaning specified in the first recital in
this Agreement.
"Threshold Appreciation Price" has the meaning specified in
Section 2.1(a).
"Total Firm Contract Commitment" has the meaning specified in
Section 2.1(a).
"Total Option Contract Commitment" has the meaning specified
in Section 2.1(b).
"Trading Day" means, with respect to any Reference Security
the Closing Price of which is being determined, a day on which such
Reference Security (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.
"Trust Agreement" has the meaning specified in the third
recital in this Agreement.
"Underwriters" has the meaning specified in the second recital
in this Agreement.
"Underwriting Agreement" has the meaning specified in the
second recital in this Agreement.
2.
Future Sale of Contract Consideration or Cash Settlement
2.1. Sale and Purchase. (a) On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, at the Closing (as defined in Section 2.3 hereof), each Seller, severally
and not jointly, agrees to assign, transfer, convey and deliver to the
Purchaser, and the Purchaser agrees to acquire from each Seller, severally and
not jointly, the 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 such Seller's Contract Commitment. For the
purposes of this Agreement, subject to Section 2.1(b) below, the respective
Contract Commitments of the Sellers are as follows:
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<PAGE> 7
<TABLE>
<CAPTION>
Number of
Name of Seller Units
-------------- -----
<S> <C>
Cherrywood Holdings, Inc............................................. 5,108,907
Vernon Investors, L.L.C.............................................. 2,059,680
--------------
Total ..................................................... 7,168,587
==============
</TABLE>
The number of Units set forth above opposite the name of each Seller is referred
to herein as such Seller's "Firm Contract Commitment" and the number of Units
equal to the sum of the Firm Contract Commitments is referred to herein as the
"Total Firm Contract Commitment".
The term "Reference Property" shall initially mean one share of Nextel
Common Stock and shall be subject to adjustment from time to time prior to the
date of Closing to reflect the addition or substitution of any cash, securities
and/or other property resulting from the application of the provisions of
Section 3.1 hereof. The term "Exchange Amount" shall mean the number or amount
of each type of Reference Security and other property constituting part of the
Reference Property determined as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Exchange Date in accordance with the following
formula: (i) if the Reference Property Value is greater than or equal to $ (the
"Threshold Appreciation Price"), % 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 is 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.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Sellers, severally and not jointly, hereby grant an option to the Purchaser to
purchase at the Closing up to an additional number or amount of each type of
Reference Security and other property then constituting part of the Reference
Property equal to the product of the Exchange Amount and ____________ (the
"Total Option Contract Commitment"). The option granted hereby will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time for the sole purpose of obtaining 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 by the Purchaser upon exchange
of any Option STRYPES issued by the Purchaser upon exercise by the Underwriters
of the option described in Section 2(b) of the Underwriting Agreement. The
Purchaser may exercise the option granted hereby by delivering to the Sellers,
upon receipt by the Purchaser of notice that the Underwriters are exercising
their option to purchase Option STRYPES, prompt notice of such exercise by the
Underwriters,stating the number of Option STRYPES as to which the Underwriters
are then exercising the option and the time and date of payment and delivery for
such Option STRYPES (any such time and date of delivery, a "Date of Delivery").
Upon delivery of such notice as aforesaid, each Seller's Contract Commitment
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<PAGE> 8
shall be increased automatically by a number of Units equal to that portion of
the total number of Option STRYPES then being purchased by the Underwriters
which such Seller's Firm Contract Commitment bears to the Total Firm Contract
Commitment, such number of Units by which such Seller's Contract Commitment
shall so increase being referred to as an "Option Contract Commitment" of such
Seller.
2.2. Consideration. (a) The consideration to be paid by the Purchaser
for each Seller's obligation hereunder to deliver (or cause to be delivered) the
Contract Consideration in respect of such Seller's Firm Contract Commitment
shall be an amount in cash (the "Firm Consideration Amount") equal to the
product of $____ and such Seller's Firm Contract Commitment. Upon the terms and
subject to the conditions of this Agreement, the Purchaser shall deliver to each
Seller such Seller's Firm Consideration Amount at the offices of Brown & Wood
LLP, One World Trade Center, New York, New York 10048, or at such other place as
shall be agreed upon by the Purchaser and the Sellers, at 9:00 A.M. (New York
City time) on the third (fourth, if the pricing of the STRYPES offering occurs
after 4:30 P.M. (New York City time) on any given day) Business Day after the
date hereof, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Purchaser and the Seller (such time and date of
payment being herein called the "Firm Payment Date").
(b) The consideration to be paid by the Purchaser in exchange for each
Seller's obligation hereunder to deliver (or cause to be delivered) the Contract
Consideration in respect of any Option Contract Commitment of such Seller shall
be an amount in cash (the "Option Consideration Amount") equal to the product of
such Option Contract Commitment and the Option Unit Consideration set forth in
an Option Unit Pricing Agreement substantially in the form of Exhibit A hereto.
The Option Unit Pricing Agreement may take the form of an exchange of any
standard form of written telecommunication among the Purchaser and the Sellers.
From and after the date of execution and delivery of any Option Unit Pricing
Agreement, this Agreement shall be deemed to incorporate such Option Unit
Pricing Agreement. Upon the terms and subject to the conditions of this
Agreement, the Purchaser shall deliver to each Seller such Seller's Option
Consideration Amount on the related Date of Delivery at the offices of Brown &
Wood LLP, One World Trade Center, New York, New York 10048, or at such other
place as shall be agreed upon by the Purchaser and the Sellers.
(c) Payment of the Firm Consideration Amount and the Option
Consideration Amount to each Seller shall be made by Fedwire transfer of
immediately available funds to an account designated by such Seller, or such
other form of payment specified by such Seller, against delivery by such Seller
to the Collateral Agent of the number of shares of Nextel Common Stock and/or
cash, securities and other property necessary to comply with such Seller's
obligations under Section 6.1 hereof.
2.3. Delivery of Contract Consideration. Consummation of the
acquisition, sale and delivery of the Contract Consideration shall take place on
a date mutually agreeable to the Purchaser and the Sellers, not later than one
(1) Business Day prior to the Exchange Date (the "Closing"). Delivery of the
Contract Consideration shall be made at the offices of [____________], or at
such other place as shall be agreed upon by the Purchaser and the Sellers.
Certificates representing Reference Securities in registered form that are part
of the Contract
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Consideration shall be registered in the Purchaser's name or in the name of a
depositary or a nominee of a depositary as requested by the Purchaser, unless
such Reference Securities are represented by one or more global certificates
registered in the name of a depositary or a nominee of a depositary or are book
entry securities, in which event the Purchaser's interest in such securities
shall be noted in a manner satisfactory to the Purchaser and its counsel. Other
property that is a part of the Contract Consideration delivered to the Purchaser
shall be transferable by the Purchaser to the same extent as when received by or
on behalf of the relevant Seller and shall not be subjected, by reason of or
following receipt by such Seller, to any transfer restrictions not generally
applicable to all holders of such other property.
2.4. No Fractional Interests. No fractional units or scrip representing
fractional units of any Reference Security shall be delivered at the Closing.
Instead of any fractional unit of any such Reference Security which would
otherwise be deliverable by any Seller at the Closing, such Seller shall make a
cash payment in respect of such fractional unit in an amount equal to the value
of such fractional unit based upon 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 Sellers will deliver fractional interests of any Reference
Property other than cash or a Reference Security at the Closing. If such
delivery is not practicable, in lieu of any fractional interest of any Reference
Property other than cash or a Reference Security which would otherwise be
deliverable at the Closing, the Sellers shall make a cash payment in respect of
such fractional interest in an amount 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.
2.5. Cash Settlement. (a) Notwithstanding the provisions of Sections
2.1, 2.2, 2.3 and 2.4 hereof, to the extent permitted by applicable law, each
Seller shall have the option, exercisable in its sole discretion, to settle the
obligations of such Seller contained therein, in whole or in part, through a
cash payment at Closing in lieu of delivery of the portion of such Seller's
Contract Consideration in respect of which an election to exercise the cash
settlement option is made. The amount of such cash settlement payment (the "Cash
Payment Amount") to be made by the relevant Seller shall be equal to the sum,
determined as of 10:00 A.M. (New York City time) on the date of Closing, of (a)
for any portion of the Contract Consideration 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 the Contract
Consideration 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 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 Contract
Consideration consisting of a Reference Security (including Nextel Common Stock)
(except as provided in Section 3.1(b)) 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
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of the Contract Consideration in respect of which an election to exercise the
cash settlement option is made. On or prior to the twenty-seventh Business Day
preceding the Exchange Date, each Seller shall notify the Purchaser whether it
will exercise its option to require cash settlement pursuant to this Section
2.5.
(b) In the event that any Seller elects to settle its obligations in
part through a cash payment at Closing, (i) such Seller shall be required to
cash settle an equal percentage of each type of Reference Security and other
property constituting part of the Reference Property that would otherwise be
deliverable by such Seller at Closing and (ii) the remaining number of units of
any Reference Security consisting of capital stock to be delivered at Closing
shall be evenly divisible by 100.
(c) If the Contract Consideration consists of securities and/or other
property other than Nextel Common Stock, each Seller's right to deliver (or
cause to be delivered) to the Purchaser hereunder such securities and/or other
property shall be conditioned upon such securities and/or other property to be
so delivered being transferable by the Purchaser, following receipt from
such Seller, without any restrictions not generally applicable to all holders
of such securities and/or other property. If the condition set forth in the
preceding sentence shall not be satisfied with respect to the securities and/or
other property to be delivered by any Seller, then, notwithstanding the
provisions hereof, such Seller's obligations contained in Sections 2.1, 2.2,
2.3 and 2.4 hereof shall be settled, in whole, through a cash payment at the
Closing in lieu of delivery of the Contract Consideration as provided in
Section 2.5(a).
2.6. Sellers' Conditions to Closing. Each Seller's obligation to
consummate the transactions contemplated hereunder is conditioned upon (a) the
purchase and sale of the Initial STRYPES pursuant to the Underwriting Agreement
having been consummated as contemplated therein, (b) the representations and
warranties of the Purchaser contained in paragraphs (iii) and (iv) of Article 5
hereof being true and correct as of the date of the Closing and (c) the Security
and Pledge Agreement having been executed by the parties thereto and the
delivery of the Collateral thereunder having been made.
2.7. Purchaser's Conditions to Closing. The Purchaser's obligation to
consummate the transactions contemplated hereunder is conditioned upon (a) the
purchase and sale of the Initial STRYPES pursuant to the Underwriting Agreement
having been consummated as contemplated therein, (b) the representations and
warranties of the Sellers contained in paragraphs (i), (iii)(b), (iv), (v) and
(vi) of Article 4 hereof being true and correct as of the date of the Closing
and (c) the Security and Pledge Agreement having been executed by the parties
thereto and the delivery of the Collateral thereunder having been made.
3.
Reference Property Adjustments
3.1. (a) Adjustment for Subdivisions, Splits, Combinations or
Reclassifications. If an issuer of a Reference Security shall:
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(A) subdivide or split the outstanding units of such
Reference Security into a greater number of units;
(B) combine the outstanding units of such Reference
Security into a smaller number of units; or
(C) issue by reclassification of units of such
Reference Security any units of another security of such issuer;
then, in any such event, the Reference Property shall be adjusted to include the
number of units of such Reference Security and/or other security of such issuer
which a holder of units of such Reference Security would have owned or been
entitled to receive immediately following any event described above 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.
(b) Adjustment for Issuance of Certain Rights or Warrants. If an issuer
of a Reference Security shall 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), then in each such case, 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 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 this subsection (b), the fair market value of each such right or
warrant shall be determined by the Administrator and 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 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 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
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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
purposes of the definition of Reference Property Value and Section 2.5 hereof to
have a fair market value of zero.
(c) Adjustment for Distributions. If an issuer of a Reference Security
shall 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, excluding any payment of interest on any Reference
Security consisting of an evidence of indebtedness and excluding any dividend or
distribution described in subsection (a) or (b) above) or shall issue to all
holders of such Reference Security rights or warrants to subscribe for or
purchase any of its securities or other property (excluding any rights or
warrants referred to in subsection (b) above) (any of the foregoing being
referred to herein as "Distributed Assets"), then in each such case, 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.
(d) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of an issuer of a Reference
Security with or into another entity (other than a consolidation or merger 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), (ii) 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, (iii) 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 (iv) any liquidation, dissolution, winding up
or bankruptcy of an issuer of a Reference Security (excluding any distribution
in such event referred to in subsection (c) above) (any such event described in
clause (i), (ii), (iii) or (iv), 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
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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.
4.
Representations and Warranties of the Sellers
Each Seller severally represents and warrants to the Purchaser as of
the date hereof and as of the date of Closing as follows:
(i) Such Seller has the full right, power and authority to enter
into and perform its obligations under this Agreement and the Security and
Pledge Agreement, including, without limitation, to pledge and assign the shares
of Nextel Common Stock and/or cash, securities and other property to be pledged
and assigned by such Seller pursuant to the Security and Pledge Agreement, and
to sell, transfer and deliver the Contract Consideration to be sold by such
Seller pursuant to this Agreement.
(ii) This Agreement and the Security and Pledge Agreement have
been duly authorized, executed and delivered by such Seller and (assuming the
due authorization, execution and delivery by the other parties thereto)
constitute valid and binding agreements of such Seller, enforceable against such
Seller in accordance with their respective terms, except as the enforcement
hereof and thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement hereof and thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law). Neither the Firm Consideration Amount received by such Seller
at Closing nor any Option Consideration Amount received by such Seller at any
Date of Delivery will be used by such Seller for the purpose, whether immediate,
incidental or ultimate, of buying or carrying a margin stock, as such terms are
defined in Regulation G promulgated by the Board of Governors of the Federal
Reserve System.
(iii) (a) At the date hereof, such Seller is the registered owner
of and has all rights in and to the shares of Nextel Common Stock to be pledged
and assigned by such Seller pursuant to the Security and Pledge Agreement, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity and (b) to the extent such Seller elects to deliver all or a portion
of the Contract Consideration at Closing, upon delivery of such Contract
Consideration against payment therefor pursuant to this Agreement, the Purchaser
will be the sole owner of such Contract Consideration and, assuming the
Purchaser purchased for value in good faith and without notice of any adverse
claim, the Purchaser will have acquired all rights in and to such Contract
Consideration, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. The sale, transfer and delivery of the Contract
Consideration by such Seller as contemplated by this Agreement is not, and at
the time of delivery such Contract Consideration will not be, subject to any
right of first refusal or similar rights of any person
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pursuant to any contract to which such Seller or any Affiliate of such Seller is
a party or by which any of them is bound.
(iv) No declaration or filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the execution,
delivery or performance by such Seller of this Agreement or the Security and
Pledge Agreement or the consummation by such Seller of the transactions
contemplated herein and therein, except such as have been already obtained or as
may be required under the 1933 Act or the rules and regulations promulgated
thereunder or state securities laws.
(v) The execution, delivery and performance by such Seller of
this Agreement and the Security and Pledge Agreement and the consummation by
such Seller of the transactions contemplated herein and therein and compliance
by such Seller with its obligations hereunder and thereunder do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Seller Repayment Event
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of such Seller or any Affiliate of such
Seller pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to which such
Seller or any Affiliate of such Seller is a party or by which it or any of them
is bound, or to which any of the property or assets of such Seller or any
Affiliate of such Seller is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not, singly or in the
aggregate, materially and adversely affect the ability of such Seller to perform
its obligations under this Agreement or the Security and Pledge Agreement), nor
will such action result in any violation of the provisions of any applicable
law, statute, rule or regulation of any government or government instrumentality
having jurisdiction over such Seller or any Affiliate of such Seller or any of
their assets, properties or operations (other than any state securities or "blue
sky" law, statute, rule or regulation, as to which no representation and
warranty is made), or any applicable judgment, order, writ or decree of any
government, government instrumentality or domestic court having jurisdiction
over such Seller or any Affiliate of such Seller or any of their assets,
properties or operations (except in all cases for violations that would not,
singly or in the aggregate, materially and adversely affect the ability of such
Seller to perform its obligations under this Agreement or the Security and
Pledge Agreement). As used herein, a "Seller Repayment Event" with respect to
any Seller means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by such Seller or any Affiliate of such
Seller.
(vi) such Seller is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, required to be
registered thereunder.
In so far as the foregoing representations and warranties of each
Seller relate to its power and authority to enter into this Agreement and the
forward transaction contemplated herein and the legality and binding nature of
this Agreement and that transaction, each Seller makes such
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representations and warranties on the basis of its good faith belief that this
Agreement constitutes a forward contract, and not a contract for sale of a
security for future delivery.
5.
Representations and Warranties of Purchaser
The Purchaser represents and warrants to each Seller as of the date
hereof and as of the date of Closing as follows:
(i) The Purchaser has been duly created and is validly existing
as a business trust in good standing under the laws of the State of Delaware
with power and authority to enter into and perform its obligations under this
Agreement and the Security and Pledge Agreement.
(ii) This Agreement and the Security and Pledge Agreement have
been duly authorized, executed and delivered by the Purchaser and (assuming the
due authorization, execution and delivery by the other parties thereto)
constitute valid and binding agreements of the Purchaser, enforceable against
the Purchaser in accordance with their respective terms, except as the
enforcement hereof and thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement hereof and thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(iii) No declaration or filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the execution,
delivery or performance by the Purchaser of this Agreement or the Security and
Pledge Agreement or the consummation by the Purchaser of the transactions
contemplated herein and therein, except such as have been already obtained or as
may be required under the 1933 Act or the rules and regulations promulgated
thereunder or state securities laws.
(iv) The execution, delivery and performance by the Purchaser of
this Agreement and the Security and Pledge Agreement and the consummation by the
Purchaser of the transactions contemplated herein and therein and compliance by
the Purchaser with its obligations hereunder and thereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Purchaser Repayment Event
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument to which the Purchaser is a party or
by which the Purchaser is bound, or to which any of the property or assets of
the Purchaser is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not, singly or in the aggregate,
materially and adversely affect the ability of the Purchaser to perform its
obligations under this Agreement or the Security and Pledge Agreement), nor will
such action result in any violation of the provisions of the Trust Agreement of
the Purchaser, or any applicable law, statute, rule, or regulation of any
government or government instrumentality having jurisdiction over the
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Purchaser or any of its assets or properties (other than any state securities or
"blue sky" law, statute, rule or regulation, as to which no representation and
warranty is made), or any applicable judgment, order, writ or decree of any
government, government instrumentality or domestic court having jurisdiction
over the Purchaser or any of its assets, properties or operations (except in all
cases for violations that would not, singly or in the aggregate, materially and
adversely affect the ability of the Purchaser to perform its obligations under
this Agreement or the Security and Pledge Agreement). As used herein, a
"Purchaser Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Purchaser.
6.
Covenants
6.1. Collateral. (a) Each Seller shall cause to be held by the
Collateral Agent during the term of this Agreement an aggregate number of shares
of Nextel Common Stock and/or cash, securities and/or other property at least
equal to the maximum number or amount of each type of Reference Security and
other property constituting part of the Reference Property that may be required
to be delivered by such Seller at the Closing pursuant to Section 2.1 hereof,
assuming that (x) the fair market value of any Reference Property consisting of
rights or warrants described in Section 3.1(b) hereof is the value determined
pursuant to such Section 3.1(b), and (y) such Seller has not elected to exercise
its option to require cash settlement of all or any portion of its obligations
hereunder pursuant to Section 2.5 hereof (such aggregate number of shares of
Nextel Common Stock and/or cash, securities and/or other property being referred
to herein as such Seller's "Maximum Contract Consideration"), subject to such
Seller's right to deliver to the Collateral Agent substitute collateral for all
or any portion of the Maximum Contract Consideration in accordance with Section
4(b) of the Security and Pledge Agreement.
(b) Each Seller shall direct the Collateral Agent to sell (as provided
in Section 2(c) of the Security and Pledge Agreement) any rights or warrants
described in Section 3.1(b) hereof at the net bid received by the Collateral
Agent in accordance with the procedures specified in Section 4(g) of the
Security and Pledge Agreement and to hold during the term of this Agreement the
proceeds from such sale. If the Collateral Agent is unable to consummate such
sale, the rights or warrants shall be held by the Collateral Agent, and neither
such Seller nor the Collateral Agent shall be required to take any action to
sell such rights or warrants other than as specified in such Section 4(g) of the
Security and Pledge Agreement.
6.2. Affirmative Covenants. During the term of this Agreement, each
Seller covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders to the extent noncompliance would have a material adverse
effect on the ability of such Seller to perform its obligations hereunder or
under the Security and Pledge Agreement, such compliance to include, without
limitation, paying before the same become delinquent all taxes,
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assessments and governmental charges imposed upon it or upon its property,
including the Collateral, except to the extent contested in good faith.
(b) Furnish to the Purchaser as soon as possible and in any event
within twenty calendar days after such Seller shall become aware of the
occurrence of each failure by such Seller to comply with or perform any
agreement or obligation contained in Sections 6.1, 6.2 or 6.3 of this Agreement
or Sections 2(b), 7(a), 7(b) and 7(c) of the Security and Pledge Agreement
continuing on the date of such statement, a statement of the president or any
vice president of such Seller describing such failure and setting forth details
of such failure and the action which such Seller has taken and proposes to take
with respect thereto.
(c) Preserve and maintain its corporate existence, rights (charter and
statutory), powers, franchises and qualifications, except that such Seller may
terminate franchises and qualifications that it determines are not required to
serve the interests of such Seller, provided such termination does not have a
material adverse effect on the ability of such Seller to perform its obligations
hereunder or under the Security and Pledge Agreement.
(d) At any reasonable time and from time to time, upon reasonable
notice, prior to the occurrence of an Event of Default (as defined in the
Security and Pledge Agreement), and upon any notice after the occurrence of an
Event of Default until delivery of the Collateral to such Seller to the extent
required in accordance with Sections 2.1, 2.3, 2.4 and 7.1 hereof, as
applicable, permit the Purchaser or representatives thereof to visit the offices
of such Seller and, to the extent necessary or desirable to preserve, protect,
exercise or enforce any of the Purchaser's rights hereunder, to examine and make
copies of and abstracts from the records and books of account of such Seller and
discuss the affairs, finances and accounts of such Seller with any of its
officers, directors and representatives; provided that the covenant and
agreement contained in this Section 6.2(d) is expressly made subject to the
understanding that the Purchaser and any such representatives shall keep
confidential all non-public information made available to them except to the
extent disclosure of such information is necessary to preserve, protect,
exercise or enforce the Purchaser's rights hereunder or is otherwise required by
law, rule, regulation or court order.
(e) Keep proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of such Seller, including the Collateral, in accordance with appropriate
accounting principles consistently applied.
6.3. Taxes. Each Seller shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
execution and delivery by such Seller of this Agreement and the transfer and
delivery by such Seller of the Contract Consideration pursuant hereto.
6.4. Tax Treatment. The Purchaser and each Seller hereby agree to
treat, for all United States Federal, state and local tax purposes, this
Agreement as a pre-paid forward contract, which does not constitute, in whole or
in part, indebtedness, pursuant to which the Purchaser is obligated to purchase
at the Closing the Contract Consideration which each Seller
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is obligated to deliver at that time (subject to each Seller's right to deliver
cash in lieu of the Contract Consideration as provided in Section 2.5 hereof).
6.5. Certain Notices. (a) In case at any time while any of the STRYPES
are outstanding any Seller who receives written notice in its capacity as a
holder of any Reference Security that:
(i) an issuer of a Reference Security shall declare a
dividend (or any other distribution) on or in respect of such Reference
Security to which Section 3.1(c) hereof shall apply (other than any
cash dividends, if any, paid from time to time by the issuer of such
Reference Security that do not constitute Extraordinary Cash
Dividends);
(ii) an issuer of a Reference Security shall authorize
the issuance to all holders of such Reference Security of rights or
warrants to subscribe for or purchase units of such Reference Security
or of any other subscription rights or warrants;
(iii) there shall occur any conversion or
reclassification of any Reference Security (other than a subdivision or
combination of outstanding units of such Reference Security) or any
consolidation, merger or reorganization to which an issuer of a
Reference Security is a party and for which approval of any unitholders
of such issuer is required, or the sale or transfer of all or
substantially all of the assets of an issuer of a Reference Security;
or
(iv) there shall occur the voluntary or involuntary
dissolution, liquidation, winding up or bankruptcy of an issuer of a
Reference Security;
then such Seller shall promptly notify the Purchaser of such fact and of (x) the
date, if known by such Seller, on which a record is to be taken for the purpose
of such dividend, distribution or grant of rights or warrants, or, if a record
is not to be taken, the date as of which the holders of such Reference Security
of record to be entitled to such dividend, distribution or grant of rights or
warrants are to be determined, or (y) the date, if known by such Seller, on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation, winding up or bankruptcy is expected to become effective.
(b) Immediately upon the occurrence of any Event of Default, within the
meaning of the Security and Pledge Agreement, with respect to any Seller, or
upon any Seller's obtaining knowledge that an Event of Default, within the
meaning of the Security and Pledge Agreement, shall have occurred with respect
to another Seller, such Seller shall promptly notify the Purchaser of such
occurrence.
6.6. Limitations on Trading During Certain Days. Each of the Sellers
and the Purchaser hereby agrees that it will not, and it will cause each of its
Affiliates not to, buy or sell units of any Reference Security for their own
account during the 20 Trading Days immediately prior to the second Trading Day
preceding the Exchange Date or any Early Settlement Date.
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<PAGE> 19
6.7. Further Assurances. From time to time on and after the date hereof
through the date of Closing, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper and advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement in accordance with the terms and conditions hereof, including (i)
using best efforts to remove any legal impediment to the consummation of such
transactions and (ii) the execution and delivery of all such deeds, agreements,
assignments and further instruments of transfer and conveyance necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement in accordance with the terms and conditions hereof.
7.
Acceleration of Delivery
7.1. Termination Event; Delivery. If an Event of Default, within the
meaning of the Security and Pledge Agreement, shall occur with respect to any
Seller, then this Agreement shall be liquidated. Upon the occurrence of any
such Event of Default with respect to any Seller, (i) an Acceleration Date shall
occur, (ii) the Sellers' rights under Section 2.5 hereof shall terminate
immediately and (iii) there shall become immediately deliverable and payable by
each Seller (and immediately deliverable by the Collateral Agent under the
Security and Pledge Agreement to the Purchaser) 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
(determined in the manner provided in Section 2.5 hereof for the Cash Payment
Amount) equal to the Aggregate Acceleration Value multiplied by a fraction, the
numerator of which shall be such Seller's Firm Contract Commitment and the
denominator of which shall be the Total Firm Contract Commitment (the
"Acceleration Amount"). The "Aggregate Acceleration Value" means the product
obtained by multiplying: (i) the quotient obtained by dividing (A) the
Acceleration Value by (B) 1,000 by (ii) the sum of the Contract Commitments of
the Sellers; except that, if no quotations for the determination of the
Acceleration Value are obtained as described below, the Aggregate Acceleration
Value shall 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 by the Sellers on such date
under this Agreement if the Exchange Date were redefined to be the Acceleration
Date.
The "Acceleration Value" means an amount determined on the basis of
quotations from four nationally recognized independent investment banking firms
selected by the Administrator (the "Independent Dealers") as follows. Each
quotation will be for the amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between the Purchaser and such
Independent Dealer that would have the effect of preserving the Purchaser's
right to receive the payments and deliveries that the Purchaser would, but for
the occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date under Article 2 hereof (taking into account any Reference
Property adjustments that may have been effected on or prior to the Acceleration
Date), provided that, for purposes of determining the payments and deliveries to
which the Purchaser is entitled under Article 2 hereof, the sum of the Contract
Commitments of the Sellers shall be deemed to equal 1,000. On or as soon as
reasonably practicable following the Acceleration Date, the Administrator will
request each Independent
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<PAGE> 20
Dealer to provide its quotation as soon as reasonably practicable, but in any
event within two Business Days. The Administrator shall compute the Acceleration
Value upon receipt of each Independent Dealer's quotation, provided that if, at
the close of business on the fourth Business Day following the Acceleration
Date, the Administrator shall have received quotations from fewer than four of
the Independent Dealers, the Administrator shall compute the Acceleration Value
using the quotations, if any, it shall have received at or prior to such time.
If four quotations are provided, the Acceleration Value shall be the arithmetic
mean of the two quotations remaining after disregarding the highest and lowest
quotations. (For this purpose, if more than one quotation has the same highest
or lowest value, then one of such quotations shall be disregarded.) If two or
three quotations are provided, the Acceleration Value shall be the arithmetic
mean of such quotations. If one quotation is provided, the Acceleration Value
shall be equal to such quotation. If no quotations are provided, the
Acceleration Value will not be determined and the Aggregate Acceleration Value
shall be determined as provided above.
As promptly as reasonably practicable after receipt of the quotations
on which the Acceleration Value is based (or, as the case may be, after failure
to receive any such quotations within the time period prescribed above) the
Purchaser shall deliver to the Collateral Agent and the Sellers a notice (the
"Acceleration Amount Notice") specifying the Acceleration Amount required to be
delivered by each Seller. The Purchaser and each Seller agree that the
Aggregate Acceleration Value is a reasonable pre-estimate of loss and not a
penalty. Such amount is payable for the loss of bargain and the Purchaser will
not be entitled to recover additional damage as a consequence of loss resulting
from an Event of Default.
7.2. Nextel Reorganization Event; Delivery. Notwithstanding the
provisions of Sections 2.1, 2.3 and 2.5 hereof, if a Reorganization Event with
respect to Nextel or any Nextel Successor shall occur, each Seller's obligations
under Section 2.1 shall be automatically accelerated and each Seller shall
deliver to the Purchaser, on the tenth Business Day after the effective date for
such Reorganization Event (the "Early Settlement Date"), the Contract
Consideration that would be required to be delivered by such Seller at Closing
under this Agreement if the Exchange Date were redefined to be the Early
Settlement Date.
8.
Miscellaneous
8.1. Adjustments to Reference Property; Selection of Independent Firm.
The Purchaser shall be responsible for the effectuation and calculation of any
adjustment to the Reference Property and any amount deliverable pursuant to
Sections 2.1, 2.4, 2.5 and 7 hereof. The Purchaser shall provide the Sellers
reasonable opportunity to review the calculations pertaining to any adjustment
of the Reference Property. As soon as practicable, but in no event later than
10:00 A.M. (New York City time) on the date of Closing, the Purchaser shall
provide the Sellers with a statement showing the Purchaser's calculations of the
amounts deliverable pursuant to Sections 2.1, 2.4, 2.5 and 7 hereof. If any
Seller disagrees with any such calculation or determination, the Contract
Consideration or any Cash Payment Amount, ____________ or such other independent
accounting or investment banking firm agreed upon by such Seller and the
Purchaser shall be retained to make such calculation, which shall be
20
<PAGE> 21
binding upon the Purchaser and such Seller. The fees and expenses of such firm
shall be borne by the relevant Seller. If, pursuant to the terms and conditions
of this Agreement, the Administrator shall be required to retain a nationally
recognized independent investment banking firm for any purpose provided herein,
such nationally recognized independent investment banking firm shall be selected
and retained by the Administrator only after giving the Sellers 30 days prior
notice (or such shorter notice as may be reasonably practicable) of the identity
of such firm and after consultation with the Sellers, and the Administrator
shall not select any firm that is not reasonably acceptable to the Sellers. The
fees and expenses of any such nationally recognized independent investment
banking firm retained by the Administrator shall be borne by the Sellers.
8.2. Notices. Notices to the Purchaser shall be directed to it in care
of the Administrator at 101 Barclay Street, New York, New York 10286, telecopy
number (212) 635- 7128, attention of Christopher T. Nicholls, with a copy to
Richard Bourgerie, Esq., Emmet, Marvin & Martin, 120 Broadway, New York, New
York 10271; notices to the Sellers shall be directed to them in care
of Telcom Ventures, L.L.C., 2300 Clarendon Boulevard, Suite 800, Arlington,
Virginia 22201, telecopy number (703) ________, attention of ________________,
with a copy to William J. Phillips, Esq. at Dewey Ballantine, 1301 Avenue of the
Americas, New York, New York 10019-6092, telecopy number (212) 259-6333.
Notwithstanding the foregoing, notices to a party shall be directed to such
other address for such party as shall be specified by such party in a like
notice given pursuant to this Section 8.2. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
either (i) personally delivered (including delivery by courier service or by
Federal Express or any other nationally recognized overnight delivery service
for next day delivery) to the offices specified in the preceding sentence, in
which case they shall be deemed received on the first Business Day by which
delivery shall have been made to said offices; or (ii) sent by certified mail,
return receipt requested, in accordance with the preceding sentence, in which
case they shall be deemed received when receipted for unless acknowledgment is
refused (in which case delivery shall be deemed to have been received on the
first Business Day on which such acknowledgment is refused).
8.3. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. For
the purpose of any suit, action or proceeding arising out of or relating to this
Agreement, the parties hereto hereby expressly and irrevocably consent and
submit to the non-exclusive jurisdiction of any competent court in the place of
its domicile and any United States Federal court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non conveniens or any similar basis to which it
might otherwise be entitled.
8.4. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE,
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<PAGE> 22
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY EACH OTHER PARTY HERETO THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH
OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF ANY OTHER PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
8.5. Entire Agreement. Except as expressly set forth herein, this
Agreement and the Security and Pledge Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements, understandings and negotiations, both written and oral, among
the parties with respect to the subject matter of this Agreement.
8.6. Amendments; Waivers. Any provision of this Agreement may be
amended or waived prior to the Closing if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Purchaser and each
of the Sellers or, in the case of a waiver, by the party against whom the waiver
is to be effective. No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
8.7. Successors, Assigns. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns. Notwithstanding the
foregoing, neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any party hereto
without the prior written consent of the other parties hereto.
8.8. No Third Party Rights. This Agreement is not intended and shall
not be construed to create any rights in any person other than the Sellers and
the Purchaser and no person shall assert any rights as third party beneficiary
hereunder.
8.9. Application of Bankruptcy Code. The parties hereto acknowledge and
agree that the Collateral Agent is a "financial intermediary" within the
meaning of Section 101(22) of Title 11 of the United States Code (the
"Bankruptcy Code") and is acting as agent and custodian for the Purchaser in
connection with this Agreement and that the Purchaser is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The parties hereto
further acknowledge and agree that this Agreement is a "securities contract", as
such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
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<PAGE> 23
8.10. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
Purchaser: Seller:
NEXTEL STRYPES TRUST CHERRYWOOD HOLDINGS, INC.
By: By:
------------------------------- --------------------------------
Name: Donald J. Puglisi, Name:
as Managing Trustee Title:
Seller:
VERNON INVESTORS, L.L.C.
By:
--------------------------------
Name:
Title:
23
<PAGE> 24
Exhibit A
NEXTEL STRYPES TRUST
(a Delaware business trust)
Option Unit Pricing Agreement
____________, 1997
CHERRYWOOD HOLDINGS, INC.
VERNON INVESTORS L.L.C.
c/o Telcom Ventures, L.L.C.
2300 Clarendon Blvd., Suite 800
Arlington, Virginia 22201
Ladies and Gentlemen:
Reference is made to the Forward Purchase Contract, dated as of March __,
1997 (the "Forward Purchase Contract"), among Nextel STRYPES Trust (the
"Purchaser") and each of you (collectively, the "Sellers") relating to the
future purchase by the Purchaser of the Contract Consideration from the Sellers.
The Underwriters have exercised their option, pursuant to Section 2(b) of the
Underwriting Agreement, to purchase an aggregate of __________ Option STRYPES.
In connection with such exercise, the Purchaser has agreed to issue and sell to
the Underwriters, severally and not jointly, ______________ Option STRYPES.
Payment for and delivery of such Option STRYPES will be made at ______ on _____,
1997 (the "Date of Delivery").
Pursuant to subsection (b) of Section 2.1 of the Forward Purchase Contract,
the Purchaser and the Sellers hereby agree that the Option Unit Consideration to
be used in calculating the Option Consideration Amounts payable by the Purchaser
to the Sellers on the Date of Delivery as consideration for each Seller's
obligation to deliver (or cause to be delivered) the Contract Consideration in
respect of the Option Contract Commitment of such Seller created hereby shall be
$___________.*
- --------
* The Option Unit Consideration shall be an amount equal to the initial public
offering price per Option STRYPES, net of (1) the underwriting discount per
Option STRYPES and (2) the cost per Option STRYPES of the zero-coupon U.S.
Government securities to be purchased by the Purchaser to provide for the
quarterly distributions on the Option STRYPES to which this Option Unit
Pricing Agreement relates. The selection of the zero-coupon U.S.
Government securities to be purchased in respect of any Option STRYPES
shall be made in a manner and on a basis consistent with the selection of
the zero-coupon U.S. Government securities purchased in respect of the
Initial STRYPES.
<PAGE> 25
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Forward Purchase Contract.
If the foregoing is in accordance with our agreement, please sign and
return to Purchaser a counterpart hereof, whereupon this instrument, along with
all counterparts, will become a binding agreement among the Purchaser and each
Seller in accordance with its terms.
Very truly yours,
Nextel STRYPES TRUST
By: _____________________________
Name: Donald J. Puglisi,
as Managing Trustee
CONFIRMED AND ACCEPTED, as of
the date first above written:
CHERRYWOOD HOLDINGS, INC.
By: ____________________________
Name:
Title:
VERNON INVESTORS, L.L.C.
By: ____________________________
Name:
Title:
A-2
<PAGE> 1
Exhibit (k)(4)
Form of Security and Pledge Agreement
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (the "Security and Pledge
Agreement") is made as of March __, 1997 among Nextel STRYPES Trust, a Delaware
business trust (such trust and the trustees thereof acting in their capacity as
such being referred to herein as the "Trust"), Cherrywood Holdings, Inc., a
Delaware corporation ("Cherrywood"), Vernon Investors, L.L.C., a Delaware
limited liability company ("Vernon") (Cherrywood and Vernon being referred to
herein individually as a "Pledgor" and collectively as the "Pledgors"), and The
Bank of New York, a New York banking corporation, as collateral agent (the
"Collateral Agent") hereunder for the benefit of the Trust.
WHEREAS, the Trust has filed with the Securities and Exchange
Commission a registration statement on Form N-2 (File Nos. 33-63795 and
811-7389) and Pre-Effective Amendments No. 1, No. 2, No. 3 and No. 4 thereto
contemplating the offering of up to 8,243,875 of its Structured Yield Product
Exchangeable for Stock(SM) (the "STRYPES"), the terms of which contemplate that,
on , 2000 (the "Exchange Date"), each such STRYPES will be mandatorily
exchanged for a specified 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 and Reference Property, with an
equal value).
WHEREAS, the STRYPES are to be issued pursuant to an Amended and
Restated Trust Agreement, dated as of March __, 1997 (the "Trust Agreement"),
among the trustees of the Trust and ML IBK Positions, Inc. and Donaldson, Lufkin
& Jenrette Securities Corporation, as Sponsors.
WHEREAS, in order to obtain the Reference Property that would be
required by the Trust in order to exchange all of the STRYPES on the Exchange
Date in accordance with the Trust's investment objective, the Trust has entered
into a Forward Purchase Contract, dated as of March __, 1997 (the "Forward
Purchase Contract"), with the Pledgors providing for the future acquisition,
sale and delivery 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 by the Trust in order to exchange all of the STRYPES on the
Exchange Date in accordance with the Trust's investment objective, assuming that
none of the Pledgors has elected to exercise its option to deliver cash in lieu
of all or part of the Reference Property.
WHEREAS, the Trust and each Pledgor desire that, to the extent
permitted by law, at the option of each Pledgor, the future sale and delivery
obligations of such Pledgor can be settled in whole or in part through cash
payment in lieu of delivery of all or a part of such Pledgor's Contract
Consideration.
- --------
(SM) Service mark of Merrill Lynch & Co., Inc.
<PAGE> 2
WHEREAS, the Trust and the Pledgors desire that ownership of the
Contract Consideration (including, without limitation, voting rights and rights
to receive any dividends, interest, distributions and other payments in respect
thereof, provided that, to the extent constituting part of the Reference
Property, such dividends, interest, distributions and other payments and the
proceeds of any sale required by the provisions of the Forward Purchase Contract
shall be retained and held by the Collateral Agent in accordance with the
provisions hereof or of the Forward Purchase Contract) remain in the Pledgors
unless and until delivery, if any, of such Contract Consideration to the Trust
pursuant to the provisions hereof and of the Forward Purchase Contract.
WHEREAS, the Pledgors have initially Delivered to the Collateral Agent
an aggregate of 7,168,587 shares of Class A Common Stock, par value $.001 per
share (the "Nextel Common Stock"), of Nextel Communications, Inc., a Delaware
corporation ("Nextel").
WHEREAS, the Trust and the Pledgors desire that the obligations of each
Pledgor under the Forward Purchase Contract shall be secured pursuant to the
terms hereof.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
(a) This Security and Pledge Agreement. The following terms, when used
herein, shall have the following meanings; capitalized words and phrases used
herein and not otherwise defined shall have the meanings ascribed to them in the
Forward Purchase Contract:
"Authorized Representative" means, with respect to any Pledgor, any
officer or other representative as to whom such Pledgor shall have delivered
notice to the Collateral Agent that such officer or other representative is
authorized to act hereunder on behalf of such Pledgor.
"Bankruptcy Code" has the meaning specified in Section 12.
"Bankruptcy Event" has the meaning ascribed thereto in Schedule B.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which the New York Stock Exchange, the NASDAQ National Market, banking
institutions or trust companies in The City of New York are authorized or
obligated by law or executive order to close.
"Collateral" means all the cash, securities and other property
Delivered to the Collateral Agent hereunder in respect of each Pledgor's
Collateral Amount and held by the Collateral Agent, including, without
limitation, cash, securities or other property purchased or obtained by the
Collateral Agent in respect of any Pledgor's Collateral Amount pursuant to
Section 4(e) or with cash Delivered by any Pledgor pursuant to Section 4(i) or
obtained by the Collateral Agent as contemplated in Section 4(g) or in respect
of any of the foregoing.
2
<PAGE> 3
"Collateral Agent" means the financial institution identified as such
in the introductory paragraph hereof, or any successor appointed in accordance
with Section 9(l).
"Collateral Amount" shall mean, with respect to any Pledgor at any
time, such Pledgor's Maximum Contract Consideration.
"Collateral Event of Default" has the meaning specified in Section
4(e).
"Collateral Requirement" means, as of any date and with respect to: (i)
any Reference Security and other property constituting part of the Reference
Property, 100%; and (ii) any U.S. Government Securities, 150%, provided that
upon and after any failure to cure an Insufficiency Determination by 4:00 p.m.,
New York City time, on the third Business Day following telephonic notice of
such Insufficiency Determination as described in Section 4(e), which
insufficiency shall be continuing on such third Business Day, the Collateral
Requirement relating to any U.S. Government Securities shall be 200%.
"Delivery" means (i) the delivery of cash, securities or other
property, free and clear of all Liens (other than a Lien created or permitted by
this Security and Pledge Agreement), (A) to the Collateral Agent at such
location in the State of New York as it shall direct, in suitable form for
delivery and transfer, accompanied by duly executed instruments of transfer or
assignment in blank and accompanied by any required transfer tax stamps, or (B)
to an account of the Collateral Agent in a clearing system (or with a Securities
Intermediary) acceptable to the Collateral Agent or (ii) with respect to any
securities the ownership of which is recorded in book-entry form by a Federal
Reserve Bank, delivery to the Collateral Agent of (a) a listing of such
securities by title (or series), unpaid principal amount and maturity date and
(b) such steps as are necessary for the Collateral Agent or its Securities
Intermediary to become the holder of a Security Entitlement with respect to such
securities through the Securities Account. The term "Deliver" used as a verb has
a corresponding meaning.
"Eligible Collateral" means (i) Nextel Common Stock and/or cash,
securities and other property constituting part of the Reference Property, and
(ii) U.S. Government Securities, provided, in each case, that the Pledgor has
good and marketable title thereto, free of all Liens (other than the Liens
created by this Security and Pledge Agreement) and Transfer Restrictions and (at
any time after Delivery) that the Collateral Agent has a valid, first priority
perfected security interest therein and first lien thereon, and provided further
that to the extent the number or amount of any type of Reference Security or
other property constituting part of the Reference Property pledged by any
Pledgor hereunder exceeds at any time the Maximum Deliverable Number thereof
with respect to such Pledgor, such excess number or amount thereof shall not be
Eligible Collateral.
"Event of Default" means, with respect to any Pledgor, the occurrence
of: (i) a Bankruptcy Event described in Schedule B hereto, (ii) a Collateral
Event of Default, or (iii) a failure by such Pledgor to have caused the
Collateral to meet the requirements described in Section 2(c) on the date of
Closing.
"Ineligible Collateral" means Collateral that does not constitute
"Eligible Collateral".
3
<PAGE> 4
"Insufficiency Determination" has the meaning specified in Section
4(e).
"Lien" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any Reference
Property consisting of cash, the amount of such cash on such date; (b) with
respect to any Reference Property consisting of property other than cash or
Reference Securities, the fair market value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Collateral Agent) as of such date; (c) with respect to any Reference Property
consisting of a Reference Security, an amount equal to the Closing Price of a
unit of such Reference Security on such date multiplied by the number of units
of such Reference Security then being valued; and (d) with respect to any U.S.
Government Security, the product of (x)(i) the average unit bid price for such
security as published on the Trading Day prior to such date in the New York
edition of The Wall Street Journal or The New York Times or, if not so
published, (ii) the lower bid price quoted (which quotation shall be evidenced
in writing) on the Trading Day prior to such date by either of two nationally
recognized dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. and (y) the number of such
units comprised in the outstanding principal amount of such security; provided
that the "Market Value" of any Ineligible Collateral shall be zero.
"Maximum Contract Consideration" has the meaning ascribed thereto in
Section 6.1(a) of the Forward Purchase Contract.
"Maximum Deliverable Number" means, with respect to any Pledgor on any
date and with respect to any type of Reference Security or other property
constituting part of the Reference Property, the maximum number or amount of
such type of Reference Security or other property constituting part of the
Reference Property that may be required to be delivered by such Pledgor at the
Closing pursuant to Section 2.1 of the Forward Purchase Contract.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any particular
type of Collateral, an amount equal to the aggregate Market Value of such
Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, with respect to any Pledgor as of any
date, the aggregate Market Value on such date of such Pledgor's Collateral
Amount on such date.
"Prior Collateral" has the meaning specified in Section 4(b)(1).
"Responsible Officer" means, when used with respect to the Collateral
Agent, any vice president, assistant vice president, assistant treasurer or
assistant secretary located in the division or department of the Collateral
Agent responsible for performing the obligations of the Collateral Agent under
this Security and Pledge Agreement, or in any other division or department of
the
4
<PAGE> 5
Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily performing
functions similar to those performed by any of the aforesaid officers, and also
means, with respect to any matter relating to this Security and Pledge Agreement
or the Collateral, any other officer to whom such matter is referred because of
his knowledge of and familiarity with the particular subject.
"Secured Amounts" means, with respect to any Pledgor, the amounts at
any time payable or obligations to be performed by such Pledgor to or for the
benefit of the Trust pursuant to the Forward Purchase Contract and this Security
and Pledge Agreement, including, without limitation, (i) the delivery of such
Pledgor's Contract Consideration at Closing pursuant to Section 2.1 of the
Forward Purchase Contract or, if such Pledgor has elected to exercise its option
to settle such obligation in whole or in part through a cash payment at Closing,
the payment of the cash settlement payment at Closing in lieu of delivering the
portion of the Contract Consideration in respect of which such election is made
pursuant to Section 2.5 of the Forward Purchase Contract, and (ii) the delivery
to the Trust of all or any portion of the Collateral required to be delivered to
the Trust pursuant to Section 6.1(a) and (b) of the Forward Purchase Contract at
the respective times specified therein.
"Securities Account" means the account of the Collateral Agent
identified as such in __________ or such other account as is identified as such
to the relevant Pledgor by notice from the Collateral Agent.
"Securities Intermediary" has the meaning ascribed thereto in the
Uniform Commercial Code.
"Security and Pledge Agreement" means this Security and Pledge
Agreement and any schedules and exhibits hereto.
"Security Entitlement" has the meaning ascribed thereto in the Uniform
Commercial Code.
"Transfer Restriction" means, with respect to any item of Collateral,
any condition to or restriction on the ability of the holder thereof to sell,
assign or otherwise transfer such item of Collateral or to enforce the
provisions thereof or of any document related thereto whether set forth in such
item of Collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such item of Collateral be consented to or approved by any
Person, including, without limitation, the issuer thereof or any other obligor
thereon, (ii) any limitations on the type or status, financial or otherwise, of
any purchaser, pledgee, assignee or transferee of such item of Collateral, (iii)
any requirement of the delivery of any certificate, consent, agreement, opinion
of counsel, notice or any other document of any Person to the issuer of, any
other obligor on or any registrar or transfer agent for, such item of
Collateral, prior to the sale, pledge, assignment or other transfer or
enforcement of such item of Collateral and (iv) any registration or
qualification requirement for such item of Collateral pursuant to any federal or
state securities law; provided that (x) the required delivery of any assignment
from the seller, pledgor, assignor or transferor of such item of Collateral,
together with any evidence of the corporate or other authority of such Person,
or
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(y) any registration or qualification requirement for such item of Collateral
pursuant to any federal or state securities law which is generally applicable to
all holders of such item of Collateral, shall not constitute a "Transfer
Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the Trust
identified on the signature pages hereto, or any successor as such trustee or
trustees.
"Uniform Commercial Code" means the Uniform Commercial Code in effect
in the State of New York or, in connection with Delivery of any security
referred to in clause (ii) of the definition of that term, deemed to be in
effect pursuant to U.S. law and regulations applicable thereto.
"U.S. Government Securities" means direct obligations of the United
States of America that mature on a date that is one year or less from the date
such obligations are pledged hereunder, but in any event prior to the date of
Closing.
(b) Uniform Commercial Code. Unless otherwise defined herein, all terms
defined in Article 8 or Article 9 of the Uniform Commercial Code are used herein
as therein defined.
2. Required Collateral.
(a) Initial Delivery by Pledgors to Collateral Agent. Each Pledgor has
Delivered to the Collateral Agent certificates representing the number of shares
of Nextel Common Stock set forth opposite such Pledgor's name on Schedule A
hereto, which represents such Pledgor's Collateral Amount as of the date hereof.
(b) Pledge Value Requirement. Each Pledgor shall cause the aggregate
Pledge Value of the Collateral pledged by such Pledgor hereunder to be equal to
or greater than such Pledgor's Pledge Value Requirement at all times, and shall
pledge additional Collateral in the manner described in Section 4(c) as
necessary to cause such requirement to be met.
(c) Pledge of Contract Consideration. Notwithstanding each Pledgor's
right to substitute Collateral pursuant to Section 4(b), each Pledgor shall
cause the Collateral pledged by such Pledgor to include, on the date of Closing,
a number or amount of each type of Reference Security and other property
constituting part of the Reference Property at least equal to the number or
amount thereof required to be delivered by such Pledgor at the Closing pursuant
to Section 2.1 of the Forward Purchase Contract.
3. Grant of Security Interest.
(a) As security for the prompt and complete payment and performance
when due of the Secured Amounts with respect to such Pledgor, each Pledgor
hereby pledges, assigns, grants and conveys unto the Collateral Agent, as agent
of and for the benefit of the Trust, a continuing first priority security
interest under the Uniform Commercial Code or other applicable law in and to,
and a general first lien upon and right of set off against, all of such
Pledgor's right, title
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and interest in and to, the securities, obligations and other property of such
Pledgor which are Delivered to the Collateral Agent on behalf of the Trust and
to any other assets in possession of the Collateral Agent as security pursuant
to and in accordance with the provisions of this Security and Pledge Agreement,
all certificates or instruments representing or evidencing any or all of the
foregoing, and all principal, interest and payments and distributions or
dividends, cash or other property and proceeds from time to time received,
receivable or otherwise distributed in respect of, or in exchange for, any or
all of the foregoing (whether such proceeds arise before or after the
commencement of any proceeding under any applicable bankruptcy, insolvency or
other similar law, by or against such Pledgor with respect to such Pledgor)
(except for the cash dividends, interest and payments required to be distributed
to such Pledgor in accordance with Section 5 hereof) and, subject to Section 5
hereof, all powers and rights of such Pledgor now or hereafter acquired by such
Pledgor, including rights of enforcement, under or with respect to any or all of
the foregoing.
(b) Each Pledgor shall, at its expense and in such manner and form as
the Trust or the Collateral Agent may require, give, execute, deliver, file and
record any financing statement, notice, instrument, document, agreement or other
papers, and shall take all other action, that may be necessary or desirable in
order to create, preserve, perfect, substantiate or validate any security
interest in the Collateral granted by such Pledgor pursuant hereto or to enable
the Collateral Agent to exercise and enforce its rights and the rights of the
Trust hereunder with respect to such security interest. Upon the request of the
Collateral Agent, each Pledgor will execute and deliver to the Collateral Agent
financing statements conforming to the Uniform Commercial Code in effect in any
state or jurisdiction deemed appropriate by the Collateral Agent, and such other
documents as may be required in order to perfect the security interest, all in a
form the Collateral Agent reasonably deems to be acceptable. Upon the request of
the Collateral Agent, each Pledgor also agrees to execute and deliver to the
Collateral Agent for filing by the Collateral Agent continuation statements
conforming to the Uniform Commercial Code in effect in any state or jurisdiction
deemed appropriate by the Collateral Agent and in a form the Collateral Agent
reasonably deems to be acceptable. If any Pledgor fails to deliver to the
Collateral Agent financing statements or continuation statements that the
Collateral Agent requests, the Collateral Agent may, to the extent permitted by
law and without limiting its other rights under this Security and Pledge
Agreement, execute and file in such Pledgor's name, as such Pledgor's
attorney-in-fact, such documents.
4. Administration of Collateral and Valuation of Securities.
(a) Valuation of Collateral. The Collateral Agent shall determine on
each Business Day whether the aggregate Pledge Value of the Collateral pledged
by each Pledgor is at least equal to such Pledgor's Pledge Value Requirement and
whether an Insufficiency Determination or Collateral Event of Default shall have
occurred and, from and after any substitution by a Pledgor of U.S. Government
Securities for pledged Reference Property pursuant to paragraph (b) of this
Section 4, shall determine the Pledge Value of the Collateral pledged by such
Pledgor on each Business Day and shall provide written notice of such Pledge
Value to such Pledgor.
(b) Substitution of Collateral. Each Pledgor may substitute Collateral
in accordance with the following provisions:
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<PAGE> 8
(1) Unless an Event of Default or a failure by such Pledgor to meet any
of its obligations under Section 2(b) hereof has occurred and is continuing,
such Pledgor shall have the right at any time and from time to time to Deliver
Eligible Collateral to the Collateral Agent in substitution for securities,
obligations or other property previously Delivered to the Collateral Agent as
Collateral hereunder ("Prior Collateral") and to obtain the release from the
Lien hereof of such Prior Collateral.
(2) If a Pledgor wishes to deposit Eligible Collateral with the
Collateral Agent in substitution for Prior Collateral, it shall (i) give written
notice to the Collateral Agent identifying the Prior Collateral to be released
from the Lien hereof, (ii) deliver to the Collateral Agent concurrently with
such Eligible Collateral a certificate of an Authorized Representative of such
Pledgor substantially in the form of Exhibit A hereto and dated the date of such
delivery, (A) identifying the items of Eligible Collateral being substituted for
the Prior Collateral and the Prior Collateral that is to be transferred to such
Pledgor and (B) certifying that the representations and warranties contained in
such Exhibit A are true and correct on and as of the date thereof and (iii)
deliver to the Collateral Agent concurrently with such Eligible Collateral an
opinion (dated the date of such delivery) of counsel (who may be an employee of
such Pledgor) addressed to the Collateral Agent confirming the representations
contained in the second sentence of paragraph 3(b) of Exhibit A hereto. Each
Pledgor hereby covenants and agrees to take all actions required under Section
3(b) and any other actions necessary to create for the benefit of the Collateral
Agent a valid, first priority perfected security interest in, and a first lien
upon, such Eligible Collateral deposited with the Collateral Agent in
substitution for Prior Collateral.
(3) No such substitution shall be made unless and until the Collateral
Agent shall have determined that the aggregate Pledge Value of all of the
Collateral pledged by the relevant Pledgor at the time of such proposed
substitution, after giving effect to the proposed substitution, shall at least
equal such Pledgor's Pledged Value Requirement. However, the Collateral Agent
shall determine the Pledge Value of all such Collateral promptly and, promptly
after the required determination has been made, take all such steps as are
necessary to effect delivery of the Prior Collateral so identified to such
Pledgor, free and clear of all Liens and Transfer Restrictions, to such account
or place as such Pledgor shall have specified by notice to the Collateral Agent
and otherwise in the manner contemplated for such Prior Collateral in the
definition of "Delivery" herein.
(c) Additional Collateral. A Pledgor may pledge additional Collateral
hereunder at any time. Concurrently with the Delivery of any additional Eligible
Collateral, the Pledgor pledging such additional Collateral shall deliver (i) a
certificate of an Authorized Representative of such Pledgor substantially in the
form of Exhibit B hereto and dated the date of such delivery, (A) identifying
the additional items of Eligible Collateral being pledged and (B) certifying
that with respect to such items of additional Eligible Collateral the
representations and warranties contained in such Exhibit B hereto are true and
correct on and as of the date thereof and (ii) an opinion, dated the date of
such delivery, of counsel (who may be an employee of such Pledgor) addressed to
the Collateral Agent confirming the representations contained in the second
sentence of paragraph 2(b) of Exhibit B hereto. Each Pledgor hereby covenants
and agrees to take all actions required under Section 3(b) and any other actions
necessary to create for the benefit of the Collateral Agent a valid, first
priority perfected security interest in, and a first lien upon, such additional
Eligible Collateral.
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<PAGE> 9
(d) Examination of Collateral. Upon Delivery of any securities,
obligations or other property by a Pledgor as Collateral under this Security and
Pledge Agreement, the Collateral Agent shall examine such securities,
obligations or property and any opinions and certificates delivered pursuant to
Sections 4(b) or (c) or otherwise pursuant to the terms hereof in connection
therewith to determine that they comply as to form with the requirements for
Eligible Collateral.
(e) Insufficiency Determination. (1) If on any Business Day the
Collateral Agent determines that the aggregate Pledge Value of the Collateral
pledged by a Pledgor is less than such Pledgor's Pledge Value Requirement (any
such determination, an "Insufficiency Determination"), the Collateral Agent
shall promptly notify such Pledgor of such determination by telephone call to an
Authorized Representative of such Pledgor followed by a written confirmation of
such call.
(2) If, by 4:00 p.m., New York City time, on the third Business Day
following the day on which telephonic notice shall have been given pursuant to
the preceding paragraph (e)(1), the relevant Pledgor shall have failed to
Deliver, in the manner set forth in paragraph (c) of this Section 4, sufficient
additional Eligible Collateral so that, after giving effect to such Delivery,
the aggregate Pledge Value of the Collateral pledged by such Pledgor, as of such
third Business Day, is at least equal to such Pledgor's Pledge Value
Requirement, then (x) the Collateral Requirement with respect to any U.S.
Government Securities pledged by such Pledgor hereunder shall be increased from
150% to 200%, and (y) unless a Collateral Event of Default shall have occurred
and be continuing, the Collateral Agent shall, if practicable:
(i) commence sales, in the manner described in paragraph (3)
below, of such portion of the Collateral pledged by such Pledgor
consisting of U.S. Government Securities as may be required to be sold
in order to generate proceeds sufficient to purchase each type of
Reference Security and other property constituting part of the
Reference Property, as described in the following clause (ii); and
(ii) commence purchases, in the manner described in paragraph
(3) below, of each type of Reference Security and other property then
constituting part of the Reference Property, in such numbers or amounts
as are sufficient to cause the aggregate Pledge Value of the Collateral
pledged by such Pledgor to be at least equal to such Pledgor's Pledge
Value Requirement.
Notwithstanding the foregoing, the Collateral Agent shall discontinue sales and
purchases pursuant to the preceding clauses (i) and (ii), respectively, if at
any time a Collateral Event of Default with respect to such Pledgor shall have
occurred and be continuing. The Collateral Agent shall determine the Market
Value and the Pledge Value of the Collateral pledged by such Pledgor after each
purchase of Reference Property pursuant to the preceding clause (ii) in order to
determine whether such Pledgor's Pledge Value Requirement is met and whether a
Collateral Event of Default with respect to such Pledgor has occurred. Any cash
obtained from any such sale which cannot be invested through any such purchase
shall be held as, and deemed to be, cash Collateral pledged by such Pledgor.
A "Collateral Event of Default" shall mean, with respect to any Pledgor
at any time, the occurrence of any of the following: (A) failure of the
aggregate Market Value of the Collateral pledged by such Pledgor to equal or
exceed such Pledgor's Pledge Value Requirement; (B)
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<PAGE> 10
failure of the Market Value of any U.S. Government Securities pledged by such
Pledgor at such time to have an aggregate Market Value of at least 105% of the
aggregate Market Value of a number or amount of each type of Reference Security
and other property constituting part of the Reference Property equal to (x) the
Maximum Deliverable Number thereof with respect to such Pledgor minus (y) the
number or amount thereof pledged by such Pledgor as Collateral hereunder at such
time.
(3) Collateral sold and Reference Property purchased by the Collateral
Agent pursuant to the preceding paragraphs (e)(i) and (e)(ii) may be sold and
purchased on any securities exchange or in any over-the-counter market or in any
private purchase transaction, and at such price or prices, in each case as the
Collateral Agent may deem satisfactory, in all cases consistent with commercial
reasonableness. Each Pledgor covenants and agrees that it will execute and
deliver such documents and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sales and purchases may be made in
compliance with law.
(f) Release of Excess Collateral. If on any Business Day the Collateral
Agent determines that the aggregate Pledge Value of any Pledgor's Eligible
Collateral exceeds such Pledgor's Pledge Value Requirement and no Event of
Default with respect to such Pledgor or failure by such Pledgor to meet any of
its obligations under Sections 2 or 4 hereof has occurred and is continuing,
such Pledgor may obtain the release from the Lien hereof of any Collateral
pledged by such Pledgor having an aggregate Pledge Value on such Business Day
less than or equal to such excess, upon delivery to the Collateral Agent of a
written notice from an Authorized Representative of such Pledgor indicating the
items of Collateral to be released. Such Collateral shall be released only after
the Collateral Agent shall have determined that the aggregate Pledge Value of
all of the Collateral pledged by such Pledgor remaining after such release as
determined on such Business Day is at least equal to such Pledgor's Pledge Value
Requirement. Release shall be effected as described in Section 4(b)(3) in
connection with substitutions and release of Prior Collateral.
(g) Sale of Certain Rights or Warrants. Upon receipt by the Collateral
Agent of any rights or warrants identified in writing to the Collateral Agent by
the Administrator as being those rights or warrants referred to in Section
3.1(b) of the Forward Purchase Contract in respect of the Collateral Amount of
any Pledgor, the Collateral Agent shall, through the Administrator, solicit net
bids at approximately 10:00 A.M., New York City Time, on the fifth Business Day
following receipt by the Collateral Agent of such rights or warrants (the
"Receipt Date") for settlement three Business Days later, of three (or such
fewer number of dealers as may be providing such bids) recognized securities
dealers in The City of New York (which may include the Collateral Agent or its
affiliates) selected by the Administrator and so identified in writing to the
Collateral Agent for the purchase by the quoting dealer of all such rights or
warrants. If for any reason the Collateral Agent is unable, through the
Administrator, 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. The Collateral Agent shall accept the
highest bid that will result in the greatest amount of proceeds from the sale of
all such rights or warrants and shall sell all such rights or warrants at that
highest bid and the proceeds from such sale shall be held by the Collateral
Agent as Collateral in accordance with the provisions of this Security and
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Pledge Agreement. If the Collateral Agent is unable to obtain the required bid
or otherwise unable to consummate such sale, the rights or warrants shall be
held by the Collateral Agent as Collateral pledged by such Pledgor subject to
the provisions of this Security and Pledge Agreement. The Collateral Agent shall
not be held liable in any way for failure to obtain such required bid solicited
by the Collateral Agent in accordance with this Section 4(g).
(h) Maintenance of Collateral. The Collateral shall be maintained by
the Collateral Agent in a separate non-commingled account and the Collateral
Agent shall use reasonable care with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession and shall accord the
Collateral treatment substantially equal to that which it accords its own
property. The Collateral Agent shall have no right of offset against the
Collateral with respect to any amounts owed to the Collateral Agent, whether or
not arising under this Security and Pledge Agreement, and the Collateral Agent
hereby waives any such right of offset that it may otherwise have.
Any securities to be held by the Collateral Agent shall be held by the
Collateral Agent as Delivered, or caused to be Delivered, to it by the relevant
Pledgor (endorsed in blank) or as obtained by the Collateral Agent pursuant to
Section 4(e), 4(g) or 4(i), if applicable.
(i) Investment of Cash Collateral. The Collateral Agent shall, in
accordance with the written instructions of each Pledgor, invest and reinvest
all cash Collateral pledged by such Pledgor in United States Treasury Bills with
maturities of 30 days or less but in any case maturing not later than the second
Business Day prior to the Exchange Date and all such securities so obtained and
amounts obtained in respect thereof shall be held as Collateral pledged by such
Pledgor for all purposes hereof.
(j) Delivery of Contract Consideration. At the Closing, the Collateral
Agent shall deliver to the Trust, in respect of each Pledgor's obligations under
Section 2.1 of the Forward Purchase Contract, an aggregate number or amount of
each type of Reference Security and other property constituting part of the
Reference Property then pledged by such Pledgor and held by the Collateral Agent
hereunder equal to the number or amount of each such type of Reference Property
then required to be delivered by such Pledgor under Section 2.1 of the Forward
Purchase Contract, except to the extent such Pledgor has elected, pursuant to
Section 2.5 thereof, to settle its obligations under Section 2.1 thereof through
a cash payment. Upon such delivery, the Trust shall hold such Reference Property
absolutely and free from any claim or right whatsoever.
5. Distributions in Respect of Collateral.
(a) Unless an Event of Default with respect to a Pledgor or a failure
by a Pledgor to meet any of its obligations under Section 2(c) hereof has
occurred and is continuing, such Pledgor shall be entitled to receive for its
own account all dividends, interest, distributions and other payments relating
to all of the Collateral pledged by such Pledgor, unless such dividends,
interest, distributions or other payments constitute part of the Reference
Property or the payment thereof to such Pledgor would reduce the aggregate
Pledge Value of the Collateral pledged by such Pledgor below such Pledgor's
Pledge Value Requirement. The Collateral Agent agrees to remit to the relevant
Pledgor on the Business Day received or the first Business Day thereafter
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all such payments received by it. At any time when a Pledgor is not entitled to
receive any such payments hereunder, the Collateral Agent shall retain such
payments (and any such payments which are received by such Pledgor shall be
received in trust for the benefit of the Trust, shall be segregated from other
funds of the Pledgor and shall forthwith be paid over to the Collateral Agent),
and the Collateral Agent shall hold all such payments so retained by, or paid
over to, the Collateral Agent as Collateral hereunder. The security interest of
the Collateral Agent shall continue in any such payment so retained by, or paid
over to, the Collateral Agent.
(b) Unless an Event of Default with respect to a Pledgor has occurred
and is continuing, such Pledgor shall have the right, from time to time, to vote
and to give consents, ratifications and waivers with respect to the Collateral
pledged by such Pledgor, and the Collateral Agent shall, upon receiving a
written request from such Pledgor, deliver to such Pledgor or as specified in
such request such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of the Collateral pledged by such Pledgor which is
registered in the name of the Collateral Agent or its nominee as shall be
specified in such request and be in form and substance satisfactory to the
Collateral Agent.
If an Event of Default with respect to a Pledgor shall have
occurred and be continuing, the Collateral Agent shall have the right to the
extent permitted by law, and such Pledgor shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to give
consents, ratifications and waivers, and take any other action with respect to
any or all of the Collateral pledged by such Pledgor with the same force and
effect as if the Collateral Agent were the absolute and sole owner thereof.
6. Remedies Upon Events of Default.
(a) Delivery Upon Receipt of Acceleration Amount Notice. (i) If an
Event of Default with respect to any Pledgor shall have occurred and be
continuing, the Collateral Agent shall, in respect of each Pledgor, deliver all
Collateral pledged by such Pledgor consisting of Reference Securities and other
property constituting part of the Reference Property (but not, in the case of
any particular type of Reference Security or other property constituting part of
the Reference Property, in excess of the number or amount thereof deliverable by
such Pledgor under the Forward Purchase Contract at such time) to the Trust on
the date of the Acceleration Amount Notice relating to such Event of Default
(or, in the case of an Event of Default described in clause (iii) of the
definition thereof, on the date of Closing) (in either case, the "Delivery
Date"), whereupon the Trust shall hold such Reference Property absolutely free
from any claim or right of whatsoever kind, including any equity or right of
redemption of any Pledgor which may be waived, and each Pledgor, to the extent
permitted by law, hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted.
(ii) If the delivery made pursuant to subsection (i) above shall be
insufficient to satisfy in full all of the obligations of any Pledgor under the
Forward Purchase Contract, the Collateral Agent may exercise as agent for and on
behalf of the Trust all the rights of a secured party under the Uniform
Commercial Code (whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, without being required to give any notice,
except as herein provided or as may be required by mandatory provisions of law,
shall sell all
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of the remaining Collateral pledged by such Pledgor, or such lesser portion
thereof as may be necessary to generate proceeds sufficient to satisfy in full
all of the obligations of such Pledgor under the Forward Purchase Contract, at
public or private sale or at any broker's board or on any securities exchange or
otherwise, for cash, upon credit or for future delivery, and at such price or
prices as the Collateral Agent may deem satisfactory.
Each Pledgor covenants and agrees that it will execute and deliver such
documents and take such other action as the Collateral Agent deems necessary or
advisable in order that any such sale may be made in compliance with law. Upon
any such sale the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each purchaser at any
such sale shall hold the Collateral so sold absolutely and free from any claim
or right of whatsoever kind, including any equity or right of redemption of the
relevant Pledgor which may be waived, and each Pledgor, to the extent permitted
by law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted.
The notice (if any) of such sale required by Section 9 of the Uniform
Commercial Code shall (1) in case of a public sale, state the time and place
fixed for such sale, (2) in case of sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made and the
day on which the Collateral, or the portion thereof so being sold, will first be
offered for sale at such board or exchange, and (3) in the case of a private
sale, state the day after which such sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix in the notice of such sale.
At any such sale the relevant Collateral may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may determine. The Collateral
Agent shall not be obligated to make any such sale pursuant to any such notice.
The Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any sale of all or
any part of the Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Collateral Agent until the selling price is paid by
the purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) Power of Attorney. Upon any delivery or sale of all or any part of
any Collateral pledged by a Pledgor made either under the power of delivery or
sale given hereunder or under judgment or decree in any judicial proceedings for
foreclosure or otherwise for the enforcement of this Security and Pledge
Agreement, the Collateral Agent is hereby irrevocably appointed the true and
lawful attorney of such Pledgor, in the name and stead of such Pledgor, to make
all necessary deeds, bills of sale and instruments of assignment, transfer or
conveyance of the property thus delivered or sold. For that purpose the
Collateral Agent may execute all such documents and instruments. This power of
attorney shall be deemed coupled with an interest, and each Pledgor hereby
ratifies and confirms all that his attorneys acting under such power, or such
attorneys' successors or agents, shall lawfully do by virtue of this Security
and Pledge
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Agreement. If so requested by the Collateral Agent, by the Trustees or by any
purchaser of the Collateral pledged by a Pledgor or a portion thereof, such
Pledgor shall further ratify and confirm any such delivery or sale by executing
and delivering to the Collateral Agent, to the Trustees or to such purchaser or
purchasers at the expense of such Pledgor all proper deeds, bills of sale,
instruments of assignment, conveyance of transfer and releases as may be
designated in any such request.
(c) Application of Collateral and Proceeds. In the case of an Event of
Default with respect to any Pledgor, the Collateral Agent may proceed to realize
upon the security interest in the Collateral against any one or more of the
types of Collateral, at any one time, as the Collateral Agent shall determine in
its sole discretion subject to the foregoing provisions of this Section 6. The
proceeds of any sale of, or other realization upon, or other receipt from, any
of the remaining Collateral pledged by any Pledgor shall be applied by the
Collateral Agent in the following order of priorities:
first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number or amount of each type of Reference
Security and other property constituting part of the Reference Property
equal to (1) the number or amount of each type of Reference Security
and other property constituting part of the Reference Property required
to be delivered by such Pledgor under the Forward Purchase Contract on
the Delivery Date minus (2) the number or amount of each type of
Reference Security and other property constituting part of the
Reference Property pledged by such Pledgor delivered by the Collateral
Agent to the Trust on the Delivery Date as described above;
second, to the payment to the Collateral Agent of the expenses of such
sale or other realization, including reasonable compensation to the
Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances incurred or made by the Collateral Agent in
connection therewith, including brokerage fees in connection with the
sale by the Collateral Agent of any securities, obligations or other
property pledged by such Pledgor as Collateral hereunder; and finally,
if all of the obligations of such Pledgor hereunder and under the
Forward Purchase Contract have been fully discharged or sufficient
funds have been set aside by the Collateral Agent at the request of
such Pledgor for the discharge thereof, any remaining proceeds shall be
released to such Pledgor.
(d) Waivers by Pledgors. Each Pledgor waives any presentment, demand,
protest or, to the extent permitted by applicable law, notice in connection with
this Security and Pledge Agreement.
7. Other Provisions Regarding the Collateral.
Until all obligations of each party under the Forward Purchase Contract
have been performed in full, the parties hereto covenant and agree as follows:
(a) No Disposition. Each Pledgor covenants and agrees that it will not
sell, assign, transfer, exchange or otherwise dispose of, or grant any option
with respect to, any of the Collateral, nor will it create, incur or permit to
exist any Lien on or with respect to any of the Collateral, any interest
therein, or any proceeds thereof, other than Liens created by this Security and
Pledge Agreement.
14
<PAGE> 15
(b) Direction of Transfer Agents. Each Pledgor shall deliver to the
transfer agent for each Reference Security a letter of direction, substantially
in the form of Exhibit C hereto, directing such transfer agent to Deliver, and
shall use its best efforts to cause such transfer agent to Deliver, all cash,
securities and other property constituting part of the Reference Property
received in respect of such Reference Security directly to the Collateral Agent.
If any such cash, securities or other property constituting part of the
Reference Property shall be delivered to any Pledgor, such Pledgor shall
promptly Deliver the same to the Collateral Agent. So long as a Pledgor's
obligations under Articles 2 and 7 of the Forward Purchase Contract have been
fully satisfied and discharged, the Collateral Agent and the Trust shall, upon
request of such Pledgor, take such action as shall be necessary to modify or
terminate in accordance with such request any standing letter of direction
previously delivered pursuant to this Section 7(b).
(c) Further Protections. Each Pledgor will pay in a timely fashion all
taxes, assessments or charges of any nature that are imposed in respect of the
Collateral pledged by such Pledgor. Each Pledgor will give written notice to the
Trust and the Collateral Agent of, and defend the Collateral pledged by such
Pledgor against, any suit, action or proceeding against the Collateral pledged
by such Pledgor or which could adversely affect the security interests granted
hereunder.
(d) Delay in Enforcement; No Waiver. To the extent consistent with the
Uniform Commercial Code and applicable law, the Collateral Agent can choose to
delay or not to enforce any of its rights under this Security and Pledge
Agreement without losing such rights. If the Collateral Agent chooses not to
exercise or enforce any of its rights, each Pledgor agrees that the Collateral
Agent is not waiving the right to enforce such rights at a later time or any of
its other rights. Any waiver of the Collateral Agent's rights under this
Security and Pledge Agreement must be in writing.
8. Representations and Warranties.
(a) Representations and Warranties of the Pledgors. On a continuing
basis during the term of this Security and Pledge Agreement, each Pledgor
represents and warrants to the Collateral Agent and to the Trust as follows:
(i) such Pledgor has full power and authority to execute and
deliver this Security and Pledge Agreement and to perform and observe
the provisions hereof, except as performance may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(ii) the execution, delivery and performance of this Security
and Pledge Agreement by such Pledgor has been duly authorized by all
necessary action, corporate or otherwise, on the part of such Pledgor
and does not contravene any requirement of law, such Pledgor's charter
or by-laws or any transactional restriction or agreement binding on or
affecting such Pledgor or any of its assets;
(iii) this Security and Pledge Agreement has been duly and
properly executed and delivered by such Pledgor and constitutes a
legal, valid and binding agreement of such
15
<PAGE> 16
Pledgor enforceable against such Pledgor in accordance with its terms,
except as the enforcement of rights and remedies may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) no Transfer Restrictions exist with respect to or
otherwise apply to the assignment of, or transfer by such Pledgor of
possession of, any items of Collateral to the Collateral Agent
hereunder, or the subsequent sale or transfer of such items of
Collateral by the Collateral Agent pursuant to the terms hereof;
(v) except for the rights of the Trust and of the
Collateral Agent on the Trust's behalf established under this Security
and Pledge Agreement and the Forward Purchase Contract, such Pledgor
has good and marketable title to the Collateral pledged by it under
this Security and Pledge Agreement, free and clear of all Liens (other
than the Lien created by this Security and Pledge Agreement) and
Transfer Restrictions and has the right to pledge such Collateral as
provided in this Security and Pledge Agreement;
(vi) such Pledgor is not in default under any agreement by
which the Collateral may be bound and no litigation, arbitration or
administrative proceedings are current or pending, which default,
litigation, arbitration or administrative proceedings are material to
the Collateral in the context of this Security and Pledge Agreement;
(vii) upon Delivery of the Collateral to the Collateral Agent
hereunder, the Collateral Agent will obtain a valid first priority and
perfected and enforceable security interest in, and a first lien on,
such Collateral subject to no other Lien; and none of such Collateral
is or shall be pledged by such Pledgor as collateral for any other
purpose; and
(viii) such Pledgor is presently solvent and able to pay, and
paying, its debts as they come due, and anticipates that it will
continue to be able to pay its debts as they come due for the
foreseeable future.
(b) Representations and Warranties of Collateral Agent. On a continuing
basis during the term of this Security and Pledge Agreement, the Collateral
Agent represents and warrants to each Pledgor and to the Trust as follows:
(i) the Collateral Agent is a banking corporation, duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to enter into, and perform its obligations under,
this Security and Pledge Agreement;
(ii) the execution, delivery and performance by the
Collateral Agent of this Security and Pledge Agreement have been duly
authorized by all necessary corporate action on the part of the
Collateral Agent (no action by the shareholders of the Collateral Agent
being required) and do not and will not violate, contravene or
constitute a default under any provision of applicable law or
regulation or of the charter or by-laws of the
16
<PAGE> 17
Collateral Agent or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Collateral Agent;
and
(iii) this Security and Pledge Agreement has been duly and
properly executed and delivered by the Collateral Agent and constitutes
a legal, valid and binding agreement of the Collateral Agent
enforceable against the Collateral Agent in accordance with its terms,
except as the enforcement of rights and remedies may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
9. The Collateral Agent.
(a) Appointment of Collateral Agent. The Trust hereby appoints and
designates the Collateral Agent as its agent for the purposes set forth herein,
and the Collateral Agent does hereby accept such appointment under the terms and
conditions set forth herein.
(b) Duties of Agent. The Collateral Agent undertakes to perform only
such duties as are expressly set forth herein. The duties and responsibilities
of the Collateral Agent hereunder shall be determined solely by the express
provisions of this Security and Pledge Agreement, and no other or further duties
or responsibilities shall be implied.
(c) Reliance. Subject to the limitations, covenants and provisions
hereof, the Collateral Agent may rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any note, notice,
resolution, consent, certificate, affidavit, letter, telegram, statement, order
or other document furnished to it hereunder by the Trust or any Pledgor and
believed by it to be genuine and to have been signed or presented by the proper
party or parties, and shall have no responsibility for determining the accuracy
thereof.
(d) Liability of Agent. Neither the Collateral Agent nor any of its
directors, officers or employees shall be liable for any action taken or omitted
by it hereunder except in the case of its negligence, bad faith, willful
misconduct or its failure to use reasonable care with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession. The
Collateral Agent may consult with counsel of its own choice, including in-house
counsel, and shall have full and complete authorization and protection for any
action taken or omitted by it hereunder in good faith and in accordance with the
opinion of such counsel. The Collateral Agent shall not be liable with respect
to any action taken, suffered or omitted by it in good faith (i) reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred on it by this Security and Pledge Agreement or (ii) in accordance with
any direction or request of the Trustees. In no event shall the Collateral Agent
be personally liable for any taxes or other governmental charges imposed upon or
in respect of (i) the Collateral or (ii) the income or other distributions
thereon. Except as specifically provided herein, the Collateral Agent shall not
be responsible for the validity, sufficiency, collectibility or marketability of
any Collateral Delivered to or held by it hereunder or for the validity or
sufficiency of the Forward Purchase Contract or the Lien on the Collateral
purported to be created hereby. In no event shall the Collateral Agent be liable
for indirect, punitive, special or consequential damages.
17
<PAGE> 18
(e) Risk of Funds. No provision of this Security and Pledge Agreement
shall require the Collateral Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(f) Use of Sub-Agents or Attorneys. The Collateral Agent may perform
any duties hereunder either directly or by or through agents or attorneys,
provided that the Collateral Agent shall remain liable to fulfill all of such
duties to the same extent, and with the same protections, as if the Collateral
Agent was performing them itself. In furtherance thereof, any subsidiary owned
or controlled by the Collateral Agent, or its successors, as agent for the
Collateral Agent, may perform any or all of the duties of the Collateral Agent
relating to the valuation of securities and other instruments and property
constituting Collateral hereunder.
(g) Eligibility of Collateral; Recitals and Statements. Unless and
until the Collateral Agent shall have received notice from a Pledgor, or unless
and until a Responsible Officer of the Collateral Agent shall have actual
knowledge to the contrary, the Collateral Agent shall be entitled to deem and
treat all Collateral delivered to it hereunder as Eligible Collateral hereunder,
provided that the Collateral Agent has carried out the duties specified in
Section 4 with respect to such Collateral at the time of delivery thereof. The
Collateral Agent shall not be responsible for the correctness of the recitals
and statements herein which are made by the Trust and the Pledgors or for any
statement or certificate delivered by any Pledgor pursuant hereto.
(h) Knowledge. The Collateral Agent shall not be deemed to have
knowledge of any Event of Default (except a Collateral Event of Default), unless
and until a Responsible Officer of the Collateral Agent shall have actual
knowledge thereof or shall have received written notice thereof.
(i) Merger. Any corporation or association into which the Collateral
Agent may be converted or merged, or with which it may be consolidated, or to
which it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a party,
shall, subject to the prior written consent of the Trust, be and become a
successor Collateral Agent hereunder and vested with all of the title to the
Collateral and all of the powers, discretions, immunities, privileges and other
matters as was its predecessor without, except as provided above, the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
(j) Resignation of Agent. The Collateral Agent may resign and be
discharged from its duties or obligations hereunder by giving thirty (30) days
prior notice in writing of such resignation to the Trust and each Pledgor. Such
resignation shall take effect upon the appointment of a successor Collateral
Agent by the Trust.
(k) Removal. The Collateral Agent may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Collateral
Agent and to each Pledgor and signed by the Trust.
18
<PAGE> 19
(l) Appointment of Successor.
(1) If the Collateral Agent hereunder shall resign or be
removed, or be dissolved or shall be in the course of dissolution or
liquidation or otherwise become incapable of action hereunder, or if it
shall be taken under the control of any public officer or officers or
of a receiver appointed by a court, a successor may be appointed by the
Trust by an instrument or concurrent instruments in writing signed by
the Trust or by its attorneys in fact fully authorized. A copy of such
instrument or concurrent instruments shall be sent by registered mail
to each Pledgor.
(2) Every such temporary or permanent successor Collateral
Agent appointed pursuant to the provisions hereof shall be a trust
company or bank in good standing, having a reported capital and surplus
of not less than $100,000,000 and capable of holding the Collateral in
the State of New York, if there be such an institution willing,
qualified and able to accept the duties of the Collateral Agent
hereunder upon customary terms.
(m) Acceptance by Successor. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to each Pledgor an instrument in writing accepting such
appointment hereunder, whereupon such successor, without any further act, deed
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessors. Such predecessor
shall, nevertheless, on the written request of its successor or any Pledgor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from any Pledgor be required by a successor Collateral Agent for more fully and
certainly vesting in such successor the estates, properties, rights, powers,
duties and obligations hereby vested or intended to be vested in the
predecessor, any and all such instruments in writing shall, at the request of
the temporary or permanent successor Collateral Agent, be forthwith executed,
acknowledged and delivered by such Pledgor.
10. Miscellaneous.
(a) Amendments, Etc. Any amendment or modification of any provision of
this Security and Pledge Agreement shall be in writing with the express written
consent of the parties hereto. Any terms and conditions of this Security and
Pledge Agreement may be waived in writing at any time by the party or parties
entitled to the benefits of such terms and conditions. Any waiver shall be
effective only for the specific purpose for which given and for the specific
time period, if any, contemplated therein. A waiver of any of the terms and
conditions of this Security and Pledge Agreement on one occasion shall not
constitute a waiver of the other terms and conditions of this Security and
Pledge Agreement, or of such terms and conditions on any other occasion.
(b) Notices and Other Communications. All notices and other
communications shall be directed as follows (or to such other address for a
particular party as shall be specified by such party in a like notice given
pursuant to this Section 10(b):
19
<PAGE> 20
Pledgors: c/o Telcom Ventures, L.L.C.
2300 Clarendon Boulevard
Suite 800
Arlington, Virginia 22201
Attention:
Telephone:
Telecopier:
Collateral Agent: The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Christopher T. Nicholls
Telephone: (212) 635-7128
Telecopier: (212) 635-7141
Trust: c/o Puglisi & Associates
850 Library Avenue
Suite 204
Newark, Delaware 19715
Attention: Donald J. Puglisi
Telephone: 302-738-6680
Telecopier: 302-738-7210
Except as otherwise specifically provided herein, all notices and other
communications provided for hereunder shall be in writing and shall be deemed to
have been duly given if either (i) personally delivered (including delivery by
courier service or by Federal Express or any other nationally recognized
overnight delivery service for next day delivery) to the offices set forth
above, in which case they shall be deemed received on the first Business Day by
which delivery shall have been made to said offices, (ii) transmitted by any
standard form of telecommunication to the offices set forth above, in which case
they shall be deemed received on the first Business Day by which a standard
confirmation that such transmission occurred is received by the transmitting
party, or (iii) sent by certified mail, return receipt requested, in which case
they shall be deemed received when receipted for unless acknowledgment of
receipt is refused (in which case delivery shall be deemed to have been received
on the first Business Day on which such acknowledgment is refused).
(c) Waivers. No failure or delay by any party hereto in exercising any
rights, power or privilege hereunder shall operate as a waiver thereof.
(d) Non-Assignment. No party hereto shall have the right to assign
their rights or obligations hereunder to any other person without the other
parties' prior written consent.
(e) Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT
20
<PAGE> 21
TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS SECURITY AND PLEDGE AGREEMENT
OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO HEREBY
ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS SECTION
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HERETO HAVE
RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS SECURITY AND PLEDGE
AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE OTHER PARTIES HERETO TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY.
(f) Governing Law. This Security and Pledge Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed wholly within such State; provided that
as to Collateral located in any jurisdiction other than the State of New York,
the Collateral Agent on behalf of the Trust shall have all of the rights to
which a secured party is entitled under the laws of such other jurisdiction. For
the purpose of any suit, action or proceeding arising out of or relating to this
Security and Pledge Agreement, the parties hereto hereby expressly and
irrevocably consent and submit to the non-exclusive jurisdiction of any
competent court in the place of its domicile and any United States Federal court
sitting in the Borough of Manhattan, City and State of New York, and expressly
and irrevocably waive, to the extent permitted under applicable law, any
immunity from the jurisdiction thereof and any claim or defense in such suit,
action or proceeding based on a claim of improper venue, forum non conveniens or
any similar basis to which it might otherwise be entitled.
(g) Headings. The headings herein are for the convenience of reference
only and shall not affect the meaning or construction of any provision hereof.
(h) Entire Agreement. This Security and Pledge Agreement and the
Forward Purchase Contract contains the entire agreement between the parties
relating to the subject matter hereof and supersede all oral statements and
prior writings with respect thereto.
(i) Counterparts. This Security and Pledge Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed for all purposes an original, but all such counterparts shall
constitute but one and the same instrument.
(j) Force Majeure. None of the Pledgors, the Collateral Agent or the
Trust shall be responsible for delays or failures in performance resulting from
acts beyond its control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations
superimposed after the fact, fire, communication line failures, computer
viruses, power failures, earthquakes or other disasters.
(k) Binding Effect. This Security and Pledge Agreement shall be binding
upon the respective parties hereto and their heirs, executors, successors and
assigns. All the covenants and agreements herein contained by or on behalf of
any Pledgor and the Collateral Agent shall be enforceable by and inure to the
benefit of the Trust and its successors and assigns.
21
<PAGE> 22
(l) Separability. To the extent permitted by law, the unenforceability
or invalidity of any provision or provisions of this Security and Pledge
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
11. Termination of Security and Pledge Agreement. This Security and Pledge
Agreement and the rights hereby granted by each Pledgor in the Collateral
pledged by such Pledgor shall cease, terminate and be void upon fulfillment of
all of the obligations of such Pledgor under the Forward Purchase Contract, and
each Pledgor shall have no further liability hereunder upon such termination.
Any Collateral pledged by a Pledgor remaining at the time of such termination
shall be fully released and discharged from the Lien hereof and delivered to
such Pledgor by the Collateral Agent, all at the expense of such Pledgor.
12. Application of Bankruptcy Code. The parties hereto acknowledge and agree
that the Collateral Agent is a "financial intermediary" within the meaning of
Section 101(22) of Title 11 of the United States Code (the "Bankruptcy Code")
and is acting hereunder as agent and custodian for the Trust in connection with
the Forward Purchase Contract and that the Trust is a "customer" of the
Collateral Agent within the meaning of said Section 101(22).
13. No Personal Liability of Trustees. By executing this Security and Pledge
Agreement, none of the Trustees assumes any personal liability hereunder.
22
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Security and
Pledge Agreement to be executed by their respective officers or representatives
thereunto duly authorized as of the day and year first above written.
CHERRYWOOD HOLDINGS, INC.
By:_______________________________________
Name:
Title:
Tax ID No. _______________________________
VERNON INVESTORS, L.L.C.
By:_______________________________________
Name:
Title:
Tax ID No. _______________________________
THE BANK OF NEW YORK,
as Collateral Agent
By:_______________________________________
Name:
Title:
NEXTEL STRYPES TRUST
__________________________________________,
Donald J. Puglisi, as Trustee
__________________________________________,
William R. Latham III, as Trustee
__________________________________________,
James B. O'Neill, as Trustee
23
<PAGE> 24
SCHEDULE A
----------
<TABLE>
<CAPTION>
Number of
Name of Pledgor Shares
--------------- ---------
<S> <C>
Cherrywood Holdings, Inc........................................ 5,108,907
Vernon Investors, L.L.C. ....................................... 2,059,680
-----------
Total ................................................ 7,168,587
===========
</TABLE>
Sch A-1
<PAGE> 25
SCHEDULE B
Bankruptcy Events
A "Bankruptcy Event" shall have occurred with respect to any Pledgor
upon the occurrence at any time of any of the following events:
1. Such Pledgor shall commence a voluntary case or other proceeding
seeking a liquidation, reorganization or other relief with respect to itself or
its debts under the Bankruptcy Code or any other bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall take any corporate action to
authorize any of the foregoing; or
2. An involuntary case or other proceeding shall be commenced against
such Pledgor seeking liquidation, reorganization or other relief with respect to
it or its debts under the Bankruptcy Code or any other bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or such Pledgor's
assets shall become subject to the jurisdiction of a bankruptcy court; or an
order for relief or similar decree shall be entered against such Pledgor under
the Bankruptcy Code or any other bankruptcy, insolvency or other similar law now
or hereafter in effect.
Sch B-1
<PAGE> 26
EXHIBIT A
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, __________________, [title] of [Cherrywood Holdings,
Inc.] [Vernon Investors, L.L.C.] (the "Pledgor"), hereby certifies, pursuant to
Section 4(b) of the Security and Pledge Agreement dated as of March __, 1997
among the Pledgor, __________________________, as Collateral Agent, and Nextel
STRYPES Trust (the "Security and Pledge Agreement"; terms defined in the
Security and Pledge Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as substituted Collateral
(the "Substituted Collateral"):
[Specify Substituted Collateral]
2. The Pledgor requests that the Collateral Agent transfer to the
Pledgor the following Prior Collateral, pursuant to Section 4(b) of the Security
and Pledge Agreement:
[Specify Prior Collateral]
3. The Pledgor hereby represents and warrants to the Collateral
Agent and the Trust that:
(a) Consents to Transfer. No Transfer Restrictions exist with
respect to or otherwise apply to the assignment of, or transfer by the
Pledgor of possession of, any items of Substituted Collateral to the
Collateral Agent under the Security and Pledge Agreement, or the
subsequent sale or transfer of such items of Substituted Collateral by
the Collateral Agent pursuant to the terms of the Security and Pledge
Agreement.
(b) Title to Collateral; Perfected Security Interest. The
Pledgor has good and marketable title to the Substituted Collateral,
free of all Liens (other than the Lien created by the Security and
Pledge Agreement) and Transfer Restrictions. Upon Delivery of the
Substituted Collateral to the Collateral Agent, the Collateral Agent
will obtain a valid, first priority perfected security interest in, and
a first lien upon, such Substituted Collateral subject to no other
Lien. None of such Substituted Collateral is or shall be pledged by the
Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the
same extent as if this Certificate had been specifically addressed to the Trust.
Ex A-1
<PAGE> 27
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_______ day of _______________ , 199__.
___________________________
Name:
Title:
Ex A-2
<PAGE> 28
EXHIBIT B
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, ________________, [title] of [Cherrywood Holdings,
Inc.] [Vernon Investors, L.L.C.] (the "Pledgor"), hereby certifies, pursuant to
Section 4(c) of the Security and Pledge Agreement, dated as of March __, 1997,
among the Pledgor, _________________________, as Collateral Agent, and Nextel
STRYPES Trust (the "Security and Pledge Agreement"; terms defined in the
Security and Pledge Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities, obligation
or other property to the Collateral Agent to be held by the Collateral Agent as
additional Collateral (the "Additional Collateral"):
[Specify Additional Collateral]
2. The Pledgor hereby represents and warrants to the Collateral
Agent that:
(a) Consents to Transfer. No Transfer Restrictions exist with
respect to or otherwise apply to the assignment of, or transfer by the
Pledgor of possession of, any items of Additional Collateral to the
Collateral Agent under the Security and Pledge Agreement, or the
subsequent sale or transfer of such items of Additional Collateral by
the Collateral Agent pursuant to the terms of the Security and Pledge
Agreement.
(b) Title to Collateral; Perfected Security Interest. The
Pledgor has good and marketable title to the Additional Collateral,
free of all Liens (other than the Lien created by the Security and
Pledge Agreement) and Transfer Restrictions. Upon Delivery of the
Additional Collateral to the Collateral Agent, the Collateral Agent
will obtain a valid, first priority perfected security interest in, and
a first lien upon, such Additional Collateral subject to no other Lien.
None of such Additional Collateral is or shall be pledged by the
Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the
same extent as if this Certificate had been specifically addressed to the Trust.
Ex B-1
<PAGE> 29
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_______ day of _______________ , 199__.
________________________________
Name:
Title:
Ex B-2
<PAGE> 30
EXHIBIT C
[Date]
[Transfer Agent of Reference Security]
[Address]
Re: [description of securities]
owned by [Cherrywood Holdings, Inc.] [Vernon Investors, L.L.C.] (the
"Pledgor")
Dear Sir/Madam:
Please be advised that as of _______, ____, the Pledgor hereby directs
that you, as transfer agent of the [description of securities] owned by the
Pledgor, distribute all future dividends or other distributions in the form of
cash, securities or other property to The Bank of New York at
___________________________________________, ABA No. ___________, Account No.
__________, Ref: ______________________________. This letter of direction may
not be amended or altered in any way without the receipt by you, as transfer
agent, of joint written instructions from the Pledgor, The Bank of New York and
Nextel STRYPES Trust.
Very truly yours,
[Cherrywood Holdings, Inc.]
[Vernon Investors, L.L.C.]
By: _________________________
Name:
Title:
Accepted and Acknowledged:
[Transfer Agent]
Name: Date:
Title:
Ex C-1
<PAGE> 1
EXHIBIT (k)(5)
FORM OF FUND EXPENSE
AGREEMENT
FUND EXPENSE AGREEMENT
Agreement dated as of March __, 1997 among Cherrywood Holdings, Inc.
and Vernon Investors, L.L.C. (each, a "Contracting Stockholder" and,
collectively, the "Contracting Stockholders"), Merrill Lynch & Co., Inc.
("Merrill Lynch") and The Bank of New York (the "Service Provider"), in its
capacities as administrator, custodian, paying agent and collateral agent for
Nextel STRYPES Trust (the "Trust").
WHEREAS, the Trust is a trust formed under the laws of the State of
Delaware pursuant to a Trust Agreement dated as of October 25, 1995, as amended
and restated as of February 27, 1997 (the "Trust Agreement"); and
WHEREAS, the Contracting Stockholders and Merrill Lynch desire to make
provisions for the payment of certain initial and on-going expenses of the
Trust;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. DEFINITIONS. (a) Capitalized terms used herein and not defined
herein shall have the meanings ascribed thereto in the Trust Agreement.
(b) The following terms shall have the following meanings:
"Additional Expense" means the Ordinary Expense the incurring of which
will require the Service Provider to provide the Additional Expense Notice
pursuant to Section 3(a) hereof and any Ordinary Expense incurred thereafter.
"Additional Expense Notice" means the notice required to be given by
the Service Provider to Merrill Lynch pursuant to Section 3(a)(i) hereof.
"Closing Time" shall have the meaning ascribed thereto in the Purchase
Agreement.
"Offering Expense Amount" means the amount set forth as such on
Schedule I hereto as the fees and expenses of the Trust incurred in connection
with the offering of the STRYPES.
<PAGE> 2
"Ordinary Expense" of the Trust means any expense of the Trust other
than any expense of the Trust arising under Section 6.6 of the Administration
Agreement, Section 15 of the Custodian Agreement, Section 5.4(b) of the Paying
Agent Agreement and Section 7.6 of the Trust Agreement.
"Organizational Expense Amount" means the amount set forth as such on
Schedule II hereto as the fees and expenses of the Trust incurred in connection
with the organization of the Trust.
"Up-front Fee Amount" means the amount set forth as such on Schedule
III hereto payable as a one-time payment to the Service Provider in respect of
its collective services as Administrator, Custodian, Paying Agent and Collateral
Agent for the entire term of the Trust.
"Up-front Expense Amount" means the amount set forth as such on
Schedule IV hereto payable as a one-time payment to the Service Provider in
respect of Ordinary Expenses anticipated to be incurred by the Administrator on
behalf of the Trust, pursuant to the Administration Agreement, during the term
of the Trust.
2. AGREEMENT TO PAY UP-FRONT FEES AND OFFERING, ORGANIZATIONAL AND
UP-FRONT EXPENSES. The Contracting Stockholders jointly and severally agree to
pay to the Service Provider in Federal (same day) funds at the Closing Time the
Up-front Fee Amount, the Offering Expense Amount, the Organizational Expense
Amount and the Up-front Expense Amount.
3. AGREEMENT TO PAY ADDITIONAL EXPENSES. (a) Prior to incurring any
Ordinary Expense on behalf of the Trust that, together with all prior Ordinary
Expenses incurred by the Administrator on behalf of the Trust, would cause the
aggregate amount of Ordinary Expenses of the Trust to exceed the Up-front
Expense Amount, the Administrator shall provide to Merrill Lynch and to each
Contracting Stockholder (i) prompt written notice to the effect that the
aggregate amount of Ordinary Expenses of the Trust will exceed the Up-front
Expense Amount, and (ii) an accounting, in such detail as shall be reasonably
acceptable to Merrill Lynch and the Contracting Stockholders, of all Ordinary
Expenses incurred on behalf of the Trust through the date of the Additional
Expense Notice.
(b) From and after the date of the Additional Expense Notice, the
Service Provider agrees that it will not, without the prior written consent of
Merrill Lynch and each Contracting Stockholder, incur on behalf of the Trust (i)
any single expense in excess of $___________ or (ii) in any calendar [quarter]
expenses aggregating in excess of $___________. Subject to the foregoing, the
Service Provider shall give notice to Merrill Lynch and each Contracting
Stockholder in writing promptly following the incurring of any Additional
Expense. Such notice to Merrill Lynch shall be accompanied by any demand, bill,
invoice or other similar document in respect of such Additional Expense.
2
<PAGE> 3
(c) Subject to the first sentence of paragraph (b) of this Section 3,
Merrill Lynch agrees to pay to the Service Provider from time to time the amount
of any Additional Expense. Payment by Merrill Lynch of any Additional Expense
shall be made in New York Clearing House (next-day) funds by the later of (i)
five Business Days after the receipt by Merrill Lynch from the Service Provider
of notice of the incurring thereof or (ii) the due date for the payment of such
Additional Expense.
(d) The Contracting Stockholders jointly and severally agree to
reimburse Merrill Lynch from time to time for the amount of any Additional
Expense paid by Merrill Lynch pursuant to paragraph (c) of this Section 3.
Merrill Lynch shall be reimbursed for any such Additional Expense in New York
Clearing House (next-day) funds by the later of (i) five Business Days after the
receipt by the Contracting Stockholders from the Service Provider of notice of
the incurring thereof or (ii) the due date for the payment of such Additional
Expense.
(e) Merrill Lynch or the Contracting Stockholders may contest in good
faith the reasonableness of any Additional Expense and the parties shall attempt
to resolve amicably the disagreement; provided that if the parties cannot
resolve the dispute by the due date hereunder with respect to such Additional
Expense, subject to the first sentence of paragraph (b) of this Section 3,
Merrill Lynch shall pay the amount of such Additional Expense, and the
Contracting Stockholders shall reimburse Merrill Lynch for the amount so paid,
subject to later adjustment and credit if such dispute is resolved in favor of
Merrill Lynch or the Contracting Stockholders, as the case may be.
4. CONDITION TO PAYMENT. The obligations of the Contracting
Stockholders under Sections 2 and 3 hereof and the obligations of Merrill Lynch
under Section 3 hereof shall be subject to the condition that the Structured
Yield Product Exchangeable for Stock(SM) (the "STRYPES") issued by the Trust
shall have been issued and paid for at the Closing Time.
5. TRUST TERMINATION; REFUND OF UNUSED EXPENSE FUNDS. If at the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement
the aggregate amount of Ordinary Expenses incurred by the Service Provider on
behalf of the Trust through the date of termination shall be less than the
Up-front Expense Amount, the Service Provider shall, promptly following the date
of such termination, pay to each Contracting Stockholder in New York Clearing
House funds such Contracting Stockholder's pro rata share of the amount of such
excess.
6. TERMINATION OF ADMINISTRATION AGREEMENT. In the event of the
termination of the Administration Agreement in accordance with Section 4.1
thereof, the Service Provider shall promptly pay to each Contracting Stockholder
in New York Clearing House funds such Contracting Stockholder's pro rata share
of (i) the portion of the Service Provider's Up-front Fee Amount ratable for the
period from the date of the termination of
- -----------------
(SM) Service mark of Merrill Lynch & Co., Inc.
3
<PAGE> 4
the Administration Agreement to the Exchange Date and (ii) any unexpended
portion of the Up-front Expense Amount.
7. STATEMENTS AND REPORTS. The Service Provider shall collect and
safekeep all demands, bills, invoices or other written communications received
from third parties in connection with any Ordinary Expenses and Additional
Expenses and shall prepare and maintain adequate books and records showing all
receipts and disbursements of funds in connection therewith. Merrill Lynch and
each Contracting Stockholder shall have the right to inspect and to copy, at its
expense, all such documents, books and records at all reasonable times and from
time to time during the term of this Agreement.
8. TERM OF CONTRACT. This Agreement shall continue in effect until the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement.
9. NO ASSIGNMENT. No party to this Agreement may assign its rights or
delegate its duties hereunder without the prior written consent of the other
parties.
10. AMENDMENTS. The Service Provider agrees that it will not consent to
any amendment of the Administration Agreement, the Custodian Agreement, the
Paying Agent Agreement or the Collateral Agreement without the prior written
consent of Merrill Lynch and each Contracting Stockholder.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the matters contained herein and supersedes
all prior agreements or understandings. No amendment or modification of this
Agreement shall be valid unless the amendment or modification is in writing and
is signed by all the parties to this Agreement.
12. NOTICES. All notices, demands, reports, statements, approvals or
consents given by any party under this Agreement shall be in writing and shall
be delivered in person or by telecopy or other facsimile communication or sent
by first-class U.S. mail, registered or certified, postage prepaid, to the
appropriate party at its address on the signature pages hereof or at such other
address subsequently notified to the other parties hereto. Any party may change
its address for purposes hereof by delivering a written notice of the change to
the other parties. All notices given under this Agreement shall be deemed
received (a) in the case of hand delivery, on the day of delivery, (b) in the
case of telecopy or other facsimile communication, on the day of transmission,
and (c) in the case of mailing, on the third day after such notice was deposited
in the mail.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York applicable
to agreements made and to be performed wholly within such State.
4
<PAGE> 5
15. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized representatives the date first above written.
CHERRYWOOD HOLDINGS, INC.
By:_________________________________
Address: c/o Telcom Ventures, L.L.C.
2300 Clarendon Blvd., Suite 800
Arlington, Virginia 22201
VERNON INVESTORS, L.L.C.
By:________________________________
Address: c/o Telcom Ventures, L.L.C.
2300 Clarendon Blvd., Suite 800
Arlington, Virginia 22201
MERRILL LYNCH & CO., INC.
By:__________________________________
Address: World Financial Center
North Tower
New York, New York 10281
THE BANK OF NEW YORK
By:__________________________________
Address: 101 Barclay Street
New York, New York 10286
6
<PAGE> 1
EXHIBIT(k)(6)
FORM OF FUND INDEMNITY
AGREEMENT
FUND INDEMNITY AGREEMENT
Agreement dated as of March __, 1997 among Cherrywood Holdings, Inc.
and Vernon Investors, L.L.C. (each a "Contracting Stockholder" and,
collectively, the "Contracting Stockholders"), Merrill Lynch & Co., Inc.
("Merrill Lynch") and Nextel STRYPES Trust (such trust and the trustees thereof
acting in their capacity as such being referred to herein as the "Trust").
WHEREAS, the Trust is a trust formed under the laws of the State of
Delaware pursuant to a Trust Agreement dated as of October 25, 1995, as amended
and restated as of February 27, 1997 (the "Trust Agreement"); and
WHEREAS, the Contracting Stockholders and Merrill Lynch desire to make
provision for the payment of certain indemnification expenses of the Trust;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not defined herein
shall have the meanings ascribed thereto in the Trust Agreement.
2. AGREEMENT TO PAY EXPENSES. Merrill Lynch agrees to pay to the Trust,
and hold the Trust harmless from, any expenses of the Trust arising under
Sections 2.2(g) and 6.6 of the Administration Agreement, Section 15 of the
Custodian Agreement, Section 5.4(b) of the Paying Agent Agreement and Section
7.6 of the Trust Agreement (collectively, "Indemnification Expenses").
Notwithstanding the foregoing, it is understood that (i) Merrill Lynch shall
not, in respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) and (ii) Merrill Lynch shall not be liable for any settlement of
any proceeding effected without the written consent of Merrill Lynch and each
Contracting Stockholder, but if settled with such consent or if there be a final
judgment for the Claimant, Merrill Lynch agrees to indemnify the Trustees and
the Trust from and against any loss or liability by reason of such settlement or
judgment. Payment hereunder by Merrill Lynch shall be made in New York Clearing
House (next-day) funds no later than five Business Days after the receipt by
Merrill Lynch, pursuant to paragraph 4 hereof, of written notice of any claim
for Indemnification Expenses.
<PAGE> 2
3. AGREEMENT TO REIMBURSE FOR PAYMENTS MADE. The Contracting
Stockholders jointly and severally agree to reimburse Merrill Lynch from time to
time for the amount of any Indemnification Expenses paid by Merrill Lynch
pursuant to paragraph 2 hereof. Merrill Lynch shall be reimbursed for any such
Indemnification Expenses in New York Clearing House (next-day) funds no later
than five Business Days after the receipt by the Contracting Stockholders,
pursuant to paragraph 4 hereof, of written notice of any claim for
Indemnification Expenses.
4. NOTICE OF RECEIPT OF CLAIM. The Trust shall give notice to, or cause
notice to be given to, Merrill Lynch and each Contracting Stockholder in writing
of any claim for Indemnification Expenses or any threatened claim for
Indemnification Expenses immediately upon the Trust acquiring knowledge thereof.
Such written notice to Merrill Lynch shall be accompanied by any demand, bill,
invoice or other communication received from any third party claimant (a
"Claimant") in respect of such Indemnification Expense.
5. STATEMENTS AND REPORTS. The Trust shall collect and safekeep all
demands, bills, invoices or other written communications received from third
parties in connection with any claim for Indemnification Expenses and shall
prepare and maintain adequate books and records showing all receipts and
disbursements of funds in connection therewith. Merrill Lynch and each
Contracting Stockholder shall have the right to inspect and to copy, at its
expense, all such documents, books and records at all reasonable times and from
time to time during the term of this Agreement.
6. TERM OF CONTRACT. This Agreement shall continue in effect until the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement.
7. NO ASSIGNMENT. No party to this Agreement may assign its rights or
delegate its duties hereunder without the prior written consent of the other
parties, except that the Trust may delegate any and all duties hereunder to the
Administrator to the extent permitted by law.
8. ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties with respect to the matters contained herein and supersedes all
prior agreements or understandings. No amendment or modification of this
Agreement shall be valid unless the amendment or modification is in writing and
is signed by all parties to this Agreement.
9. NOTICES. All notices, demands, reports, statements, approvals or
consents given by any party under this Agreement shall be in writing and shall
be delivered in person or by telecopy or other facsimile communication or sent
by first-class U.S. mail, registered or certified, postage prepaid, to the
appropriate party at its address on the signature pages hereof or at such other
address subsequently notified to the other parties hereto. A copy of any
communication to Merrill Lynch shall be furnished to Brown & Wood LLP, One World
Trade Center, New York, New York 10048, Attention: Norman D. Slonaker, Esq.,
provided
2
<PAGE> 3
that the failure to furnish such copy shall not affect the effectiveness of any
such communication. Any party may change its address for purposes hereof by
delivering a written notice of the change to the other parties. All notices,
given under this Agreement shall be deemed received (a) in the case of hand
delivery, on the day of delivery, (b) in the case of telecopy or other facsimile
communication, on the day of transmission, and (c) in the case of mailing, on
the third day after such notice was deposited in the mail.
10. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York applicable
to agreements made and to be performed wholly within such State.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized representatives the date first above written.
MERRILL LYNCH & CO., INC.
World Financial Center
North Tower
By____________________________________ New York, New York 10281
Name: Telecopier: (212)__________
Title:
NEXTEL STRYPES TRUST
c/o Puglisi & Associates
850 Library Avenue
______________________________________ Suite 204
Donald J. Puglisi, as Managing Trustee Newark, Delaware 19715
Telecopier: (302) 738-7210
CHERRYWOOD HOLDINGS, INC.
c/o Telcom Ventures, L.L.C.
2300 Clarendon Boulevard
By____________________________________ Suite 800
Name: Arlington, Virginia 22201
Title: Telecopier:
VERNON INVESTORS, L.L.C.
c/o Telcom Ventures, L.L.C.
2300 Clarendon Boulevard
By____________________________________ Suite 800
Name: Arlington, Virginia 22201
Title: Telecopier:
4
<PAGE> 1
Exhibit (1)
Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
February 28, 1997
Nextel STRYPES Trust
c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
Ladies and Gentlemen:
We have acted as counsel for Nextel STRYPES Trust, a Delaware business
trust (the "Trust"), in connection with the registration of 8,243,875 STRYPES,
par value $0.10 per STRYPES (the "STRYPES"), under the Securities Act of 1933,
as amended, pursuant to a registration statement on Form N-2 to be filed with
the Securities and Exchange Commission on the date hereof (the "Registration
Statement").
As counsel for the Trust, we are familiar with the proceedings taken by
the Trust in connection with the authorization, issuance and sale of the
STRYPES. In addition, we have examined and are familiar with the Restated
Certificate of Trust of the Trust, the Amended and Restated Trust Agreement of
the Trust and such other documents as we have deemed relevant to the matters
referred to in this opinion.
Based upon the foregoing, we are of the opinion that the STRYPES, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less
<PAGE> 2
than the par value thereof, will be legally issued, fully paid and
non-assessable STRYPES of the Trust.
In rendering this opinion, we have relied as to matters of Delaware law
upon an opinion of Richards, Layton & Finger rendered to the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus constituting
a part thereof.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE> 1
Exhibit (n)(1)
Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
February 28, 1997
Nextel STRYPES Trust
c/o Puglisi & Associates
850 Library Avenue
Suite 204
Newark, Delaware 19715
Re: Registration Statement on Form N-2
Registration Nos. 33-63795 and 811-7389
Ladies and Gentlemen:
We have acted as tax counsel to the Nextel STRYPES Trust (the "Trust")
in connection with the registration of its Structured Yield Product Exchangeable
for Stock (the "STRYPES"). In connection therewith, we have prepared the
discussion set forth under the caption "Certain United States Federal Income Tax
Considerations" (the "Discussion") in the Prospectus (the "Prospectus") that is
part of Amendment No.4 to the Registration Statement on Form N-2 (Registration
Nos. 33-63795 and 811-7389) filed by the Trust with the Securities and Exchange
Commission on February 28, 1997.
We hereby confirm our opinion as set forth in the Discussion. In
rendering our opinion, we have examined (i) the Amended and Restated Trust
Agreement constituting Nextel STRYPES Trust, (ii) the Contract and (iii) the
Security and Pledge Agreement, each in the form filed as an exhibit to the
Registration Statement, and have assumed that the obligations contemplated
thereunder will be performed in accordance with their terms.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Certain
United States Federal Income Tax Considerations" in the Prospectus. The issuance
of such consent does not concede that we are an "expert" for the purposes of the
Securities Act of 1933.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE> 1
Exhibit (n)(2)
INDEPENDENT AUDITORS' CONSENT
Nextel STRYPES Trust
We consent to the inclusion in this Pre-Effective Amendment No. 4 to
Registration Statement No. 33-63795 of Nextel STRYPES Trust (the "Trust") on
Form N-2 of our report dated February 27, 1997 relating to the audit of the
statement of assets, liabilities and capital of the Trust and to the reference
to us under the heading "Experts" in the Prospectus, which is a part of the
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
February 27, 1997
<PAGE> 1
EXHIBIT(p)
FORM OF SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT is entered into as of the ___ day of March
1997, between Nextel STRYPES Trust, a trust created and existing under the laws
of Delaware (such trust and the trustees thereof acting in their capacity as
such being referred to herein as the "Trust"), and ML IBK Positions, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation (each a "Purchaser" and,
collectively the "Purchasers").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF THE STRYPES
1.1 SALE AND ISSUANCE OF UNITS. Subject to the terms and conditions of
this Agreement, the Trust agrees to sell to each Purchaser, severally and not
jointly, and each Purchaser, severally and not jointly, agrees to purchase from
the Trust, one Structured Yield Product Exchangeable for Stock(SM), representing
an undivided beneficial interest in the Trust (a "STRYPES"), at a purchase price
per STRYPES of $50,000.
1.2 CLOSING. The purchase and sale of the STRYPES shall take place at
the offices of Brown & Wood LLP, One World Trade Center, New York, New York
10048 at 9:00 a.m., on March , 1997, or at such other time ("Closing Date") and
place as the Trust and the Purchasers mutually agree upon. At or after the
Closing, the Trust shall deliver to each Purchaser a certificate representing
the STRYPES purchased by such Purchaser, registered in the name of such
Purchaser or its nominee. Payment for the STRYPES shall be made on the Closing
Date by each Purchaser by bank wire transfer or by delivery of a certified or
official bank check, in either case in immediately available funds, of an amount
equal to the purchase price of the STRYPES purchased by such Purchaser.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH PURCHASER. Each
Purchaser hereby represents and warrants to, and covenants for the benefit of,
the Trust that:
2.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made by the
Trust with such Purchaser in reliance upon such Purchaser's representation to
the Trust, which by such Purchaser's execution of this Agreement such Purchaser
hereby
- ------------
(SM) Service Mark of Merrill Lynch & Co., Inc
<PAGE> 2
confirms, that the STRYPES are being acquired for investment for such
Purchaser's own account, and not as a nominee or agent and not with a view to
the resale or distribution by such Purchaser of any of the STRYPES, and that
such Purchaser has no present intention of selling, granting any participation
in, or otherwise distributing the STRYPES, in either case in violation of any
securities registration requirement under applicable law, but subject
nevertheless, to any requirement of law that the disposition of its property
shall at all times by within its control. By executing this Agreement, such
Purchaser further represents that such Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
STRYPES.
2.2 INVESTMENT EXPERIENCE. Such Purchaser acknowledges that it can bear
the economic risk of the investment for an indefinite period of time and has
such knowledge and experience in financial and business matters (and
particularly in the business in which the Trust operates) as to be capable of
evaluating the merits and risks of the investment in the STRYPES. Such Purchaser
is an "accredited investor" as defined in Rule 501(a) of Regulation D under the
Securities Act of 1933 (the "Act").
2.3 RESTRICTED SECURITIES. Such Purchaser understands that the STRYPES
are characterized as "restricted securities" under the United States securities
laws inasmuch as they are being acquired from the Trust in a transaction not
involving a public offering and that under such laws and applicable regulations
such STRYPES may be resold without registration under the Act only in certain
circumstances. In this connection, such Purchaser represents that it understands
the resale limitations imposed by the Act and is generally familiar with the
existing resale limitations imposed by Rule 144.
2.4 FURTHER LIMITATIONS ON DISPOSITION. Such Purchaser further agrees
not to make any disposition directly or indirectly of all or any portion of the
STRYPES unless and until:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Such Purchaser shall have furnished the Trust with an
opinion of counsel, reasonably satisfactory to the Trust and such
disposition will not require registration of such STRYPES under the
Act.
(c) Notwithstanding the provisions of subsections (a) and (b)
above, no such registration statement or opinion of counsel shall be
necessary for a transfer by such Purchaser to any affiliate of such
Purchaser, if the transferee agrees in writing to be subject to the
terms hereof to the same extent as if it were the original Purchaser
hereunder.
2
<PAGE> 3
2.5 LEGENDS. It is understood that the certificate evidencing the
STRYPES may bear either or both of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for sale, pledged
or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
reasonably satisfactory to the Trustees of Nextel STRYPES Trust that
such registration is not required."
(b) Any legend required by the laws of any other applicable
jurisdiction.
Each Purchaser and the Trust agree that the legend contained in the
paragraph (a) above shall be removed at a holder's request when they are no
longer necessary to ensure compliance with federal securities laws.
2.6 SPLIT OF STRYPES. Each Purchaser consents to the split of such
Purchaser's STRYPES. Subsequent to the determination of the public offering
price per STRYPES and related underwriting discount for the STRYPES to be sold
to the Underwriters (as defined in the Amended and Restated Trust Agreement of
the Trust, dated as of February 26, 1997, by and among ML IBK Positions, Inc.,
and Donaldson, Lufkin & Jenrette Securities Corporation, as sponsors, and the
trustees of the Trust named therein) but prior to the sale of the STRYPES to the
Underwriters, each STRYPES purchased hereby shall be split into a greater number
of STRYPES so that immediately following such split the value of each STRYPES
held by the Purchasers will equal the aforesaid public offering price per
STRYPES.
2.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
2.8 GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York applicable
to agreements made and to be performed wholly within such state.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NEXTEL STRYPES TRUST
By ______________________________________
Donald J. Puglisi, as Managing Trustee
ML IBK POSITIONS, INC.
By ______________________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By ______________________________________
Name:
Title:
4
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<NAME> NEXTEL STRYPES TRUST
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