<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 1996
(August 22, 1996)
-----------------------------
NEXTEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19656 36-3939651
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
1505 FARM CREDIT DRIVE, SUITE 100, MCLEAN, VIRGINIA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 394-3000
-----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
Nextel Communications, Inc. ("Nextel"), has reached an agreement dated
August 16, 1996 with Chase Securities Inc., Morgan Guaranty Trust Company of
New York, J.P. Morgan Securities Inc., The Toronto - Dominion Bank and Toronto
- - Dominion Securities (USA), Inc. to arrange a credit facility, on the terms
described in the commitment letter (and attached term sheet) attached hereto as
Exhibit 99.1, which information is incorporated herein by reference. There can
be no assurance that Nextel will be able to reach binding agreements with all
necessary parties to allow such financing to be put in place, or, if such
agreements are reached, that the terms of such financing will be as
contemplated in Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) EXHIBITS.
Exhibit No. Exhibit Description
99.1 Commitment Letter dated August 16, 1996
between Nextel, Chase Securities Inc., Morgan
Guaranty Trust Company of New York, J.P.
Morgan Securities Inc., The Toronto -
Dominion Bank and Toronto - Dominion
Securities (USA), Inc. (and attached term
sheet).
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEXTEL COMMUNICATIONS, INC.
Date: August 30, 1996 By: /s/ Thomas J. Sidman
----------------------------------
Thomas J. Sidman
Vice President and General Counsel
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
- ----------- -------------------
<S> <C>
99.1 Commitment Letter dated August 16, 1996 between Nextel, Chase Securities Inc., Morgan
Guaranty Trust Company of New York, J.P. Morgan Securities Inc., The Toronto -
Dominion Bank and Toronto - Dominion Securities (USA), Inc. (and attached term
sheet).
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE CHASE MANHATTAN BANK
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
THE TORONTO-DOMINION BANK
August 22, 1996
Nextel Finance Company
Senior Secured Credit Facilities
Commitment Letter
Nextel Communications, Inc.
1505 Farm Credit Drive
Suite 100
McLean, Virginia 22102
Attention: Steven Shindler
Senior Vice President and
Chief Financial Officer
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase"), Chase
Securities Inc. ("CSI"), Morgan Guaranty Trust Company of New York ("Morgan"),
J.P. Morgan Securities Inc. ("JPMSI"), The Toronto-Dominion Bank ("Toronto
Dominion" and, together with Chase and Morgan, the "Initial Lenders") and
Toronto-Dominion Securities (USA), Inc. ("TDSI" and, together with CSI and
JPMSI, the "Arrangers") that Nextel Finance Company (the "Borrower"), a
Delaware corporation and a wholly-owned subsidiary of Nextel Communications,
Inc., requires senior secured credit facilities in aggregate principal amount
of up to at least $1,550,000,000 (the "Facilities") (i) to refinance the
Borrower's existing outstanding indebtedness, (ii) to acquire licenses and
other rights in order to utilize certain portions of the broadcasting spectrum,
(iii) to make certain international investments, (iv) to make capital
expenditures and (v) for working capital and other general corporate purposes.
In that connection, you have requested that the Arrangers agree to structure,
arrange and syndicate the Facilities, and that each of the Initial Lenders
commit to provide a portion of the Facilities.
The Arrangers are pleased to advise you that they are willing
to act as the exclusive advisors and arrangers for the Facilities.
<PAGE> 2
Furthermore, each of the Initial Lenders is pleased to advise
you of (a) its respective commitment to provide up to $250,000,000 of the
Facilities, and (b) its agreement to use best efforts to assemble a syndicate
of financial institutions identified by the Arrangers and the Initial Lenders
in consultation with you, to provide the balance of the necessary commitments
for the Facilities, in each case upon the terms and subject to the conditions
set forth or referred to in this commitment letter (the "Commitment Letter"),
in the Summary of Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet") and in the Fee Letter referred to below. It is a condition to each of
the Initial Lenders' commitments hereunder that the portion of the Facilities
not being provided by the Initial Lenders shall be provided by the other
Lenders referred to below. The Initial Lenders shall be relieved of their
obligation to provide the Facilities to the extent that you accept the offers
of Lenders other than the Initial Lenders to provide a portion of the
Facilities that the Initial Lenders have offered to commit to provide.
It is agreed that the Arrangers will act as the sole and
exclusive advisors and arrangers, for the Facilities, and each will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by them in such roles. You agree that no other agents, co-agents
or arrangers will be appointed, no other titles will be awarded and no
compensation (other than that expressly contemplated by the Term Sheet and the
Fee Letter referred to below) will be paid in connection with the Facilities
unless you and we shall so agree.
We intend to syndicate the Facilities (including, in our
discretion, all or part of the respective commitments hereunder of the Initial
Lenders) to a group of financial institutions (together with the Initial
Lenders, the "Lenders") identified by us and approved by you. The Arrangers
intend to commence syndication efforts promptly upon the execution of this
Commitment Letter, and you agree actively to assist the Arrangers in completing
a syndication satisfactory to them and to you. Such assistance shall include
(a) your using commercially reasonable efforts to ensure that the syndication
efforts benefit materially from your existing lending relationships, (b) direct
contact between senior management and advisors of the Borrower and the proposed
Lenders, (c) assistance in the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection with the
syndication and (d) the hosting, with the Arrangers, of one or more meetings of
prospective Lenders.
The Arrangers, in consultation with you, will manage all
aspects of the syndication, including decisions as to the selection of
institutions to be approached and when they will be approached, when their
commitments will be accepted, which institutions will participate, the
allocations of the commitments among the Lenders and the amount and
distribution of fees among the Lenders. To assist the Arrangers in its
syndication efforts, you agree promptly to prepare and provide to the Arrangers
and the Initial Lenders all information with respect to the Borrower and the
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request in connection
with the arrangement and syndication of the Facilities. You hereby represent
and covenant
<PAGE> 3
that (a) all information other than the Projections (the "Information") that
has been or will be made available to any of the Initial Lenders or the
Arrangers by you or any of your representatives does not or will not, when
furnished, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be made available to
any of the Initial Lenders or the Arrangers by you or any of your
representatives have been or will be prepared in good faith based upon
reasonable assumptions. You understand that in arranging and syndicating the
Facilities we may use and rely on the Information and Projections without
independent verification thereof.
As consideration for the respective commitments hereunder of
the Initial Lenders and the agreements of the Arrangers to perform the services
described herein, you agree to pay and to cause the Borrower to pay to each of
the Initial Lenders the nonrefundable fees set forth in the Fee Letter dated
the date hereof and delivered herewith (the "Fee Letter").
The commitment hereunder of each of the Initial Lenders and
the agreement of each Arranger to perform the services described herein are
subject to (a) there not occurring or becoming known to us any material adverse
condition or material adverse change in or affecting the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
its subsidiaries, taken as a whole, (b) our completion of and satisfaction in
all respects with a due diligence investigation of the Borrower, (c) our not
becoming aware after the date hereof of any information or other matter
affecting the Borrower or the transactions contemplated hereby which is
inconsistent in a material and adverse manner with any such information or
other matter disclosed to us prior to the date hereof, (d) there not having
occurred a material disruption of or material adverse change in financial,
banking or capital market conditions that, in our judgment, could materially
impair the syndication of the Facilities, (e) our satisfaction that prior to
and during the syndication of the Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of you, the Borrower or any of your controlled affiliates, (f) the
negotiation, execution and delivery on or before October 31, 1996 of definitive
documentation with respect to the Facilities satisfactory to the Initial
Lenders and their counsel, (g) the other conditions set forth or referred to in
the Term Sheet, (h) the payment when due of the fees or other compensation
provided for by the Fee Letter, (i) there being drawn not less than $150
million of the commitments under the vendor facilities referred to in the Term
Sheet, (j) the execution and delivery by you, the Arrangers and Motorola, Inc.
("Motorola") of an agreement satisfactory to you and the Arrangers relating to
the restructuring of such vendor facility between you and Motorola, and (k) the
satisfaction of all of the conditions to each Initial Lender's obligations set
forth herein or in the Term Sheet. The terms and conditions of the commitments
hereunder of the Initial Lenders and of the Facilities are not limited to those
set forth herein and in the Term Sheet. Those matters that are not covered by
the provisions hereof and of the Term Sheet are subject to the approval and
agreement of the Initial Lenders, the Arrangers and the Borrower.
<PAGE> 4
You agree (a) to indemnify and hold harmless the Initial
Lenders, the Arrangers, their affiliates and their respective officers,
directors, employees, advisors, and agents (each, an "indemnified person") from
and against any and all losses, claims, damages, liabilities and related
expenses (collectively "Recoveries") to which any such indemnified person may
become subject arising out of or in connection with this Commitment Letter, the
Facilities, the use of the proceeds thereof, the transactions contemplated
hereby or any related transaction or any claim, litigation, investigation or
proceeding relating to any of the foregoing, regardless of whether any
indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, provided that the foregoing
indemnity will not, as to any indemnified person, apply to Recoveries to the
extent (i) they are found by a final, non-appealable judgment of a court to
arise from the willful misconduct or gross negligence of such indemnified
person or (ii) they arise from a settlement with respect to which you have
admitted liability or from an admission of liability on the part of the
indemnified party in either case entered into without your prior written
consent, which shall not be unreasonably withheld or delayed, and (b) to
reimburse the Initial Lenders, the Arrangers and their affiliates on demand for
all out-of-pocket expenses (including due diligence expenses, syndication
expenses, travel expenses, and reasonable fees, charges and disbursements of
counsel) incurred in connection with the Facilities and any related
documentation (including this Commitment Letter, the Term Sheet, the Fee Letter
and the definitive financing documentation) or the administration, amendment,
modification or waiver thereof. No indemnified person shall be liable for any
indirect or consequential damages in connection with its activities related to
the Facilities.
This Commitment Letter shall not be assignable by you without
the prior written consent of each of the Initial Lenders and the Arrangers (and
any purported assignment without such consent shall be null and void), is
intended to be solely for the benefit of the parties hereto and is not intended
to confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto. This Commitment Letter, including the Term Sheet, may
not be amended or waived except by an instrument in writing signed by each of
you, the Initial Lenders and the Arrangers. This Commitment Letter may be
executed in any number of counterparts, each of which shall be an original, and
all of which, when taken together, shall constitute one agreement. Delivery of
an executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter and the Fee Letter are the only agreements that have been
entered into among us with respect to the Facilities and set forth the entire
understanding of the parties with respect thereto. This Commitment Letter
shall be governed by, and construed in accordance with, the laws of the State
of New York.
This Commitment Letter is delivered to you on the
understanding that neither this Commitment Letter, the Term Sheet or
the Fee Letter nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) to your
officers, agents and advisors who are directly involved in the
consideration of this matter or (b) as may be
<PAGE> 5
compelled in a judicial or administrative proceeding or as otherwise
required by law (in which case you agree to inform us promptly thereof),
provided, that the foregoing restrictions shall cease to apply (except in
respect of the Fee Letter and its terms and substance) after this Commitment
Letter has been accepted by you.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or the respective commitments hereunder
of the Initial Lenders hereunder, except, in the case of such compensation and
reimbursement provisions only, if such termination is made by the Initial
Lenders in violation of the provisions of this Commitment Letter.
The Initial Lenders and the Arrangers shall have the right to
review and approve all public announcements and filings relating to the
Facilities that refer to the Initial Lenders, the other Lenders or the
Arrangers before they are made or filed.
The obligations of the Initial Lenders and the Arrangers
hereunder are several and not joint.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter,
not later than 5:00 p.m., New York City time, on August 22, 1996. The
respective commitments of the Initial Lenders and the agreements of the
Arrangers herein will expire at such time in the event that the Initial Lenders
have not received such executed counterparts in accordance with the immediately
preceding sentence.
<PAGE> 6
The Initial Lenders and the Arrangers are pleased to have been
given the opportunity to assist you in connection with this important
financing.
Very truly yours,
THE CHASE MANHATTAN BANK CHASE SECURITIES INC.
By: /s/ James Kuster By: /s/ Patricia H. Deans
____________________ _____________________
Name: James Kuster Name: Patricia H. Deans
Title: Vice President Title: Vice President
MORGAN GUARANTY TRUST J.P. MORGAN SECURITIES INC.
COMPANY OF NEW YORK
By: /s/ R. Blake Witherington By: /s/ David A. Nass
_____________________ _____________________
Name: R. Blake Witherington Name: David A. Nass
Title: Vice President Title: Vice President
THE TORONTO-DOMINION BANK TORONTO-DOMINION
SECURITIES (USA), INC.
By: /s/ Brian O'Reilly By: /s/ Kathryn Dunn
_____________________ _____________________
Name: Brian O'Reilly Name: Kathryn Dunn
Title: Managing Director Title: Managing Director
Accepted and agreed to
as of the date first
written above by:
NEXTEL COMMUNICATIONS, INC.
By: /s/ Steven Shindler
_________________________
Name: Steven Shindler
Title: Chief Financial Officer
<PAGE> 7
EXHIBIT A
NEXTEL FINANCE COMPANY
SUMMARY OF TERMS AND CONDITIONS
AUGUST 22, 1996
BORROWER: Nextel Finance Company ("Nextel" or the
"Borrower")
ARRANGERS: Chase Securities Inc., J.P. Morgan Securities
Inc. and Toronto-Dominion Securities (USA),
Inc.
LENDERS: Syndicate of banks acceptable to the Borrower
and the Arrangers
FACILITY: Tranche A - A $250,000,000 Senior Secured
Multi-Draw Term Loan (to be drawn in full not
later than December 31, 1996)
Tranche B - A $1,000,000,000 Senior Secured
Reducing Revolving Loan
Tranche C - A $300,000,000 Senior Secured
Single-Draw Term Loan (to be drawn in full on
the Closing Date)
MATURITY: Tranche A - March 31, 2003
Tranche B - March 31, 2003
Tranche C - June 30, 2003
PURPOSE: Capital expenditures, general corporate
purposes, working capital, international
investments, spectrum acquisitions and
refinancing of existing indebtedness.
AVAILABILITY: The full amount of the facility will be
available at closing, subject to compliance
with conditions precedent to drawdown.
CLOSING: No later than October 31, 1996.
REPAYMENT: The Facility shall amortize quarterly
beginning in 2001 as follows:
<TABLE>
<CAPTION>
ANNUAL REPAYMENT
PERIOD TRANCHE A AND B TRANCHE C
------ --------------- ---------
<S> <C> <C>
2001 30% 1%
2002 40% 1%
2003 30% 98%
</TABLE>
<PAGE> 8
- 2 -
PREPAYMENT: OPTIONAL
Prepayments are permitted without
penalty at the option of Nextel,
subject to applicable notice
provisions. Nextel shall bear any
unwinding costs associated with
early breakage of LIBOR contracts.
MANDATORY
i) 100% of net proceeds from any
sale or disposition by any of
the Restricted Companies of
any material assets (other
than in the ordinary course)
that are not reinvested in
like assets within 12 months
of the receipt thereof shall
be applied ratably (according
to amount of respective total
commitments under each
applicable facility) to
reduce the Facility and the
Vendor Facility pro rata in
order of maturity.
ii) Commencing with Excess Cash
Flow for the year ending
12/31/99, 50% of Excess Cash
Flow for the immediate
preceding fiscal year shall
be applied ratably (according
to amount of respective total
commitments under each
applicable facility) to
reduce the Facility and the
Vendor Facility pro rata in
order of maturity;
prepayments will be required
to the extent that, after any
such reduction, outstandings
shall exceed the relevant
Commitment.
RATES OF INTEREST: At the Borrower's option, any
Advance under the Facility will be
available at the rates and for the
interest periods stated below, plus
an applicable margin as follows:
TRANCHE A AND B: Applicable Margin
based on the ratio of Total Debt to
Annualized Operating Cash Flow for
the most recent fiscal quarter
for which information is available:
<PAGE> 9
- 3 -
<TABLE>
<CAPTION>
---------------------------------------------------------------
LESS THAN BUT GREATER
OR EQUAL TO THAN BASE RATE + LIBOR +
---------------------------------------------------------------
<S> <C> <C> <C>
(1) 1.500% 2.500%
---------------------------------------------------------------
(2) 1.250% 2.250%
---------------------------------------------------------------
(3) 10.00x 1.000% 2.000%
---------------------------------------------------------------
10.00x 9.00x 0.875% 1.875%
---------------------------------------------------------------
9.00x 8.00x 0.750% 1.750%
---------------------------------------------------------------
8.00x 7.00x 0.500% 1.500%
---------------------------------------------------------------
7.00x 6.00x 0.375% 1.375%
---------------------------------------------------------------
6.00x 5.00x 0.125% 1.125%
---------------------------------------------------------------
5.00x 4.00x 0.000% 0.875%
---------------------------------------------------------------
4.00x ---- 0.000% 0.750%
---------------------------------------------------------------
</TABLE>
(1) Closing
(2) Latest quarter revenue times 4
exceeds $475,000,000
(3) Total Indebtedness/Annualized
Operating Cash Flow is
positive.
TRANCHE C: Base Rate plus 2% or LIBOR
plus 3%
BASE RATE OPTIONS: Interest shall be
at the greater of i) the
Administrative Agent's Prime Rate or
ii) the Federal Funds Rate plus 1/2
of 1%. Interest shall be payable
quarterly in arrears and calculated
on basis of a 365/6-day year
(360-day year in the event the Base
Rate is determined with reference to
the Federal Funds Rate).
LIBOR OPTION: Interest shall be
determined for periods of 1, 2, 3, 6, or
12 months the latter subject to
availability. Interest shall be paid at
the end of each Interest Period or
quarterly in arrears, whichever is
earlier, and will be calculated on the
basis of a 360 day year. LIBOR shall be
adjusted for Regulation D reserve
requirements.
POST-DEFAULT INTEREST:
2% over the greater of the Base Rate
plus the Applicable Margin or the
applicable LIBOR Rate plus the
Applicable Margin, upon the
occurrence of specified defaults.
COMMITMENT FEE:
Based on the Ratio of Total Debt to
Annualized Operating Cash Flow and
payable on the unused Commitments
quarterly in arrears based on a 360
day year, as indicated in the table
below:
<TABLE>
<CAPTION>
RATIO COMMITMENT FEE
----- --------------
<S> <C>
>7.00x 0.500%
<7.00x 0.375%
-
</TABLE>
<PAGE> 10
- 4 -
SECURITY: All security shall be shared pari
passu with the Vendors.
- A first priority pledge of
all of the shares of stock of the
Restricted Companies' direct and
indirect Subsidiaries.
- Liens on substantially all of
the Restricted Companies'
assets (including all system
operating leasehold interests
in the U.S. and on all system
infrastructure equipment
owned by the Restricted
Companies' in the U.S.)
- A pledge of the capital stock
of any newly formed
Subsidiary of a Restricted
Company.
- A negative pledge of the assets
of the Restricted Companies
(subject to exceptions to be
agreed upon).
- Consistent with the
requirements of the Public
Notes, a concentration
account, pledged to the
Collateral Agent (to be
determined), will be
established to which all
proceeds of collateral will
be directed, to be released
to the Restricted Companies
pursuant to mechanisms to be
agreed upon.
GUARANTEES: - Guarantees from all
Restricted Companies
(including Subsidiaries
holding the SMR licenses).
- An unsecured guarantee from
Nextel Communications, Inc.
("NCI"). NCI would agree to
deliver financial statements
for NCI and its Subsidiaries,
not to grant liens on any
assets (unless the guarantee
is equally and ratably
secured), not to agree to any
amendments or waivers to
Public Notes that would have
the effect of making any
provision thereof more
restrictive on NCI and its
Subsidiaries without consent
of Lenders and to invest
proceeds of planned option
exercises in the Restricted
Companies.
CONDITIONS PRECEDENT TO
INITIAL DRAWDOWN: Including but not limited to the
following:
i) Compliance certificate showing
no default after giving
effect to the drawdown
(including compliance with
applicable debt-incurrence
tests under each Senior
Notes' indenture);
ii) All security and documentation
in place;
iii) Completion of satisfactory due
diligence, including, but not
limited to comfort with the
business plan;
<PAGE> 11
- 5 -
iv) No material adverse change;
v) Evidence of at least $450MM of
vendor financing commitments
under terms and conditions
satisfactory to the Lenders;
$400MM of such vendor
financing shall be provided
by Motorola, Inc. and $50MM
of such vendor financing
shall be provided by NTFC
Capital Corporation;
vi) An Intercreditor Agreement
shall have been executed by
the Lenders and the Vendors;
vii) Confirmation that the
reconfigured iDEN technology
has met the terms of
conditional and final
acceptance in the Chicago
market;
viii) All representations and
warranties are true and
correct in all material
respects on and as of the
date of the Borrowing, before
and after giving effect to
such Borrowing and to the
application of the proceeds
therefrom, as though made as
of such date;
ix) Satisfactory review of vendor
equipment agreements;
x) Satisfactory review of vendor
financing agreements and any
other relevant agreements;
xi) Satisfactory formation of
Borrower and of the related
corporate reorganization
involving NCI Subsidiaries;
and
xii) Favorable legal opinion from
counsel for the Arrangers.
REPRESENTATIONS AND
WARRANTIES: The Loan documents will contain
representations and warranties
customarily found in Loan Agreements
for similar financings, as well as
those deemed by the Borrower to be
appropriate for this transaction.
DOCUMENTATION: Loan Agreement incorporating usual
representations and warranties,
events of default, and covenants for
financing of this nature, including
but not limited to the following:
i) LIMITATIONS ON ADDITIONAL
INDEBTEDNESS other than:
a) indebtedness of the Borrower
in respect of pari passu
financing, provided by the
Vendors, up to $500MM in net
proceeds (which includes the
existing outstandings) under
terms and conditions
acceptable to the Lenders;
<PAGE> 12
- 6 -
b) Indebtedness of the Borrower
in respect of interest rate
swaps;
c) structurally subordinated
indebtedness of NCI (the
"Subordinated Debt"),
including the existing Public
Notes and an additional
$750MM so long as (i) any
such indebtedness is PIK for
5 years and matures after the
Bank Debt and (ii) terms
applicable to such
Indebtedness are not more
restrictive than the NCI
Notes due 2004;
d) Permitted Refinancing
Indebtedness: indebtedness
of the Borrower to the extent
the proceeds thereof are used
to refinance indebtedness of
the Borrower, provided that
after giving effect to the
incurrence of such
indebtedness the Borrower is
in pro forma compliance and
provided that the terms of
such indebtedness are no more
restrictive than the bank
debt and the maturity is no
shorter than the indebtedness
being refinanced;
e) an additional $250 MM tranche
of the Facility ("Tranche D")
provided that i) Majority
Lenders' consent to such
increase, ii) the Lenders
have the right to participate
in Tranche D and iii) Tranche
D does not begin to amortize
until the Facility is
scheduled to have been repaid
in full; and
f) Indebtedness of Unrestricted
Companies.
ii) LIMITATIONS ON LIENS,
ENCUMBRANCES AND LEASES -
Negative pledge on all assets
of the Restricted Companies
(subject to exceptions to be
agreed upon).
iii) OWNERSHIP/CHANGE IN CONTROL -
The authority of the Operations
Committee of NCI shall be
terminated or materially modified
(including through the occurrence
of a "Trigger Event" as defined
in NCI's Certificate of
Incorporation) or, in certain
circumstances, Craig O. McCaw
shall cease to be entitled to
designate a majority of the
members of the Operations
Committee.
iv) LIMITATIONS ON MERGERS - Mergers
among Restricted Companies will be
permitted, so long as in any
merger involving the Borrower, the
Borrower is the surviving entity.
Mergers by NCI will be permitted
so long as, after giving effect
thereto, no default or change of
control shall exist and the net
worth of the combined
<PAGE> 13
- 7 -
surviving entity is at least
equal to the net worth of NCI
prior to the merger.
v) LIMITATIONS ON PERMITTED
ACQUISITIONS - Acquisitions will
be permitted so long as (i) for
cash consideration (up to an
aggregate of $200,000,000 for all
acquisitions during the term of
the Facility), (ii) for equity
capital of NCI, (iii) consisting
of the currently planned 800 MHz
auction or (iv) consisting of
acquisitions (up to a limit to be
agreed upon) designed to create
contiguous spectrum blocks for the
Restricted Companies. In the case
of any acquisition involving cash
or equity in an amount greater
than $50,000,000, the amount of
Subscribers and most recent
quarter's revenue (multiplied by
4) of the assets or business being
acquired (as determined on the
date of such acquisition) shall
thereafter be deducted from the
determination of any future
compliance with the Minimum
Subscribers and Minimum Revenue
covenants.
vi) LIMITATION ON INVESTMENTS -
Restrictions on investments other
than (i) investments in cash
equivalents; (ii) receivables in
the ordinary course of business;
(iii) investments in affiliates
(amount to be determined); (iv)
investments among Restricted
Companies; and (v) investments of
up to $250 MM in the Unrestricted
Companies, such amount to be
increased by any amount of equity
proceeds received by the
Restricted Companies other than
the proceeds of planned option
exercises.
vii) RESTRICTIONS ON ASSET SALES (not
including swap transactions
for like-kind assets of comparable
value) other than:
a) the sale of assets in
the ordinary course of
business; and
b) the sale of assets for
cash and for fair value (the net
cash proceeds of which are applied
as described under "Mandatory
Prepayments" above) so long as i)
no default is in existence or
would result therefrom, ii) after
giving effect thereto, the
Restricted Companies would be in
pro forma compliance, and iii)
cumulative sales do not exceed
$250MM during the term of the
deal.
viii) RESTRICTED PAYMENTS AND
DISTRIBUTIONS shall not be
permitted except:
<PAGE> 14
- 8 -
a) to the extent necessary to
make required tax distributions
(as set forth in a tax sharing
agreement satisfactory to the
Lenders);
b) to the extent necessary to
service the Public Notes as
outlined in the indentures,
subject to covenant
compliance under the Loan
Agreement; and
c) once leverage is below 5.00x
and after giving effect to
the Excess Cash Flow
Recapture, funds can be
distributed subject to the
Facility being repaid by an
amount equal to such
distribution.
In the case of dividends and
restricted payments, such
restrictions would be structured
in a manner to be consistent with
the requirements of the Public
Notes.
ix) HEDGING REQUIREMENTS - Nextel
will ensure that within 90
days of closing and at the
end of such fiscal quarter thereafter,
at least 50% of Total Debt is either
fixed rate debt or effectively hedged
through satisfactory hedging
arrangements. Swaps will be secured
pari passu with the Facilities if
effected by participating banks.
x) AFFILIATES. Limitation of transactions
with Affiliates (including NCI and
Unrestricted Companies).
xi) FINANCIAL COVENANTS - NCI and
Restricted Companies (as applicable) must
meet the following financing tests at
the end of each fiscal quarter:
a) Minimum Subscriber test for
Restricted Companies:
<TABLE>
<CAPTION>
PERIOD MINIMUM SUBSCRIBERS
------ -------------------
<S> <C>
9/30/96 800,000
12/31/96 800,000
3/31/97 900,000
6/30/97 950,000
9/30/97 1,000,000
12/31/97 1,120,000
3/31/98 1,230,000
6/30/98 1,390,000
9/30/98 1,575,000
12/31/98 1,750,000
1999-2000 2,250,000
</TABLE>
<PAGE> 15
- 9 -
b) Minimum Annualized Revenue test
for Restricted Companies:
<TABLE>
<CAPTION>
PERIOD MINIMUM REVENUE
------ ---------------
<S> <C>
9/30/96 $ 240,000,000
12/31/96 $ 250,000,000
3/31/97 $ 275,000,000
6/30/97 $ 300,000,000
9/30/97 $ 340,000,000
12/31/97 $ 400,000,000
3/31/98 $ 500,000,000
6/30/98 $ 650,000,000
9/30/98 $ 815,000,000
12/31/98 $ 975,000,000
1999 $1,485,000,000
2000 $2,150,000,000
</TABLE>
c) The ratio of Secured
Indebtedness to Annualized
Revenue shall not exceed the
following (on an incurrence
or maintenance basis, as
indicated):
<TABLE>
<CAPTION>
Maximum Ratio
PERIOD INCURRENCE MAINTENANCE
------ ---------- -----------
<S> <C> <C>
Closing - 9/29/97 4.25x 4.50x
9/30/97 - 12/30/97 3.50x 3.75x
12/31/97 - 3/30/98 2.75x 3.00x
3/31/98 - 9/29/99 2.50x 2.75x
</TABLE>
d) Total Contributed Capital
shall be at least equal to
$550MM by 12/31/97 and
$1,100MM by 12/31/99.
e) The ratios of Secured Indebtedness
and Total Indebtedness to
Annualized Operating Cash Flow
shall not exceed:
<TABLE>
<CAPTION>
SECURED TOTAL
PERIOD DEBT/CF DEBT/CF
------ ------- -------
<S> <C> <C>
9/30/99 - 3/30/00 10.00x 15.00x
3/31/00 - 3/30/01 5.00x 7.50x
3/31/01 - 3/30/02 4.00x 6.00x
3/31/02 - thereafter 3.00x 5.00x
</TABLE>
<PAGE> 16
- 10 -
f) The ratios of Annualized
Operating Cash Flow to Cash
Interest Expense for the four
fiscal quarters most recently
completed must be at least
the following:
<TABLE>
<CAPTION>
PERIOD MINIMUM RATIO
------ -------------
<S> <C>
9/30/99 - 3/30/00 1.10
3/31/00 - 3/30/01 1.50
3/31/01 - thereafter 2.00
</TABLE>
g) Pro-Forma Debt Service Ratio must
be at least the following:
<TABLE>
<CAPTION>
PERIOD MINIMUM RATIO
------ -------------
<S> <C>
3/31/01 & thereafter 1.00
</TABLE>
h) Fixed Charges Ratio for the
most recently completed four
fiscal quarters, must be at
least 1.0 to 1 for each
fiscal quarter beginning in
3/31/01.
GENERAL: Including but not limited to the
following:
i) Nextel shall be responsible for
reasonable fees of the Arrangers' counsel
in preparation of documentation and for
any reasonable out of pocket expenses;
ii) Nextel shall provide quarterly
unaudited financial statements
with respect to the Restricted Companies
within 60 days of quarter's end and annual
audited financial statements with respect
to the Restricted Companies within 120
days of fiscal year's end, quarterly
operating reports, and any other
information which may be reasonably
requested from time to time;
iii) All loan documents shall be
governed by the laws of the
State of New York; and
iv) Indemnification of the Arrangers
and the Lenders and their respective
affiliates, officers, directors,
employees, agents and advisors for any
claims, damages, losses, liabilities and
expenses (including, without limitation,
reasonable fees and expenses of counsel)
arising out of or in connection with the
Facility, the transactions contemplated
thereby or the use of proceeds.
ASSIGNMENTS AND
PARTICIPATIONS: Lenders will be permitted to assign and participate
the Facility (i) on a collateral basis to any
Federal Reserve Bank and (ii) subject to the
consent of the Borrower and the Administrative
Agent, which consent will not be unreasonably
<PAGE> 17
- 11 -
withheld, to any bank, or other financial
institution (including funds). Assignments pursuant
to clause (ii) of the preceding sentence will be in
minimum amounts of $5,000,000. Voting rights to
participants will be limited to an increase in
principal amount, reduction of rates of interest or
fees, postponement of the scheduled payments of any
principal, interest or fees, changes to required
reductions of the commitment or release of any
material collateral. Assignments will be subject
to the payment by the assigning Lender of a service
fee (to be determined) to the Administrative Agent
(to be determined).
YIELD PROTECTION: The loan documents will contain yield protection
provisions, customary for telecommunications
facilities of this nature, protecting the Lenders
in the event of unavailability of funding, losses,
reserve and capital adequacy requirements.
COUNSEL TO THE
ARRANGERS: Milbank, Tweed, Hadley & McCloy
EXPENSES: The Borrower shall reimburse the Arrangers for all
reasonable out-of-pocket expenses (including
reasonable fees and expenses of outside counsel
for the Arrangers, including FCC Counsel)
incurred by them in the negotiation, syndication
and execution of the Facility. Such expenses
shall be reimbursed by the Borrower upon
presentation of a statement of account, regardless
of whether the transaction contemplated is
actually completed or the loan documents are
signed.
<PAGE> 18
- 12 -
DEFINITIONS: Unless otherwise indicated, all cash flow, income
and expense calculations include only the
Restricted Companies (as defined below), and
exclude Unrestricted Companies.
"Annualized Operating Cash Flow" for any fiscal
quarter means Operating Cash Flow for the
immediately preceding quarter multiplied by four
(4).
"Annualized Revenue" on any date means revenue
for the most recent three months multiplied by four
(4).
"Availability" means that portion of
the Facility that is undrawn.
"Capital Expenditures" means those expenditures
defined per GAAP as capital in nature that are used
exclusively to construct wireless
telecommunications systems , excluding any portion
thereof financed with the proceeds of debt or
equity.
"Debt Service" means all principal, cash Interest
Expense and fees paid or payable on Indebtedness.
"Excess Cash Flow" means, for any Fiscal Year,
the amount (if any) by which (a) Operating Cash
Flow for such Fiscal Year exceeds (b) the sum of
(i) Debt Service for such Fiscal Year plus (ii) the
aggregate amount of Capital Expenditures made by
the Restricted Companies during such Fiscal year
plus (iii) cash Income Taxes paid for such Fiscal
Year.
"Fixed Charges" for any fiscal quarter means the
sum of a) all Debt Service, b) Capital
Expenditures, and c) cash Income Taxes paid for
that quarter.
"Fixed Charge Ratio" for any fiscal quarter
means the ratio of Annualized Operating Cash Flow
plus Availability and cash-on-hand at the beginning
of the period tested to Fixed Charges.
"Interest Coverage Ratio" for any fiscal quarter
means the ratio of Operating Cash Flow for the
fiscal quarter most recently completed to Cash
Interest Expense for the fiscal quarter most
recently completed.
"Majority Lenders" means 51% of the Lenders as
determinedby commitment amount or outstandings, as
applicable.
"Operating Cash Flow" for any fiscal quarter means
as of the last day of each fiscal quarter,
the sum of Net Income for that quarter plus a)
Income Tax Expense, b) Interest Expense for that
period, c) depreciation, amortization, and other
non-cash charges for that period, adjusted for
extraordinary items and
<PAGE> 19
- 13 -
non-cash minority interest
payments and receipts, all determined in accordance
with GAAP, consistently applied.
"Pro-Forma Debt Service" for any fiscal quarter
means projected cash interest expense and scheduled
principal repayments for the immediately following
four fiscal quarters.
"Pro-Forma Debt Service Ratio" for any fiscal
quarter means the ratio of Annualized Operating
Cash Flow to Pro-Forma Debt Service.
"Public Notes" refers to the Nextel
Communications, Inc. Notes due 2003, the Nextel
Communications, Inc. Notes due 2004, the OneComm
Notes due 2004, the DialPage Notes due 2004 and the
DialPage Notes due 2005 or newly issued Notes that
are used to refinance any of the above, so long as
the same (i) are not greater in amount, and are
longer in maturity, than the Notes being refinanced
and (ii) are not more restrictive than the Notes
due 2004.
"Restricted Companies" means Nextel and all U.S.
SMR operating subsidiaries of NCI or Nextel plus
any other existing or to be created restricted
subsidiaries pursuant to the Public Notes.
"Secured Indebtedness" means, as of any date of
determination, all secured indebtedness for
borrowed money, of the Restricted Companies
including capital lease obligations and contingent
liabilities such as guarantees and obligations
under letters of credit and including all Bank Debt
and Vendor Debt.
"SMR Systems" means all analog and digital
Specialized Mobile Radio networks in the United
States, utilizing 800 Mhz and 900 Mhz SMR licenses
issued by the FCC.
"Subscribers" means the number of users
(including dispatch, cellular and multi service
users) which have been purchasing services on the
Restricted Companies' network for not less than 30
days, and are not more than 90 days past due on
any amounts owed to the Restricted Companies.
"Total Contributed Capital" means equity or
Subordinated Debt to the extent the proceeds of
such equity or Subordinated Debt are contributed as
additional common equity to the Restricted
Companies.
"Total Debt" means Secured Indebtedness plus all
other indebtedness for borrowed money (including
secured interest) of NCI and the Restricted
Companies including money borrowed by NCI.
<PAGE> 20
- 14 -
"Unrestricted Subsidiaries" means any subsidiary
of NCI other than the Restricted Companies.
"Vendor Debt" means indebtedness owed to the
Vendors.
"Vendors" means Motorola, Inc. and NTFC Capital
Corporation.
