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):April 15, 1997(April 10, 1997)
NEXTEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19656 36-3939651
(State or other jurisdiction (Commission File (I.R.S. Employer
of 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>
Item 5. Other Events.
On April 11, 1997, Nextel Communications, Inc. ("Nextel") reached an
agreement with Digital Radio, L.L.C., an entity controlled by Craig O. McCaw
(the "McCaw Investor"), pursuant to which the McCaw Investor committed to
exercise in full its currently outstanding option (the "First Tranche Option")
to purchase 15,000,000 shares of Nextel's Class A Common Stock, par value $0.001
per share ("Nextel Common Stock"), for an aggregate purchase price of
$232,500,000 (the "Option Commitment"), with the consummation thereof scheduled
to occur on July 28, 1997, (the "Option Closing").In consideration for the McCaw
Investor's making the Option Commitment, Nextel agreed to issue to the McCaw
Investor a contingent equity instrument (the "CEI"), which, at any time between
the Option Closing and July 18, 1999, may be converted, without any additional
consideration, into a number of shares of Nextel Common Stock to be determined
using a formula based upon the average closing price for a share of Nextel
Common Stock during the 20 trading days immediately preceding the Option Closing
(the "Average Trading Price"). The number of shares of Nextel Common Stock into
which the CEI may be converted ranges from a minimum of no shares, if the
Average Trading Price is equal to $15.50 or more, to a maximum of 1,607,143
shares, if the Average Trading Price is $14.00 or less. The remaining options
held by the McCaw Investor to purchase up to 20,000,000 additional shares of
Nextel Common Stock remain in effect as originally issued.
Nextel also reached an agreement with Option Acquisition, L.L.C., an
entity controlled by Mr. McCaw (the "Purchaser"), pursuant to which the
Purchaser will acquire, for an aggregate purchase price of $25,000,000, an
option, in replacement of the option previously issued to Comcast Corporation,
to purchase 25,000,000 shares of Nextel Common Stock (the "New Option"),
15,000,000 of which would be purchasable at an exercise price of $16.00 per
share and the remaining 10,000,000 of which would be purchasable at an exercise
price of $18.00 per share, at any time through July 28, 1998 amounting to an
aggregate of $420 million in new equity. The New Option, and any shares of
Nextel Common Stock issued upon exercise thereof, would be transferable, subject
to certain limitations. In addition, one direct transferee of the Purchaser
would be entitled to designate one nominee for election to Nextel's Board of
Directors, provided that such party (i) has exercised the transferred portion of
the New Option and continues to own at least 10,000,000 shares of Nextel Common
Stock obtained on such exercise, (ii) is not an affiliate of Mr. McCaw, and
(iii) does not hold a 5% or greater equity ownership interest in any entity that
provides terrestrial-based wireless communications services in competition with
Nextel in any of its markets. Shares issuable upon exercise of the New Option
will be entitled to certain demand and piggyback registration rights, which
would be assignable to transferees in certain circumstances.
Finally, Nextel has also reached an understanding with the McCaw
Investor, which contemplates that the McCaw Investor will provide up to
$50,000,000 in debt financing on terms and subject to conditions that parallel
those contemplated in Nextel's senior secured financing commitment with
Motorola, Inc.
Each of the transactions described above is subject to negotiation of
definitive agreements and to receipt of certain approvals, including Nextel's
receipt of consents to certain amendments of its public indentures that would
enhance Nextel's financing flexibility.
The Memorandum of Understanding dated as of April 11, 1997 between
Nextel, Unrestricted Subsidiary Funding Company, a subsidiary of Nextel, and
Purchaser, and the Memorandum of Understanding dated as of April 11, 1997
between Nextel and McCaw Investor relating to the transactions described above
are attached to this Current Report as Exhibits 99.1 and 99.2, respectively, and
are incorporated herein by reference, and the description contained herein is
qualified in its entirety by reference thereto.
On April 14, 1997, Nextel issued a Press Release describing the
agreements reached with the McCaw Investor and the Purchaser, a copy of which is
attached to this Current Report as Exhibit 20.1 and is incorporated herein by
reference.
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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
20.1 Press Release issued April 14, 1997.
99.1 Memorandum of Understanding, dated as of April 11, 1997,
between Nextel Communications, Inc., Unrestricted
Subsidiary Funding Company and Option Acquisition, L.L.C.
99.2 Memorandum of Understanding, dated as of April 11, 1997,
between Digital Radio, L.L.C. and Nextel Communications,
Inc.
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: April 15, 1997 By: /s/ Steven M. Shindler
Steven M. Shindler
Senior Vice President & CFO
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EXHIBIT INDEX
Exhibit No. Exhibit Description Page
20.1 Press Release issued April 14, 1997.
99.1 Memorandum of Understanding, dated as of April 11, 1997,
between Nextel Communications, Inc., Unrestricted
Subsidiary Funding Company and Option Acquisition, L.L.C.
99.2 Memorandum of Understanding, dated as of April 11, 1997,
between Digital Radio, L.L.C. and Nextel Communications,
Inc.
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EXHIBIT 20.1
NEWS RELEASE
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
703-394-3000
[LOGO] Media:
Ben Banta (703) 394 - 3573
For Immediate Release Investors/Analysts:
Paul Blalock (703) 394 - 3500
NEXTEL ANNOUNCES EARLY COMMITMENT OF MCCAW FAMILY
TO EXERCISE OPTIONS, AN EXPANDED AGREEMENT FOR ADDITIONAL FINANCING
AND RECORD FIRST QUARTER SUBSCRIBER GAINS
-- Commitment to Early Exercise of July 1997
Options Worth $232.5 Million --
-- McCaw Family Pays $25 Million for New
July 1998 Options Worth $420 Million --
-- Record First Quarter Digital Adds of 122,600
on Increased Revenue --
McLEAN, VA., April 14, 1997 -- Nextel Communications, Inc.(NASDAQ: NXTL) today
announced an early McCaw Family commitment to exercise its option to acquire 15
million shares of Nextel common stock on July 28, 1997, at an exercise price of
$15.50 per share, for a total of $232.5 million. The McCaw Family also
purchased, for a $25 million total purchase price, options to acquire up to 25
million shares expiring in July 1998 for a total exercise price of $420 million
in new equity, further increasing the potential McCaw Family strategic
investment in Nextel to approximately $1.6 billion.
Nextel also announced that it added a record 122,600 digital subscribers during
the first quarter of 1997. As of March 31, 1997, Nextel has approximately
422,900 digital subscriber units in service in hundreds of cities across the
U.S. The increase is a 70 percent jump over last year's fourth quarter results
when 72,300 digital subscriber units were added. The company also announced an
increase in average monthly revenue per digital unit from a fourth quarter 1996
level of $56 to a first quarter 1997 level of $59.
"Strong subscriber growth and the early option exercise and enhanced financing
from the McCaw Family are significant votes of confidence and confirm that we're
on target with our business plan," said Dan Akerson, chairman and chief
executive officer of Nextel Communications. "We continue to aggressively build
out our network and now have rolled out an equally aggressive advertising and
marketing program to fuel our growth."
"Under Dan Akerson's able leadership, Nextel is finally on the road to
fulfilling the promise of high quality wireless communications for work groups,"
commented Craig O. McCaw, Nextel's leading shareholder. "We appreciate the
incredible effort Motorola has made in lifting the iDEN technology to a global
standard of quality."
<PAGE>
The new McCaw Family July 1998 options to acquire 25 million shares are divided
into an option to acquire 15 million Nextel shares at an exercise price of $16
per share and 10 million shares at an exercise price of $18 per share. These
options expire on July 28, 1998.
In a related transaction, the McCaw Family has agreed to provide Nextel with $50
million in senior secured financing in order to permit Nextel to meet certain
requirements of its current financing commitment with Motorola. In addition,
Nextel has agreed, concurrent with the firm commitment of the McCaw Family to
exercise its options for 15 million shares at $15.50 per share, to issue a price
protection instrument to the McCaw Family that will be exercisable at no cost
for up to 1.6 million shares of Nextel common stock. The actual number of shares
to potentially be issued will vary based upon the average market price of Nextel
common stock for the 20 days prior to the July 28 option exercise. No additional
shares will be issued if the average is above the $15.50 exercise price and the
maximum number of shares will be issued if the average is $14.00 or less. Nextel
has also agreed that the McCaw Family may grant, to a purchaser of at least 10
million of the shares issuable on exercise of the new options, a right to
designate one nominee for election to Nextel's board.
The transactions are subject to negotiation of definitive agreements and to
receipt of certain approvals, including Nextel's receipt of consents to certain
amendments of its public indenture that would enhance Nextel's financing
flexibility.
Nextel Communications, based in McLean, VA, is the nation's leading provider of
fully integrated wireless communications and has built the largest guaranteed
all-digital wireless network in the United States. To learn more about Nextel
and our services, visit our website at http://www.nextel.com.
# # #
EXHIBIT 99.1
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is between Nextel Communications, Inc.
("Nextel"), Unrestricted Subsidiary Funding Company ("USFC") and Option
Acquisition, L.L.C. ("Option Acquisition"), and is dated as of April 11, 1997.
I. Current Status.
A. USFC, a wholly-owned subsidiary of Nextel, has acquired from an
affiliate of Comcast Corporation ("Comcast") options held by such Comcast
affiliate to acquire 25 million shares of Nextel (the "Comcast Options"). The
purchase price paid for such Comcast Options was $1.00 per share, or a total of
$25 million.
B. Option Acquisition wishes to enter into a transaction with Nextel
and USFC wherein Option Acquisition would obtain from USFC certain rights in and
to the Comcast Options, which rights would in turn be exchanged with (or
surrendered for cancellation to) Nextel, for the issuance by Nextel to Option
Acquisition of new options to acquire 25 million shares of Nextel (the "New
Options"), which New Options would have terms and conditions that would
generally parallel those of the Comcast Options but would also contain certain
terms and conditions additional to, or different from, those contained in the
Comcast Options.
II. Acquisition of New Options.
A. Option Acquisition would pay USFC a total of $25 million in cash in
return for the right to cause the Comcast Options to be exchanged or canceled in
connection with the issuance of the New Options as described below in this
Section II. The closing of the transaction respecting the Comcast Options
described in this paragraph
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A would be contingent upon and subject to the contemporaneous closing of the
transactions relating to the issuance of the New Options connected therewith, as
described below in this Section II.
B. Simultaneously with the transactions described in paragraph A
above, and without the payment of any additional amount by Option Acquisition
(but in consideration of the agreements and commitments of Option Acquisition
set forth herein and of Digital Radio L.L.C. set forth in a Memorandum of
Understanding with Nextel of even date), Nextel will issue and Option
Acquisition will acquire the New Options. The New Options will permit the holder
thereof to purchase up to a total of 25 million Nextel shares, of which 15
million of such New Options would be exercisable to acquire 15 million Nextel
shares at an exercise price of $16.00 per share, and the remaining 10 million of
such New options would be exercisable to acquire 10 million Nextel shares at an
exercise price of $18.00 per share, and such New Options will provide that they
may be exercised at any time prior to 6:00 p.m. New York local time on July 28,
1998.
C. Subject to applicable securities laws, the New Options or
any shares obtained on exercise of the New Options ("New Shares") may be sold or
otherwise transferred by Option Acquisition in accordance with the following:
(i) if the proposed transfer (or series of related proposed transfers) relates
to New Options and/or New Shares representing less than 5,000,000 shares of
Nextel Common Stock, or to a proposed transfer of any number of New Shares to be
effected pursuant to a broadly-disseminated underwritten secondary public
offering, such proposed transfer may be effected by Option Acquisition in its
sole discretion and (ii) in any other case, such proposed transfer shall not be
effected without the prior consent of Nextel, which shall not be unreasonably
withheld or delayed. Transfers of equity interests in Option
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Acquisition (which as of the Closing will be wholly owned, directly or
indirectly, by Craig O. McCaw, his brothers and mother) shall be treated, on a
proportionate and derivative basis, as transfers of the New Options and/or New
Shares held by Option Acquisition at the relevant time. A transferee of New
Options and/or New Shares received in accordance with clause (ii) above shall be
required to agree that future transfers by such transferee shall be subject to
the same standards and procedures as outlined above for proposed transfers by
Option Acquisition.
D. Any party to which the New Options or any New Shares may be
transferred by Option Acquisition, having exercised such New Options and
continuing to hold no fewer than 10 million New Shares shall be entitled to
election of one director of Nextel as designated by such investor; provided that
the person so designated must undergo the normal process and meet reasonable
criteria for approval as a proposed director, involving both the Operations
Committee and the full Board of Directors of Nextel; and further provided that
(i) such right may not be transferred to or exercised by a controlled affiliate
of Craig O. McCaw, (ii) such right may not be transferred to or exercised by any
person or entity that has a 5% or greater equity ownership interest in any
entity that provides terrestrial - based wireless communications services in
competition with Nextel in any of its markets, unless approved by at least
two-thirds of the Nextel directors (excluding directors who have been designated
to the Nextel Board by Craig O. McCaw or his controlled affiliates), (iii) such
right shall terminate automatically, and such designated director shall have
agreed to resign from the Nextel Board at Nextel's request, when the relevant
investor ceases to hold the requisite threshold level of Nextel equity and (iv)
such right shall be transferable only by Option Acquisition to a single
investor, and shall not be capable of further transfer or assignment.
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E. So long as Option Acquisition is directly or indirectly controlled
by Craig O. McCaw, Nextel will permit any and all of the New Shares held by
Option Acquisition to be included as "Registrable Securities" (as such term is
defined in and for purposes of the Registration Rights Agreement entered into as
of July 28, 1995, as amended, by and among Nextel and Digital Radio L.L.C. (the
"Registration Agreement")) for purposes of any exercise of demand or piggyback
registration rights pursuant to such Registration Agreement. In addition, Nextel
shall grant to Option Acquisition two additional demand registration rights and
unlimited piggyback rights exercisable by such investor with respect to any and
all of the New Shares. The minimum number of New Shares which may utilize such
right is 3,000,000 New Shares. Such registration rights shall be at Nextel's
expense and shall be included in a separate agreement in form and substance
similar in all material respects to the Registration Agreement, and which shall
be entered into by Nextel and Option Acquisition at or prior to the closing of
the acquisition of the New Options. The registration rights under such agreement
shall be assignable by Option Acquisition, in whole or in part, to not more than
two additional non-affiliated entities who receive from Option Acquisition New
Options or New Shares representing (as to each such entity) at least 3,000,000
shares of Nextel Common Stock. No entity (including, without limitation, Option
Acquisition) may exercise registration rights with respect to the New Shares (x)
prior to January 1, 1999 or (y) if such entity, in reliance on Rule 144 (or any
amended or replacement rule then in effect), could dispose of the New Shares
sought to be registered in the ninety (90) day period commencing on the date of
the relevant registration request.
F. The transactions contemplated by this Section II shall be
conditioned upon Nextel obtaining the required consents of the holders of each
outstanding issue of
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Nextel's public notes (the "Notes") to amendments to the indentures governing
the Notes (the "Indentures") that would permit Nextel to incur additional
borrowings. Such amendments shall be on terms and conditions reasonably
satisfactory to Option Acquisition and shall allow Nextel (i) to incur debt
evidenced by unsecured notes issued on or prior to December 31, 1997 for which
Nextel will receive gross proceeds of up to $350 million, (ii) to incur
additional debt in an aggregate amount up to two times the aggregate net
proceeds received by Nextel from the issuance of certain qualifying equity
securities (excluding the proceeds received in connection with the exercise by
Digital Radio, L.L.C. of the options expiring on July 28, 1997), and (iii) to
incur certain additional categories of permitted debt in an aggregate amount of
up to $2.5 billion.
III. Future Documentation.
The parties hereto and their respective representatives and advisors
will use their best efforts in good faith to prepare and finalize appropriate
definitive documentation as soon as is practicable to implement the undertakings
and related matters contemplated by this Memorandum of Understanding. Such
definitive documentation shall be in all respects consistent with the terms and
conditions set forth herein, shall contain representations and warranties as
indicated in Section IV below and such other representations, warranties,
covenants and other terms and conditions as are customary and appropriate for
transactions of this type and otherwise shall be reasonably acceptable to each
of the parties. The parties each shall use their respective best efforts in good
faith to obtain all necessary governmental, judicial and third party consents
required to implement any of the matters contemplated herein, and agree that
such parties' mutual objective is enter into definitive documentation (subject
to the matters discussed above) as soon as is practicable.
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IV. Representations and Warranties
A. Nextel shall make reasonable representations and warranties as
to the current status of its business, as to the consummation of acquisition of
the Comcast Options, and as to other matters reasonably requested by Option
Acquisition.
B. Option Acquisition shall make representations as to its
authority and power, and such other representations as may reasonably be
requested by Nextel.
C. The final documentation shall provide that, assuming compliance
with any relevant federal or state securities and antitrust laws, no decision by
Option Acquisition to exercise and/or to transfer any of the New Options shall
be subject to the need to seek or obtain any consent or approval of, or make any
notice to or filing with, any third party (other than the consent of Nextel, if
relevant, as provided in Section II.C. above) or any governmental agency, court
or similar governmental or judicial body.
NEXTEL COMMUNICATIONS, INC.
By: /s/Steven Shindler
Its: Steven Shindler, Senior Vice President & CFO
UNRESTRICTED SUBSIDIARY
FUNDING COMPANY
By: /s/Steven Shindler
Its: Steven Shindler, Senior Vice President & CFO
OPTION ACQUISITION, L.L.C.
By: /s/Dennis Weibling
Its: President
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EXHIBIT 99.2
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is between Digital Radio, L.L.C.
("Digital Radio") and Nextel Communications, Inc. ("Nextel"), and is dated as
of April 11, 1997.
I. Current Status.
A. Digital Radio has the right, pursuant to an Option Agreement dated
as of July 28, 1995, to purchase up to 15 million shares of common stock of
Nextel at an exercise price of $15.50 per share ("Option").
B. The Option described above must be exercised on or before
6:00 p.m. New York local time, July 28, 1997.
C. The total price for the Nextel shares to be acquired upon
exercise of the Option, at the relevant exercise price of $15.50 per share, is
$232,500,000.
II. Option Exercise Transaction.
A. Digital Radio commits to exercise its Option to purchase shares in
Nextel from Nextel to the extent of a total purchase price of $232,500,000.
Notwithstanding that Digital Radio's commitment shall be fixed as of the date of
the comprehensive documentation contemplated by Section V hereof, closing of the
Option exercise and transfer of funds shall occur on Monday, July 28, 1997 (the
"Closing").
B. In consideration of Digital Radio's early exercise commitment set
forth in the foregoing paragraph A, Nextel will enter into a Contingent Equity
Instrument ("CEI") and issue and deliver, in exchange for a cash payment of One
Hundred Sixty-One Dollars ($161.00), such CEI to Digital Radio at the time of
execution and delivery of the comprehensive documentation contemplated by
Section V hereof. The CEI will provide
<PAGE>
that it shall be convertible, at Digital Radio's election at any time at or
after the Option exercise and transfer of funds contemplated in the foregoing
paragraph A until July 28, 1999, without the payment of any additional amount by
Digital Radio, into a number of fully paid and non-assessable shares of Nextel
common stock given by the formula shown on Annex A attached hereto.
C. The purchase price for each share of Nextel common stock acquired
pursuant to exercise of the Option at the Closing shall be $15.50, resulting in
an issuance of 15,000,000 Nextel shares to, and the payment of an aggregate cash
purchase price of $232,500,000 by, Digital Radio at the Closing.
D. The transactions contemplated by this Section II shall be
conditioned upon Nextel obtaining the required consents of the holders of each
outstanding issue of Nextel's public notes (the "Notes") to amendments to the
indentures governing the Notes (the "Indentures") that would permit Nextel to
incur additional borrowings. Such amendments shall be on terms and conditions
reasonably satisfactory to Digital Radio and shall allow Nextel (i) to incur
debt evidenced by unsecured notes issued on or prior to December 31, 1997 for
which Nextel will receive gross proceeds of up to $350 million, (ii) to incur
additional debt in an aggregate amount up to two times the aggregate net
proceeds received by Nextel from the issuance of certain qualifying equity
securities (excluding the proceeds received in connection with the exercise by
Digital Radio of the Option), and (iii) to incur certain additional categories
of permitted debt in an aggregate amount of up to $2.5 billion.
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III. Concurrent Undertakings
A. Digital Radio will agree to lend up to $50,000,000 to
Nextel, in satisfaction of the related condition pertaining to the Tranche E
Senior Secured Loans referred to in that certain Term Sheet for Debt Financing,
dated as of March 26, 1997, between Nextel and Motorola, Inc. ("Motorola"),
filed as Exhibit 10.37 to Nextel's Form 10-K Report for the Fiscal Year ended
December 31, 1996 (the "Motorola Term Sheet"), under the following conditions
(and any other conditions applicable to the Tranche E Senior Secured Loans
referred to in the Motorola Term Sheet):
1. The loan facility will parallel the terms and
conditions of the Motorola Tranche E Senior Secured Loan facility in the amount
of $200,000,000;
2. Digital Radio will receive (on the date of the first dollar
drawdown of such loan and regardless of the amount of the drawdown or the total
drawdown) warrants to purchase 250,000 shares of Nextel common stock at an
exercise price equal to the average of the closing prices for Nextel shares on
the NASDAQ on each of the 20 days preceding the first dollar drawdown of the
loan and with an expiration date five years from the date thereof in
consideration of the financing;
3. Digital Radio debt will rank pari passu with the Motorola
Tranche E Senior Secured debt;
4. Nextel will exercise its good faith, best efforts to locate
an investor or investors to contribute at least an additional $400,000,000 of
equity. The amount of the Digital Radio landing commitment is reduced by $20 for
every $100 of equity raised by Nextel. For purposes of the first sentence of
this subparagraph A.4., all equity proceeds received by Nextel upon issuance of
its equity securities shall be counted toward such $400 million objective other
than equity proceeds received in respect of exercises by (i)
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Digital Radio of the options for an aggregate of 35 million shares of Nextel
common stock held by Digital Radio on the date hereof (the "Existing DR
Options") and (ii) by Motorola or its assignees of the options for an aggregate
of 3 million shares of Nextel Common Stock originally issued to Motorola in
connection with the equipment purchase and financing arrangements between Nextel
and Motorola entered in to in 1991 ("Motorola Options"). For purposes of this
subparagraph A.4, all equity proceeds received from Digital Radio or any of its
controlled or controlling affiliates, upon exercise of the Existing DR Options,
and any equity proceeds received upon exercise of the Motorola Options from any
controlling or controlled affiliates of Motorola, shall not be taken into
account in reducing the lending commitment of Digital Radio hereunder.
5. No drawdown is permitted outside the commitment
period applicable to the Motorola Tranche E Senior Secured Loans.
6. No Digital Radio financing is required unless prior
to drawdown:
a. All bank financing under current $1.655 billion
credit arrangement must be fully drawn down;
b. All debt under the current $345 million Vendor
Financing Agreement must be fully drawn down;
c. Nextel must borrow an additional $250 million under
the Amended Credit Agreement;
d. Motorola must provide an additional $50 million of
financing under the Amended Vendor Financing Agreement;
e. Nextel must borrow all of Tranche D financing $200
million from Motorola;
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f. Nextel must access capital markets for an additional
$250 million of high-yield debt;
g. All other terms and conditions will be consistent
with the Motorola Tranche E loan.
7. The parties recognize that certain actions involving
Digital Radio and/or its controlled or controlling affiliates (including without
limitation, Digital Radio's designees to the Nextel Board, in their capacities
as directors and as members of any Board Committee) may be required or
contemplated to satisfy or bring about the satisfaction of certain
conditions to the Motorola Tranche E Senior Secured Loan Financing and/or
the related $50 million Digital Radio Financing. It is understood that,
to the extent such conditions are not satisfied by reason of any action or
failure to act on the part of Digital Radio or such controlling or controlled
affiliates thereof, Digital Radio shall be deemed to have waived satisfaction
of such conditions as they relate to Digital Radio's obligation to provide the
$50 million of debt financing contemplated above.
IV. Additional Condition for Digital Radio Undertakings.
The Lock-Up Period provided in Section 8.3(g) of the Securities
Purchase Agreement shall terminate as of the Closing.
V. Future Documentation.
The parties hereto and their respective representatives and advisors
will use their best efforts in good faith to prepare and finalize appropriate
definitive documentation as soon as is practicable to implement the undertakings
and related matters contemplated by this Memorandum of Understanding. Such
definitive documentation shall be in all respects consistent with the terms and
conditions set forth herein, shall contain representations and warranties as
indicated in Section IV below and such other
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representations, warranties, covenants and other terms and conditions as are
customary and appropriate for transactions of this type and otherwise shall be
reasonably acceptable to each of the parties. The parties each shall use their
respective best efforts in good faith to obtain all necessary governmental,
judicial and third party consents required to implement any of the matters
contemplated herein, and agree that such parties' mutual objective is enter
into definitive documentation (subject to the matters discussed above) as soon
as is practicable.
VI. Representations and Warranties
A. Nextel shall make reasonable representations and warranties as to
the current status of its business and as to other matters reasonably requested
by Digital Radio; no such representations and warranties (other than on "basic"
matters, such as due incorporation, due authorization and execution of
definitive documents, number and type of authorized shares of capital stock and
the like) shall be "brought down" to Closing.
B. Digital Radio shall make representations as to its authority
and power, and such other representations as may reasonably be requested by
Nextel.
C. The final documentation shall provide that, assuming
compliance with any relevant federal or state securities and antitrust laws,
the option exercise commitment of Digital Radio set forth in Section I. hereof
and the lending commitment of Digital Radio set forth in Section III.A. hereof
(as to the latter, subject to the conditions set forth in the final
documentation as contemplated in Section III.A.), shall be irrevocable and
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unconditional, and shall not be subject to the need to seek or obtain any
consent or approval of, or to make any notice to or filing with, any third party
or any governmental agency, court or similar governmental or judicial body.
NEXTEL COMMUNICATIONS, INC.
By: /s/Steven Shindler
Its: Steven Shindler, Senior Vice President & CFO
DIGITAL RADIO, L.L.C.
By: /s/Dennis Weibling
Its: President
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ANNEX A
[TO EARLY COMMITMENT MOU]
The contingent Exercise Instrument ("CEI") shall be exchangeable for a
number of shares of Nextel Common Stock ("N") determined in accordance with the
following formula:
(a) if X is $14.00 or less, N equals 1,607,143 shares;
(b) if X is $15.50 or more, N equals zero shares; and
(c) in any other case, N equals the number of shares resulting
from the equation [D multiplied by 15,000,000], divided by X,
where X is the average closing price for a share of Nextel Common Stock on the
NASD-National Market during the 20 trading days immediately preceding the date
of the Closing, and D is the result of subtracting X from $15.50. By way of
example, if X is $14.50, then N (determined in accordance with clause (c) above)
would be 1,034,483 shares (rounded up to the nearest whole share) i.e., 1.00
times 15,000,000 = 15,000,000 DIVIDED BY 14.50 = 1,034,482.76
