<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
<TABLE>
<CAPTION>
<S> <C>
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _______________
</TABLE>
Commission File Number 0-19656
NEXTEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3939651
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1505 FARM CREDIT DRIVE, MCLEAN, VA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 394-3000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
--- ---
Indicate the number of shares outstanding of each of issuer's classes of
common stock as of the latest practicable date:
Number of Shares Outstanding
Title of Class on November 1, 1998
-------------- -------------------
Class A Common Stock, $0.001 par value 269,650,302
Class B Non-Voting Common Stock,
$0.001 par value 17,830,000
<PAGE> 2
NEXTEL COMMUNICATIONS, INC.
INDEX
<TABLE>
<CAPTION>
NO. PAGE
- --- -------
<S> <C> <C>
PART I FINANCIAL INFORMATION.
Item 1. Financial Statements - Unaudited.
Condensed Consolidated Balance Sheets -
As of September 30, 1998 and December 31, 1997. 3
Condensed Consolidated Statements of Operations -
For the Nine Months Ended September 30, 1998 and 1997. 4
Condensed Consolidated Statements of Operations -
For the Three Months Ended September 30, 1998 and 1997. 5
Condensed Consolidated Statement of Changes in Stockholders' Equity -
For the Nine Months Ended September 30, 1998. 6
Condensed Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 1998 and 1997. 7
Notes to Condensed Consolidated Interim Financial Statements. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk. 25
PART II OTHER INFORMATION.
Item 1. Legal Proceedings. 28
Item 2. Changes in Securities. 28
Item 6. Exhibits and Reports on Form 8-K. 28
</TABLE>
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS - UNAUDITED.
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (of which $173,818 and $159,790 is restricted) $ 291,952 $ 301,601
Marketable securities (of which $49,093 and $128,560 is restricted) 51,130 131,404
Accounts and notes receivable, less allowance for doubtful
accounts of $53,282 and $56,590 384,010 240,637
Subscriber equipment inventory 85,286 101,338
Prepaid expenses and other 104,257 64,617
------------- -------------
Total current assets 916,635 839,597
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
of $1,040,707 and $594,473 4,585,555 3,225,603
INTANGIBLE ASSETS, net of accumulated amortization
of $871,563 and $764,554 4,945,467 4,699,746
OTHER ASSETS 665,876 462,855
------------- -------------
$ 11,113,533 $ 9,227,801
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other $ 856,821 $ 761,314
Current portion of long-term debt 5,292 7,577
------------- -------------
Total current liabilities 862,113 768,891
LONG-TERM DEBT 7,335,254 5,038,250
DEFERRED INCOME TAXES 825,259 951,192
OTHER 97,992 27,929
------------- -------------
Total liabilities 9,120,618 6,786,262
------------- -------------
SERIES D EXCHANGEABLE PREFERRED STOCK MANDATORILY REDEEMABLE 2009,
13% cumulative annual dividend; 567,044 and 515,166 shares issued;
567,031 and 515,166 shares outstanding; stated at liquidation value 582,389 529,119
SERIES E EXCHANGEABLE PREFERRED STOCK MANDATORILY REDEEMABLE 2010, 11.125%
cumulative annual dividend; 793,252 and 0 shares issued and
outstanding; stated at liquidation value 804,269 --
STOCKHOLDERS' EQUITY
Preferred stock, Class A convertible redeemable,
7,905,981 shares issued and outstanding 290,545 290,545
Preferred stock, Class B convertible, 82 shares issued and outstanding -- --
Common stock, Class A, 268,896,065 and 253,246,237 shares issued,
268,050,209 and 252,028,617 shares outstanding 269 253
Common stock, Class B, non-voting convertible, 17,830,000 shares
issued and outstanding 18 18
Paid-in capital 4,382,961 4,379,810
Accumulated deficit (4,029,850) 2,749,105)
Treasury shares, at cost, 845,856 and 1,217,620 shares (16,211) (23,435)
Other stockholders' equity (21,475) 14,334
------------- -------------
Total stockholders' equity 606,257 1,912,420
------------- -------------
$ 11,113,533 $ 9,227,801
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 4
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
OPERATING REVENUES $ 1,255,145 $ 463,838
-------------- --------------
OPERATING EXPENSES
Cost of revenues 365,753 195,077
Selling, general and administrative 1,106,312 568,112
Depreciation and amortization 583,108 361,757
-------------- --------------
2,055,173 1,124,946
-------------- --------------
OPERATING LOSS (800,028) (661,108)
-------------- --------------
OTHER INCOME (EXPENSE)
Interest expense (467,857) (279,901)
Interest income 29,783 21,514
Other, net (36,920) 5,486
-------------- --------------
(474,994) (252,901)
-------------- --------------
LOSS BEFORE INCOME TAX BENEFIT AND EXTRAORDINARY ITEM (1,275,022) (914,009)
INCOME TAX BENEFIT 127,502 125,402
-------------- --------------
LOSS BEFORE EXTRAORDINARY ITEM (1,147,520) (788,607)
EXTRAORDINARY ITEM - LOSS ON EARLY RETIREMENT OF DEBT,
NET OF INCOME TAX OF $0 (133,225) --
-------------- --------------
NET LOSS (1,280,745) (788,607)
EXCHANGEABLE REDEEMABLE PREFERRED STOCK DIVIDENDS (107,566) (12,822)
-------------- --------------
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (1,388,311) $ (801,429)
============== ==============
BASIC AND DILUTED LOSS PER SHARE ATTRIBUTABLE TO COMMON
STOCKHOLDERS:
Loss before extraordinary item attributable to
common stockholders $ (4.56) $ (3.28)
Extraordinary item (0.48) --
-------------- --------------
$ (5.04) $ (3.28)
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 275,584,000 244,221,000
============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 5
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
<TABLE>
<CAPTION>
1998 1997
------------- --------------
<S> <C> <C>
OPERATING REVENUES $ 506,598 $ 207,224
------------- --------------
OPERATING EXPENSES
Cost of revenues 140,571 72,423
Selling, general and administrative 405,574 253,757
Depreciation and amortization 204,497 137,053
------------- --------------
750,642 463,233
------------- --------------
OPERATING LOSS (244,044) (256,009)
------------- --------------
OTHER INCOME (EXPENSE)
Interest expense (170,724) (107,445)
Interest income 8,039 9,228
Other, net (39,852) 8,620
------------- --------------
(202,537) (89,597)
------------- --------------
LOSS BEFORE INCOME TAX BENEFIT (446,581) (345,606)
INCOME TAX BENEFIT 44,658 39,472
------------- --------------
NET LOSS (401,923) (306,134)
EXCHANGEABLE REDEEMABLE PREFERRED STOCK DIVIDENDS (40,097) (12,822)
------------- --------------
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (442,020) $ (318,956)
============= ==============
BASIC AND DILUTED LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (1.56) $ (1.26)
============= ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 282,691,000 253,483,000
============= ==============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE> 6
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Class A Class B Class A
Preferred Stock Preferred Stock Common Stock
----------------------- -------------------- -----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998 7,905,981 $ 290,545 82 $ -- 253,246,237 $ 253
Issuance of common stock:
Exercise of options and warrants 2,077,826 2
Employee stock purchase plan
Acquisitions 3,618,181 4
Option Acquisition exercise (Note 2) 9,953,821 10
Deferred compensation
Unrealized loss on available-for-sale
securities, net of income taxes
Foreign currency translation adjustment
Exchangeable redeemable preferred
stock dividends
Net loss
--------- ---------- ------ ------ ----------- ------
BALANCE, September 30, 1998 7,905,981 $ 290,545 82 $ -- 268,896,065 $ 269
========= ========== ====== ====== =========== ======
<CAPTION>
Class B
Common Stock
-------------------- Paid-in Accumulated Treasury
Shares Amount Capital Deficit Shares
------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998 17,830,000 $ 18 $4,379,810 $(2,749,105) $(23,435)
Issuance of common stock:
Exercise of options and warrants 25,698 1,796
Employee stock purchase plan 650 5,428
Acquisitions 85,541
Option Acquisition exercise (Note 2) (10)
Deferred compensation (1,162)
Unrealized loss on available-for-sale
securities, net of income taxes
Foreign currency translation adjustment
Exchangeable redeemable preferred
stock dividends (107,566)
Net loss (1,280,745)
---------- ------ ---------- ----------- --------
BALANCE, September 30, 1998 17,830,000 $ 18 $4,382,961 $(4,029,850) $(16,211)
========== ====== ========== =========== ========
<CAPTION>
Other Stockholders' Equity
-------------------------------------------------
Accumulated Other
Comprehensive Income
---------------------------------
Unrealized Cumulative
Gain (Loss) Translation Deferred
on Investments Adjustment Compensation
-------------- ----------- ------------
<S> <C> <C> <C>
BALANCE, January 1, 1998 $ 22,798 $ -- $ (8,464)
Issuance of common stock:
Exercise of options and warrants
Employee stock purchase plan
Acquisitions
Option Acquisition exercise (Note 2)
Deferred compensation 5,185
Unrealized loss on available-for-sale
securities, net of income taxes (24,585)
Foreign currency translation adjustment (16,409)
Exchangeable redeemable preferred
stock dividends
Net loss
------------ --------- ---------
BALANCE, September 30, 1998 $ (1,787) $ (16,409) $ (3,279)
============ ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
<PAGE> 7
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,280,745) $ (788,607)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred financing costs and accretion of senior
redeemable discount notes, net of capitalized accreted interest 376,783 234,809
Depreciation and amortization 583,108 361,757
Provision for losses on accounts receivable 51,845 23,091
Deferred income tax benefit (127,502) (125,402)
Extraordinary loss on retirement of debt 133,225 --
Loss on interest rate protection agreement 46,873 --
Other, net 36,101 13,791
Change in current assets and liabilities, net of effects from
acquisitions:
Accounts and notes receivable (195,878) (155,795)
Subscriber equipment inventory 1,339 (29,756)
Other assets (29,761) 4,126
Accounts payable, accrued expenses and other 110,909 205,402
------------- -------------
Net cash used in operating activities (293,703) (256,584)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,772,712) (1,041,186)
Payments for acquisitions and purchase of licenses, net of cash acquired (349,365) (176,591)
Purchases of marketable securities (97,896) (145,289)
Proceeds from maturities and sales of marketable securities 176,378 64,465
Other investments in and advances to affiliates (175,007) (18,129)
------------- -------------
Net cash used in investing activities (2,218,602) (1,316,730)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt securities 1,401,013 1,000,282
Issuance of redeemable preferred stock 750,000 500,000
Retirement of debt securities (740,791) --
Borrowings under long-term credit facilities 1,052,000 250,000
Repayments under long-term credit facilities (972,021) --
Revolving line of credit borrowings (repayments), net 1,064,164 (20,000)
Other long-term repayments, net (5,724) (1,149)
Deferred financing costs (89,618) (118,267)
Issuance of common stock and options 33,514 278,384
Capital contributions from minority stockholders 10,119 --
Consent solicitation subscription proceeds -- 44,266
Option repurchase and other -- (24,513)
------------- -------------
Net cash provided by financing activities 2,502,656 1,909,003
------------- -------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (9,649) 335,689
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 301,601 139,681
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 291,952 $ 475,370
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized of $12,837 and $35,725 $ 94,483 $ 40,252
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
7
<PAGE> 8
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 -- BASIS OF PRESENTATION.
The condensed consolidated interim financial statements of Nextel
Communications, Inc. and subsidiaries ("Nextel" or the "Company") included
herein have been prepared by the Company without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the "Commission") and
reflect all adjustments that are, in the opinion of management, necessary for a
fair statement of the results for the interim periods. All adjustments made were
normal recurring accruals. Additionally, certain prior period amounts have
been reclassified to conform to the 1998 presentation.
These interim financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K"), and
the Nextel International, Inc. Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Nextel International 1997 Form 10-K"), for matters
related to operations of Nextel International, Inc. and its subsidiaries
("Nextel International"), an indirect, substantially wholly-owned subsidiary of
Nextel. Operating results for the interim periods are not necessarily indicative
of results for an entire year.
SUPPLEMENTAL CASH FLOW INFORMATION -- Total capital expenditures paid in
cash and financed during the nine months ended September 30, 1998 and 1997 were
$1,768.1 million and $1,023.2 million, respectively (including $312.0 million
and $59.2 million for Nextel International for the respective periods). Total
capital expenditures include interest capitalized in connection with the
construction and development of the Company's advanced mobile communications
systems using digital technology with a multi-site configuration permitting
frequency reuse (the "Digital Mobile network") of approximately $41.8 million
and $35.7 million during the nine months ended September 30, 1998 and 1997,
respectively.
RESTRICTED CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES -- As of
September 30, 1998 and December 31, 1997, approximately $222.9 million and
$288.4 million, respectively, of cash, cash equivalents and marketable
securities held by Nextel International were not available to fund any of the
cash needs of Nextel's domestic Digital Mobile network and analog specialized
mobile radio ("SMR") businesses due to the restrictions contained in (i) the
indenture related to the 10-year discount notes issued by Nextel International
in March 1997 (the "1997 NI Notes") and (ii) the indenture related to the
10-year discount notes issued by Nextel International in March 1998 (such
indentures, collectively, the "NI Indentures").
NEXTEL INTERNATIONAL ARGENTINA INVESTMENT -- On January 30, 1998, Nextel
International acquired the remaining 50% equity interest in the holding company
for Nextel Argentina S.R.L. ("Nextel Argentina") for a purchase price of $46.0
million. As a result of this purchase, Nextel International commenced
consolidating the accounts of Nextel Argentina effective February 1, 1998.
COMPREHENSIVE INCOME -- Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), that establishes new rules for the reporting and display
of comprehensive income and its components. Adoption of SFAS 130 requires
unrealized gains or losses on the Company's available-for-sale securities and
foreign currency translation adjustments to be included in other comprehensive
income.
8
<PAGE> 9
The components of comprehensive income (loss) are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
----------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Loss attributable to
common stockholders $(1,388,311) $ (801,429) $ (442,020) $ (318,956)
Other comprehensive income (loss):
Unrealized (loss) gain
on investments, net of tax (24,585) 49,170 (17,009) 36,479
Foreign currency translation
adjustments (16,409) -- (7,497) --
----------- -------------- ------------ ------------
Comprehensive loss $(1,429,305) $ (752,259) $ (466,526) $ (282,477)
=========== ============== ============ ============
</TABLE>
NEW ACCOUNTING PRONOUNCEMENTS -- In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which establishes accounting and reporting standards for derivative
instruments and for hedging activities by requiring that all derivatives be
recognized in the balance sheet and measured at fair value. SFAS 133 is
effective for fiscal years beginning after June 15, 1999. The Company has not
evaluated the effects of this change on its financial position or results of
operations.
In March 1998, the American Institute of Certified Public Accountants (the
"AICPA") issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." This statement will
be effective in 1999 and establishes accounting standards for costs incurred in
the acquisition or development and implementation of computer software. These
new standards will require the capitalization of certain software implementation
costs relating to software acquired or developed and implemented for the
Company's use. This statement is not expected to have a significant effect on
the Company's financial position or results of operations.
In April 1998, the AICPA issued Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities." This statement will be effective in 1999 and
will require costs of start-up activities and organization costs to be expensed
as incurred. This statement is not expected to have a significant effect on the
Company's financial position or results of operations.
NOTE 2 -- SIGNIFICANT ACQUISITIONS AND EQUITY ISSUANCES.
During the nine months ended September 30, 1998, the Company completed the
following transactions. Transactions completed in the three-month period ended
September 30, 1998 are more fully discussed in "Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Domestic
Transactions and Developments for the Three-Month Period Ending September 30,
1998."
MCCAW INVESTOR OPTION EXERCISE -- On July 28, 1998, Option Acquisition,
L.L.C., an entity controlled by Craig O. McCaw ("Mr. McCaw"), exercised options
to purchase 9,953,821 shares of Nextel's Class A Common Stock, par value $0.001
per share ("Common Stock"), in a cashless exercise transaction as permitted by
the terms of such options. The exercise of the options was effected by
surrendering a number of options determined (as provided in such options) by
dividing the full cash exercise price for all of the options by the average
closing sales price for a share of Common Stock on the Nasdaq National Market
for the 20 trading days immediately preceding the exercise date.
DOMESTIC ACQUISITIONS -- During the second quarter of 1998, the Company
acquired several analog SMR businesses for a total purchase price of $172.2
million, consisting of $88.6 million in cash and approximately 3.6 million
shares of Nextel's Common Stock having an aggregate value of $83.6 million on
the contract date. The results of operations of these businesses were not
material in relation to the Company's consolidated results of operations.
PREFERRED STOCK ISSUANCE -- On February 11, 1998, Nextel completed the
sale of 750,000 shares of 11.125% Series E Exchangeable Preferred Stock
Mandatorily Redeemable 2010 (the shares of such stock issued originally, any
shares of such stock issued in exchange therefor and any shares of such stock
issued as payment in kind dividends thereon, collectively, the "Series E
Preferred Stock"), with a liquidation preference of $1,000 per share, yielding
net cash proceeds of approximately $727.9 million (the "Series E Preferred Stock
Proceeds"). At September 30, 1998, accrued
9
<PAGE> 10
but unpaid dividends on the outstanding shares of 13% Series D Exchangeable
Preferred Stock Mandatorily Redeemable 2009 (the "Series D Preferred Stock") and
Series E Preferred Stock were approximately $15.4 million and $11.0 million,
respectively.
NOTE 3 -- LONG-TERM DEBT.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(dollars in thousands)
<S> <C> <C>
11.5% Senior Redeemable Discount Notes due 2003,
net of unamortized discount of $0 and $24,564 $ 35,811 $ 318,801
9.75% Senior Redeemable Discount Notes due 2004,
net of unamortized discount of $38,980 and $113,926 1,087,455 1,012,509
10.125% Senior Redeemable Discount Notes due 2004,
net of unamortized discount of $78,300 and $111,870 331,576 298,006
12.25% Senior Redeemable Discount Notes due 2004,
net of unamortized discount of $1,352 and $104,504 7,274 326,966
10.25% Senior Redeemable Discount Notes due 2005,
net of unamortized discount of $25,127 and $34,320 90,038 80,845
13.0% Senior Redeemable Discount Notes due 2007
(issued by Nextel International), net of unamortized
discount of $356,821 and $411,571 594,642 539,892
10.65% Senior Redeemable Discount Notes due 2007,
net of unamortized discount of $282,710 and $324,329 557,290 515,671
9.75% Senior Serial Redeemable Discount Notes due 2007,
net of unamortized discount of $363,373 and $416,021 765,727 713,079
9.95% Senior Serial Redeemable Discount Notes due 2008,
net of unamortized discount of $562,640 1,064,360 --
12.125% Senior Redeemable Discount Notes due 2008,
(issued by Nextel International), net of unamortized
discount of $302,242 427,758 --
Bank credit facility, interest payable quarterly at an
adjusted rate calculated either on the prime rate or LIBOR
(7.81% to 8.84% -- 1998 and 7.94% to 9.75% -- 1997) 2,217,000 1,021,000
Vendor credit facility, interest payable quarterly at 2.0%
over the prime rate (10.5%) -- 152,021
Nextel Argentina bank credit facility, interest payable
quarterly at an adjusted rate calculated either on the
prime rate or LIBOR (9.44% to 9.5%) 52,000 --
Nextel International vendor credit facility, interest payable
semiannually at 2.5% over the prime rate
(10.41% to 11.0% -- 1998 and 11.0% -- 1997) 98,414 50,250
Other 11,201 16,787
----------- -----------
7,340,546 5,045,827
Less current portion 5,292 7,577
----------- -----------
$ 7,335,254 $ 5,038,250
=========== ===========
</TABLE>
During the nine months ended September 30, 1998 Transactions completed in
the three-month period ended September 30, 1998 are more fully discussed
in "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Domestic Transactions and Developments for
the Three-Month Period Ending September 30, 1998."
10
<PAGE> 11
During the quarter ended September 30, 1998, the Company terminated an
interest rate protection agreement and recorded a $46.9 million loss included in
other expense within the Company's statement of operations.
FEBRUARY NOTES ISSUANCE -- On February 11, 1998, the Company completed a
private placement of $1,627.0 million in principal amount at maturity of 9.95%
Senior Serial Redeemable Discount Notes due 2008 (the securities issued
originally, and any securities issued in exchange therefor collectively, the
"February Notes") yielding approximately $975.9 million in net cash proceeds
(the "February Notes Proceeds").
NEW BANK FINANCING -- On March 13, 1998, the Company entered into
definitive agreements which increased the Company's total secured financing
capacity under its bank financing agreement to $3.0 billion (consisting of a
$1.5 billion revolving loan and $1.5 billion in term loans) and concurrently
terminated its domestic vendor credit facilities. The $1.5 billion revolving
loan and a $500.0 million portion of the term loans mature over the period from
September 30, 2001 to March 31, 2006. The remaining $1.0 billion portion of the
term loans matures over the period from September 30, 2001 to September 30,
2006. (See Note 5 -- Subsequent Events.)
TENDER OFFER -- On April 3, 1998, the Company concluded a cash tender
offer and related consent solicitation with respect to all of the then
outstanding 11.5% Senior Redeemable Discount Notes due 2003 (the "2003 Notes")
and 12.25% Senior Redeemable Discount Notes due 2004 (the "12.25% 2004 Notes"
and collectively with the 2003 Notes, the "Targeted Notes"). Pursuant to the
terms of the tender offer and consent solicitation, the Company paid
approximately $740.8 million for the tendered Targeted Notes (representing both
the purchase price of the tendered Targeted Notes and related consent fees)
utilizing a portion of the February Notes Proceeds. As a result of the early
retirement of the tendered Targeted Notes, the Company recognized an
extraordinary loss of approximately $133.2 million, representing the sum of (i)
the excess of the purchase price for such tendered Targeted Notes over the sum
of carrying values of such tendered Targeted Notes and (ii) the write-off of the
associated unamortized deferred financing costs related to such tendered
Targeted Notes of approximately $19.3 million.
NEXTEL INTERNATIONAL NOTES ISSUANCE -- On March 12, 1998, Nextel
International completed a private placement of $730.0 million in principal
amount at maturity of 12.125% Senior Redeemable Discount Notes due 2008 (the
"1998 NI Notes") yielding approximately $387.0 million in net cash proceeds (the
"1998 NI Notes Proceeds").
NEXTEL INTERNATIONAL ARGENTINA CREDIT FACILITY -- On February 27, 1998,
Nextel Argentina entered into an $83.0 million senior secured credit facility
(the "Argentina Credit Facility"), which, as amended on May 8, 1998 and
September 30, 1998, was increased to $100.0 million. Borrowings under the
Argentina Credit Facility are scheduled to be repaid in quarterly installments
beginning September 30, 2000 and ending March 31, 2003.
NOTE 4 -- DIGITAL MOBILE NETWORK EQUIPMENT SALES AND RELATED COSTS.
The loss generated from the sale of subscriber units used in the Digital
Mobile network primarily results from the Company's subsidy of digital
subscriber units and represents marketing costs. Consolidated equipment and
accessory sales revenue and the related cost of sales of digital subscriber
units and related accessories, which includes current period order fulfillment
and installation related expenses and write downs to estimated net realizable
value of subscriber unit inventory and related accessories, are classified
within selling, general and administrative expenses as follows (dollars in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------------- ------------------------------------
1998 1997 1998 1997
------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Equipment and accessory sales $ 308,526 $ 171,024 $ 126,325 $ 72,348
Cost of equipment and accessory sales 502,429 272,902 192,157 126,586
------------- --------------- -------------- ---------------
$ (193,903) $ (101,878) $ (65,832) $ (54,238)
============= =============== ============== ===============
</TABLE>
11
<PAGE> 12
NOTE 5 -- SUBSEQUENT EVENTS.
Subsequent to September 30, 1998, the Company completed the following
financing transactions which are more fully discussed in "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Post-September 30, 1998 Transactions and Developments."
ADDITIONAL BANK FINANCING -- On October 28, 1998, Nextel, Nextel Finance
Company, a wholly-owned subsidiary of Nextel and certain other subsidiaries of
the Company amended the existing bank credit facility with certain banks (the
"Bank Credit Facility") to provide for $195.0 million in additional term loan
financing availability thereunder. This amendment increased Nextel's current
total secured financing capacity under such Bank Credit Facility to $3.195
billion (consisting of a $1.5 billion revolving loan and $1.695 billion in term
loans), subject to the satisfaction or waiver of applicable borrowing
conditions. The entire $195.0 million in additional term loans was fully drawn
on October 28, 1998, bears interest payable quarterly at an adjustable rate
calculated based on either the prime rate or London Interbank Offered Rate
("LIBOR") and has a final maturity of March 31, 2007. In connection with such
amendment, the Company secured the consent of the lenders to obtain incremental
financing under the Bank Credit Facility from time to time that would increase
the aggregate secured financing available thereunder to $3.5 billion. Borrowings
under the Bank Credit Facility, as amended, are ratably secured by liens on
assets of the Company's subsidiaries that are "restricted" subsidiaries under
the terms of the Company's public indentures.
NOVEMBER 1998 NOTES ISSUANCE -- On November 4, 1998, the Company completed
a private placement of $300.0 million in principal amount at maturity of 12.0%
Senior Serial Redeemable Notes due 2008 (the "November 1998 Notes") yielding
approximately $289.3 million in net cash proceeds (the "November 1998 Note
Proceeds").
MOTOROLA INTERNATIONAL FINANCING COMMITMENTS -- On November 11, 1998,
Motorola Credit Corporation ("MCC") reached an agreement in principle with
Nextel International to provide up to $275.0 million in additional financing
under a senior secured credit facility. For additional information concerning
this facility, see Nextel International's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
NOTE 6 -- CONTINGENCIES.
See Part II, Item 1. "Legal Proceedings" for a discussion of certain
lawsuits and other legal matters.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW.
The following discussion of the condensed consolidated financial
condition and results of operations of Nextel for the nine and three-month
periods ended September 30, 1998 and the nine and three-month periods ended
September 30, 1997 and certain factors that could affect Nextel's prospective
financial condition should be read in conjunction with the Company's 1997 Form
10-K.
Nextel provides a wide array of digital and analog wireless
communications services throughout the United States. The Company offers a
differentiated, integrated package of digital wireless communications services
under the Nextel brand name primarily to business users, and as of September 30,
1998, provided service to approximately 2,417,400 digital subscriber units in
the United States. At September 30, 1998, the Company's Digital Mobile network
was operational in areas in or around 91 of the top 100 metropolitan statistical
areas ("MSAs") in the United States. In addition to its Digital Mobile network,
Nextel also operates analog wireless networks providing analog SMR services
throughout the continental United States and Hawaii to approximately 417,800
analog SMR subscriber units as of September 30, 1998. Nextel has significant SMR
spectrum holdings in and around every major business and population center in
the country, including all of the top 50 MSAs in the United States.
In early 1997, Nextel finalized and began implementing a business plan
that contemplated an accelerated build-out of its Digital Mobile network in the
United States incorporating the modified version of the digital technology
developed by Motorola, Inc. ("Motorola") referred to as the "integrated Digital
Enhanced Network" or "Reconfigured iDEN." During 1997, Nextel achieved a
significant expansion of its Digital Mobile network and experienced a large
increase in the number of digital subscriber units in service and system minutes
of use. In early 1998, Nextel updated and revised its 1998 domestic business
plan in light of its results and experience in building out and commercializing
its Digital Mobile network in 1997. This revised and updated 1998 Plan
contemplated further expansion of the Company's Digital Mobile network with the
objectives of: (i) achieving additional penetration in its targeted business
customer base in markets where the Digital Mobile network was or was planned to
be operating in early 1998; (ii) selecting and prioritizing additional markets
for expansion of Digital Mobile network coverage by Nextel during 1998; and
(iii) enhancing the quality and performance of its Digital Mobile network
wireless service offerings to maintain and strengthen Nextel's competitive
position relative to other existing and emerging providers of digital wireless
services in the United States.
The growth in Nextel's domestic Digital Mobile network coverage and
capacity, and the related significant increases in the number of digital
subscriber units in service and in system minutes of use, that began in 1997 has
continued and accelerated through the third quarter of 1998. This growth has
contributed significantly to the Company achieving positive earnings before
interest, taxes, depreciation and amortization for its domestic operations for
the third quarter of 1998. It also has resulted in a steady increase in the
Company's capital expenditures and in the amount of net cash used in Digital
Mobile network operations during this 1997 - 1998 period. See Part I, Item 1.
"Business -- 1998 Business Plan" in the Company's 1997 Form 10-K.
The Company currently estimates that its domestic funding requirements
for system and non-system capital expenditures for 1998 will be approximately
$1,930.0 million, as compared to the approximately $1,452.5 million in funding
used for such purposes during 1997. Such actual and contemplated capital
expenditures exclude capital expenditures relating to international operations
and capitalized interest relating to the Company's domestic and international
operations for the respective years. During the nine months ended September 30,
1998, domestic capital expenditures (excluding capitalized interest) were
approximately $1,431.7 million, and the Company currently anticipates that
domestic capital expenditures (excluding capitalized interest) during the fourth
quarter of 1998 will total approximately $500.0 million. However, the actual
levels of capital expenditures that will be incurred by the Company in the
remainder of 1998 are subject to certain risks and uncertainties, including
those identified or referred to in the Company's 1997 Form 10-K. The Company
previously has identified and disclosed the most significant factors that the
Company believes have accounted for the level of its domestic capital
expenditures during 1998. Such factors include: (1) the continued strong growth
in net subscriber adds experienced by the Company, resulting in over 2.4 million
subscriber units in service at September 30, 1998, or nearly twice the number
of subscriber units in service at
13
<PAGE> 14
December 31, 1997; (2) the growth rate in system utilization by its customer
base, steadily increasing to an aggregate of approximately 2.7 billion minutes
of use in the third quarter of 1998, as compared to approximately 2.2 billion
minutes of use during the second quarter of 1998 and approximately 1.5 billion
minutes of use during the first quarter of 1998; (3) the acceleration of the
deployment of certain switching and related system infrastructure equipment from
early 1999 to the latter half of 1998; and (4) the implementation of the
Company's planned acceleration of system build out activities to attain an
approximate three month lead time in that process, to enable the Company to
conduct network upgrade activities once per quarter in its market areas, thereby
minimizing potential service disruptions and unsatisfactory customer experiences
arising from more frequent network affecting events. See "-- Forward Looking
Statements."
During 1998, the Company has continued to make capital expenditures to
construct transmission towers and to expand the Digital Mobile network to new
market areas. The Company currently is pursuing two transactions which, if
consummated, would be expected to have an impact on the level of the Company's
capital expenditures and funding requirements that are related to such
activities. Specifically, the Company is currently discussing with third parties
potential transactions involving the sale of all or a portion of its portfolio
of transmission tower assets, which includes towers and related assets
constructed during 1998. Also, the Company is seeking to finalize the terms of
agreements (and to assemble related equity and debt funding commitments)
pursuant to which Nextel Partners, Inc. ("Nextel Partners"), would build out and
operate digital mobile systems compatible with the Digital Mobile network in
domestic markets outside or adjacent to the Company's currently operating market
areas. Definitive agreements covering the potential transactions described in
this paragraph have not yet been finalized, and there can be no assurance that
such agreements will be finalized or that either or both of such potential
transactions will be consummated. See "--Forward Looking Statements."
The Company also operates or has investments in international wireless
companies through Nextel International. Nextel International's subsidiaries or
other entities in which Nextel International holds equity or equivalent
interests own and operate wireless communications systems (the "Operating
Companies") in Latin America, Asia and Canada and, together with Nextel's
domestic Digital Mobile network operations, provide service in 10 of the
world's 25 largest cities. The Company's condensed consolidated financial
statements include financial information reflecting the assets, liabilities and
results of operations relating to Nextel International and its consolidated
subsidiaries as of the relevant dates or for periods indicated therein except
for foreign subsidiaries, which are reported as of a date one month earlier.
Since March 1997, the funding needs relating to international operations have
been met largely through separate financing arrangements entered into by Nextel
International and its operating subsidiaries and affiliates. Nextel
International currently estimates its funding requirements for fiscal year 1998
to be approximately $810.0 million. As of September 30, 1998, Nextel
International's total cash expenditures for its business activities were
approximately $574.0 million.
As of September 30, 1998, Nextel International's proportionate share of
the approximately 472,400 international digital subscriber units in service,
based on its ownership interests in the Operating Companies, is estimated to be
approximately 118,200. These units in service are derived from the reported
total digital subscriber units as of September 30, 1998 on the Operating
Companies' current commercial networks in Argentina, Brazil, Canada, Japan,
Mexico, the Philippines, and Shanghai, China.
During the third quarter of 1998, Nextel International, through its
subsidiaries or affiliated companies, launched commercial digital enhanced SMR
("ESMR") service in Rio de Janeiro, Manila, the Kanto region of Japan (which
includes Tokyo) and Mexico City. More detailed information relating to Nextel
International's business operations, financial condition and results of
operations may be found in the periodic and other reports filed by Nextel
International with the Commission pursuant to rules under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act").
DOMESTIC TRANSACTIONS AND DEVELOPMENTS FOR THE THREE-MONTH PERIOD ENDING
SEPTEMBER 30, 1998
SERIES E PREFERRED STOCK EXCHANGE OFFER: On July 16, 1998, Nextel completed an
exchange offer for its Series E Preferred Stock, of which 750,000 shares were
initially issued on February 11, 1998 in a private placement transaction.
14
<PAGE> 15
FEBRUARY SENIOR NOTES EXCHANGE OFFER: Concurrent with the exchange offer of the
Series E Preferred Stock on July 16, 1998, Nextel completed an exchange offer
for $1,627.0 million in principal amount at maturity of its February Notes,
which were initially issued on February 11, 1998 in a private placement
transaction.
LMDS AUCTION: On February 18, 1998, the Federal Communications Commission (the
"FCC") commenced an auction of Local Multipoint Distribution Service ("LMDS")
spectrum in the 28 GHz - 31 GHz frequency range. The Company's participation
in the LMDS spectrum auction and related activities have been conducted through
NextBand Communications, L.L.C. ("NextBand"), a joint venture in which the
Company has a 50% ownership interest, with the remaining 50% interest held by
NextLink Communications, Inc. ("NextLink"), a publicly traded company that is
controlled by Mr. McCaw. As of the conclusion of the LMDS spectrum auction on
March 25, 1998, NextBand had submitted $134.7 million in bids that represented
the highest bids with respect to the auction of LMDS spectrum in 42 markets
covering approximately 96 million people throughout the United States. Through
September 30, 1998, the Company made $67.2 million in payments to the FCC,
representing its full 50% share of the bid amount in accordance with the
relevant NextBand joint venture arrangements.
MCCAW INVESTOR OPTION EXERCISE -- On July 28, 1998, Option Acquisition, L.L.C.,
an entity controlled by Mr. McCaw, exercised options to purchase 9,953,821
shares of Nextel Common Stock in a cashless exercise transaction as permitted by
the terms of such options. The exercise of the options was effected by
surrendering a number of options determined (as provided in such options) by
dividing the full cash exercise price for all of the options by the average
closing sales price for a share of Common Stock on the Nasdaq National Market
for the 20 trading days immediately preceding the exercise date.
NEXTEL INTERNATIONAL TRANSACTIONS AND DEVELOPMENTS FOR THE THREE-MONTH PERIOD
ENDED SEPTEMBER 30, 1998
PHILIPPINES RESTRUCTURING: In February 1998, Nextel International reached an
agreement in principle with the three groups of local shareholders of Infocom
Communications Network, Inc. ("Nextel Philippines"), including the Gotesco group
(the "Gotesco Group" and together with the other local shareholders, the
"Philippines Shareholders"), and consummated such agreement in April 1998 (the
"Philippines Partner Agreements"). On June 26, 1998, Nextel International and
the Gotesco Group entered into an Agreement to Accelerate Put Rights (the
"Gotesco Put Acceleration Agreement") pursuant to which the exercise date of the
Gotesco Group's right to put its 20% interest to Nextel International was
accelerated from January 1999 to August 21, 1998. Pursuant to the Gotesco Put
Acceleration Agreement, the Company agreed to pay the Gotesco Group $9.0 million
for the shares covered by the Gotesco Put in three installments. The first two
installments were paid on June 26 and July 13, 1998. On August 21, 1998, Gamboa
Holdings, Inc. ("Gamboa Holdings"), which is 60% owned by ACCRA Investments
Corporation, a corporation organized under the laws of the Philippines and owned
by Philippines nationals ("ACCRAIN"), and 40% owned by an indirect subsidiary of
Nextel International, delivered the final installment of $8.0 million to the
Gotesco Group and the Gotesco Group delivered the shares covered by the Gotesco
Put to Gamboa Holdings. Nextel International also agreed to other terms and
conditions relating to an agreement dated August 21, 1998 between a wholly-owned
subsidiary of Nextel International and ACCRAIN. Additional information regarding
Nextel Philippines is contained in Nextel International's Quarterly Report on
Form 10-Q for the period ended September 30, 1998.
SHANGHAI: Prior to September 1998, China United Telecommunications, Ltd.
("Unicom") requested that Shanghai CCT -- McCaw Telecommunications Systems Co.,
Ltd. ("Shanghai CCT McCaw") participate in financing the expansion of the
Shanghai GSM System ("Phase IV"). While Nextel International had previously
advised its partners in Shanghai CCT McCaw that it was not willing to provide
funding for Phase IV of the Shanghai GSM System, such partners advised Nextel
International that each intended to participate in the funding of Phase IV.
Accordingly, Nextel International and its partners in Shanghai CCT McCaw have
engaged in discussions among themselves and with Unicom with respect to Shanghai
CCT McCaw's possible participation in Phase IV.
In September 1998, Unicom advised the parties that pursuant to a new policy of
the Chinese government, Unicom was no longer permitted to enter into any new
contracts for its projects wherein financing was derived through investment
structures involving indirect investment by foreign investors, including the
structure utilized by Shanghai CCT McCaw with respect to the Shanghai GSM
System. Further, Unicom advised the parties that it intended to finance Phase IV
and any possible future expansions of the Shanghai GSM System on its own using
financing derived independently of Shanghai CCT McCaw. Additional information
regarding Shanghai CCT McCaw is contained in Nextel International's Quarterly
Report on Form 10-Q for the period ended September 30, 1998.
NEXTEL INTERNATIONAL NOTES ISSUANCE: On March 12, 1998, Nextel International
completed a private placement of its 1998 NI Notes yielding approximately $387.0
million in 1998 NI Notes Proceeds. On September 10, 1998, Nextel International
completed an exchange offer for the 1998 NI Notes.
15
<PAGE> 16
POST-SEPTEMBER 30, 1998 TRANSACTIONS AND DEVELOPMENTS
ADDITIONAL BANK FINANCING: At September 30, 1998, the Company had drawn an
aggregate of approximately $2.2 billion of its then-maximum $3.0 billion in
available financing under its Bank Credit Facility. On October 28, 1998, the
Company and certain lenders amended the terms of its current Bank Credit
Facility to increase the amount available for borrowing thereunder by an
additional $195.0 million in term loans. The Bank Credit Facility as so amended
now provides for up to $3.195 billion of secured financing, subject to the
satisfaction or waiver of applicable borrowing conditions, consisting of a $1.5
billion revolving loan and $1.695 billion in term loans which matures over a
period from September 30, 2001 to March 31, 2007. The additional $195.0
million in term loans was fully drawn on October 28, 1998, and was used to
reduce outstanding borrowings under the revolving loan. The loans bear interest
payable quarterly at an adjustable rate calculated either on the prime rate or
LIBOR. The maturity date of the loans is subject to acceleration if the
aggregate principal amount of certain series of the Company's senior redeemable
discount notes is not less than $1.0 billion by specified dates. See also "Item
1. Note 5 -- Subsequent Events."
NOVEMBER 1998 NOTES OFFERING: On November 4, 1998, the Company completed the
issuance and sale in a private placement of $300.0 million in principal amount
of its November 1998 Notes. Cash interest on the November 1998 Notes will be
payable on May 1 and November 1 of each year commencing May 1, 1999, at a rate
of 12.0% per annum. The issue price of the November 1998 Notes, which mature on
November 1, 2008, was $985.78 per $1,000 principal amount (generating
approximately $289.3 million in November 1998 Notes Proceeds), representing an
effective yield to maturity of 12.25% computed on a semi-annual bond equivalent
basis from the date of issuance. The November 1998 Notes are redeemable at the
option of Nextel, in whole or in part, at any time, on or after November 1,
2003, at specified redemption prices. The November 1998 Notes are senior
unsecured indebtedness of Nextel and rank pari passu in right of payment with
all unsubordinated, unsecured indebtedness of Nextel (including all of Nextel's
previously issued Senior Redeemable Discount Notes outstanding as of September
30, 1998) (collectively the "Nextel Notes").
The November 1998 Notes were issued in a private placement transaction
and have not been registered with the Commission under the Securities Act of
1933 (the "Securities Act") and may not be sold absent registration or an
applicable exemption from the registration requirements. In connection with the
issuance of the November 1998 Notes, Nextel has agreed to use its best efforts
to file with the Commission and cause to become effective a registration
statement with respect to a registered offer to exchange the then outstanding
November 1998 Notes for substantially identical notes of equal value that have
been registered pursuant to the Securities Act (the "November 1998 Notes
Exchange Offer"). In the event that the November 1998 Notes Exchange Offer is
not consummated prior to the specified dates, additional incremental interest
on the principal amount of the November 1998 Notes will accrue until the
November 1998 Notes Exchange Offer is consummated or certain other requirements
are met. Terms of the November 1998 Notes are set forth in the Indenture filed
as Exhibit 4.1 hereto.
MOTOROLA INTERNATIONAL FINANCING COMMITMENTS: On November 11, 1998, MCC reached
an agreement in principle with Nextel International to provide up to $275.0
million in additional financing under a senior secured credit facility. For
additional information concerning this facility, see Nextel International's
Quarterly Report on Form 10-Q for the period ended September 30, 1998.
RESULTS OF OPERATIONS
The following discussion compares the consolidated results of operations
for the nine- and three-month periods ended September 30, 1998 to the nine- and
three-month periods ended September 30, 1997. The operating results of these
nine- and three-month periods are not necessarily indicative of operating
results in future periods. The following comparative information should be read
in conjunction with the Condensed Consolidated Financial Statements and
accompanying Notes, as well as the information presented elsewhere herein and in
the financial statements and related notes for the year ended December 31, 1997
included in the Company's 1997 Form 10-K.
16
<PAGE> 17
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1998 VS. 1997 SEPTEMBER 30, 1998 VS. 1997
------------------------------- -------------------------------
INCREASE PERCENT INCREASE PERCENT
(DECREASE) CHANGE (DECREASE) CHANGE
------------ --------- ------------ ---------
(dollars (dollars
in millions) in millions)
<S> <C> <C> <C> <C>
Operating revenues $ 791.3 170.6% $ 299.4 144.5%
Cost of revenues 170.7 87.5% 68.1 94.1%
Selling, general and
administrative expenses 538.2 94.7% 151.8 59.8%
Depreciation and
amortization expense 221.4 61.2% 67.4 49.2%
Interest expense 188.0 67.2% 63.3 58.9%
Interest income 8.3 38.4% (1.2) (12.9%)
Other expense, net 42.4 NM 48.5 NM
NM--change not meaningful
</TABLE>
Operating revenues include service revenues, which consist primarily of
charges for airtime usage and monthly network access fees, as well as revenue
from sales of analog equipment and accessories. Operating revenues for the nine-
and three-month periods ended September 30, 1998 increased from the comparable
1997 periods principally as a result of a 155% increase in end-of-period digital
subscriber units in service from approximately 946,600 at September 30, 1997, to
approximately 2,417,400 at September 30, 1998. The increase in operating
revenues primarily reflects the increased number of subscriber units in service
in both new and existing markets and an increase in minutes of use producing an
increase in the average revenue per digital subscriber unit. The growth in
digital subscriber units in service is the result of a number of factors,
including principally the Company's increased sales force and marketing staff,
increased distribution channels, expanded network capacity, declining equipment
prices, increased consumer awareness and acceptance of wireless communications
and pricing plans targeted at particular market segments. Average monthly
revenue per digital unit increased from approximately $65 to approximately $68
for the nine-month periods and was approximately $70 for each of the three-month
periods ended September 30, 1997 and 1998, respectively.
The average churn rate for the Digital Mobile network operation has
increased from approximately 1.2% and 1.3% per month for the nine- and
three-month periods ended September 30, 1997, respectively, to approximately
1.7% per month for both the nine- and three-month periods ended September 30,
1998.
Cost of revenues consists primarily of network operating costs and
interconnection fees assessed by local exchange carriers. Cost of revenues for
the nine- and three-month periods ended September 30, 1998 increased from the
comparable 1997 periods primarily as a result of an increase in cell sites and
related equipment activated by the Company during 1998 as well as increases in
airtime usage and digital subscriber units in service. Cost of revenues as a
percentage of revenues decreased from 42% for the nine months ended September
30, 1997 to 29% for the nine months ended September 30, 1998 and from 35% for
the three months ended September 30, 1997 to 28% for the three months ended
September 30, 1998. This improvement primarily resulted from increases in system
usage and digital subscriber units placed in service during 1998 and the fourth
quarter of 1997.
The increase in selling, general and administrative expenses for the nine
and three months ended September 30, 1998 consisted of an increase in selling
and marketing expenses of $342.5 million and $87.0 million, respectively, and an
increase in general and administrative expenses of $195.7 million and $64.8
million, respectively, from the comparable 1997 periods.
Selling and marketing expenses for the nine months ended September 30,
1998 increased by 99% to $688.8 million, as compared to $346.3 million for the
nine months ended September 30, 1997. Selling and marketing expenses for the
three months ended September 30, 1998 increased by 54% to $249.5 million, as
compared to $162.5 million for the three months ended September 30, 1997. These
increases in selling and marketing expenses for the nine months ended September
30, 1998 and the three months ended September 30, 1998 over the comparable 1997
periods consisted
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<PAGE> 18
primarily of (i) increased costs incurred in connection with higher levels of
consolidated sales of digital subscriber units, including an increase in the
loss generated from consolidated sales of digital subscriber units and related
accessories of $92.0 million and $11.6 million, respectively (including a loss
of $5.9 million for the nine and three months ended September 30, 1998 relating
to international digital subscriber unit sales); (ii) an increase in
commissions and residuals to domestic indirect distributors of $95.0 million
and $26.1 million, respectively; and (iii) increased international sales and
marketing costs of $22.8 million and $14.9 million, respectively. Also
contributing to the increase in selling and marketing expenses were higher
domestic advertising and promotion expenses related to the aggressive national
and regional marketing campaigns which began in March 1997 and have continued
into 1998. The remaining increase in selling and marketing expenses is
attributable to increased salaries, commissions and related personnel costs
associated with increased sales and marketing staffing. Selling and marketing
expenses are expected to increase both domestically and internationally as the
Company continues to expand its presence in existing markets and expands the
geographic coverage of its Digital Mobile network.
The Company offers digital subscriber units and related accessories at
competitive prices, which are below cost, as an incentive for new customers to
subscribe to its services and for certain existing customers to remain
subscribers. The Company includes the loss generated from the sale of digital
subscriber units and related accessories in selling and marketing expenses, as
the loss primarily represents marketing costs. The loss on digital subscriber
unit and related accessory sales for the nine months ended September 30, 1998
increased 90% to $193.9 million, as compared to $101.9 million for the nine
months ended September 30, 1997. The loss on digital subscriber unit and related
accessory sales for the three months ended September 30, 1998 increased 21% to
$65.8 million, as compared to $54.2 million for the three months ended September
30, 1997. These increases primarily reflect the continued effect of customer
subsidies and discounts on increased sales of digital subscriber units and
related accessories and also include write downs to estimated net realizable
value of subscriber unit inventory and related accessories. Competitive market
pressures are expected to result in a continued trend of negative gross margins
on digital subscriber unit and related accessory sales as the Company
anticipates that it will continue to offer customers subsidies and/or discounts
in connection with the sale and installation of digital subscriber units and
related accessories.
General and administrative expenses for the nine months ended September
30, 1998 increased 88% to $417.5 million, as compared to $221.8 million for the
nine months ended September 30, 1997, and decreased as a percentage of
operating revenues from 48% for 1997 to 33% for 1998. General and
administrative expenses for the three months ended September 30, 1998 increased
71% to $156.1 million, as compared to $91.3 million for the three months ended
September 30, 1997, and decreased as a percentage of operating revenues from
44% for 1997 to 31% for 1998. The increase in general and administrative
expenses for the nine and three months ended September 30, 1998 over the
comparable 1997 periods is primarily related to (i) increased domestic
personnel costs principally reflecting increased staffing for back-office,
customer care and collection activities of $45.2 million and $16.0 million,
respectively; (ii) increased general and administrative expenses to support the
growth of international operations of $43.2 million and $19.4 million,
respectively; and (iii) increased domestic bad debt expense of $25.8 million
and $0.1 million, respectively.
The Company recognized an aggregate of $51.8 million and $18.8 million in
bad debt expense for the nine and three months ended September 30, 1998,
respectively. The Company initiated a comprehensive and aggressive program for
more stringent credit reviews and the collection of past due receivables in the
second half of 1997, including involuntarily disconnecting certain non-paying
customer accounts. As a result of such initiatives, bad debt expense as a
percentage of total revenues, including digital equipment revenues classified
within selling and marketing expense, decreased to 3.3% for the nine months
ended September 30, 1998 from 3.6% for the nine months ended September 30, 1997
and decreased to 3.0% for the three months ended September 30, 1998 from 6.1%
for the three months ended September 30, 1997.
The increase in depreciation and amortization expense for the nine months
ended September 30, 1998 from the comparable 1997 period consisted of an
increase in depreciation expense of $266.0 million offset by a decrease in
amortization expense of $44.6 million. The increase in depreciation and
amortization expense for the three months ended September 30, 1998 from the
comparable 1997 period consisted of an increase in depreciation expense of $83.4
million offset by a decrease in amortization expense of $16.0 million.
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Depreciation expense for the nine months ended September 30, 1998
increased 162% to $430.5 million, as compared to $164.5 million for the nine
months ended September 30, 1997. Depreciation expense for the three months ended
September 30, 1998 increased 121% to $152.6 million, as compared to $69.2
million for the three months ended September 30, 1997. These increases reflect
the effect of activating additional operational cell sites and switches, the
expansion of the existing Digital Mobile network and the effect of certain
business acquisitions during the last quarter of 1997 and the first three
quarters of 1998. System assets relating to the development and expansion of the
Digital Mobile network represent the largest portion of capital expenditures
during the period. Depreciation of such assets begins upon commencement of
commercial service.
Effective October 1, 1997, the Company changed the estimated useful lives
of certain intangible assets, including FCC licenses and the excess of purchase
price over fair value of net assets acquired related to domestic acquisitions,
from 20 to 40 years to better reflect the period over which the economic
benefits of such assets will be realized. Accordingly, amortization expense for
the nine months ended September 30, 1998 decreased 23% to $152.6 million, as
compared to $197.2 million for the nine months ended September 30, 1997.
Amortization expense for the three months ended September 30, 1998 decreased 23%
to $51.9 million, as compared to $67.9 million for the three months ended
September 30, 1997.
The increase in interest expense for the nine and three months
ended September 30, 1998 from the comparable 1997 periods resulted from the
Company's issuance of discount notes during 1997, the February Notes and the
1998 NI Notes, as well as a higher average level of borrowings under the Bank
Credit Facility and Nextel International's bank and vendor credit facilities.
The increase was partially offset by a decrease in the weighted average
interest rate on the total outstanding debt which was a result of the
refinancing of the domestic vendor credit facility during the first quarter of
1998 and the retirement of a portion of the Targeted Notes during the fourth
quarter of 1997 and the second quarter of 1998. In April 1998, a portion of the
net proceeds from the February Notes were applied to retire approximately 94%
of the principal amount of the Targeted Notes then outstanding. Specifically,
during April 1998, the Company purchased $294.2 million in book value of its
2003 Notes and $332.7 million in book value of its 12.25% 2004 Notes at a cost
in excess of related carrying amounts. Accordingly, the Company recorded an
extraordinary loss of $133.2 million related to the early retirement of debt.
The extraordinary loss represented the difference between the purchase price of
$740.8 million and the book value of such purchased Targeted Notes on the date
of purchase plus the write-off of the associated unamortized deferred financing
costs related to such purchased Targeted Notes of approximately $19.3 million.
See "Item 1. Note 3 -- Tender Offer."
The increase in interest income for the nine months ended September 30,
1998 from the comparable 1997 period is primarily attributable to income
recognized on the investment of the net proceeds received from the Company's
sale of the Series E Preferred Stock and the February Notes.
In the fourth quarter of 1997, the Company entered into an interest rate
protection agreement to lock in interest rates on 10-year U.S. Treasury notes in
anticipation of a future debt issuance. During the quarter ended September 30,
1998, management determined that this anticipated transaction was not likely to
occur before the interest rate protection agreement expiration date. The
interest rate protection agreement was terminated on September 29, 1998 and
approximately $46.9 million was recognized as other expense within the Company's
statement of operations for the quarter ended September 30, 1998.
The effective tax benefit rate for the nine months ended September 30,
1998 of 10.0% decreased from 13.7% for the nine months ended September 30, 1997.
The effective tax benefit rate for the three months ended September 30, 1998 of
10.0% decreased from 11.4% for the three months ended September 30, 1997. These
income tax benefits were derived from the recognition of net operating losses
that can be utilized against existing deferred tax liabilities. In certain
circumstances, Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," limits the recognition of income tax benefits for net
operating losses to the amount of deferred tax liabilities that are expected to
reverse within the statutory carry forward period. This limitation resulted in a
reduction in the Company's effective tax rate for 1998 as compared to 1997. The
decrease is not expected to have an impact on the Company's ability to utilize
its net operating losses for income tax purposes.
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LIQUIDITY AND CAPITAL RESOURCES
Nextel had net losses attributable to common stockholders of $1,388.3
million and $801.4 million for the nine months ended September 30, 1998 and
1997, respectively. The operating expenses associated with developing,
enhancing and operating the Digital Mobile network have more than offset
operating revenues, and such operating expenses, debt service obligations and
anticipated capital expenditures are expected to continue to offset such
operating revenues for the next several years. Nextel has consistently used
external sources of funds, primarily from equity issuances and debt
incurrences, to fund operations, capital expenditures, acquisitions and other
non-operating needs. For the next several years, Nextel intends to use its
existing cash and investments, anticipated positive earnings before interest,
taxes, depreciation and amortization and externally generated funds from debt
and equity sources (as discussed below) to cover the majority of its future
liquidity needs, including funding required for the design, implementation and
operation of its Digital Mobile network. See "-- Future Capital Needs and
Resources."
CASH FLOWS -- Capital expenditures to fund the continued expansion of the
Digital Mobile network continue to represent the largest use of Company funds
for investing activities. Net cash used in investing activities for the nine
months ended September 30, 1998 increased $901.9 million as compared to the nine
months ended September 30, 1997, primarily attributable to the $731.5 million
increase in capital expenditures. Cash payments for capital expenditures totaled
$1,772.7 million and $1,041.2 million for the nine months ended September 30,
1998 and 1997, respectively. Of these amounts, $291.5 million and $59.2 million
represent capital expenditures for international operations for the nine months
ended September 30, 1998 and 1997, respectively. Capital spending has increased
as a result of the continued build-out of the Digital Mobile network to enhance
or expand coverage and increase network capacity. See "-- Future Capital Needs
and Resources." Also contributing to the increase in cash used in investing
activities was a $172.8 million increase in payments for acquisitions and
purchases of licenses, consisting primarily of $76.1 million and $67.2 million
in payments required in connection with the recently concluded FCC auctions for
800 MHz and LMDS licenses, respectively, and $44.5 million of additional cash
investments in international subsidiaries. The increases in cash used in
investing activities were offset in part by $78.5 million in net proceeds from
marketable securities transactions.
Cash flows provided by financing activities for the nine months ended
September 30, 1998 increased by $593.7 million as compared to the nine months
ended September 30, 1997, primarily reflecting higher net proceeds in the first
quarter of 1998 from the issuance of long-term debt and mandatorily redeemable
preferred stock and additional borrowings under domestic and international
credit facilities. Net cash provided by financing activities for the nine months
ended September 30, 1998 consisted primarily of gross proceeds from the Series E
Preferred Stock of $750.0 million, the February Notes of $1,000.1 million, and
the 1998 NI Notes of $400.9 million, along with $2,116.2 million in borrowings
under the Company's Bank Credit Facility and Nextel International's bank and
vendor credit facilities, offset in part by repurchases of the Targeted Notes of
$740.8 million, deferred financing cost payments of $89.6 million and $972.0
million used to repay the outstanding term borrowings under the domestic bank
and vendor credit facilities in effect prior to March 1998.
Since December 31, 1997, working capital has decreased by $16.2 million
to $54.5 million at September 30, 1998. This decrease primarily resulted from
the utilization of working capital derived from the proceeds of the 1997 NI
Notes to fund international investing and operating activities. Proceeds of the
1998 NI Notes are primarily used to finance international operations, capital
expenditures and acquisitions and are not available to fund any of the cash
needs of the Company's domestic Digital Mobile and analog SMR businesses due to
restrictions contained in the NI Indentures.
FUTURE CAPITAL NEEDS AND RESOURCES
Nextel anticipates that, for the foreseeable future, it will be utilizing
significant amounts of its available cash for capital expenditures for the
construction and enhancement of the Digital Mobile network, operating expenses
relating both to the Digital Mobile network and to its analog SMR business,
potential acquisitions (including any future auctions of spectrum by the FCC),
debt service requirements and other general corporate expenditures. Nextel
anticipates that its cash utilization for capital expenditures and other
investing activities will continue to exceed its positive cash flows from
operating activities over the remainder of 1998 and throughout 1999 as it builds
out, expands and enhances its Digital Mobile network.
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Nextel estimates that the external funding required to meet the cash
needs of its domestic business activities throughout 1998, including principally
the purchase in April 1998 of the Targeted Notes and the funding of actual and
anticipated capital expenditures, acquisitions (including approximately $76.1
million for acquisitions of licenses in the FCC's 800 MHz spectrum auction
concluded in December 1997 and paid to the FCC in July 1998, and $67.2 million
paid to the FCC in 1998 to acquire LMDS licenses) and operating losses, will be
approximately $3.5 billion, which includes approximately $1.9 billion of capital
expenditures. Such estimates are based in part on the Company's experience
through September 30, 1998, and on a number of significant assumptions,
including assumptions regarding continued subscriber growth, increased demand
for the Company's wireless services and enhancements to its existing Digital
Mobile system infrastructure to expand and improve systems coverage and
performance to address competitive pressures in its domestic markets. The
telecommunications industry is rapidly evolving and there can be no assurance
that the Company will not experience levels of demand for its services or
competitive pressures that differ from those experienced through September 30,
1998 and from those assumed in developing the foregoing estimates, which could
cause a material change in the Company's need for additional financing. See "--
Forward Looking Statements."
The Bank Credit Facility, as amended on October 28, 1998, currently
provides for up to approximately $3.2 billion in secured financing available to
the Company, subject to the satisfaction or waiver of applicable borrowing
conditions. At September 30, 1998, the Company had drawn an aggregate of
approximately $2.2 billion of its available financing under its Bank Credit
Facility. Amounts outstanding under the Bank Credit Facility are secured by
liens on assets of Nextel's subsidiaries that are "restricted" subsidiaries
under the terms of Nextel's public indentures relating to the Nextel Notes (the
"Nextel Indentures") and bear interest payable quarterly at an adjustable rate
calculated based either on the prime rate or LIBOR. The availability of such
financing is subject to Nextel's satisfying certain requirements under the
Nextel Indentures relating to Nextel Notes that were issued prior to 1997 (the
"Old Indentures"), which require Nextel to issue new equity for cash as a
condition to obtaining access to all amounts not constituting "permitted debt"
(as such term is defined in the Old Indentures). Based on (i) the amount of
equity issuances, including issuances of Series D and Series E Preferred Stock,
and (ii) the Company's outstanding debt at September 30, 1998 (and taking into
account the additional debt incurred upon issuance of the November 1998 Notes),
the Company may access all amounts available under the Bank Credit Facility in
compliance with the debt incurrence covenants contained in the Old Indentures.
The Company has not completed its business plan for 1999, and accordingly
is not currently able to estimate its 1999 funding needs including its estimated
capital expenditures for 1999. However, based on its estimate of approximately
$500.0 million in domestic capital expenditures for the fourth quarter of 1998
and its preliminary assessments of business activity and related net cash needs
through the end of 1999, the Company anticipates that its cash on hand
(including proceeds of the November 1998 Notes), the amounts remaining available
for borrowing under the Bank Credit Facility (as currently in effect), the
assumed exercise in 1999 of certain options held by an affiliate of Mr. McCaw
and net cash expected to be generated by domestic operations through the end of
1999 collectively will provide sufficient funds to finance the Company's
domestic operations, meet its domestic debt service obligations and fund its
domestic capital expenditures, all at levels the Company currently anticipates
would be consistent with maintaining growth within an assumed minimum range of
an annual rate of 1.4 to 1.6 million net domestic digital subscriber unit
additions through the end of 1999. The Company currently is exploring a number
of additional sources of debt and equity financing for its domestic operations,
and is pursuing other avenues for increasing the amount of cash available to
meet potential additional domestic operating expenses and capital expenditures
likely to be associated with more aggressive business plans. Access to
additional funding would likely enhance the Company's growth prospects. See
"Item 1. Note 5 -- Subsequent Events," "--Liquidity and Capital Resources" and
"-- Forward Looking Statements."
Nextel may require substantial additional financing to fund further
deployment, expansion and enhancement of its Digital Mobile network after 1999
or in market areas where the Company has assumed that Nextel Partners would
raise the necessary equity and debt capital for Digital Mobile system build and
operation. Nextel also may require additional financing to pursue activities
related to new business opportunities (including commercial activities involving
its LMDS spectrum holdings), additional spectrum acquisitions (including any
spectrum auctions by the FCC) and other potential transactions or investments
not a part of its current domestic mobile wireless communications businesses.
Finally, the above funding requirements and estimates relate only to the
Company's domestic business operations and opportunities, and do not reflect any
of the separate funding needs of Nextel International.
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As described in the Nextel International 1997 Form 10-K, Nextel
International currently estimates its funding requirements for fiscal year 1998
to be approximately $810.0 million. These amounts consist primarily of the costs
of building Nextel International's ESMR networks, including the purchase of
switches and other equipment, the acquisition of cell sites, the costs of
constructing the networks and loading subscribers and the acquisition of
licenses and investments and funding of operating losses. As of September 30,
1998, Nextel International's total cash expenditures for its business activities
for fiscal year 1998 were $574.0 million. Nextel International's cash
expenditures, funding requirements and access to funding sources, as well as its
business, financial condition and future prospects, are subject to a number of
risks and contingencies. For a detailed description of the risks and
contingencies that Nextel International regards as significant, see the Nextel
International 1997 Form 10-K and Nextel International's Quarterly Reports on
Form 10-Q for the periods ended March 31, 1998, June 30, 1998 and September 30,
1998. Nextel International is currently exploring a number of alternative
sources of equity and debt financing, including the additional vendor financing
arrangements on which Nextel International and MCC have reached agreement
in principle, to fund its contemplated business operations, including related
capital expenditures, working capital and other cash needs through 1999. There
is no assurance that such financing will become available. If such financing
does not become available in sufficient amounts on a timely basis, Nextel may
(but is not obligated to) fund some or all of Nextel International's cash needs
through 1999 (subject to compliance with certain covenants set forth in the
Nextel Indentures, including those relating to investment limitations). To the
extent Nextel were to provide such funding to Nextel International, Nextel would
have reduced availability for its own needs. If the Company were to elect to
provide funding to Nextel International, and if the Company's existing and
assumed financing sources are insufficient to meet both such needs and the needs
of its domestic businesses, the Company may seek to raise additional capital
from public or private equity or debt sources. There can be no assurance that
any such efforts would be successful. See "Liquidity and Capital Resources" and
"-- Forward Looking Statements."
The availability of borrowings pursuant to the Bank Credit Facility is
subject to certain conditions, and there can be no assurance that such
conditions will be met. Moreover, there can be no assurance that Nextel will
receive funding from its other existing or assumed sources, such as the exercise
of outstanding options to purchase the Company's Common Stock, including the
options currently held by an affiliate of Mr. McCaw. The Bank Credit Facility,
the Nextel Indentures, and the terms of the Series D and Series E Preferred
Stock contain provisions that operate to limit the amount of borrowings that may
be incurred by Nextel. The terms of the Bank Credit Facility also require Nextel
and its restricted subsidiaries at specified times to maintain compliance with
certain operating and financial covenants or ratios including certain covenants
and ratios specifically related to leverage which become more stringent over
time. In addition, Nextel's capital needs, and its ability to adequately address
those needs through debt or equity funding sources, are subject to a variety of
factors that cannot presently be predicted with certainty, such as the
commercial success of Nextel's Digital Mobile network, the amount and timing of
Nextel's capital expenditures and operating losses, the availability and
volatility of the equity and debt markets, the market price of its Common Stock
and consummation of certain potential transactions currently being explored by
the Company. See "-- Forward Looking Statements."
Nextel is currently aware of numerous factors and considerations, any one
or more of which could have a material effect on the timing and/or amount of the
future funding to be required by Nextel, but Nextel cannot currently quantify
with precision either the magnitude or the certainty of the effects associated
with any such factors. These factors include: (i) the uncertainty of legal
challenges lodged against the 800 MHz SMR auction that was completed on December
8, 1997; (ii) the amounts that will be required to accomplish retuning or
acquisition of 800 MHz incumbent channels in spectrum blocks for which Nextel
was the high bidder at the 800 MHz auction; (iii) the possibility that Nextel
will be able to obtain geographic area licenses on the lower 800 MHz channels
through an FCC auction; (iv) the potential commercial opportunities and risks
associated with the Company's domestic and international business plans; (v) the
uncertain availability of additional debt and equity financing in view of the
recent and continuing volatility in the domestic and international capital
markets; and (vi) the net impact on Nextel's capital plan of certain
developments currently expected to increase capital needs (e.g., possible
acquisition of additional spectrum in certain markets to increase the capacity
and/or efficiency of its Digital Mobile network in such markets, construction of
the Digital Mobile network in additional market areas acquired or that may be
acquired in the future, enhancing the coverage in existing and new Nextel
Digital Mobile network markets, pursuit of new telecommunications service
offerings or business opportunities and analog SMR station construction
requirements under the currently effective FCC 800 MHz channel
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licensing approach) that may be wholly or partially offset by other developments
anticipated to, or having the potential to, reduce capital needs (e.g.,
co-location of antenna and/or transmitter sites with other providers of wireless
services in certain markets, greater reliance on "build-to-suit" and related
leasing arrangements for tower sites, reductions in infrastructure and
subscriber unit prices obtained from Motorola, and utilization of more
economical means for increasing system capacity as alternatives to constructing
additional cell sites and/or installing additional base radios). Many of the
foregoing involve elements wholly or partially beyond Nextel's control or
influence. Other considerations in addition to the factors identified above may
significantly affect Nextel's decisions to seek additional financing, including
general economic conditions, conditions in the telecommunications and/or
wireless communications industry, and the feasibility and attractiveness of
structuring particular financings for specific purposes (e.g., separate
capital-raising activities with respect to international activities and
opportunities). See "-- Forward Looking Statements."
Nextel has had and may in the future have discussions with third parties
regarding potential equity investments and debt financing arrangements to
satisfy actual or anticipated financing needs. At present, other than the
existing equity or debt financing arrangements that have been consummated and/or
are disclosed herein, Nextel has no legally binding commitments or
understandings with any third parties to obtain any material amount of equity or
debt financing. Under the terms of the agreements between the Company and
Motorola pursuant to which the Company acquired substantially all of Motorola's
domestic 800 MHz SMR licenses in 1995, Nextel has agreed, under certain
circumstances, not to grant superior governance rights to any third-party
investor without Motorola's consent, which may make securing equity investments
more difficult. The ability of Nextel to incur additional indebtedness
(including, in certain circumstances, indebtedness incurred under the Bank
Credit Facility) is and will be limited by the terms of the Nextel Indentures,
Series D and Series E Preferred Stock and the Bank Credit Facility.
YEAR 2000 COMPLIANCE
STATE OF READINESS: The Company has taken and is scheduled to take actions that
are designed to assure that the Company will be fully Year 2000 compliant by the
end of the third quarter of 1999. However, the Company's ability to reach its
Year 2000 full compliance goal is and will continue to be dependent on the
parallel efforts of certain third-party vendors, suppliers, subcontractors and
business partners. Certain of such third parties are not yet Year 2000 compliant
and some of them also have not yet provided the Company with detailed action
plans and timetables for achieving full Year 2000 compliance. Nextel is in the
process of contacting and obtaining from such third parties relevant details and
schedules concerning their contemplated development of Year 2000 compliant
applications for the Company's utilization in its domestic and international
operations and systems. In particular, the Company relies on services and
products offered by the following third parties: Motorola, for the Company's
system infrastructure and subscriber handset units; International
Telecommunications Data Systems, Inc., as the software vendor for the Company's
domestic order entry and provisioning systems, as well as the Company's domestic
billing information systems; LHS Group, Inc. as the software vendor for Nextel
International's billing information systems; Vantive Corporation, which provides
information systems used in the Company's customer care function and order entry
systems for Nextel International; Oracle Corporation, which provides the Company
with information systems, development tools and database management used to
support the Company's human resources function and financial systems; and
Hewlett-Packard, Inc., which supplies computer hardware (i.e., monitors,
peripherals, etc.) and UNIX operating systems.
The Company has identified five phases that assist in defining the status
of the Company's progress toward Year 2000 compliance. The five phases are (i)
awareness--locating, listing and prioritizing specific technology used in the
Company's operations that is potentially subject to Year 2000 related
challenges; (ii) assessment--determining the level of risk of Year 2000
challenges that exist on the Company's systems through inquiry, research and
testing; (iii) renovation--determining and resolving Year 2000 related
challenges that were identified in previous phases through replacement, upgrade
or repair and planning for the scheduled implementation of the selected Year
2000 compliant resolution; (iv) validation--testing, monitoring, certification
and verification of the correct manipulation of dates and date related data on
non-Information Technology ("IT") and IT systems, including those of material
third parties; and (v) implementation--installing and integrating the
application of Year 2000 compliant resolutions by replacement, upgrade or repair
of non-IT and IT systems, including those of material third parties.
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As of September 30, 1998, with respect to its non-IT devices and/or
systems containing embedded circuitry, the Company is for the most part in the
assessment phase. Additionally, with respect to its IT systems and issues
relating to third parties with which the Company maintains a material
relationship, the Company is in various phases as of September 30, 1998, ranging
from assessment through implementation.
The Company has established a Year 2000 committee. This committee
consists of employees across functional and divisional departments who are
responsible for assisting in the identification, assessment and remediation of
Year 2000 challenges. In addition, the committee includes representatives from
certain of the material third parties identified above and outside consultants
that the Company has retained to advise and support the committee in its Year
2000 related tasks. Members of the Year 2000 committee provide weekly status
reports regarding the progress of ongoing activities and performance against
plan by the relevant functions and divisions.
THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 CHALLENGES: Based on information
developed to date as a result of the Company's assessment efforts, the Company
believes that the costs of modifying, upgrading or replacing its systems and
equipment will not have a material effect on the Company's liquidity, its
financial condition or results of operations. To date, the Company has not
deferred any specific projects, goals or objectives relating to its domestic and
international operations as a result of implementing the Company's Year 2000
compliance efforts.
THE RISKS OF THE COMPANY'S YEAR 2000 CHALLENGES: In light of the progress made
to date, the Company does not anticipate delays and postponements in finalizing
and implementing Year 2000 resolutions by the end of the third quarter of 1999.
Until the Company's renovation and validation phases are substantially complete,
however, the Company cannot fully and accurately estimate any uncertainty in
timely resolving its Year 2000 challenges or in finalizing and implementing
related Year 2000 resolutions. Additionally, any failure by third parties which
have a material relationship with the Company to achieve full Year 2000
compliance may be a potential risk if such failure were to adversely impact the
ability of such third parties to provide any products or services that are
critical to the Company's operations. Finally, where the Company is not in a
position to validate or certify that technology provided by third parties is
fully Year 2000 compliant, the Company is seeking to obtain assurances from such
third parties that their systems are or will be Year 2000 compliant no later
than the end of the third quarter of 1999. If these third parties fail to
appropriately address Year 2000 challenges, there could be a materially adverse
effect on the Company's financial condition and results of operations. Such
risks include, but are not limited to: (i) inability of subscribers to make or
receive phone calls; (ii) inability of sites, switches and other interfaces to
accurately record call details of subscriber phone calls; and (iii) inability of
billing systems to accurately report and bill subscribers for phone usage. Other
risks associated with the inability of the Company or material third parties to
develop and deploy Year 2000 solutions in a timely and successful manner may
involve or result in conditions that could preclude the Company from: (a)
obtaining equity or debt financing; (b) deploying an alternative technology that
is Year 2000 compliant; (c) implementing commercial launches in new markets
or introducing new services in existing markets; and (d) pursuing additional
business opportunities.
Significantly, the Company cannot independently assess the impact of Year
2000 challenges and compliance activities and programs involving operators of
public switch telecommunications networks ("PSTNs") or other service providers
(such as electric utilities). The Company therefore must rely on PSTN and
utility providers' estimates of their own Year 2000 challenges and the status of
their related compliance activities and programs in the Company's own Year 2000
assessment process. Because the Company's systems will be interconnected with
PSTNs and will be dependent upon the systems of other service providers, any
disruption of operations in the computer programs of such PSTNs or service
providers would likely have an impact on the Company's systems. Moreover, there
can be no assurance that such impact will not have a materially adverse effect
on the Company's operations.
Finally, in assessing its Year 2000 exposure associated with its
international operations, the Company has considered that certain operators of
PSTNs or other service providers and operations located in foreign countries may
not be at the same level of awareness or assessment of the Year 2000 challenges
and remedial measures as their United States counterparts. Such factors, to the
extent present with respect to the Company's international operations, may
result in delays in identifying Year 2000 challenges and a lag in implementing
remediation efforts as compared with the Company's domestic operations. In the
event the Company's international affiliates and third parties fail to timely
address their Year 2000 challenges, the Company's international operations
could experience disruption after December 31, 1999.
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THE COMPANY'S CONTINGENCY PLANS: The Company has not completed all systems and
software testing in its critical systems, nor has it been advised of the
completion of such activities by all third-party providers of critical products
and services. As a result, the Company has not fully assessed its exposure from
potential Year 2000 noncompliance. The Company has not yet determined whether or
not it will require, and thus has not developed, Year 2000 contingency plans.
Following testing of the Company's critical systems, the Company will evaluate
alternative plans designed to address various potential business interruptions
that may occur as a result of noncompliance. Additionally, since contingency
plans may also be provided by third parties resulting from any anticipated
failure on their part to be Year 2000 compliant, the Company will have to assess
development of appropriate alternative solutions advanced by any such third
party to determine its effectiveness and likely impact on the Company's Year
2000 risk profile.
FORWARD LOOKING STATEMENTS
"SAFE HARBOR" STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. A number of the matters and subject areas discussed in the foregoing
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" (including the related discussions referred to above that are
included in Nextel's 1997 Form 10-K) that are not historical or current facts
deal with potential future circumstances and developments. The discussion of
such matters and subject areas is qualified by the inherent risks and
uncertainties surrounding future expectations generally, and also may materially
differ from Nextel's actual future experience involving any one or more of such
matters and subject areas. Nextel has attempted to identify, in context, certain
factors that it currently believes may cause actual future experiences and
results to differ from Nextel's current expectations regarding the relevant
matter or subject area. Certain risks are also discussed in the "Risk Factors"
section of Nextel's 1997 Form 10-K. The operation and results of Nextel's
wireless communications business also may be subject to the effect of other
risks and uncertainties in addition to the relevant qualifying factors
identified or referred to elsewhere in the foregoing "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section,
including, but not limited to, general economic conditions in the geographic
areas and occupational market segments that Nextel is targeting for its Digital
Mobile system service; the uncertain availability of additional debt and equity
financing in view of the recent and continuing volatility in the domestic and
international capital markets; the availability of adequate quantities of system
infrastructure and subscriber equipment and components to meet Nextel's service
deployment and marketing plans and customer demand; the success of efforts to
improve and satisfactorily address issues relating to Digital Mobile network
performance; the continued successful performance of the iDEN technology being
deployed in Nextel's various market areas; the ability to achieve market
penetration and average subscriber revenue levels sufficient to provide
financial viability to the Digital Mobile network business; the consummation of
currently contemplated transactions involving dispositions of capital assets and
corresponding reductions in ongoing capital expenditures; Nextel's ability to
timely and successfully accomplish required scale-up of its billing, collection,
customer care and similar back-room operations to keep pace with customer growth
and increased system usage rates; access to sufficient debt and/or equity
capital to meet Nextel's operating and financial needs; the impact of the
introduction of new products and services on utilization rates, revenues, and
expenditures relating to the Digital Mobile network; the quality and price of
similar or comparable wireless communications services offered or to be offered
by Nextel's competitors, including providers of cellular and PCS service; the
ability to fulfill the Company's Year 2000 compliance efforts in a timely and
successful manner; future legislative or regulatory actions relating to SMR
services, other wireless communications services or telecommunications generally
and other risks and uncertainties described from time to time in Nextel's
reports filed with the Commission, including the Company's 1997 Form 10-K and
Form 10-Q reports for the quarters ended March 31, 1998 and June 30, 1998 and,
with specific reference to risk factors relating to international operations, in
Nextel International's reports filed with the Commission, including the Nextel
International 1997 Form 10-K and Form 10-Q reports for the quarters ended March
31, 1998, June 30, 1998, and September 30, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Nextel uses mandatorily redeemable preferred stock, senior discount
notes, and bank and vendor credit facilities to finance its operations. These
on-balance sheet financial instruments, to the extent that they provide for
variable rates of interest, expose the Company to interest rate risk, with the
primary interest rate risk exposure resulting from changes in LIBOR or the prime
rate which are used to determine the interest rates that are applicable to
borrowings under the Company's bank and vendor credit facilities. Nextel uses
off-balance sheet derivative financial instruments, including
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interest rate swap and collar agreements, to partially hedge interest rate
exposure associated with on-balance sheet financial instruments. All of the
Company's financial instrument transactions are entered into for non-trading
purposes. As of September 30, 1998, the terms and characteristics of the
derivative financial instruments are matched with existing on-balance sheet
financial instruments and do not constitute speculative or leveraged positions
independent of these exposures.
Nextel International's revenues are denominated in foreign currencies,
while a significant portion of its operations are financed through senior
discount notes and bank and vendor credit facilities, which are denominated in
U.S. dollars. Accordingly, fluctuations in exchange rates relative to the U.S.
dollar, primarily those related to the Brazilian Real and the Argentinean Peso,
expose the Company to foreign currency exchange rate risk. In the near term, the
Company's foreign currency exchange rate exposure associated with the repayment
of Nextel International's debt obligations is limited, as the terms of the
senior discount notes and bank and vendor credit facilities do not require
principal payments until after 1999. Accordingly, as of September 30, 1998, the
Company has not established any hedge or risk reduction strategies related to
its foreign currency exchange rate exposure.
The information below summarizes Nextel's sensitivity to market risks
associated with fluctuations in interest rates and foreign currency exchange
rates as of September 30, 1998 in U.S. dollars. To the extent that the Company's
financial instruments expose the Company to interest rate and foreign currency
exchange risk, they are presented within each market risk category in the table
below. The table presents principal cash flows and related interest rates by
year of maturity for the Company's mandatorily redeemable preferred stock,
senior discount notes, and bank and vendor credit facilities in effect as of
September 30, 1998 and, in the case of the mandatorily redeemable preferred
stock and senior discount notes, exclude the potential exercise of the relevant
redemption features. The cash flows related to the variable portion of interest
rate swaps are determined by dealers using valuation models that estimate the
future level of interest rates, with consideration of the applicable yield curve
as of September 30, 1998. For interest rate swap and collar agreements, the
table presents notional amounts and the related reference interest rates by year
of maturity. Fair values included herein have been determined based on: (i)
quoted market prices for mandatorily redeemable preferred stock and senior
discount notes; (ii) the carrying value for the bank and vendor credit
facilities at September 30, 1998, as interest rates are reset periodically; and
(iii) estimates obtained from dealers to settle interest rate swap and collar
agreements.
Descriptions of the Company's mandatorily redeemable preferred stock,
senior discount notes, bank and vendor credit facilities, and interest rate risk
management agreements are contained in Notes 6, 7 and 10 to the consolidated
financial statements contained in the Company's 1997 Form 10-K and should be
read in conjunction with the table below.
In June 1998, the FASB issued SFAS 133, which establishes accounting and
reporting standards for derivative instruments and for hedging activities by
requiring that all derivatives be recognized in the balance sheet and measured
at fair value. SFAS 133 is effective for fiscal years beginning after June 15,
1999. The Company has not evaluated the effects of this change on its financial
position or results of operations.
26
<PAGE> 27
Year of Maturity
(US dollars in millions)
<TABLE>
<CAPTION>
1998 1999 2000 2001
--------------- -------------- -------------- ---------------
I. Interest Rate Sensitivity
Redeemable Preferred Stock and Long-Term Debt:
- ----------------------------------------------
<S> <C> <C> <C> <C>
Fixed Rate -- -- -- --
Average Interest Rate -- -- -- --
Variable Rate -- -- $ 24.9 $ 35.1
Average Interest Rate -- -- 10.2% 9.9%
Interest Rate Swaps:
- --------------------
Variable to Fixed -- -- -- $ 200.0
Average Pay Rate -- -- -- 5.4%
Average Receive Rate -- -- -- 5.6%
Variable to Variable -- -- $ 50.0 $ 100.0
Average Pay Rate -- -- 5.7% 5.8%
Average Receive Rate -- -- 5.8% 5.6%
Interest Rate Collars:
- ----------------------
Collars -- -- -- --
Average Cap Rate -- -- -- --
Average Floor Rate -- -- -- --
II. Foreign Exchange Rate Sensitivity
Note Receivable:
- ----------------
Fixed Rate - Yen -- -- -- --
Average Interest Rate -- -- -- --
Long-Term Debt:
- ---------------
Fixed Rate -- -- -- --
Average Interest Rate -- -- -- --
Variable Rate -- -- $ 24.9 $ 30.1
Average Interest Rate -- -- 10.2% 10.1%
<CAPTION>
Total
There- Due at Fair
2002 After Maturity Value
-------------- ------------------ ------------------ ------------
I. Interest Rate Sensitivity
Redeemable Preferred Stock and Long-Term Debt:
- ----------------------------------------------
<S> <C> <C> <C> <C>
Fixed Rate -- $ 8,333.8 $ 8,333.8 $ 5,830.0
Average Interest Rate -- 10.8% 10.8%
Variable Rate $ 49.9 $ 2,257.5 $ 2,367.4 $ 2,367.4
Average Interest Rate 9.8% 8.1% 8.2%
Interest Rate Swaps:
- --------------------
Variable to Fixed -- 670.0 $ 870.0 $ (81.6)*
Average Pay Rate -- 7.7% 7.2%
Average Receive Rate -- 5.4% 5.4%
Variable to Variable -- $ 400.0 $ 550.0 $ (12.7)
Average Pay Rate -- 5.3% 5.4%
Average Receive Rate -- 5.7% 5.7%
Interest Rate Collars:
- ----------------------
Collars -- $ 200.0 $ 200.0 $ (6.0)
Average Cap Rate -- 6.7% 6.7%
Average Floor Rate -- 4.5% 4.5%
II. Foreign Exchange Rate Sensitivity
Note Receivable:
- ----------------
Fixed Rate - Yen -- $ 31.5 $ 31.5 $ 30.0
Average Interest Rate -- 3.8% 3.8%
Long-Term Debt:
- ---------------
Fixed Rate -- $ 1,681.5 $ 1,681.5 $ 775.7
Average Interest Rate -- 12.6% 12.6%
Variable Rate $ 39.9 $ 55.5 $ 150.4 $ 150.4
Average Interest Rate 10.2% 10.0% 10.1%
</TABLE>
- ---------------
*Of this amount, approximately $46.9 million was recognized as a loss in the
Company's statement of operations for the period ended September 30, 1998
and approximately $14.9 million was previously capitalized as deferred
financing costs in connection with the issuance of the February Notes.
27
<PAGE> 28
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company is involved in certain legal proceedings that are described
in the Company's 1997 Form 10-K. During the three months ended September 30,
1998, there were no material changes in the status of or developments regarding
those legal proceedings.
ITEM 2. CHANGES IN SECURITIES.
(a) Inapplicable
(b) Inapplicable
(c) Recent Issues of Unregistered Securities. Nextel sold securities that
were not registered under the Securities Act in the following transaction
during the third quarter of 1998.
On July 28, 1998, Option Acquisition, L.L.C., an entity controlled by Mr.
McCaw, exercised options to purchase 9,953,821 shares of Nextel Common
Stock in a cashless exercise transaction as permitted by the terms of
such options. The exercise of the options was effected by surrendering a
number of options determined (as provided in such options) by dividing
the full cash exercise price for all of the options by the average
closing sales price for a share of Common Stock on the Nasdaq National
Market for the 20 trading days immediately preceding the exercise date.
The foregoing transaction was effected pursuant to the exemption of
Section 4(2) of the Securities Act in reliance upon representations of
the relevant purchaser and its agreement to resell such securities only
pursuant to a registration statement or in a transaction exempt from the
registration requirements of such act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) List of Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT DESCRIPTION
- -------------- -------------------
<S> <C>
4.1 Indenture dated as of November 4, 1998 between Nextel Communications,
Inc. and Harris Trust and Savings Bank, as Trustee (the "November 1998
Indenture"), relating to Nextel's 12.0% Senior Serial Redeemable Notes
due 2008.
4.2 Form of Note issued pursuant to November 1998 Indenture (included in
Exhibit 4.1 hereto).
4.3 Amendment No. 1 dated as of October 28, 1998, amending the Credit Agreement
dated as of March 12, 1998, between Nextel Communications, Inc., Nextel
Finance Company, the other restricted companies party thereto, the lenders
party thereto and the Administrative Agent and Collateral Agent (the "Bank
Credit Agreement")(filed on October 29, 1998, as Exhibit 4.1 to Nextel's
Current Report on Form 8-K dated October 28, 1998, and incorporated herein
by reference).
27** Financial Data Schedule.
99.1 Press Release dated August 13, 1998, announcing an agreement with Nextel
Partners, Inc., filed as Exhibit 99.1 to Nextel's Current Report on Form 8-K
filed and dated on August 18, 1998.
</TABLE>
28
<PAGE> 29
---------------------
** Submitted only with the electronic filing of this
document with the Commission pursuant to
Regulation S-T under the Securities Act.
(b) Reports on Form 8-K.
(i) Current Report on Form 8-K dated and filed
August 18, 1998, with the Commission reporting
under Item 5 the announcement of the agreement
with Nextel Partners, Inc., to build and operate
a related integrated digital wireless network
and filed for the purpose of filing a press
release related thereto.
29
<PAGE> 30
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 thereunto duly authorized.
NEXTEL COMMUNICATIONS, INC.
By: /s/WILLIAM G. ARENDT
Date: November 16, 1998 -------------------------------
William G. Arendt
Vice President and Controller
(Principal Accounting Officer)
30
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT DESCRIPTION
- -------------- -------------------
<S> <C>
4.1 Indenture dated as of November 4, 1998 between Nextel Communications,
Inc. and Harris Trust and Savings Bank, as Trustee (the "November 1998
Indenture"), relating to Nextel's 12.0% Senior Serial Redeemable Notes
due 2008.
4.2 Form of Note issued pursuant to November 1998 Indenture (included in
Exhibit 4.1 hereto).
4.3 Amendment No. 1 dated as of October 28, 1998, amending the Credit Agreement
dated as of March 12, 1998, between Nextel Communications, Inc., Nextel
Finance Company, the other restricted companies party thereto, the lenders
party thereto and the Administrative Agent and Collateral Agent (the "Bank
Credit Agreement")(filed on October 29, 1998, as Exhibit 4.1 to Nextel's
Current Report on Form 8-K dated October 28, 1998, and incorporated herein
by reference).
27** Financial Data Schedule.
99.1 Press Release dated August 13, 1998, announcing an agreement with Nextel
Partners, Inc., filed as Exhibit 99.1 to Nextel's Current Report on Form
8-K filed and dated on August 18, 1998.
</TABLE>
----------------
** Submitted only with the electronic filing of this document
with the Commission pursuant to Regulation S-T under the
Securities Act.
31
<PAGE> 1
Nextel Communications, Inc.
to
Harris Trust and Savings Bank
Trustee
----------------
Indenture
Dated as of November 4, 1998
----------------
12% Senior Serial Redeemable Notes due 2008
<PAGE> 2
Nextel Communications, Inc.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of November 4, 1998
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- -------------- ---------
<S> <C>
Section 310(a)(1) 609
(a)(2) 609
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 609
(b) 608, 610
Section 311(a) 613
(b) 613
(c) 613
Section 312(a) 701, 702
(b) 702(b)
(c) 702(c)
Section 313(a) 703
(b) 703
(c) 703
(d) 703(b)
Section 314(a)(1)-(3) 704
(a)(4) 1017
(b) Not Applicable
(c)(1) 102, 401, 1204
(c)(2) 102, 401, 1204
(c)(3) 1204
(d) Not Applicable
(e) 102
Section 315(a) 601, 603
(b) 602
(c) 601
(d) 601
(e) 514
Section 316(a)(1)(A) 512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
(c) 104
Section 317(a)(1) 503
(a)(2) 504
(b) 1003
Section 318(a) 107
</TABLE>
<PAGE> 3
INDENTURE, dated as of November 4, 1998, between Nextel
Communications, Inc., a Delaware corporation (herein called the "Company"),
having its principal office at 1505 Farm Credit Dr., McLean, Virginia 22102 and
Harris Trust and Savings Bank, an Illinois banking corporation, as Trustee
(herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its
Senior Serial Redeemable Notes due 2008 of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) whenever this Indenture requires that a particular ratio or
amount be calculated with respect to a specified period after giving
effect to certain transactions or events on a pro forma basis, such
calculation will be made as if the transactions or events occurred on
the first day of such period, unless otherwise specified herein, and all
<PAGE> 4
accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles
(whether or not such is indicated herein), and, except as otherwise
herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case
may be, of this Indenture;
(5) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) each reference herein to a rule or form of the Commission
shall mean such rule or form and any rule or form successor thereto, in
each case as amended from time to time.
Certain terms, used principally in Article Six, are defined in
that Article.
Whenever this Indenture requires that a particular ratio or
amount be calculated with respect to a specified period after giving effect to
certain transactions or events on a pro forma basis, such calculation shall be
made as if the transactions or events occurred on the first day of such period,
unless otherwise specified.
"Acquired Debt" means Debt of a Person existing at the time such
Person becomes a Restricted Subsidiary or assumed by the Company or a
Restricted Subsidiary in connection with the acquisition of assets from
such Person.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person. "Affiliate" shall be deemed to
include, but only for purposes of Section 1011 and without limiting the
application of the preceding sentence for the purpose of such or any
other Section, any Person owning, directly or indirectly, (i) 10% or
more of the Company's outstanding Common Stock or (ii) securities having
10% or more of the total voting power of the Company's Voting Stock. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing. No
individual shall be deemed
<PAGE> 5
to be controlled by or under common control with any specified Person
solely by virtue of his or her status as an employee or officer of such
specified Person or of any other Person controlled by or under common
control with such specified Person.
"Agent Members" has the meaning provided in Section 306(a).
"Annualized Operating Cash Flow" means, for any fiscal quarter,
the Operating Cash Flow for such fiscal quarter multiplied by four.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 hereof to act on behalf of the Trustee to
authenticate Securities.
"Average Life" means, at any date of determination with respect
to any Debt, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from such date of determination to
the dates of each successive scheduled principal payment of such Debt
and (b) the amount of such principal payment by (ii) the sum of all such
principal payments.
"Beneficial Owner" means a beneficial owner as defined in Rules
13d-3 and 13d-5 under the Exchange Act (or any successor rules),
including the provision of such Rules that a person shall be deemed to
have beneficial ownership of all securities that such person has a right
to acquire within 60 days, provided that a person shall not be deemed a
beneficial owner of, or to own beneficially, any securities if such
beneficial ownership (1) arises solely as a result of a revocable proxy
delivered in response to a proxy or consent solicitation made pursuant
to, and in accordance with, the Exchange Act and the applicable rules
and regulations thereunder and (2) is not also then reportable on
Schedule 13D (or any successor schedule) under the Exchange Act.
"Board of Directors" means (i) whenever used in Sections 1009
through 1015, inclusive, the board of directors of the Company and (ii)
whenever used elsewhere herein, either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors (unless the context specifically
requires that such resolution be adopted by a majority of the
Disinterested Directors, in which case by a majority of such directors)
and to be in full force and effect on the date of such certification and
delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the
Borough of Manhattan, The City of New York are authorized or obligated
by law or executive order to close.
"Capital Lease Obligations" of any Person means the obligations
to pay rent or other amounts under lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person
which are required to be classified and accounted for
<PAGE> 6
as a capital lease or a liability on the face of a balance sheet of such
Person determined in accordance with generally accepted accounting
principles and the amount of such obligations shall be the capitalized
amount thereof in accordance with generally accepted accounting
principles and the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
stock of, or other ownership interests in, such Person.
"Change of Control" means the occurrence of any of the following
events:
(a) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act and the regulations thereunder) is or
becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the total Voting Stock or Total Common Equity of the
Company; provided that no Change of Control shall be deemed to
occur pursuant to this clause (a) (x) if the person is a
corporation with outstanding debt securities having a maturity at
original issuance of at least one year and if such debt
securities are rated Investment Grade by S&P or Moody's for a
period of at least 90 consecutive days, beginning on the date of
such event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is under
publicly announced consideration for possible downgrading by the
applicable rating agency), or (y) if the person is a corporation
(1) that is not, and does not have any outstanding debt
securities that are, rated by S&P, Moody's or any other rating
agency of national standing at any time during a period of 90
consecutive days beginning on the date of such event (which
period will be extended up to an additional 90 days for as long
as any such rating agency has publicly announced that such
corporation or debt thereof will be rated), unless after such
date but during such period debt securities of such corporation
having a maturity at original issuance of at least one year are
rated Investment Grade by S&P or Moody's and remain so rated for
the remainder of the period referred to in clause (x) above and
(2) that, when determined as of the Trading Day immediately
before and the Trading Day immediately after the date of such
event, has Total Common Equity of at least $10 billion (provided
that, solely for the purpose of calculating Total Common Equity
as of such later Trading Day, the average Closing Price of the
Common Stock of such person shall be deemed to equal the Closing
Price of such Common Stock on such later Trading Day, subject to
the last sentence of the definition of "Total Common Equity"); or
(b) the Company consolidates with, or merges with or
into, another Person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges
with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any
such transaction where (i) the outstanding Voting Stock of the
Company is converted into or
<PAGE> 7
exchanged for (1) Voting Stock (other than Redeemable Stock) of
the surviving or transferee Person or (2) cash, securities and
other property in an amount which could be paid by the Company
as a Restricted Payment under this Indenture and (ii)
immediately after such transaction no person (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act and the
regulations thereunder) is the Beneficial Owner, directly or
indirectly, of more than 50% of the total Voting Stock or Total
Common Equity of the surviving or transferee Person; provided
that no Change of Control shall be deemed to occur pursuant to
this clause (b), (x) if the surviving or transferee Person or
the person referred to in clause (b)(ii) is a corporation with
outstanding debt securities having a maturity at original
issuance of at least one year and if such debt securities are
rated Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such event
(which period will be extended up to 90 additional days for as
long as the rating of such debt securities is under publicly
announced consideration for possible downgrading by the
applicable rating agency), or (y) if the surviving or transferee
Person or such other person is a corporation (1) that is not,
and does not have any outstanding debt securities that are,
rated by S&P, Moody's or any other rating agency of national
standing at any time during a period of 90 consecutive days
beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any such
rating agency has publicly announced that such corporation or
debt thereof will be rated), unless after such date but during
such period debt securities of such corporation having a
maturity at original issuance of at least one year are rated
Investment Grade by S&P or Moody's and remain so rated for the
remainder of the period referred to in clause (x) above and (2)
that, when determined as of the Trading Day immediately before
and the Trading Day immediately after the date of such event,
has Total Common Equity of at least $10 billion (provided that,
solely for the purpose of calculating Total Common Equity as of
such later Trading Day, the average Closing Price of the Common
Stock of such person shall be deemed to equal the Closing Price
of such Common Stock on such later Trading Day, subject to the
last sentence of the definition of "Total Common Equity"); or
(c) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of
Directors (together with any directors who are members of the
Board of Directors on the date hereof and any new directors whose
election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a
vote of 66 2/3% of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of
Directors then in office.
Any event that would constitute a Change of Control pursuant to
clause (a) or (b)
<PAGE> 8
above (i) but for the proviso thereto shall not be deemed to be a Change
of Control until such time (if any) as the conditions described in such
proviso cease to have been met and (ii) if and to the extent resulting
from any restructuring transaction or any sale or assignment of all or
substantially all of the assets and liabilities of the Company to, or
merger or consolidation of the Company with, any Person (any such
transaction, a "Restructuring Transaction") effected at substantially
the same time as and in connection with any of the Permitted
Transactions described in clause (i) of the definition of the term
"Permitted Transactions" shall not constitute a Change of Control so
long as the Persons who, immediately prior to the closing of such
Restructuring Transaction and the particular Permitted Transaction being
consummated at substantially the same time and in connection therewith
(the "Restructuring Closing"), were the Beneficial Owners, directly or
indirectly, of more than 50% of the total Voting Stock and more than 50%
of the Total Common Equity of the Company would remain, immediately
after such Restructuring Closing (and after taking into account all
issuances of securities in such Restructuring Transaction and related
Permitted Transaction), the Beneficial Owners, directly or indirectly,
of more than 50% of the total Voting Stock and more than 50% of the
Total Common Equity of the Company (or the surviving transferee Person,
as the case may be); provided that, immediately after any transaction or
combination of transactions described in this clause (ii), no person (as
such term is used in Sections 13(d) and 14(a) of the Exchange Act and
the regulations thereunder) is the ultimate Beneficial Owner of more
than 50% of the total Voting Stock or more than 50% of the Total Common
Equity of the Company (or the surviving transferee Person, as the case
may be) unless such person (as so defined) was the Beneficial Owner of
more than 50% of the total Voting Stock and more than 50% of the Total
Common Equity of the Company immediately before such transaction or
combination of transactions.
"Closing Date" means the date on which the Securities are
originally issued hereunder.
"Closing Price" on any Trading Day with respect to the per share
price of any shares of Capital Stock means the last reported sale price
regular way or, in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices regular way, in
either case on the New York Stock Exchange or, if such shares of Capital
Stock are not listed or admitted to trading on such exchange, on the
principal national securities exchange on which such shares are listed
or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the Nasdaq Stock Market or, if such
shares are not listed or admitted to trading on any national securities
exchange or quoted on the Nasdaq Stock Market but the issuer is a
Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and
the principal securities exchange on which such shares are listed or
admitted to trading is a Designated Offshore Securities Market (as
defined in Rule 902(a) under the Securities Act), the average of the
reported closing bid and asked prices regular way on such principal
exchange, or, if such shares are not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq Stock Market
and the issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange
member firm of national standing
<PAGE> 9
that is selected from time to time by the Company for that purpose.
"Code" means the Internal Revenue Code, as amended from time to
time, and the rules and regulations thereunder.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person
that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of
any other class of such Person.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board,
its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Adjusted Net Income" and "Consolidated Adjusted Net
Loss" mean, for any period, the net income or net loss, as the case may
be, of the Company and its Restricted Subsidiaries for such period, all
as determined on a Consolidated basis in accordance with generally
accepted accounting principles, adjusted, to the extent included in
calculating such net income or net loss, as the case may be, by
excluding without duplication (a) any after-tax gain or loss
attributable to the sale, conversion or other disposition of assets
other than in the ordinary course of business, (b) any after-tax gains
resulting from the write-up of assets and any loss resulting from the
write-down of assets, (c) any after-tax gain or loss on the repurchase
or redemption of any securities (including in connection with the early
retirement or defeasance of any Debt), (d) any foreign exchange gain or
loss, (e) all payments in respect of dividends on shares of Preferred
Capital Stock of the Company, (f) any other extraordinary, non-recurring
or unusual items incurred by the Company or any of its Restricted
Subsidiaries, (g) the net income (or loss) of any Person acquired by the
Company or any Restricted Subsidiary in a pooling-of-interests
transaction for any period prior to the date of such transaction and (h)
all income or losses of Unrestricted Subsidiaries and Persons (other
than Subsidiaries) accounted for by the Company using the equity method
of accounting except, in the case of any such income, to the extent of
dividends, interest or other cash distributions received directly or
indirectly from any such Unrestricted Subsidiary or Person.
<PAGE> 10
"Consolidated Adjusted Net Income (Loss)" means, for any period,
the Company's Consolidated Adjusted Net Income or Consolidated Adjusted
Net Loss for such period, as applicable.
"Consolidated Debt to Annualized Operating Cash Flow Ratio"
means, as at any date of determination, the ratio of (i) the aggregate
amount of Debt of the Company and the Restricted Subsidiaries on a
Consolidated basis outstanding as at the date of determination to (ii)
the Annualized Operating Cash Flow of the Company for the most recently
completed fiscal quarter of the Company.
"Consolidated Interest Expense" of any Person means, for any
period, the aggregate interest expense and fees and other financing
costs in respect of Debt (including amortization of original issue
discount and non-cash interest payments and accruals), the interest
component in respect of Capital Lease Obligations and any deferred
payment obligations of such Person and its Restricted Subsidiaries,
determined on a Consolidated basis in accordance with generally accepted
accounting principles and all commissions, discounts, other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net costs (including amortizations of discounts)
associated with interest rate swap and similar agreements and with
foreign currency hedge, exchange and similar agreements and the amount
of dividends paid in respect of Redeemable Stock.
"Consolidated Net Income" and "Consolidated Net Loss" mean, for
any period, the net income or net loss, as the case may be, of the
Company and its Restricted Subsidiaries for such period, all as
determined on a Consolidated basis in accordance with generally accepted
accounting principles, adjusted, to the extent included in calculating
such net income or net loss, as the case may be, by excluding without
duplication (a) any after-tax gain or loss attributable to the sale,
conversion or other disposition of assets other than in the ordinary
course of business, (b) any after-tax gains resulting from the write-up
of assets and any loss resulting from the write-down of assets, (c) any
after-tax gain or loss on the repurchase or redemption of any securities
(including in connection with the early retirement or defeasance of any
Debt), (d) any foreign exchange gain or loss, (e) all payments in
respect of dividends on shares of Preferred Capital Stock of the
Company, (f) any other extraordinary, non-recurring or unusual items
incurred by the Company or any of its Restricted Subsidiaries, (g) the
net income (or loss) of any Person acquired by the Company or any
Restricted Subsidiary in a pooling-of-interests transaction for any
period prior to the date of such transaction, (h) all income or losses
of Unrestricted Subsidiaries and Persons (other than Subsidiaries)
accounted for by the Company using the equity method of accounting
except, in the case of any such income, to the extent of dividends,
interest or other cash distributions received directly or indirectly
from any such Unrestricted Subsidiary or Person and (i) the net income
(but not net loss) of any Restricted Subsidiary which is subject to
restrictions which prevent the payment of dividends or the making of
distributions to the Company but only to the extent of such
restrictions.
<PAGE> 11
"Consolidated Net Income (Loss)" means, for any period, the
Company's Consolidated Net Income or Consolidated Net Loss for such
period, as applicable.
"Consolidated Net Worth" of any Person means the Consolidated
stockholders' equity of such Person, determined on a Consolidated basis
in accordance with generally accepted accounting principles, less
amounts attributable to Redeemable Stock of such Person; provided that,
with respect to the Company, no effect shall be given to adjustments
following the Closing Date to the accounting books and records of the
Company in accordance with Accounting Principles Board Opinions Nos. 16
and 17 (or successor opinions thereto) or otherwise resulting from the
acquisition of control of the Company by another Person.
"Consolidation" means the consolidation of the accounts of each
of the Restricted Subsidiaries with those of the Company, if and to the
extent that the accounts of each such Restricted Subsidiary would
normally be consolidated with those of the Company in accordance with
generally accepted accounting principles; provided, however, that
"Consolidation" shall not include consolidation of the accounts of any
Unrestricted Subsidiary, but the interest of the Company or any
Restricted Subsidiary in any Unrestricted Subsidiary shall be accounted
for as an investment. The term "Consolidated" has a correlative meaning.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business
shall be administered, which address as of the Closing Date is located
at 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606,
Attention: Indenture Trust Division.
"Corporation" means a corporation, association, company, joint-
stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1203.
"Credit Facility" means any credit facility (whether a term or
revolving type) of the type customarily entered into with banks, between
the Company and/or any of its Restricted Subsidiaries, on the one hand,
and any banks or other lenders, on the other hand (and any renewals,
refundings, extensions or replacements of any such credit facility),
which credit facility is designated by the Company as a "Credit
Facility" for purposes of this Indenture, and shall include all such
credit facilities in existence on the Closing Date whether or not so
designated, to the extent that the aggregate principal balance of Debt
that is Incurred and outstanding under all Credit Facilities at any time
does not exceed $3 billion.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
Incurred in connection with the acquisition of property, assets or
businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers'
<PAGE> 12
acceptances or similar facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) the
maximum fixed redemption or repurchase price of Redeemable Stock of such
Person at the time of determination plus accrued but unpaid dividends,
(vii) every obligation of such Person under interest rate swap or
similar agreements or foreign currency hedge, exchange or similar
agreements of such Person, and (viii) every obligation of the type
referred to in clauses (i) through (vii) of another Person and all
dividends of another Person the payment of which, in either case, such
Person has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, Guarantor or otherwise. The amount of Debt of
any Person issued with original issue discount is the face amount of
such Debt less the unamortized portion of the original issue discount of
such Debt at the time of its issuance as determined in conformity with
generally accepted accounting principles, and money borrowed at the time
of the Incurrence of any Debt in order to pre-fund the payment of
interest on such Debt shall be deemed not to be "Debt".
"Default" means an event that is, or after notice or passage of
time, or both, would be, an Event of Default.
"Default Amount" has the meaning specified in Section 502.
"Defaulted Interest" has the meaning specified in Section 309.
"Defeasance" has the meaning specified in Section 1202.
"Depository" shall mean The Depository Trust Company, as nominees
and their respective successors.
"Digital Mobile" means a radio communications system that employs
digital technology with a multi-site configuration that will permit
frequency reuse as described in the Memorandum.
"Digital Mobile-SMR Operating Cash Flow" means, for any fiscal
quarter, (i) the net income or loss, as the case may be, of the Company
and its Restricted Subsidiaries from its Digital Mobile and Specialized
Mobile Radio businesses and related activities and services for such
fiscal quarter, plus (ii) depreciation and amortization charged with
respect thereto for such fiscal quarter, all as determined on a
Consolidated basis in accordance with generally accepted accounting
principles, adjusted, to the extent included in calculating such net
income or loss, by excluding (a) any after-tax gain or loss attributable
to the sale, conversion or other disposition of assets other than in the
ordinary course of business, (b) any gains resulting from the write-up
of assets and any loss resulting from the write-down of assets, (c) any
gain or loss on the repurchase or redemption of any securities
(including in connection with the early retirement or defeasance of any
Debt), (d) any foreign exchange gain or loss, (e) any other
<PAGE> 13
extraordinary, non-recurring or unusual items and (f) all income or
losses of Persons (other than Subsidiaries) accounted for by the Company
using the equity method of accounting, except, in the case of any such
income, to the extent of dividends, interest or other cash distributions
received directly or indirectly from any such Person, plus (iii) all
amounts deducted in calculating net income or loss for such fiscal
quarter in respect of interest expense and other financing costs and all
income taxes, whether or not deferred, applicable to such fiscal
quarter, all as determined on a Consolidated basis in accordance with
generally accepted accounting principles.
"Directed Investment" by the Company or any of its Restricted
Subsidiaries means any Investment for which the cash or property used
for such Investment is received by the Company from the issuance and
sale (other than to a Restricted Subsidiary) on or after June 1, 1997 of
shares of its Capital Stock (other than Redeemable Stock), or any
options, warrants or other rights to purchase such Capital Stock (other
than Redeemable Stock) designated by the Board of Directors as a
"Directed Investment" to be used for one or more specified investments
in the telecommunications business (including related activities and
services) and is so designated and used at any time within 365 days
after the receipt thereof; provided that the aggregate amount of any
such Directed Investments may not at any time exceed fifty percent (50%)
of the aggregate amount of such cash or property received by the Company
on or after June 1, 1997 from any such issuance and sale or capital
contribution; and provided further that any proceeds from any such
issuance or sale may not be used for such an Investment if such proceeds
were, prior to being designated for use as a Directed Investment, (x)
used to make a Restricted Payment or (y) used as the basis for the
Incurrence of Debt under clause (i) of Section 1008 unless and until the
amount of any such Debt (I) is treated as newly issued Debt and could be
Incurred in accordance with Section 1008 (other than under clause (i)
thereof) or (II) has been repaid or refinanced with the proceeds of Debt
Incurred in accordance with Section 1008 (other than under clause (i)
thereof) or (III) has otherwise been repaid and, in the circumstances
described in clauses (I) and (II), the Company delivers to the Trustee a
certificate confirming that the requirements of such clauses have been
met.
"Disinterested Director" means, with respect to any proposed
transaction between the Company and an Affiliate thereof, a member of
the Board of Directors who is not an officer or employee of the Company,
would not be a party to, or have a financial interest in, such
transaction and is not an officer, director or employee of, and does not
have a financial interest in, such Affiliate. For purposes of this
definition, no person would be deemed not to be a Disinterested Director
solely because such person holds Capital Stock of the Company.
"Event of Default" has the meaning specified in Section 501.
"Exchange Securities" means any security of the Company
containing terms identical to the Securities initially issued hereunder
(except that such Securities shall have
<PAGE> 14
been registered under the Securities Act) that are issued and exchanged
for the Securities pursuant to the Registration Rights Agreement.
"Exchange Act" refers to the Securities Exchange Act of 1934 and
any statute successor thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in the definition of
Offer to Purchase.
"Fair Market Value" means, for purposes of clause (i) of Section
1008, the price that would be paid in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and
an informed and willing buyer under no compulsion to buy, as determined
in good faith by the Board of Directors, whose determination shall be
conclusive if evidenced by a Board Resolution; provided that (x) the
Fair Market Value of any security registered under the Exchange Act
shall be the average of the closing prices, regular way, of such
security for the 20 consecutive trading days immediately preceding the
sale of Capital Stock and (y) in the event the aggregate Fair Market
Value of any other property received by the Company exceeds $10 million,
the Fair Market Value of such property shall be (i) so long as such a
Fair Market Value determination of such property is required to be made
pursuant to the Certificate of Designation for the Series D Preferred
Stock, pursuant to the terms of the Series D Debenture Indenture,
pursuant to the Certificate of Designation for the Series E Preferred
Stock or pursuant to the terms of the Series E Debenture Indenture, the
Fair Market Value as so determined, which shall be set forth in an
Officer's Certificate delivered to the Trustee, and (ii) otherwise, such
Fair Market Value shall be as determined in good faith by the Board of
Directors, including a majority of Disinterested Directors who are then
members of such Board of Directors, which determination shall be
conclusive if evidenced by a Board Resolution.
"FCC" means the Federal Communications Commission.
"February Indenture" means the Indenture, dated February 11,
1998, between the Company and Harris Trust and Savings Bank, Trustee,
relating to the February Notes.
"February Notes" means the Company's 9.95% Senior Serial
Redeemable Discount Notes due 2008.
"Global Securities" has the meaning provided in Section 201.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any obligation of such Person, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or to
purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working
<PAGE> 15
capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to
pay such Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall
have meanings correlative to the foregoing); provided, however, that the
Guarantee by any Person shall not include endorsements by such Person
for collection or deposit, in either case, in the ordinary course of
business.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume (pursuant to a merger, consolidation, acquisition or
other transaction), Guarantee or otherwise become liable in respect of
such Debt or other obligation or the recording, as required pursuant to
generally accepted accounting principles or otherwise, of any such Debt
or other obligation on the balance sheet of such Person (and
"Incurrence" and "Incurred", shall have meanings correlative to the
foregoing); provided, however, that a change in generally accepted
accounting principles that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of
such Debt; provided further, however, that the accretion of original
issue discount on Debt shall not be deemed to be an Incurrence of Debt.
Debt otherwise Incurred by a Person before it becomes a Subsidiary of
the Company shall be deemed to have been Incurred at the time it becomes
such a Subsidiary.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and
any such supplemental indenture, the provisions of the Trust Indenture
Act that are deemed to be a part of and govern this instrument and any
such supplemental indenture, respectively.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution to (by
means of transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise), or
purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Debt issued by, any other Person or the
designation of a Subsidiary as an Unrestricted Subsidiary; provided that
a transaction will not be an Investment to the extent it involves (i)
the issuance or sale by the Company of its Capital Stock (other than
Redeemable Stock), including options, warrants or other rights to
acquire such Capital Stock (other than Redeemable Stock) or (ii) a
transfer, assignment or contribution by the Company of shares of Capital
Stock (or any options, warrants or
<PAGE> 16
rights to acquire Capital Stock), or all or substantially all of the
assets of, any Unrestricted Subsidiary of the Company to another
Unrestricted Subsidiary of the Company.
"Investment Grade" means a rating of at least BBB-, in the case
of S&P, or Baa3, in the case of Moody's.
"Licenses" means SMR licenses granted by the FCC that entitle the
holder to use the radio channels covered thereby, subject to compliance
with FCC rules and regulations, in connection with its SMR business.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such
property or assets (including any conditional sale or other title
retention agreement having substantially the same economic effect as any
of the foregoing).
"Marketable Securities" means:
(1) securities either issued directly or fully guaranteed or
insured by the government of the United States of America or any agency
or instrumentality thereof having maturities of not more than six
months;
(2) time deposits and certificates of deposit, having maturities
of not more than six months from the date of deposit, of any domestic
commercial bank having capital and surplus in excess of $500 million and
having outstanding long-term debt rated A or better (or the equivalent
thereof) by S&P or Aaa or better (or the equivalent thereof) by Moody's;
and
(3) commercial paper rated A-1 or the equivalent thereof by S&P
or P-1 or the equivalent thereof by Moody's, and in each case maturing
within six months.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, offer to purchase or
otherwise.
"Memorandum" means the offering memorandum dated October 28, 1998
in connection with the offering of the Securities.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's
Investors Service, Inc. shall cease rating debt securities having a
maturity at original issuance of at
<PAGE> 17
least one year and such ratings business shall have been transferred to
a successor Person, such successor Person; provided, however, that if
Moody's Investors Service, Inc. ceases rating debt securities having a
maturity at original issuance of at least one year and its ratings
business with respect thereto shall not have been transferred to any
successor Person, then "Moody's" shall mean any other national
recognized rating agency (other than S&P) that rates debt securities
having a maturity at original issuance of at least one year and that
shall have been designated by the Company by a written notice given to
the Trustee.
"Non-U.S. Person" means a person who is not a "U.S. Person" (as
defined in Regulation S).
"Notice of Default" means a written notice of the kind specified
in Section 501(5).
"October Indenture" means the Indenture, dated October 22, 1997,
between the Company and Harris Trust and Savings Bank, Trustee, relating
to the October Notes.
"October Notes" means the Company's 9 3/4% Senior Serial
Redeemable Discount Notes due 2007.
"Offer" has the meaning specified in the definition of Offer to
Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent by
the Company by first class mail, postage prepaid, to each Holder at his
address appearing in the Security Register on the date of the Offer
offering to purchase up to the principal amount of Securities specified
in such Offer at the purchase price specified in such Offer (as
determined pursuant to this Indenture). Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the
"Expiration Date") of the Offer to Purchase which shall be, subject to
any contrary requirements of applicable law, not less than 30 days or
more than 60 days after the date of such Offer and a settlement date
(the "Purchase Date") for purchase of Securities within five Business
Days after the Expiration Date. The Company shall notify the Trustee at
least 15 days (or such shorter period as is acceptable to the Trustee)
prior to the mailing of the Offer of the Company's obligation to make an
Offer to Purchase, and the Offer shall be mailed by the Company or, at
the Company's request, by the Trustee, in the name and at the expense of
the Company. The Offer shall contain information concerning the business
of the Company and its Subsidiaries which, at a minimum, shall include
(i) the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in the documents required to be filed with the
Trustee pursuant to this Indenture (which requirements may be satisfied
by delivery of such documents together with the Offer), (ii) a
description of material developments in the Company's business
subsequent to the date of the latest of such financial statements
referred to in clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if required
under applicable law, pro forma financial information concerning, among
other things, the Offer to Purchase and the events requiring the Company
to make the Offer to Purchase and
<PAGE> 18
(iv) any other information required by applicable law to be included
therein. The Offer shall contain all instructions and materials
necessary to enable such Holders to tender their Securities pursuant to
the Offer to Purchase. The Offer shall also state:
(1) the section of this Indenture pursuant to which the
Offer to Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount at Stated Maturity of
the Outstanding Securities offered to be purchased by the Company
pursuant to the Offer to Purchase (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each
$1,000 principal amount at Stated Maturity of Securities accepted
for payment (as specified pursuant to this Indenture) (the
"Purchase Price");
(5) the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that any
portion of Securities tendered must be tendered in an integral
multiple of $1,000 of principal amount at Stated Maturity;
(6) the place or places where the Securities are to be
surrendered for tender pursuant to the Offer to Purchase;
(7) that interest, if any, on any Securities not tendered
or tendered but not purchased by the Company pursuant to the
Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will
become due and payable upon each Security being accepted for
payment pursuant to the Offer to Purchase;
(9) that each Holder electing to tender Securities
pursuant to the Offer to Purchase will be required to surrender
such Securities at the place or places specified in the Offer
prior to the close of business on the Expiration Date (such
Securities being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed
by the Holder thereof or his attorney duly authorized in
writing);
(10) that Holders will be entitled to withdraw all or any
portion of the Securities tendered if the Company (or its Paying
Agent) receives, not later than the close of business on the
Expiration Date, a facsimile transmission or letter
<PAGE> 19
setting forth the name of the Holder, the principal amount at
Stated Maturity of the Securities the Holder tendered, the
certificate number of the Securities the Holder tendered and a
statement that such Holder is withdrawing all or a portion of
his tender;
(11) that the Company shall purchase all such Securities
duly tendered and not withdrawn pursuant to the Offer to
Purchase; and
(12) that in the case of any Holder whose Securities are
purchased only in part, the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such
Securities without service charge, new Securities of any
authorized denomination as requested by such Holder, in an
aggregate principal amount at Stated Maturity equal to and in
exchange for the unpurchased portion of the aggregate principal
amount at Stated Maturity of the Securities so tendered.
Any Offer to Purchase shall be governed by and effected in
accordance with the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1017
shall be the principal executive, financial or accounting officer of the
Company.
"Offshore Global Securities" has the meaning provided in Section
201.
"Offshore Physical Securities" has the meaning provided in
Section 201.
"Operating Cash Flow" means, for any fiscal quarter, (i) the
Company's Consolidated Adjusted Net Income (Loss) plus depreciation and
amortization in respect thereof for such fiscal quarter, plus (ii) all
amounts deducted in calculating Consolidated Adjusted Net Income (Loss)
for such fiscal quarter in respect of interest expense and other
financing costs, including dividends paid in respect of Redeemable
Stock, and all income taxes, whether or not deferred, applicable to such
income period, all as determined on a Consolidated basis in accordance
with generally accepted accounting principles. For purposes of
calculating Operating Cash Flow for the fiscal quarter most recently
completed prior to any date on which an action is taken that requires a
calculation of the Operating Cash Flow to Consolidated Interest Expense
Ratio or Consolidated Debt to Annualized Operating Cash Flow Ratio, (1)
any Person that is a Restricted Subsidiary on such date (or would become
a Restricted Subsidiary in connection with the transaction that requires
the determination of such ratio) will be deemed to have been a
Restricted Subsidiary at all times during such fiscal quarter, (2) any
Person that is not a Restricted Subsidiary on such date (or would cease
to be a Restricted Subsidiary in connection with the transaction that
requires the determination of such ratio) will be deemed not to have
been a Restricted Subsidiary at any time during such fiscal quarter and
(3) if the Company or any Restricted Subsidiary shall have in any
<PAGE> 20
manner acquired (including through commencement of activities
constituting such operating business) or disposed (including through
termination or discontinuance of activities constituting such operating
business) of any operating business during or subsequent to the most
recently completed fiscal quarter, such calculation will be made on a
pro forma basis on the assumption that such acquisition or disposition
had been completed on the first day of such completed fiscal quarter.
"Operating Cash Flow to Consolidated Interest Expense Ratio"
means, as at any date of determination, the ratio of (i) the Operating
Cash Flow of the Company for the most recently completed fiscal quarter
of the Company to (ii) the Consolidated Interest Expense of the Company
and its Restricted Subsidiaries for the most recently completed fiscal
quarter of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company
shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Securities which have been paid pursuant to
Section 308 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations
of the Company; and
(iv) Securities as to which Defeasance has been effected
pursuant to Section 1202;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given,
made or taken any request, demand,
<PAGE> 21
authorization, direction, notice, consent, waiver or other action
hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
"pari passu", when used with respect to the ranking of any Debt
of any Person in relation to other Debt of such Person, means that each
such Debt (a) either (i) is not subordinated in right of payment to any
other Debt of such Person or (ii) is subordinate in right of payment to
the same Debt of such Person as is the other and is so subordinate to
the same extent and (b) is not subordinate in right of payment to the
other or to any Debt of such Person as to which the other is not so
subordinate.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Permitted Debt" means:
(i) any Debt (including Guarantees thereof) outstanding on
the Closing Date (including the Securities) and any accretion of
original issue discount and accrual of interest with respect to
such Debt;
(ii) any Debt outstanding under a Credit Facility;
(iii) any Vendor Financing Debt or any other Debt Incurred
to finance the cost (including the cost of design, development,
construction, improvement, installation or integration) of
equipment, inventory or network assets acquired by the Company or
any of its Restricted Subsidiaries after the Closing Date;
(iv) Debt (A) to the Company or (B) to any Restricted
Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any subsequent transfer of such Debt (other than to the Company
or another Restricted Subsidiary) shall be deemed, in each case,
to constitute an Incurrence of such Debt not permitted by this
clause (iv);
(v) Debt (A) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (B) under
foreign currency hedge, interest rate swap or similar agreements;
provided that such agreements (a) are designed solely to protect
the Company or its Restricted Subsidiaries against fluctuations
in foreign currency exchange rates or interest rates and (b) do
not increase the Debt of the obligor outstanding at any time
other than as a result of fluctuations in
<PAGE> 22
foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder; and
(C) arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of the Company or any Restricted
Subsidiary pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or
Restricted Subsidiary (other than Guarantees of Debt Incurred by
any Person acquiring all or any portion of such business, assets
or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross
proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition;
(vi) renewals, refundings or extensions of any Debt
referred to in clause (i) or (iii) above or Incurred pursuant to
clause (ii) of Section 1008 and any renewals, refundings or
extensions thereof, plus (A) the amount of any premium
reasonably determined by the Company as necessary to accomplish
such renewal, refunding or extension and (B) such other fees and
expenses of the Company reasonably incurred in connection with
the renewal, refunding or extension, provided that such renewal,
refunding or extension shall constitute Permitted Debt only (a)
to the extent that it does not result in an increase in the
aggregate principal amount (or, if such Debt provides for an
amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity
thereof, in an amount not greater than such lesser amount) of
such Debt (except as permitted by clause (A) or (B) above), and
(b) to the extent such renewed, refunded or extended Debt does
not have a mandatory redemption date prior to the mandatory
redemption date of the Debt being renewed, refunded or extended
or have an Average Life shorter than the remaining Average Life
of the Debt being renewed, refunded or extended;
(vii) Debt payable solely in, or mandatorily convertible
into, Capital Stock (other than Redeemable Stock) of the
Company; and
(viii) Debt (in addition to Debt permitted under clauses
(i) through (vii) above) in an aggregate principal amount
outstanding at any time not to exceed $450 million.
"Permitted Distribution" of a Person means (x) the exchange by
such Person of Capital Stock (other than Redeemable Stock) for
outstanding Capital Stock; (y) the redemption, repurchase, defeasance or
other acquisition or retirement for value of Debt of the Company that is
subordinate in right of payment to the Securities, in exchange for
(including any such exchange pursuant to the exercise of a conversion
right or privilege in connection with which cash is paid in lieu of the
issuance of fractional shares or scrip), or out of the proceeds of a
substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of, either (a) Capital Stock of the Company (other than
Redeemable Stock) or (b) Debt of the Company that is subordinate in
right of payment to the Securities on subordination terms no less
favorable to the Holders of the Securities in
<PAGE> 23
their capacities as such than the subordination terms (or other
arrangement) applicable to the Debt that is redeemed, repurchased,
defeased or otherwise acquired or retired for value, provided that, in
the case of this clause (b), such new Debt does not mature prior to the
Stated Maturity or have a mandatory redemption date prior to the
mandatory redemption date of the Debt being redeemed, repurchased,
defeased or otherwise acquired or retired for value or have an Average
Life shorter than the remaining Average Life of the Debt being redeemed,
repurchased, defeased or otherwise acquired or retired for value; and
(z) dividend, penalty or other mandated payments, including mandatory
repurchases, on or in respect of any class or series of the Company's
Preferred Capital Stock that is authorized and designated on the Closing
Date (i.e., the Class A Preferred Stock, Class B Preferred Stock, Class
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
of the Company).
"Permitted Investment" means any Investment in Marketable
Securities.
"Permitted Transaction" means (i) any transaction pursuant to
agreements (whether or not definitive, and regardless of whether binding
or non-binding) existing on the Closing Date and described in or
incorporated by reference into the Memorandum and (ii) any transaction
or transactions with any vendor or vendors of property or materials used
in the telecommunications business (including related activities and
services) of the Company or any Restricted Subsidiary, provided (x) such
transactions are in the ordinary course of business and (y) such vendor
does not beneficially own more than 50% of the voting power of the
Voting Stock of the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 308
in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"Preferred Capital Stock" as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes
(however designated) that ranks prior, as to the payment of dividends or
as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Private Placement Legend" means the legend initially set forth
on the Securities in the form set forth in Section 205.
<PAGE> 24
"Purchase Amount" has the meaning specified in the definition of
Offer to Purchase.
"Purchase Date" has the meaning specified in the definition of
Offer to Purchase.
"Purchase Price" has the meaning specified in the definition of
Offer to Purchase.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Record Expiration Date" has the meaning specified in Section
104.
"Redeemable Stock" of any Person means any Capital Stock of such
Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Securities, (ii) redeemable at the
option of the holder thereof at any time prior to the Stated Maturity of
the Securities or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Debt having a scheduled
maturity prior to the Stated Maturity of the Securities; provided that
any Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require such
Person to repurchase or redeem such Capital Stock upon the occurrence of
a "change of control" occurring prior to the Stated Maturity of the
Securities shall not constitute Redeemable Stock if the "change of
control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions
contained in Section 1013 and such Capital Stock specifically provides
that such Person will not repurchase or redeem any such stock pursuant
to such provision prior to the Company's repurchase of such Securities
as are required to be repurchased pursuant to Section 1013; and further
provided that the Series D Preferred Stock and the Series E Preferred
Stock shall not be considered to constitute Redeemable Stock.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Closing Date, between the Company and Morgan Stanley
& Co. Incorporated.
"Registration Statement" means the Registration Statement as
defined and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
<PAGE> 25
"Required Consent" means, except as otherwise expressly provided
in this Indenture with respect to matters requiring the consent of each
holder of Securities affected thereby: (i) the consent of holders of not
less than a majority in aggregate principal amount at Stated Maturity of
the Securities for any action to (x) direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any power conferred upon such Trustee, or (y) consent to or
waive, on behalf of the holders of all the Securities, any past default
and its consequences, and (ii) with respect to all other actions
requiring the consent of holders of the Securities, the consent of
either (x) a majority in aggregate principal amount at Stated Maturity
of the Securities or (y) a majority in aggregate principal amount at
Stated Maturity of (I) the Securities, (II) the September Notes, if the
holders of the September Notes are being requested to consent to such
action with respect to the terms of the September Notes or the September
Indenture, (III) the October Notes, if the holders of the October Notes
are being requested to consent to such action with respect to the terms
of the October Notes or the October Indenture, (IV) the February Notes,
if the holders of the February Notes are being requested to consent to
such action with respect to the terms of the February Notes or the
February Indenture and (V) any other issue of unsubordinated, unsecured
notes issued by the Company, if such notes or the indenture pursuant to
which such notes were issued both (A) require the consent of the holders
of such notes to such action and (B) provide that the holders thereof
will vote with the holders of the Securities with respect to such
action.
"Restricted Payments" has the meaning specified in Section 1009.
"Restricted Subsidiary" means any Subsidiary of the Company,
whether existing on the Closing Date or created subsequent thereto,
designated from time to time by the Board of Directors as (or otherwise
deemed to be) a "Restricted Subsidiary" in accordance with Section 1010.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Services or, if Standard &
Poor's Ratings Services shall cease rating debt securities having a
maturity at original issuance of at least one year and such ratings
business shall have been transferred to a successor Person, such
successor Person; provided, however, that if Standard & Poor's Ratings
Services ceases rating debt securities having a maturity at original
issuance of at least one year and its ratings business with respect
thereto shall not have been transferred to any successor Person, then
"S&P" shall mean any other nationally recognized rating agency (other
than Moody's) that rates debt securities having a maturity at original
issuance of at least one year and that shall have been designated by the
Company by a written notice given to the Trustee.
"Securities" means securities designated in the first paragraph
of the RECITALS OF THE COMPANY that are authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term
"Securities" shall include the Securities issued on the Closing Date,
any Exchange Securities to be issued and exchanged for any Securities
<PAGE> 26
pursuant to the Registration Rights Agreement and any other Securities
issued after the Closing Date under this Indenture. For purposes of this
Indenture all Securities shall vote together as one series of Securities
under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"September Indenture" means the Indenture, dated September 17,
1997, between the Company and Harris Trust and Savings Bank, Trustee,
relating to the September Notes.
"September Notes" means the Company's 10.65% Senior Redeemable
Discount Notes due 2007.
"Series D Debenture Indenture" means an indenture (having terms
and conditions substantially as summarized in that certain confidential
Offering Memorandum, dated July 16, 1997), prepared in connection with
the original issuance by the Company of shares of Series D Preferred
Stock, pursuant to which certain exchange debentures may be issued by
the Company in exchange for outstanding shares of Series D Preferred
Stock.
"Series D Preferred Stock" means the 13% Series D Exchangeable
Redeemable Preferred Stock of the Company issued on July 21, 1997 and
any shares of Preferred Capital Stock issued in exchange therefor or as
payment in kind dividends thereon.
"Series E Debenture Indenture" means an indenture (having terms
and conditions substantially as summarized in that certain confidential
Offering Memorandum, dated February 6, 1998), prepared in connection
with the original issuance by the Company of shares of Series E
Preferred Stock, pursuant to which certain exchange debentures may be
issued by the Company in exchange for outstanding shares of Series E
Preferred Stock.
"Series E Preferred Stock" means the 11.125% Series E
Exchangeable Redeemable Preferred Stock of the Company issued on
February 11, 1998 and any shares of Preferred Capital Stock issued in
exchange therefor or as payment in kind dividends thereon.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest
means a date
<PAGE> 27
fixed by the Trustee pursuant to Section 309.
"Specialized Mobile Radio" or "SMR" means a mobile radio
communications system that is operated as described in the Memorandum.
"Stated Maturity" when used with respect to any Debt security or
any installment of interest thereon, means the date specified in such
Debt security as the fixed date on which the principal of such Debt
security or such installment of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof or (ii)
any other Person (other than a corporation) in which such Person, or one
or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and
affairs thereof.
"Total Common Equity" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Change
of Control"), the product of (i) the aggregate number of outstanding
primary shares of Common Stock of such Person on such day (which shall
not include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such Person) and (ii) the
average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day. If no such Closing Price
exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall
be determined by the Board of Directors in good faith and evidenced by a
Board Resolution.
"Total Market Value of Equity" of the Company means, as of any
day of determination, the sum of (1) the product of (i) the aggregate
number of outstanding primary shares of Common Stock of the Company on
such day (which shall not include any options or warrants on, or
securities convertible or exchangeable into, shares of Common Stock of
the Company) and (ii) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day,
plus (2) the liquidation value of any outstanding shares of Preferred
Capital Stock of the Company on such day. If no such Closing Price
exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be
determined by the Board of Directors in good faith and evidenced by a
Board Resolution.
"Trading Day" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open
for a full day of trading.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
<PAGE> 28
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended
after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"U.S. Global Securities" has the meaning provided in Section 201.
"U.S. Government Obligation" has the meaning specified in Section
1204.
"U.S. Physical Securities" has the meaning provided in Section
201.
"Unrestricted Subsidiary" means Unrestricted Subsidiary Funding
Company and any other Subsidiary that is not a Restricted Subsidiary and
includes any Restricted Subsidiary that becomes an Unrestricted
Subsidiary in accordance with Section 1010.
"Vendor Financing Debt" means any Debt owed to (i) a vendor or
supplier of any property or materials used by the Company or its
Restricted Subsidiaries in their telecommunications business, (ii) any
Affiliate of such a vendor or supplier, (iii) any assignee of such a
vendor, supplier or Affiliate of such a vendor or supplier, or (iv) a
bank or other financial institution that has financed or refinanced the
purchase of such property or materials from such a vendor, supplier,
Affiliate of such a vendor or supplier or assignee of such a vendor or
supplier; provided that the aggregate amount of such Debt does not
exceed the sum of (w) the purchase price of such property or materials
(including transportation, installation, warranty and testing charges,
as well as applicable taxes paid, in respect of such property or
materials), (x) the cost of design, development, site acquisition and
construction, (y) any interest or other financing costs accruing or
otherwise payable in respect of the foregoing, and (z) the cost of any
services provided by such vendor, supplier or Affiliate of such vendor
or supplier.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all
times or only so long as no senior class of securities has such voting
power by reason of any contingency.
"Wholly Owned Restricted Subsidiary" of the Company means a
Restricted Subsidiary all of the outstanding Capital Stock of which
(other than directors' qualifying shares) shall at the time be owned by
the Company or by one or more Wholly Owned Restricted Subsidiaries or by
the Company and one or more Wholly Owned Restricted Subsidiaries.
<PAGE> 29
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or
<PAGE> 30
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set
<PAGE> 31
pursuant to this paragraph, the Holders of Outstanding Securities on such record
date, and no other Holders, shall be entitled to take the relevant action,
whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Record Expiration Date by Holders of the requisite principal amount
of Outstanding Securities on such record date; and provided, further, that for
the purpose of determining whether Holders of the requisite principal amount of
such Securities have taken such action, no Security shall be deemed to have been
Outstanding on such record date unless it is also Outstanding on the date such
action is to become effective. Nothing in this paragraph shall prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect), nor shall anything in this paragraph be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Record Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2), (iv) any direction referred to in Section 512 or (v) the
Required Consent. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to join in such notice, declaration, request or direction,
whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Record Expiration Date by Holders of the requisite principal amount
of Outstanding Securities on such record date; and provided, further, that for
the purpose of determining whether Holders of the requisite principal amount of
such Securities have taken such action, no Security shall be deemed to have been
Outstanding on such record date unless it is also Outstanding on the date such
action is to become effective. Nothing in this paragraph shall be construed to
prevent the Trustee from setting a new record date for any action (whereupon the
record date previously set shall automatically and without any action by any
Person be canceled and of no effect), nor shall anything in this paragraph be
construed to render ineffective any action taken by Holders of the requisite
principal amount of Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Company's expense, shall cause notice of such record date, the matter(s)
to be submitted for potential action by Holders and the applicable Record
Expiration Date to be given to the Company in writing and to each Holder of
Securities in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto that sets such record date may designate any day as the "Record
Expiration Date" and from time to time may change the Record Expiration Date to
any earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Record Expiration Date is given to the other party
hereto in writing, and to each Holder of Securities in the manner set forth in
Section 106, on or before the existing Record Expiration Date. If a Record
Expiration Date is
<PAGE> 32
not designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Record Expiration Date
with respect thereto, subject to its right to change the Record Expiration Date
as provided in this paragraph. Notwithstanding the foregoing, no Record
Expiration Date shall be later than the 180th day after the applicable record
date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing and mailed, first-class postage prepaid, to or with the
Trustee at its Corporate Trust Office, Attention: Indenture Trust
Division, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any
<PAGE> 33
other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN
<PAGE> 34
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect (including with respect to the accrual of interest) as if
made on the Interest Payment Date, Redemption Date or Purchase Date, or at the
Stated Maturity.
SECTION 114. No Recourse Against Others.
No recourse for the payment of the principal of, premium, if any,
or interest on any of the Securities, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company contained in this Indenture, or in any of
the Securities, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator or against any past, present or
future partner, shareholder, other equity holder, officer, director, employee or
controlling person, as such, of the Company or of any successor Person, either
directly or through the Company or any successor Person, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof.
Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Securities in
registered form, substantially in the form set forth in Section 202 (the "U.S.
Global Securities"), deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter
<PAGE> 35
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee as custodian for the Depository or its nominee, as hereinafter provided
Securities offered and sold in offshore transactions in reliance
on Regulation S shall be issued initially in the form of one or more permanent
Global Securities in registered form substantially in the form set forth in
Section 202 (the "Offshore Global Securities") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Offshore Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary,
as hereinafter provided. The U.S. Global Securities and the Offshore Global
Securities are sometimes collectively herein referred to as the "Global
Securities."
Securities offered and sold in reliance on Regulation D under the
Securities Act or Securities issued pursuant to Section 307(b) shall be issued
in the form of permanent certificated Securities in registered form
substantially in the form set forth in Section 202 (the "U.S. Physical
Securities"). Securities issued pursuant to Section 307(d) in exchange for
interests in the Global Securities shall be in the form of permanent
certificated Securities in registered form substantially in the form set forth
in Section 202 (the "Offshore Physical Securities"). The Offshore Physical
Securities and U.S. Physical Securities are sometimes collectively herein
referred to as the "Physical Securities."
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security.
Nextel Communications, Inc.
12% Senior Serial Redeemable Notes due 2008
No. __________$________
CUSIP NO.________
CINS NO.________
Nextel Communications, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor
<PAGE> 36
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to __________________, or registered assigns, the principal sum
of _____________________ Dollars on November 1, 2008 and to pay cash interest
thereon from November 4, 1998 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually in arrears on
May 1 and November 1 in each year, commencing May 1, 1999 at the rate of 12% per
annum, until the principal hereof is paid or duly provided for, provided that
any principal and premium, and any such installment of interest, which is
overdue shall bear interest at the rate of 12 % per annum (to the extent that
the payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or duly provided for, and such interest
shall be payable on demand. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
In the case of a default in payment of principal upon
acceleration, redemption or repurchase, the overdue principal and any overdue
premium shall bear interest at the rate of 12% per annum (to the extent that the
payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or duly provided for. Interest on any
overdue principal or premium shall be payable on demand. Any such interest on
overdue principal or premium which is not paid on demand shall bear interest at
the rate of 12% per annum (to the extent that the payment of such interest on
interest shall be legally enforceable), from the date of such demand until the
amount so demanded is paid or duly provided for, and such shall be payable on
demand.
If an exchange offer registered under the Securities Act is not
consummated on or before June 1, 1999 in accordance with the terms of the
Registration Rights Agreement, incremental interest (in addition to the interest
otherwise due on the Securities after such date) will accrue from June 1, 1999,
at an annual rate of 0.5% of the principal amount of the Securities, and if such
exchange offer is not consummated on or before September 1, 1999, additional
incremental interest will accrue from September 1, 1999 at an annual rate of
0.5% of the principal amount of the Securities, with such incremental interest
payable in cash semi-annually, in arrears, on each May 1 and November 1,
commencing November 1, 1999, until the earlier of the date upon which (i) the
exchange offer is consummated, (ii) a Shelf Registration Statement with respect
to all Registrable Securities (as defined in the Registration Rights Agreement)
is declared effective, or (iii) the Securities become fully tradeable without
registration under the Securities Act, provided that from and after any such
relevant date, no such incremental interest will accrue on the Securities and
the interest rate on the Securities shall return to the original rate
<PAGE> 37
of 12% per annum and shall accrue at such original rate thereafter; and provided
further that upon the request of any Holder of the Securities, the Company will
deliver to such Holder certificates evidencing such Holder's Securities without
the Private Placement Legend. The Holder of this Security is entitled to the
benefits of such Registration Rights Agreement.
Payment of the principal of (and premium, if any) and any
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
NEXTEL COMMUNICATIONS, INC.
[Seal]
By:
---------------------------------
Title:
Attest:
- ------------------------------
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of
the Company designated as its 12% Senior Serial Redeemable Notes due 2008
(herein called the "Securities"), limited in aggregate principal amount to
$300,000,000, issued and to be issued under an Indenture, dated as of November
4, 1998 (herein called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and Harris Trust and
Savings Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the
<PAGE> 38
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Securities may be redeemed at any time on or after November
1, 2003, at the Company's option, in whole or in part, upon not less than 30 nor
more than 60 days' prior written notice mailed by first class mail to each
holder's last address as it appears in the Security Register, at the Redemption
Prices (expressed as a percentage of the principal amount thereof) set forth
below, plus an amount in cash equal to all accrued and unpaid interest, if any,
to the Redemption Date, if redeemed during the 12-month period beginning
November 1 of each of the years set forth below.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 106.000%
2004 104.800%
2005 103.600%
2006 102.400%
2007 101.200%
2008 100.000%
</TABLE>
Interest installments whose Stated Maturity is on or prior to any
Redemption Date will be payable to the Holders of Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
In addition to any redemption provided for in the immediately
preceding paragraphs, in the event of a sale by the Company after the Closing
Date and on or prior to November 1, 2001 of its Capital Stock (other than
Redeemable Stock) in a single transaction or series of transactions for an
aggregate purchase price equal to or exceeding $50 million, up to a maximum of
35% of the original aggregate principal amount of the Outstanding Securities
will, within 180 days of such sale, at the option of the Company, upon not less
than 30 nor more than 60 days' notice by mail, be redeemable from the net
proceeds thereof (but only to the extent such proceeds consist of cash or
readily marketable cash equivalents received in respect of the Company's Capital
Stock so sold, in each case net of all commissions, discounts, fees, expenses
and taxes incurred in respect thereof) at a Redemption Price equal to 112% of
the principal amount of the Securities to be redeemed plus accrued and unpaid
interest to the Redemption Date.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption, or purchase pursuant to an Offer to
Purchase, of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
<PAGE> 39
The Indenture contains provisions for defeasance at any time of
the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default shall occur and be continuing, there may
be declared due and payable the Default Amount of the Securities, in the manner
and with the effect provided in the Indenture. The Default Amount in respect of
this Security as of any particular date shall equal 100% of the principal amount
payable in respect of this Security at the Stated Maturity hereof. Upon payment
of (i) the Default Amount so declared due and payable and any overdue
installment of interest in respect of this Security, (ii) any overdue principal
or premium payable on redemption or repurchase of this Security and (iii) as
provided on the face hereof, any interest on any overdue Default Amount,
principal, premium or interest in respect of this Security (to the extent that
the payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and any premium and
interest on this Security shall terminate.
The Indenture provides that, subject to certain conditions, if a
Change of Control occurs, the Company shall be required to make an Offer to
Purchase for all of the Securities.
Unless the context otherwise requires, references herein to the
principal amount of any Security mean, as of any day, (i) with respect to any
portion thereof required hereunder to be redeemed or repurchased on any
redemption or repurchase date on or prior to such day, the amount due and
payable in respect of such portion upon such redemption or repurchase date
(excluding premium and interest), (ii) with respect to any portion thereof not
required to be so redeemed or repurchased, but which has been declared due and
payable prior to the Stated Maturity thereof as provided in the Indenture, the
Default Amount in respect of such portion as of such day and (iii) with respect
to any portion thereof not required so to be redeemed or repurchased and not so
declared due and payable, such portion of the principal amount of such Security
payable at Stated Maturity thereof.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee after having received
the Required Consent (defined as follows). The Indenture also contains
provisions permitting those Persons giving the Required Consent, on behalf of
the Holders of all the Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As used herein, "Required Consent" means, except as otherwise
expressly provided in the Indenture with respect to matters requiring the
consent of each holder of Securities affected thereby: (i) the consent of
holders of not less than a majority in aggregate principal amount at Stated
Maturity of the Securities for any action to (x) direct the time, method
<PAGE> 40
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any power conferred upon such Trustee, or (y) consent to or waive,
on behalf of the holders of all the Securities, any past default and its
consequences, and (ii) with respect to all other actions requiring the consent
of holders of the Securities, the consent of either (x) a majority in aggregate
principal amount at Stated Maturity of the Securities or (y) a majority in
aggregate principal amount at Stated Maturity of (I) the Securities, (II) the
September Notes, if the holders of the September Notes are being requested to
consent to such action with respect to the terms of the September Notes or the
September Indenture, (III) the October Notes, if the holders of the October
Notes are being requested to consent to such action with respect to the terms of
the October Notes or the October Indenture, (IV) the February Notes, if the
holders of the February Notes are being requested to consent to such action with
respect to the terms of the February Notes or the February Indenture and (V) any
other issue of unsubordinated, unsecured notes issued by the Company, if such
notes or the indenture pursuant to which such notes were issued both (A) require
the consent of the holders of such notes to such action and (B) provide that the
holders thereof will vote with the holders of the Securities with respect to
such action.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount at Stated
Maturity of the Securities at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount at
Stated Maturity of Securities at the time Outstanding a direction inconsistent
with such request, and shall have failed to institute any such proceeding,
within 60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to certain suits described in the Indenture, including
any suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein (or, in the case of redemption, on or
after the Redemption Date or, in the case of any purchase of this Security
required to be made pursuant to an Offer to Purchase, on or after the Purchase
Date.)
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
<PAGE> 41
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
the Securities are exchangeable for a like aggregate principal amount of
Securities of like tenor of a different authorized denomination, as requested by
the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and
construed in accordance with the laws of the State of New York.
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________ attorney to transfer said Security on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES
AND UNLEGENDED OFFSHORE PHYSICAL AND GLOBAL SECURITIES]
<PAGE> 42
In connection with any transfer of this Security occurring prior
to the date which is the earlier of (i) the date the Shelf Registration
Statement with respect to resales of the Securities is declared effective or
(ii) the end of the period referred to in Rule 144(k) under the Securities Act,
the undersigned confirms that without utilizing any general solicitation or
general advertising that:
[Check One]
[ ](a) this Security is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
[ ](b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee shall not be obligated to
register this Security in the name of any Person other than the Holder hereof
unless and until the conditions to any such transfer of registration set forth
herein and in Section 307 of the Indenture shall have been satisfied.
Date:_____________________ ____________________________________________
NOTICE:
The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:_____________________ ____________________________________________
NOTICE: To be executed by an executive
officer.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its
entirety by the Company pursuant to Section 1013 of the Indenture, check the
box: [ ]
<PAGE> 43
If you want to elect to have only a part of the principal amount
at Stated Maturity of this Security purchased by the Company pursuant to Section
1013 of the Indenture, state the portion of such amount: $_________
Dated: Your Signature:____________________________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:______________________________________
(Signature must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion
Signature Program ("MSP") or such other signature guarantee program as may be
determined by the Security Registrar in addition to, or in substitution for,
STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
SECTION 204. Form of Trustee's Certificate of Authentication.
Dated:
This is one of the Securities referred to in the within-mentioned
Indenture.
Harris Trust and Savings Bank,
as Trustee
By ________________________________
Authorized Signatory
SECTION 205. Restrictive Legends. Unless and until a Security is exchanged for
an Exchange Security or sold in connection with an effective Shelf Registration
Statement pursuant to the Registration Rights Agreement, (i) each U.S. Global
Security and each U.S. Physical Security shall bear the legend set forth below
on the reverse thereof and (ii) each Offshore Physical Security and each
Offshore Global Security shall bear the legend set forth below on the reverse
thereof, until at least the 41st day after the Closing Date and receipt by the
Company and the Trustee of a certificate substantially in the form of Exhibit A
hereto:
THIS SENIOR NOTE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER
<PAGE> 44
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SENIOR NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT
WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SENIOR NOTE,
RESELL OR OTHERWISE TRANSFER THIS SENIOR NOTE EXCEPT (A) TO NEXTEL
COMMUNICATIONS, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SENIOR NOTE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SENIOR NOTES OF LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO NEXTEL COMMUNICATIONS, INC. THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, OR (F) AFTER REGISTRATION OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS SENIOR NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SENIOR NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND NEXTEL COMMUNICATIONS, INC. SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SENIOR NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
<PAGE> 45
Each Global Security, whether or not an Exchange Security, shall
also bear the following legend on the reverse thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN SECTION 307 OF THE INDENTURE.
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount at Stated Maturity of Securities
which may be authenticated and delivered under this Indenture is limited to
$300,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Section 304, 305, 308, 906 or 1108 or in connection with an Offer to
Purchase pursuant to Section 1013.
The Securities shall be known and designated as the "Senior
Serial Redeemable Notes due 2008" of the Company. Their Stated Maturity shall be
November 1, 2008 and they shall bear cash interest at the rate of 12% per annum,
from November 4, 1998 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
semi-annually on May 1 and November 1, commencing May 1, 1999 until the
principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company in the
Borough of Manhattan, The City of New
<PAGE> 46
York maintained for such purpose and at any other office or agency maintained by
the Company for such purpose; provided, however, that at the option of the
Company payment of interest, may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
The Company may be required to make an Offer to Purchase the
Securities as provided in Section 1013.
The Securities shall be redeemable as provided in Article Two and
Article Eleven.
The Securities shall be subject to Defeasance and/or Covenant
Defeasance as provided in Article Twelve.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 principal amount and any integral
multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and
<PAGE> 47
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations and of a like tenor. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount and tenor. No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Holder only upon, final acceptance and
registration of the transfer by the Security Registrar in the Security Register.
Prior to the registration of any transfer by a Holder as provided herein, the
Company, the Trustee and any agent of the Company shall treat the person in
whose name the Security is registered as the owner thereof for all purposes
whether or not the Security shall be overdue, and neither the Company, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests
<PAGE> 48
in such Global Security may be effected only through a book entry system
maintained by the Holder of such Global Security (or its agent) and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for
other Securities (including an exchange of securities for Exchange Securities)
of any authorized denominations and of a like aggregate principal amount and
tenor, upon surrender of the Securities to be exchanged at such office or agency
provided, that no exchange of Securities for Exchange Securities shall occur
until a Registration Statement shall have been declared effective by the
Commission and that Securities that are exchanged for Exchange Securities
pursuant to such Registration Statement shall be canceled by the Trustee.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1108 or in accordance with any
Offer to Purchase pursuant to Section 1013, and in any such case not involving
any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
SECTION 306. Book-Entry Provisions for Global Security.
(a) The Global Security initially shall (i) be registered in the
name of the Depository for such Global Security or the nominee of such
Depository; (ii) be delivered to the
<PAGE> 49
Trustee as custodian for such Depository; and (iii) bear legends as set forth in
Section 205.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Security.
(b) Transfers of a Global Security shall be limited to transfers
of such Global Security in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depository and the provisions of Section 307. In addition, U.S. Physical
Securities and Offshore Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in the U.S. Global
Securities or Offshore Global Securities, respectively, if (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for the U.S. Global Securities or Offshore Global Securities, as the case may
be, and a successor depository is not appointed by the Company within 90 days of
such notice, (ii) an Event of Default has occurred and is continuing and the
Security Registrar has received a request therefor from the Depository or (iii)
in accordance with the rules and procedures of the Depository and the provisions
of Section 307.
(c) In connection with any transfer of a portion of the
beneficial interests in the Global Security to beneficial owners pursuant to
paragraph (b) of this Section, the Security Registrar shall reflect on the
Security Register the date and a decrease in the principal amount of the Global
Security in an amount equal to the principal amount of the beneficial interest
in the Global Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical Securities of like
tenor and amount.
(d) In connection with the transfer of an entire U.S. Global
Security or Offshore Global Security to beneficial owners pursuant to paragraph
(b) of this Section, such U.S. Global Security or Offshore Global Security shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in such U.S. Global Security or Offshore Global Security, as the case
may be, an equal aggregate principal amount of U.S. Physical Securities or
Offshore Physical Securities of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest
in the Global Security pursuant to paragraph (b), (c) or (d) of this Section
shall, except as otherwise provided by paragraph (d) of Section 307 bear the
legend regarding transfer restrictions applicable to the Physical Securities set
forth in Section 205.
<PAGE> 50
(f) The registered holder of a Global Security may grant proxies
and otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 307. Special Transfer Provisions.
Unless and until a Security is exchanged for an Exchange Security
or sold in connection with an effective Shelf Registration Statement pursuant to
the Registration Rights Agreement, the following provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Physical Security or
an interest in the Global Security prior to the removal of the Private Placement
Legend to a QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of (x) (A) U.S.
Physical Securities or (B) an interest in an Offshore Global Security
prior to the removal of the Private Placement Legend, the Security
Registrar shall register the transfer if such transfer is being made by
a proposed transferor who has checked the box provided for on the form
of security stating, or has otherwise advised the Company and the
Security Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A, to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Company and the Security Registrar in writing,
that it is purchasing the Security for its own account or an account
with respect to which it exercises sole investment discretion and that
it and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company
as it has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A or (y) an interest in
a U.S. Global Security, the transfer of such interest may be effected
only through the book entry system maintained by the Depository.
(ii) If the proposed transferee is an Agent Member, and the
Security to be transferred consists of U.S. Physical Securities, upon
receipt by the Security Registrar of the documents referred to in clause
(i) and instructions given in accordance with the Depository's and the
Security Registrar's procedures, the Security Registrar shall reflect in
the Security Register the date and an increase in the principal amount
at maturity of the U.S. Global Security in an amount equal to the
principal amount at maturity of the U.S. Physical Securities to be
transferred, and the Trustee shall cancel the U.S. Physical Securities
so transferred.
(b) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons):
<PAGE> 51
(i) The Security Registrar shall register the transfer of any
Security, whether or not such Security bears the Private Placement
Legend, if (x) the requested transfer is after the time period referred
to in Rule 144(k) under the Securities Act as in effect with respect to
such transfer or (y) the proposed transferee has delivered to the
Security Registrar (A) a certificate substantially in the form of
Exhibit B hereto and (B) if the aggregate principal amount of the Notes
being transferred is less than $250,000 at the time of such transfer, an
Opinion of Counsel acceptable to the Company that such transfer is in
compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by the
preceding paragraph (i), and (y) instructions given in accordance with
the Depositary's and the Security Registrar's procedures, the Security
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of the U.S. Global Security in an amount equal
to the principal amount of the beneficial interest in the U.S. Global
Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(c) Transfers of Interests in the Offshore Global Securities or
Offshore Physical Securities. The following provisions shall apply with respect
to any transfer of interests in the Offshore Global Securities or Offshore
Physical Securities:
(i) prior to removal of the Private Placement Legend from an
Offshore Global Security or Offshore Physical Security pursuant to
Section 205, the Security Registrar shall refuse to register such
transfer unless such transfer complies with Section 307(a) or Section
307(d), as the case may be; and
(ii) after such removal, the Security Registrar shall register
the transfer of any such Security without requiring any additional
certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Security to a Non-U.S.
Person:
(i) The Security Registrar shall register any proposed transfer
to any Non-U.S. Person if the Security to be transferred is a U.S.
Physical Security or an interest in a U.S. Global Security only upon
receipt of a certificate substantially in the form of Exhibit C hereto
from the proposed transferor.
(ii) (A) If the proposed Transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents required by paragraph (i) and
(y) instructions in accordance with the Depositary's and the Security
Registrar's procedures, the Security Registrar shall reflect on its
books and records the date and a decrease in the principal amount of
such U.S. Global Security in an amount equal to the principal amount of
the beneficial interest in
<PAGE> 52
the U.S. Global Security to be transferred, and (B) if the proposed
transferee is an Agent Member, upon receipt by the Security Registrar of
instructions given in accordance with the Depositary's and the Security
Registrar's procedures, the Security Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Offshore Global Security in an amount equal to the principal amount
of the U.S. Physical Securities or the U.S. Global Security, as the case
may be, to be transferred, and the Trustee shall cancel the Physical
Security, if any, so transferred or decrease the amount of the U.S.
Global Security.
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the Security
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of securities bearing the
Private Placement Legend, the Security Registrar shall deliver only Securities
that bear the Private Placement Legend unless either (i) the circumstances
contemplated by Section 205 exist or (ii) there is delivered to the Trustee an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(f) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture. The Security Registrar shall not register a transfer
of any Security unless such transfer complies with the restrictions on transfer
of such Security set forth in the Private Placement Legend and in this
Indenture. In connection with any transfer of Securities, each Holder agrees by
its acceptance of the Securities to furnish the Trustee or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Trustee shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Trustee shall retain copies of all letters, notices and other
written communications received pursuant to Section 306 or this Section 307. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Trustee.
SECTION 308. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as
<PAGE> 53
may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
<PAGE> 54
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be given
to each Holder in the manner specified in Section 106, not less than 10
days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 310. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Section 309) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 311. Cancellation.
All Securities surrendered for payment, redemption, registration
of transfer or exchange or for credit against any Offer to Purchase pursuant to
Section 1013 shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation
<PAGE> 55
any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy
canceled Securities.
SECTION 312. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 313. CUSIP, CINS and ISIN Numbers.
The Company in issuing the Securities may use "CUSIP," "CINS" and
"ISIN" numbers (if then generally in use), and, if so, the Trustee shall use the
"CUSIP," "CINS" and "ISIN" numbers in notices of redemption or repurchase as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or repurchase
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption or repurchase shall not be affected
by any defect in or omission of such numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 308 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by
<PAGE> 56
the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Four, the obligations of the Company to the Trustee under Section
607, the obligations of the Trustee to any Authenticating Agent under Section
614 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any)
<PAGE> 57
and interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(2) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(3) default, on the applicable Purchase Date, in the purchase of
Securities required to be purchased by the Company pursuant to an Offer
to Purchase as to which an Offer has been mailed to Holders or failure
to make an Offer to Purchase as required hereunder; or
(4) default in the performance, or breach, of Section 801; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default whose performance or whose breach is elsewhere in
this Section specifically dealt with) or in the Securities, and
continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount at Stated Maturity of the Outstanding Securities
a written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(6) a default or defaults under any bond(s), debenture(s),
note(s) or other evidence(s) of Debt for money borrowed by the Company
or any Restricted Subsidiary (or under any mortgage(s), indenture(s) or
instrument(s) under which there may be issued or by which there may be
secured or evidenced any Debt for money borrowed by the Company or any
Restricted Subsidiary) having, individually or in the aggregate, a
principal or similar amount outstanding of at least $25,000,000, whether
such Debt now
<PAGE> 58
exists or shall hereafter be created, which default or defaults shall
constitute a failure to pay any portion of the principal or similar
amount of such Debt when due and payable after the expiration of any
applicable grace period with respect thereto or shall have resulted in
such Debt becoming or being declared due and payable; or
(7) a final judgment or final judgments for the payment of money
are entered against the Company or any Restricted Subsidiary in an
aggregate amount in excess of $25,000,000 by a court or courts of
competent jurisdiction, which judgments remain undischarged or unbonded
for a period (during which execution shall not be effectively stayed) of
60 days after the right to appeal all such judgments has expired; or
(8) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or any
Restricted Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Restricted Subsidiary
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Restricted Subsidiary or of any
substantial part of the property of the Company or any Restricted
Subsidiary, or ordering the winding up or liquidation of the affairs of
the Company or any Restricted Subsidiary, and the continuance of any
such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(9) the commencement by the Company or any Restricted Subsidiary
of a voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by the Company or any Restricted Subsidiary to the entry of
a decree or order for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or any Restricted Subsidiary, or the
filing by the Company or any Restricted Subsidiary of a petition or
answer or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by the Company or any Restricted
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Restricted Subsidiary or of any substantial part of the property of the
Company or any Restricted Subsidiary, or the making by the Company or
any Restricted Subsidiary of an assignment for the benefit of creditors,
or the admission by the Company or any Restricted Subsidiary in writing
of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company or any Restricted Subsidiary
in furtherance of any such action.
<PAGE> 59
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified
in Section 501(8) or (9)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount at Stated
Maturity of the Outstanding Securities may declare the Default Amount of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such Default Amount and any accrued interest shall become immediately due and
payable. If an Event of Default specified in Section 501(8) or (9) occurs, the
Default Amount of, and any accrued interest on, the Securities then Outstanding
shall ipso facto become immediately due and payable without any declaration or
other Act on the part of the Trustee or any Holder.
The Default Amount in respect of any particular Security as of
any particular date shall equal 100% of the principal amount payable in respect
of the Security at the Stated Maturity thereof.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount at Stated Maturity of the Outstanding Securities,
by written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities (without
duplication of any amount thereof paid or deposited pursuant to
Clause (B) or (C) below),
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required to
have been purchased on the Purchase Date pursuant to an Offer to
Purchase made by the Company) and, to the extent that payment of
such interest is lawful, interest thereon at the rate provided by
the Securities (without duplication of any amount thereof paid or
deposited pursuant to Clause (A) above or Clause (C) below),
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided by the
Securities (without duplication of any amount thereof paid or
deposited pursuant to Clause (A) or (B) above), and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
<PAGE> 60
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Unless the context otherwise requires, references in this
Indenture to the principal amount of any Security mean, as of any day, (i) with
respect to any portion thereof required thereunder to be redeemed or repurchased
on any redemption or repurchase date on or prior to such day, the amount due and
payable in respect of such portion upon such redemption or repurchase date
(excluding premium and interest), (ii) with respect to any portion thereof not
required to be so redeemed or repurchased, but which has been declared due and
payable prior to the Stated Maturity thereof, the Default Amount in respect of
such portion as of such day and (iii) with respect to any portion thereof not
required so to be redeemed or repurchased and not so declared due and payable,
such portion of the principal amount of such Security payable at Stated Maturity
thereof.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate provided by the Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
<PAGE> 61
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
<PAGE> 62
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount at
Stated Maturity of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of such Event
of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount at Stated Maturity of the Outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 309) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
<PAGE> 63
Date or in the case of an Offer to Purchase made by the Company and required to
be accepted as to such Security, on the Purchase Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 308, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders.
By giving the Required Consent, those Persons giving the Required
Consent shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
<PAGE> 64
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
By giving the Required Consent, those Persons giving the Required
Consent may, on behalf of the Holders of all the Securities, waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase which has been made
by the Company), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
<PAGE> 65
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee 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.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any Default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any Default of the character specified in Section
501(5), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
<PAGE> 66
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of 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;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled (subject to reasonable
confidentiality arrangements as may be proposed by the Company) to
examine the books, records and premises of the Company, personally or by
agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
<PAGE> 67
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as
the Company and the Trustee shall from time to time agree in writing for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any and all loss, damage, claim, liability or expense incurred
without negligence or bad faith on its part, including taxes (other than
taxes based upon, measured by or determined by the revenue or income of
the Trustee), arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing to it pursuant to
this Section 607, except with respect to funds held in trust for the benefit of
the Holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(8) or Section
501(9), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive any termination of
this Indenture.
<PAGE> 68
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in Chicago, Illinois or the Borough of Manhattan, The City of New
York. If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee in
accordance with the applicable requirements of Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount at Stated Maturity of the Outstanding
Securities, delivered to the Trustee and to the Company. If an instrument of
acceptance by a successor Trustee in accordance with the applicable requirements
of Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request
<PAGE> 69
therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount at Stated Maturity of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders and
accepted appointment in accordance with the applicable requirements of Section
611, any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property
<PAGE> 70
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee 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 Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which
shall be authorized to act on behalf of the Trustee to authenticate Securities
issued upon original issue and upon exchange, registration of transfer or
partial redemption or partial purchase or pursuant to Section 308, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof
<PAGE> 71
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating 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 such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106, to all Holders as their names
and addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
Harris Trust and Savings Bank,
as Trustee
<PAGE> 72
By___________________________,
As Authenticating Agent
By___________________________
Authorized Signatory
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each April 15 and
October 15, commencing April 15, 1999, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.
<PAGE> 73
SECTION 703. Reports by Trustee.
(a) Within 60 days after January 15 of each year commencing
January 15, 1999, the Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will promptly notify the Trustee when the Securities are listed on any
stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission. The Trustee's receipt of such reports, information and documents
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc. Only on Certain Terms.
The Company (x) shall not, in any transaction or series of related
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to, any Person, and (y) shall not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer, lease or other disposition of the
properties and assets of the Company and its Restricted Subsidiaries, taken as a
whole, substantially as an entirety to any Person, unless, in each case (x) or
(y), at the time and after giving effect thereto
(i) either: (A) if the transaction or series of transactions is a
consolidation of the Company with or a merger of the Company with or
into any other Person, the
<PAGE> 74
Company shall be the surviving Person of such merger or consolidation,
or (B) the Person formed by any consolidation with or merger with or
into the Company, or to which the properties and assets of the Company
or the Company and its Restricted Subsidiaries, taken as a whole, as the
case may be, substantially as an entirety are sold, assigned, conveyed,
leased or otherwise transferred (any such surviving Person or transferee
Person referred to in this clause (B) being the "Surviving Entity"),
shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America, any state thereof or the
District of Columbia and shall expressly assume by a supplemental
indenture executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities and
this Indenture and, in each case, this Indenture, as so supplemented,
shall remain in full force and effect, and
(ii) immediately before and immediately after giving effect to
such transaction or series of transactions on a pro forma basis
(including any Debt Incurred or anticipated to be Incurred in connection
with or in respect of such transaction or series of transactions), no
Default or Event of Default shall have occurred and be continuing, and
(iii) the Consolidated Net Worth of the Company or the Surviving
Entity, as the case may be, shall be equal to or greater than that of
the Company immediately prior to such transaction or series of
transactions;
provided, however, that the foregoing requirements shall not apply to any
transaction or series of transactions involving the sale, assignment,
conveyance, transfer, lease or other disposition of the properties and assets by
any Restricted Subsidiary to any other Restricted Subsidiary, or the merger or
consolidation of any Restricted Subsidiary with or into any other Restricted
Subsidiary.
In connection with any consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition contemplated by the foregoing
provisions, the Company shall deliver, or cause to be delivered, to the Trustee,
in form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition and the supplemental indenture
in respect thereof (required under clause (i)(B) of the preceding paragraph)
comply with the requirements of this Indenture and an Opinion of Counsel that
the conditions of this Article 8 have been complied with. Each such Officers'
Certificate shall set forth the manner of determination of the Consolidated Net
Worth in accordance with clause (iii) of the preceding paragraph.
For all purposes of this Indenture and the Securities (including the
provisions described in the two immediately preceding paragraphs and Section
1008 and Section 1010), Subsidiaries of any Surviving Entity will, upon such
transaction or series of transactions, become Restricted Subsidiaries or
Unrestricted Subsidiaries as provided pursuant to Section 1010 and all Debt of
the Surviving Entity and its Subsidiaries that was not Debt of the Company and
its Subsidiaries immediately prior to such transaction or series of transactions
shall be deemed to have been Incurred upon such transaction or series of
transactions.
<PAGE> 75
SECTION 802. Successor Substituted.
Upon any transaction or series of transactions that are of the
type described in clause (x) or (y) of, and are effected in accordance with,
Section 801, the Surviving Entity shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture with the
same effect as if such Surviving Entity had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; or
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided such action pursuant to
this Clause (5) shall not adversely affect the interests of the Holders
in any material respect (as determined in good faith by the Board of
Directors).
SECTION 902. Supplemental Indentures with Consent of Holders.
After receipt of the Required Consent, given by Act of those
Persons giving the Required Consent delivered to the Company and the Trustee,
the Company, when authorized by
<PAGE> 76
a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable thereon,
or reduce the Default Amount that would be due and payable on
acceleration of the Maturity thereof pursuant to Section 502, or change
the place of payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date or, in the case of any Security required to be
purchased pursuant to an Offer to Purchase, on or after the applicable
Purchase Date), or
(2) reduce the percentage in principal amount at Stated Maturity
of the Outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1018, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) following the mailing of an Offer with respect to an Offer to
Purchase pursuant to Section 1013, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
<PAGE> 77
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City
of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust
<PAGE> 78
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands. In the event
any such notice or demands are so made or served on the Trustee, the Trustee
will promptly forward copies thereof to the Company.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will: (i) comply with the provisions of the Trust Indenture
Act applicable to it as Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were
<PAGE> 79
held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and material franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all material properties used or useful in
the conduct of its business or the business of any Restricted Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such material properties if
such discontinuance is, as determined by the Board of Directors in good faith,
desirable in the conduct of its business or the business of any Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
<PAGE> 80
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any of its
Restricted Subsidiaries or upon the income, profits or property of the Company
or any of its Restricted Subsidiaries, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Restricted Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1007. Maintenance of Insurance.
The Company shall, and shall cause its Restricted Subsidiaries
to, keep at all times all of their properties which are of an insurable nature
insured against loss or damage with insurers believed by the Company to be
responsible to the extent that property of similar character is usually so
insured by corporations similarly situated and owning like properties in
accordance with good business practice. The Company shall, and shall cause its
Restricted Subsidiaries to, use the proceeds from any such insurance policy to
repair, replace or otherwise restore all material properties to which such
proceeds relate, provided, however, that the Company shall not be required to
repair, replace or otherwise restore any such material property if the Board of
Directors in good faith determines that such inaction is desirable in the
conduct of the business of the Company or any Restricted Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 1008. Limitation on Consolidated Debt.
The Company shall not, and shall not permit any Restricted Subsidiary
to, Incur any Debt (including Acquired Debt), other than Permitted Debt, unless
(i) with respect to Debt Incurred under this clause (i), the Debt so Incurred
and outstanding is in an aggregate principal amount that does not exceed 2.25
times, with respect to Capital Stock sales after June 1, 1997 and on or prior to
March 31, 1998, or 2.00 times, with respect to Capital Stock sales after March
31, 1998, the aggregate amount of net cash proceeds (or 80% of the Fair Market
Value of property other than cash) received by the Company after June 1, 1997
from the issuance and sale (other than to a Restricted Subsidiary) of shares of
its Capital Stock (other than Redeemable Stock), or any options, warrants or
other rights to purchase such Capital Stock (other than Redeemable Stock), other
than (x) proceeds applied for use as a Directed Investment (unless such
designation has been revoked by the Board of Directors and the Company either
abandons its plans to make such Investment or is able to make such Investment
pursuant to Section 1009 (other than as a Directed Investment)) and (y) proceeds
which have been included in the computation of the amounts available for
Restricted Payments pursuant to clause (c)(2) of Section 1009, to the extent the
inclusion thereof was necessary to allow a subsequent Restricted Payment to be
made, or (ii) on
<PAGE> 81
the date of such Incurrence, after giving effect to the Incurrence of such Debt
(or Acquired Debt) and the receipt and application of the net proceeds thereof
(and, if the net proceeds of such new Debt are used to acquire a Person that
becomes a Restricted Subsidiary or an operating business of the Company or a
Restricted Subsidiary, to all terms of such acquisition) on a pro forma basis,
the Operating Cash Flow to Consolidated Interest Expense Ratio would equal or
exceed 1.75 to 1.
SECTION 1009. Limitation on Restricted Payments.
The Company shall not, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to
the holders of, any shares of its Capital Stock (other than dividends or
distributions payable solely in its Capital Stock (other than Redeemable
Stock) or in options, warrants or other rights to purchase any such
Capital Stock (other than Redeemable Stock));
(ii) purchase, redeem or otherwise acquire or retire for value,
or permit any Restricted Subsidiary to, directly or indirectly,
purchase, redeem or otherwise acquire or retire for value (other than
value consisting solely of Capital Stock of the Company that is not
Redeemable Stock or options, warrants or other rights to acquire such
Capital Stock that is not Redeemable Stock), any Capital Stock of the
Company (including options, warrants or other rights to acquire such
Capital Stock);
(iii) redeem, repurchase, defease or otherwise acquire or retire
for value, or permit any Restricted Subsidiary to, directly or
indirectly, redeem, repurchase, defease or otherwise acquire or retire
for value (other than value consisting solely of Capital Stock of the
Company that is not Redeemable Stock or options, warrants or other
rights to acquire such Capital Stock that is not Redeemable Stock),
prior to any scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Debt that is subordinate (whether pursuant to
its terms or by operation of law) in right of payment to the Securities;
or
(iv) make, or permit any Restricted Subsidiary, directly or
indirectly, to make, any Investment (other than any Permitted
Investment) in any Person (other than in a Restricted Subsidiary or a
Person that becomes a Restricted Subsidiary as a result of such
Investment);
(each of the foregoing actions set forth in clauses (i) through (iv), other than
any such action that is a Permitted Investment or a Permitted Distribution,
being referred to as a "Restricted Payment") unless, at the time of such
Restricted Payment, and after giving effect thereto:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) except with respect to Investments, after giving effect, on a
pro forma basis, to such Restricted Payment and the Incurrence of any
Debt the net proceeds of which are
<PAGE> 82
used to finance such Restricted Payment, the Consolidated Debt to
Annualized Operating Cash Flow Ratio would not have exceeded 7.0 to 1;
and
(c) after giving effect to such Restricted Payment on a pro forma
basis, the aggregate amount of all Restricted Payments made on or after
February 15, 1994 shall not exceed:
(1) 50% of the Consolidated Net Income (or, in the case of
a Consolidated Net Loss, minus 100% of such deficit) of the
Company for the period (taken as one accounting period) from
April 1, 1994 to the last day of the last fiscal quarter
preceding the date of the proposed Restricted Payment, plus
(2) the aggregate net proceeds, including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive and
evidenced by a Board Resolution), received by the Company from
the issuance and sale (other than to a Restricted Subsidiary) on
or after February 15, 1994 of shares of its Capital Stock (other
than Redeemable Stock), or any options, warrants or other rights
to purchase such Capital Stock (other than Redeemable Stock),
other than (x) (except for purposes of determining whether an
Investment under clause (iv) above is permitted) shares of
Capital Stock or options, warrants or other rights to purchase
Capital Stock (or shares issuable upon exercise thereof) issued
or sold in the PowerFone Merger, Questar/AMI Share Exchanges,
Motorola Business Acquisition and NTT transactions as defined and
described in the Company's prospectus, dated February 9, 1994,
relating to the Company's Senior Redeemable Discount Notes due
2004 and (y) shares of Capital Stock or options, warrants or
other rights to purchase Capital Stock (or shares issuable upon
exercise thereof), the proceeds of the issuance of which is used
(A) to make a Directed Investment (unless such designation has
been revoked by the Board of Directors and the Company is able
to make such Investment pursuant to this Section 1009 (other than
as a Directed Investment)) or (B) to Incur Debt under clause (i)
of Section 1008 (unless and until the amount of any such Debt (I)
is treated as newly issued Debt and could be Incurred in
accordance with the Section 1008 (other than under clause (i)
thereof) or (II) has been repaid or refinanced with the proceeds
of Debt Incurred in accordance with Section 1008 (other than
under clause (i) thereof) or (III) has otherwise been repaid),
plus
(3) the aggregate net proceeds, including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive and
evidenced by a Board Resolution), received by the Company from
the issuance or sale (other than to a Restricted Subsidiary)
after February 15, 1994 of any Capital Stock of the Company
(other than Redeemable Stock), or any options, warrants or other
rights to purchase such Capital Stock (other than Redeemable
Stock), upon the conversion of, or exchange for, Debt of the
Company or a Restricted Subsidiary.
<PAGE> 83
The foregoing limitations in this Section 1009 do not limit or restrict
the making of any Permitted Distribution, Permitted Investment or Directed
Investment, and none of a Permitted Distribution, Permitted Investment or
Directed Investment shall be counted as a Restricted Payment for purposes of
clause (c) above. In addition, the foregoing limitations do not prevent the
Company from (I) paying a dividend on Capital Stock of the Company within 60
days after the declaration thereof if, on the date when the dividend was
declared, the Company could have paid such dividend in accordance with the
provisions of this Indenture, (II) repurchasing Capital Stock of the Company
(including options, warrants or other rights to acquire such Capital Stock) from
employees or former employees of the Company or any Subsidiary thereof for
consideration not to exceed $500,000 in the aggregate in any fiscal year (with
repurchases pursuant to this clause (II) not being counted as Restricted
Payments for purposes of clause (c) above) or (III) the repurchase, redemption
or other acquisition for value of Capital Stock of the Company to the extent
necessary to prevent the loss or secure the renewal or reinstatement of any
license or franchise held by the Company or any of its Subsidiaries from any
governmental agency; or (IV) Investments in Unrestricted Subsidiary Funding
Company so long as (x) such Investments are invested in Nextel International,
Inc. and (y) Nextel International, Inc. is a Subsidiary of the Company.
Notwithstanding the foregoing limitations in this Section 1009, the
Company will be permitted to make any Investment in a Person that is not (either
before or after giving effect thereto) a Subsidiary of the Company, provided
that, immediately after giving effect thereto, the amount equal to (a) the
aggregate amount of all Investments made pursuant to this paragraph minus (b)
all cash received by the Company or any Restricted Subsidiary from the sale,
transfer or other disposition to a Person that is not a Subsidiary of the
Company of any such Investment (or portion thereof) included in such aggregate
amount (with the amount of cash to be counted for this purpose not to exceed the
amount of such Investment (or portion thereof) so included), shall not exceed
the greater of (i) $250 million and (ii) 2% of the Total Market Value of Equity
of the Company as of such time. For purposes of determining the aggregate amount
of Investments referred to in clause (a), the amount of any Investment shall be
deemed to equal the cash portion thereof plus the fair market value of any
non-cash portion thereof (to the extent such portion constitutes an Investment)
at the time such Investment is made, as determined by the Board of Directors
(whose good faith determination shall be conclusive and evidenced by a Board
Resolution).
Notwithstanding the foregoing, no Investment in a Person that
immediately thereafter would be a Restricted Subsidiary will be a Restricted
Payment. In addition, if any Person in which an Investment is made, which
Investment constitutes a Restricted Payment when made, thereafter becomes a
Restricted Subsidiary, all such Investments previously made in such Person shall
no longer be counted as Restricted Payments for purposes of calculating the
aggregate amount of Restricted Payments pursuant to clause (c) of the third
preceding paragraph or the aggregate amount of Investments pursuant to clause
(a) of the immediately preceding paragraph, in each case to the extent such
Investments would otherwise be so counted.
<PAGE> 84
For purposes of clause (c)(3) above, the net proceeds received by the
Company from the issuance or sale of its Capital Stock either upon the
conversion of, or exchange for, Debt of the Company or any Restricted Subsidiary
shall be deemed to be an amount equal to (a) the sum of (i) the principal amount
or accreted value (whichever is less) of such Debt on the date of such
conversion or exchange and (ii) the additional cash consideration, if any,
received by the Company upon such conversion or exchange, less any payment on
account of fractional shares, minus (b) all expenses incurred in connection with
such issuance or sale. In addition, for purposes of clause (c)(3) above, the net
proceeds received by the Company from the issuance or sale of its Capital Stock
upon the exercise of any options or warrants of the Company or any Restricted
Subsidiary shall be deemed to be an amount equal to (a) the additional cash
consideration, if any, received by the Company upon such exercise, minus (b) all
expenses incurred in connection with such issuance or sale.
For purposes of this Section 1009, if a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be an amount equal to the cash portion of
such Restricted Payment, if any, plus an amount equal to the fair market value
of the non-cash portion of such Restricted Payment, as determined by the Board
of Directors (whose good faith determination shall be conclusive and evidenced
by a Board Resolution).
SECTION 1010. Restricted Subsidiaries.
The Company shall not designate any Restricted Subsidiary as an
Unrestricted Subsidiary, and shall not itself, and shall not permit any
Restricted Subsidiary to, sell, convey, transfer or otherwise dispose of any
assets, other than in the ordinary course of business, to any Unrestricted
Subsidiary or any Person that becomes an Unrestricted Subsidiary as part of such
transaction, unless, after giving effect to any such action, the assets (not
including any assets so sold, conveyed, transferred or otherwise disposed of,
other than in the ordinary course of business, to any Unrestricted Subsidiary or
any Person that becomes an Unrestricted Subsidiary as part of such transaction)
and business of the Company and its remaining Restricted Subsidiaries generated
at least 90% of Digital Mobile-SMR Operating Cash Flow in the fiscal quarter of
the Company most recently completed prior to the date of such action.
The Board of Directors may designate any existing Unrestricted
Subsidiary or any Person that is about to become a Subsidiary of the Company as
a Restricted Subsidiary if, after giving effect to such action (and, if such
designation is made in connection with the acquisition of a Person or an
operating business that is about to become a Subsidiary of the Company, after
giving effect to all terms of such acquisition) on a pro forma basis, on the
date of such action, the Debt, if any, of such Unrestricted Subsidiary or Person
outstanding immediately prior to such designation would have been permitted to
be Incurred (and shall be deemed to have been Incurred) for all purposes of this
Indenture.
Subject to the second preceding paragraph and compliance with Section
1009, the Board of Directors may designate any Restricted Subsidiary as an
Unrestricted Subsidiary.
<PAGE> 85
The designation by the Board of Directors of a Restricted Subsidiary as
an Unrestricted Subsidiary shall, for all purposes of Section 1009 (including
clause (b) thereof), be deemed to be a Restricted Payment of an amount equal to
the fair market value of the Company's ownership interest in such Subsidiary
(including, without duplication, such indirect ownership interest in all
Subsidiaries of such Subsidiary), as determined by the Board of Directors in
good faith and evidenced by a Board Resolution.
Notwithstanding the foregoing provisions of this Section 1010, the Board
of Directors may not designate a Subsidiary of the Company to be an Unrestricted
Subsidiary if, after such designation, (a) the Company or any of its other
Restricted Subsidiaries (i) provides credit support for, or a Guarantee of, any
Debt of such Subsidiary (including any undertaking, agreement or instrument
evidencing such Debt) or (ii) is directly or indirectly liable for any Debt of
such Subsidiary, (b) a default with respect to any Debt of such Subsidiary
(including any right which the holders thereof may have to take enforcement
action against such Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of the Company or any Restricted Subsidiary
to declare a default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity or (c) such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, any Restricted Subsidiary which is not a Subsidiary of the Subsidiary to be
so designated.
The Board of Directors, from time to time, may designate any Person that
is about to become a Subsidiary of the Company as an Unrestricted Subsidiary,
and may designate any newly-created Subsidiary as an Unrestricted Subsidiary, if
at the time such Subsidiary is created it contains no assets (other than such de
minimis amount of assets then required by law for the formation of corporations)
and no Debt. Subsidiaries of the Company that are not designated by the Board of
Directors as Restricted or Unrestricted Subsidiaries shall be deemed to be
Restricted Subsidiaries. Notwithstanding any provisions of this Section 1010,
all Subsidiaries of an Unrestricted Subsidiary shall be Unrestricted
Subsidiaries. The Board of Directors shall not change the designation of a
Subsidiary of the Company more than twice in any period of five years.
SECTION 1011. Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) or
series of related transactions with any Affiliate of the Company on terms that
are less favorable to the Company or such Restricted Subsidiary, as the case may
be, than those which might be obtained at the time of such transaction from a
Person that is not such an Affiliate; provided, however, that this Section 1011
shall not limit, or be applicable to, (i) any transaction between Unrestricted
Subsidiaries not involving the Company or any Restricted Subsidiary, (ii) any
transaction between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries or (iii) any Permitted Transactions. In addition, any
transaction or series of related transactions, other than Permitted
Transactions, between the Company or any Restricted Subsidiary and any Affiliate
of the Company (other than a Restricted Subsidiary) involving an aggregate
consideration of $5 million or more must be approved in
<PAGE> 86
good faith by a majority of the Company's Disinterested Directors (of which
there must be at least one) and evidenced by a Board Resolution. For purposes of
this Section 1011, any transaction or series of related transactions between the
Company or any Restricted Subsidiary and an Affiliate of the Company that is
approved by a majority of the Disinterested Directors (of which there must be at
least one) and evidenced by a Board Resolution shall be deemed to be on terms as
favorable as those that might be obtained at the time of such transaction (or
series of transactions) from a Person that is not such an Affiliate and thus
shall be permitted under this Section 1011.
SECTION 1012. [Intentionally Omitted]
SECTION 1013. Change of Control.
Upon the occurrence of a Change of Control, the Company shall be
required to make an Offer to Purchase Outstanding Securities at a purchase price
in cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the relevant Purchase Date. The Offer to Purchase must be
made within 30 days following a Change of Control, must remain open for at least
30 and not more than 60 days and must comply with the requirements of Rule 14e-1
under the Exchange Act and any other applicable securities laws and regulations.
SECTION 1014. [Intentionally Omitted]
SECTION 1015. Activities of the Company and Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than the telecommunications business and
related activities and services, including such businesses, activities and
services as the Company and the Restricted Subsidiaries are engaged in on the
Closing Date.
SECTION 1016. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the Commission the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto if the Company
were subject thereto, such documents to be filed with the Commission on or prior
to the respective dates (the "Required Filing Dates") by which the Company would
have been required to file them. The Company shall also in any event (a) within
15 days of each Required
<PAGE> 87
Filing Date (i) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, without cost to such Holders, and (ii) file
with the Trustee copies of the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act or any successor
provisions thereto if the Company were subject thereto and (b) if filing such
documents by the Company with the Commission is not permitted under the Exchange
Act, promptly upon written request supply copies of such documents to any
prospective Holder. The Trustee's receipt of such reports, information and
documents shall not constitute constructive notice of any information contained
therein or determinable from information contained therein.
SECTION 1017. Statement by Officers as to Default; Compliance Certificates.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company ending after the date hereof an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder), and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware of the
occurrence of a Default or an Event of Default, an Officers' Certificate setting
forth the details of such Default or Event of Default, and the action which the
Company proposes to take with respect thereto.
SECTION 1018. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 801, provided pursuant to Section
901(2) and set forth in Sections 1004 to 1016, inclusive, if before the time for
such compliance the Holders of at least a majority in principal amount at Stated
Maturity of the Outstanding Securities shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect; provided, however, with respect to an Offer to Purchase as to
which an Offer has been mailed, no such waiver may be made or shall be effective
against any Holder tendering Securities pursuant to such Offer, and the Company
may not omit to comply with the terms of such Offer as to such Holder.
ARTICLE ELEVEN
Redemption of Securities
<PAGE> 88
SECTION 1101. Right of Redemption.
The Securities may be redeemed at any time on or after November
1, 2003, at the Company's option, in whole or in part, upon not less than 30 or
more than 60 days' prior written notice mailed by first class mail to each
Holder's last address as it appears in the Security Register, at the redemption
prices (expressed as a percentage of the principal amount thereof) set forth
below, plus an amount in cash equal to all accrued and unpaid interest to the
Redemption Date, if redeemed during the 12-month period beginning November 1 of
each of the years set forth below.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 106.000%
2004 104.800%
2005 103.600%
2006 102.400%
2007 101.200%
2008 100.000%
</TABLE>
Interest installments whose Stated Maturity is on or prior to any
Redemption Date will be payable to the Holders of Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates for the payment of such interest installments.
In addition to any redemption provided for in the immediately
preceding paragraphs, in the event of a sale by the Company after the Closing
Date and on or prior to November 1, 2001 of its Capital Stock (other than
Redeemable Stock) in a single transaction or series of transactions for an
aggregate purchase price equal to or exceeding $50 million, up to a maximum of
35% of the original aggregate principal amount of the Outstanding Securities
will, within 180 days of such sale, at the option of the Company, upon not less
than 30 nor more than 60 days' notice by mail, be redeemable from the net
proceeds thereof (but only to the extent such proceeds consist of cash or
readily marketable cash equivalents received in respect of the Company's Capital
Stock so sold, in each case net of all commissions, discounts, fees, expenses
and taxes incurred in respect thereof) at a Redemption Price equal to 112% of
the principal amount of the Securities to be redeemed plus accrued and unpaid
interest to the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted by this Indenture and the provisions of the Securities, shall be made
in accordance with such provisions and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101
<PAGE> 89
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company pursuant to Section 1101, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities are listed or, if the Securities are not listed on a national
securities exchange, on a pro rata basis, by lot or by such other method as the
Trustee in its sole discretion shall deem to be fair and appropriate; provided
that no Security of $1,000 in principal amount or less shall be redeemed in
part.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture and of the Securities, unless
the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to be
redeemed only in part, to the portion of the principal amount of such Securities
which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state (including CUSIP, CINS and
ISIN numbers, if any):
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
including CUSIP, CINS and ISIN numbers,
(4) that on the Redemption Date the Redemption Price will become
due and
<PAGE> 90
payable upon each such Security to be redeemed and that cash interest
thereon will cease to accrue on and after said Redemption Date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(6) if the redemption is being made pursuant to the provisions of
the Securities set forth in the third paragraph of Section 203, a brief
description of the nature and amount of Capital Stock sold by the
Company, the aggregate purchase price thereof and the net cash proceeds
therefrom available for such redemption, the date or dates on which such
sale was completed and the percentage of the aggregate principal amount
of Outstanding Securities being redeemed.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company and shall be
irrevocable.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) any applicable accrued interest on, all
the Securities which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and any
applicable accrued interest) such Securities shall not bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with any applicable accrued and unpaid interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 309.
If any Security called for redemption in accordance with the
election of the Company made pursuant to Section 1101 shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
<PAGE> 91
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount at Stated Maturity equal
to and in exchange for the unredeemed portion of the principal amount at Stated
Maturity of the Security so surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section
1202 or Section 1203 applied to the Outstanding Securities (as a whole and not
in part) upon compliance with the conditions set forth below in this Article.
Any such election shall be evidenced by a Board Resolution.
SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise of its option to have this Section
applied to the Outstanding Securities (as a whole and not in part), the Company
shall be deemed to have been discharged from its obligations with respect to
such Securities as provided in this Section on and after the date the conditions
set forth in Section 1204 are satisfied (hereinafter called "Defeasance"), and
thereafter such Securities shall not be subject to redemption pursuant thereto.
For this purpose, such Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by such Securities and
to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1204 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 308, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and
<PAGE> 92
(4) this Article. Subject to compliance with this Article, the Company may
exercise its option to have this Section applied to the Outstanding Securities
(as a whole and not in part) notwithstanding the prior exercise of its option to
have Section 1203 applied to such Securities.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise of its option to have this Section
applied to the Outstanding Securities (as a whole and not in part), (1) the
Company shall be released from its obligations under Section 801(iii), Sections
1005 through 1016, inclusive, and any covenant provided pursuant to Section
901(2) and (2) the occurrence of any event specified in Section 501(4) (with
respect to Section 801(iii)), Section 501(5) (with respect to any of Sections
1005 through 1016, inclusive, and any such covenants provided pursuant to
Section 901(2)), Section 501(6) or Section 501(7) shall be deemed not to be or
result in an Event of Default, in each case with respect to such Securities as
provided in this Section on and after the date the conditions set forth in
Section 1204 are satisfied (hereinafter called "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that, with respect to such Securities,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section (to
the extent so specified in the case of Sections 501(4) and 501(5)), whether
directly or indirectly by reason of any reference elsewhere herein to any such
Section or by reason of any reference in any such Section to any other provision
herein or in any other document, but the remainder of this Indenture and such
Securities shall be unaffected thereby.
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of
Section 1202 or Section 1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of
such Securities, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment, money in an
amount, or (C) a combination thereof, in each case sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of and any installment of interest on such Securities on the
respective Stated Maturities thereof, in accordance with the terms of
this Indenture and such Securities. As used herein, "U.S. Government
Obligation" means (x) any security which is (i) a direct obligation of
the United States of America for the payment of which the full faith and
<PAGE> 93
credit of the United States of America is pledged or (ii) an obligation
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (y) any
depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any U.S. Government
Obligation which is specified in Clause (x) above and held by such bank
for the account of the holder of such depository receipt, or with
respect to any specific payment of principal of or interest on any U.S.
Government Obligation which is so specified and held, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest
evidenced by such depository receipt.
(2) In the event of an election to have Section 1202 apply to the
Outstanding Securities, the Company shall have delivered to the Trustee
an Opinion of Counsel stating that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or
(B) since the Closing Date there has been a change in the applicable
Federal income tax law, in either case (A) or (B) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times
as would be the case if such deposit, Defeasance and discharge were not
to occur.
(3) In the event of an election to have Section 1203 apply to the
Outstanding Securities, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with
respect to such Securities and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would be
the case if such deposit and Covenant Defeasance were not to occur.
(4) No Default with respect to the Outstanding Securities shall
have occurred and be continuing at the time of such deposit or, with
regard to any such event specified in Sections 501(8) and (9), at any
time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
after such 90th day).
(5) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning
of such Act).
<PAGE> 94
(6) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(7) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act unless such trust shall
be registered under such Act or exempt from registration thereunder.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have
been complied with.
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 1206, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1204 in respect
of the Outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any such Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect of
principal and any premium and interest, but money so held in trust need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to the Outstanding Securities.
SECTION 1206. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money
in accordance
<PAGE> 95
with this Article with respect to any Securities by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1202 or 1203 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1205 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
--------------------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE> 96
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
NEXTEL COMMUNICATIONS, INC.
By:
Title:
Attest:
HARRIS TRUST AND SAVINGS BANK, Trustee
By:
Title:
Attest:
<PAGE> 97
EXHIBIT A
---------
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
---------------, -----
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
Attn: Treasurer
Re: Nextel Communications, Inc. (the "Company")
12% Senior Serial Redeemable Notes Due 2008 (the "Notes")
Dear Sirs:
This letter relates to U.S. $__________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of November 4, 1998 (the "Indenture") relating to the
Notes, we hereby certify that we are (or we will hold such securities on behalf
of) a person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
<PAGE> 98
EXHIBIT B
---------
Form of Certificate to Be Delivered
in Connection with Transfers to
Non-QIB Institutional Accredited Investors
------------, -----
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
Attn: Treasurer
Re: Nextel Communications, Inc. (the "Company")
12% Senior Serial Redeemable Notes due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of U.S.$__________
aggregate principal amount at stated maturity of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of November 4, 1998 (the "Indenture"), relating to the Notes, and we agree to
be bound by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should offer or sell any Notes, we will do so only (A) to the
Company or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C) to
an institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter,
(D) pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, (E) pursuant to an effective registration statement under the
Securities
<PAGE> 99
Act, if available, or (F) outside the United States in accordance with Rule 904
of Regulation S under the Securities Act, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
<PAGE> 100
EXHIBIT C
---------
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
---------------, -----
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
Attn: Treasurer
Re: Nextel Communications, Inc. (the "Company")
12% Senior Redeemable Notes due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S. $__________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933 and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or
<PAGE> 101
legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in Regulation
S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
<PAGE> 102
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
RECITALS OF THE COMPANY......................................................................1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions....................................................................1
Acquired Debt............................................................2
Act ....................................................................2
Affiliate................................................................2
Agent Members............................................................2
Annualized Operating Cash Flow...........................................3
Authenticating Agent.....................................................3
Average Life.............................................................3
Beneficial Owner.........................................................3
Board of Directors.......................................................3
Board Resolution.........................................................3
Business Day.............................................................3
Capital Lease Obligations................................................3
Capital Stock............................................................4
Change of Control........................................................4
Closing Date.............................................................6
Closing Price............................................................6
Code ....................................................................6
Commission...............................................................6
Common Stock.............................................................7
Company..................................................................7
Company Request..........................................................7
Company Order............................................................7
Consolidated Adjusted Net Income.........................................7
Consolidated Adjusted Net Loss...........................................7
Consolidated Adjusted Net Income (Loss)..................................7
Consolidated Debt to Annualized Operating Cash Flow
Ratio...............................................................7
Consolidated Interest Expense............................................8
Consolidated Net Income..................................................8
Consolidated Net Loss....................................................8
Consolidated Net Income (Loss)...........................................8
Consolidated Net Worth...................................................8
Consolidation............................................................9
Corporate Trust Office...................................................9
</TABLE>
<PAGE> 103
<TABLE>
<S> <C>
Corporation..............................................................9
Covenant Defeasance......................................................9
Credit Facility..........................................................9
Debt ....................................................................9
Default.................................................................10
Default Amount..........................................................10
Defaulted Interest......................................................10
Defeasance..............................................................10
Depository..............................................................10
Digital Mobile..........................................................10
Digital Mobile-SMR Operating Cash Flow..................................10
Directed Investment.....................................................11
Disinterested Director..................................................11
Event of Default........................................................11
Exchange Securities.....................................................11
Exchange Act............................................................11
Expiration Date.........................................................11
Fair Market Value.......................................................12
FCC ...................................................................12
February Indenture......................................................12
Global Securities.......................................................12
Guarantee...............................................................12
Holder..................................................................12
Incur...................................................................13
Indenture...............................................................13
Institutional Accredited Investor.......................................13
Interest Payment Date...................................................13
Investment..............................................................13
Investment Grade........................................................13
Licenses................................................................14
Lien ...................................................................14
Marketable Securities...................................................14
Maturity................................................................14
Memorandum..............................................................14
Moody's.................................................................14
Non-U.S. Person.........................................................15
Notice of Default.......................................................15
October Indenture.......................................................15
October Notes...........................................................15
Offer...................................................................15
Offer to Purchase.......................................................15
Officers' Certificate...................................................17
Offshore Global Securities..............................................17
</TABLE>
<PAGE> 104
<TABLE>
<S> <C>
Offshore Physical Securities............................................17
Operating Cash Flow.....................................................17
Operating Cash Flow to Consolidated Interest Expense
Ratio..............................................................17
Opinion of Counsel......................................................18
Outstanding.............................................................18
pari passu..............................................................18
Paying Agent............................................................19
Permitted Debt..........................................................19
Permitted Distribution..................................................20
Permitted Investment....................................................20
Permitted Transaction...................................................21
Person..................................................................21
Predecessor Security....................................................21
Preferred Capital Stock.................................................21
Private Placement Legend................................................21
Purchase Amount.........................................................21
Purchase Date...........................................................21
Purchase Price..........................................................21
QIB ...................................................................21
Record Expiration Date..................................................21
Redeemable Stock........................................................21
Redemption Date.........................................................22
Redemption Price........................................................22
Registration Rights Agreement...........................................22
Registration Statement..................................................22
Regular Record Date.....................................................22
Regulation S............................................................22
Required Consent........................................................22
Restricted Payments.....................................................23
Restricted Subsidiary...................................................23
Rule 144A...............................................................23
S&P ...................................................................23
Securities..............................................................23
Securities Act..........................................................23
Security Register.......................................................23
September Indenture.....................................................23
September Notes.........................................................23
Series D Debenture Indenture............................................24
Series D Preferred Stock................................................24
Series E Debenture Indenture............................................24
Series E Preferred Stock................................................24
Shelf Registration Statement............................................24
Special Record Date.....................................................24
</TABLE>
<PAGE> 105
<TABLE>
<S> <C>
Specialized Mobile Radio................................................24
Stated Maturity.........................................................24
Subsidiary..............................................................24
Total Common Equity.....................................................25
Total Market Value of Equity............................................25
Trading Day.............................................................25
Trustee.................................................................25
Trust Indenture Act.....................................................25
U.S. Global Securities..................................................25
U.S. Government Obligation..............................................25
U.S. Physical Securities................................................25
Unrestricted Subsidiary.................................................25
Vendor Financing Debt...................................................26
Vice President..........................................................26
Voting Stock............................................................26
Wholly Owned Restricted Subsidiary......................................26
SECTION 102. Compliance Certificates and Opinions..........................................26
SECTION 103. Form of Documents Delivered to Trustee........................................27
SECTION 104. Acts of Holders; Record Dates.................................................27
SECTION 105. Notices, Etc., to Trustee and Company.........................................29
SECTION 106. Notice to Holders; Waiver.....................................................30
SECTION 107. Conflict with Trust Indenture Act.............................................30
SECTION 108. Effect of Headings and Table of Contents......................................31
SECTION 109. Successors and Assigns........................................................31
SECTION 110. Separability Clause...........................................................31
SECTION 111. Benefits of Indenture.........................................................31
SECTION 112. Governing Law.................................................................31
SECTION 113. Legal Holidays................................................................31
SECTION 114. No Recourse Against Others....................................................31
</TABLE>
<PAGE> 106
<TABLE>
<S> <C>
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally...............................................................32
SECTION 202. Form of Face of Security......................................................33
SECTION 203. Form of Reverse of Security...................................................35
SECTION 204. Form of Trustee's Certificate of Authentication...............................41
SECTION 205. Restrictive Legends...........................................................41
ARTICLE THREE
The Securities
SECTION 301. Title and Terms...............................................................43
SECTION 302. Denominations.................................................................44
SECTION 303. Execution, Authentication, Delivery and Dating................................44
SECTION 304. Temporary Securities..........................................................44
SECTION 305. Registration, Registration of Transfer and Exchange...........................45
SECTION 306. Book-Entry Provisions for Global Security.....................................46
SECTION 307. Special Transfer Provisions...................................................47
SECTION 308. Mutilated, Destroyed, Lost and Stolen Securities..............................50
SECTION 309. Payment of Interest; Interest Rights Preserved................................51
SECTION 310. Persons Deemed Owners.........................................................52
SECTION 311. Cancellation..................................................................52
SECTION 312. Computation of Interest.......................................................52
SECTION 313. CUSIP, CINS and ISIN Numbers..................................................53
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.......................................53
SECTION 402. Application of Trust Money....................................................54
</TABLE>
<PAGE> 107
<TABLE>
<S> <C>
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.............................................................54
SECTION 502. Acceleration of Maturity; Rescission and Annulment............................56
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................................58
SECTION 504. Trustee May File Proofs of Claim..............................................58
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities..............................................................59
SECTION 506. Application of Money Collected................................................59
SECTION 507. Limitation on Suits...........................................................59
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest....................................................60
SECTION 509. Restoration of Rights and Remedies............................................60
SECTION 510. Rights and Remedies Cumulative................................................60
SECTION 511. Delay or Omission Not Waiver..................................................61
SECTION 512. Control by Holders............................................................61
SECTION 513. Waiver of Past Defaults.......................................................61
SECTION 514. Undertaking for Costs.........................................................62
SECTION 515. Waiver of Stay or Extension Laws..............................................62
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities...........................................62
SECTION 602. Notice of Defaults............................................................62
SECTION 603. Certain Rights of Trustee.....................................................63
</TABLE>
<PAGE> 108
<TABLE>
<S> <C>
SECTION 604. Not Responsible for Recitals or Issuance of Securities........................64
SECTION 605. May Hold Securities...........................................................64
SECTION 606. Money Held in Trust...........................................................64
SECTION 607. Compensation and Reimbursement................................................64
SECTION 608. Conflicting Interests.........................................................65
SECTION 609. Corporate Trustee Required; Eligibility.......................................65
SECTION 610. Resignation and Removal; Appointment of Successor.............................65
SECTION 611. Acceptance of Appointment by Successor........................................67
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business................................................................67
SECTION 613. Preferential Collection of Claims Against Company.............................67
SECTION 614. Appointment of Authenticating Agent...........................................68
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders.................................................................69
SECTION 702. Preservation of Information; Communications to Holders........................70
SECTION 703. Reports by Trustee............................................................70
SECTION 704. Reports by Company............................................................70
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc..................................................71
SECTION 802. Successor Substituted.........................................................72
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders............................72
</TABLE>
<PAGE> 109
<TABLE>
<S> <C>
SECTION 902. Supplemental Indentures with Consent of Holders...............................73
SECTION 903. Execution of Supplemental Indentures..........................................74
SECTION 904. Effect of Supplemental Indentures.............................................74
SECTION 905. Conformity with Trust Indenture Act...........................................74
SECTION 906. Reference in Securities to Supplemental Indentures............................74
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest...................................75
SECTION 1002. Maintenance of Office or Agency..............................................75
SECTION 1003. Money for Security Payments to be Held in Trust..............................75
SECTION 1004. Existence....................................................................76
SECTION 1005. Maintenance of Properties....................................................77
SECTION 1006. Payment of Taxes and Other Claims............................................77
SECTION 1007. Maintenance of Insurance.....................................................77
SECTION 1008. Limitation on Consolidated Debt..............................................78
SECTION 1009. Limitation on Restricted Payments............................................78
SECTION 1010. Restricted Subsidiaries......................................................81
SECTION 1011. Transactions with Affiliates.................................................83
SECTION 1012. [Intentionally Omitted]......................................................83
SECTION 1013. Change of Control............................................................83
SECTION 1014. [Intentionally Omitted]......................................................83
SECTION 1015. Activities of the Company and Restricted Subsidiaries........................83
</TABLE>
<PAGE> 110
<TABLE>
<S> <C>
SECTION 1016. Provision of Financial Information...........................................84
SECTION 1017. Statement by Officers as to Default; Compliance
Certificates............................................................84
SECTION 1018. Waiver of Certain Covenants..................................................84
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption..........................................................85
SECTION 1102. Applicability of Article.....................................................86
SECTION 1103. Election to Redeem; Notice to Trustee........................................86
SECTION 1104. Selection by Trustee of Securities to Be Redeemed............................86
SECTION 1105. Notice of Redemption.........................................................86
SECTION 1106. Deposit of Redemption Price..................................................87
SECTION 1107. Securities Payable on Redemption Date........................................87
SECTION 1108. Securities Redeemed in Part..................................................88
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or Covenant
Defeasance..............................................................88
SECTION 1202. Defeasance and Discharge.....................................................88
SECTION 1203. Covenant Defeasance..........................................................89
SECTION 1204. Conditions to Defeasance or Covenant Defeasance..............................89
SECTION 1205. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions.................................91
SECTION 1206. Reinstatement................................................................92
</TABLE>
<PAGE> 111
EXHIBITS
EXHIBIT A Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S
EXHIBIT B Form of Certificate to Be Delivered in Connection with Transfers
to Non-QIB Institutional Accredited Investors
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 291,952
<SECURITIES> 51,130
<RECEIVABLES> 437,292
<ALLOWANCES> 53,282
<INVENTORY> 85,286
<CURRENT-ASSETS> 916,635
<PP&E> 5,626,262
<DEPRECIATION> 1,040,707
<TOTAL-ASSETS> 11,113,533
<CURRENT-LIABILITIES> 862,113
<BONDS> 7,335,254
1,386,658
290,545
<COMMON> 287
<OTHER-SE> 315,425
<TOTAL-LIABILITY-AND-EQUITY> 11,113,533
<SALES> 0
<TOTAL-REVENUES> 1,255,145
<CGS> 0
<TOTAL-COSTS> 365,753
<OTHER-EXPENSES> 583,108
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 467,857
<INCOME-PRETAX> (1,275,022)
<INCOME-TAX> (127,502)
<INCOME-CONTINUING> (1,147,520)
<DISCONTINUED> 0
<EXTRAORDINARY> (133,225)
<CHANGES> 0
<NET-INCOME> (1,280,745)
<EPS-PRIMARY> (5.04)
<EPS-DILUTED> (5.04)
</TABLE>
