<PAGE>
As filed with the Securities and Exchange Commission on October 14, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
NEXTEL COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 36-3939651
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
2001 Edmund Halley Drive
Reston, Virginia 20191
(703) 433-4000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------
Thomas J. Sidman, Esq.
Senior Vice President and General Counsel
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, Virginia 20191
(703) 433-4000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------
Copies to:
Lisa A. Stater, Esq.
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street
Atlanta, Georgia 30308-3242
(404) 521-3939
Approximate date of commencement of proposed sale to the public: From time
to time following the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Be Offering Price Aggregate Amount of
Securities to Be Registered Registered per Unit(1) Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 3/4% Convertible Senior
Notes
due 2007................... $600,000,000 100% $600,000,000 $166,800
- --------------------------------------------------------------------------------------------------------
Class A Common Stock, par
value $.001 per share,
underlying the convertible
notes...................... 12,682,844 shares (2) (2) (2) (3)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(i) under the Securities Act of 1933.
(2) The number of shares of common stock to be issued upon conversion of the
convertible notes was calculated based on an initial conversion price of
$47.308 per share. In addition to the shares set forth in the table, the
amount to be registered includes an indeterminate number of shares issuable
upon conversion of the convertible notes, as such amount may be adjusted
due to stock splits, stock dividends and anti-dilution provisions.
(3) Pursuant to Rule 457(i), no additional registration fee is required in
connection with the registration of the Registrant's common stock issuable
upon conversion of the convertible notes.
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete. The selling security +
+holders may not sell or offer these securities until the registration +
+statement filed with the Securities and Exchange Commission is declared +
+effective. This prospectus is not an offer to sell these securities. Neither +
+Nextel nor the selling security holders are soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated October 14, 1999
PROSPECTUS
$600,000,000
Nextel Communications, Inc.
4 3/4% Convertible Senior Notes Due 2007
------------
This prospectus relates to the offering of Nextel's 4 3/4% convertible senior
notes due 2007 or the shares of Nextel's common stock issued upon conversion of
the convertible notes. The selling security holders may offer the securities at
fixed prices, at prevailing market prices at the time of sale, at varying
prices or negotiated prices. Nextel will not receive any cash proceeds from the
selling security holders' sales of these securities.
. Interest is payable on the convertible notes on each January 1 and July 1.
. Holders may convert the convertible notes into Nextel's common stock at
any time before July 1, 2007 or the earlier redemption or repurchase of
the convertible notes, at a conversion price of $47.308 per share, subject
to adjustment in specified events.
. On or after July 6, 2002, Nextel Communications, Inc. may redeem any of
the convertible notes at the redemption prices listed in this prospectus,
plus accrued interest.
. There is currently no established market for trading in the convertible
notes. Nextel's common stock is listed on the Nasdaq National Market under
the symbol "NXTL."
. On October 13, 1999, the last reported sale price of Nextel's common stock
was $71.00.
------------
As a prospective purchaser of these securities, you should carefully consider
the discussion of "Risk Factors" that begins on page 8 of this prospectus.
------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved the convertible notes or common stock to be distributed
under this prospectus, nor have any of these organizations determined that this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
------------
The date of this prospectus is , 1999
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
As used in this prospectus, "Nextel" refers to Nextel Communications, Inc.
and its subsidiaries, except where the context otherwise requires or as
otherwise indicated. This prospectus incorporates important business and
financial information about Nextel that is not included in or delivered with
this prospectus. You may obtain documents that are filed by Nextel with the
Securities and Exchange Commission and incorporated by reference in this
prospectus in writing or by telephone from:
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, Virginia 20191
Attention: Investor Relations
Telephone: (703) 433-4000
See "XII. Where You Can Get More Information."
"Nextel," "Nextel Direct Connect" and "Nextel Online" are trademarks or
service marks of Nextel. "Motorola," "i1000plus" and "i500plus" are trademarks
or service marks of Motorola, Inc. "Microsoft" is a trademark of Microsoft
Corporation.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
I. SUMMARY............................................................. 4
A. Nextel............................................................ 4
B. Use of Proceeds................................................... 4
C. The Convertible Notes............................................. 5
D. Summary Consolidated Financial Information........................ 6
II. RISK FACTORS........................................................ 8
A. Risk Factors Relating to Nextel................................... 8
B. Risk Factors Relating to the Convertible Notes.................... 16
C. Nextel's Forward-Looking Statements Are Subject to a Variety of
Factors That Could Cause Actual Results to Differ Materially from
Current Beliefs.................................................. 18
III. USE OF PROCEEDS..................................................... 20
IV. SELLING SECURITY HOLDERS............................................ 20
V. DESCRIPTION OF THE CONVERTIBLE NOTES................................ 22
A. General........................................................... 22
B. Form, Denomination and Registration............................... 23
C. Conversion of the Convertible Notes............................... 24
D. Optional Redemption by Nextel..................................... 26
E. Repurchase at the Option of the Holder............................ 27
F. Events of Default; Notice and Waiver.............................. 28
G. Modification of the Indenture..................................... 29
H. Information Concerning the Trustee................................ 30
I. Notices........................................................... 30
VI. DESCRIPTION OF CAPITAL STOCK........................................ 31
A. General........................................................... 31
B. Common Stock...................................................... 31
C. Preferred Stock................................................... 33
D. Relevant Provisions of the Certificate of Incorporation, the By-
laws and Delaware Law................................................ 35
VII. DILUTION............................................................ 38
VIII. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES....................... 38
IX. PLAN OF DISTRIBUTION................................................ 43
X. LEGAL MATTERS....................................................... 43
XI. EXPERTS............................................................. 43
XII. WHERE YOU CAN GET MORE INFORMATION.................................. 44
A. Available Information............................................. 44
B. Incorporation of Documents by Reference........................... 44
</TABLE>
3
<PAGE>
I. SUMMARY
This summary highlights basic information about Nextel and the securities
offered by the selling security holders, but does not contain all information
important to you. You should read the more detailed information and
consolidated financial statements and the related notes appearing elsewhere and
incorporated by reference in this prospectus.
A. Nextel
Nextel provides a wide array of digital and analog wireless communications
services throughout the United States. Nextel offers a differentiated,
integrated package of digital wireless communications services under the Nextel
brand name, primarily to business users. Nextel's digital mobile network
constitutes one of the largest integrated wireless communications systems
utilizing a single transmission technology in the United States.
A customer using Nextel's digital mobile network is able to access:
. digital mobile telephone service;
. digital two-way radio dispatch, which provides instant conferencing
capabilities and is marketed as "Nextel Direct Connect" service;
. paging; and
. short-messaging service.
Nextel refers to the handset device on which it delivers these services as a
subscriber unit.
As of June 30, 1999:
. Nextel provided service to about 3,592,900 digital subscriber units in
the United States; and
. Nextel's digital mobile network or the compatible digital mobile network
of Nextel Partners, Inc. was operational in areas in and around 92 of
the top 100 metropolitan statistical areas in the United States.
Nextel has also announced its plans to offer its customers access to new
digital two-way mobile data and Internet connectivity services. Two new
handsets developed and manufactured by Motorola, the "i1000plus" and the
"i500plus," were introduced in June and August 1999, respectively. These new
handsets are expected to be the first in a product line that incorporates
micro-browsers and wireless Internet capability, which is planned to be
combined with other mobile data applications to be used in connection with the
new "Nextel Online" service offering.
In addition to its domestic operations, Nextel has ownership interests in
international wireless companies through its subsidiary, Nextel International,
Inc. The subsidiaries of Nextel International, Inc., or other entities in which
Nextel International, Inc. holds equity or equivalent interests, own and
operate wireless communications systems in and around various major
metropolitan market areas in Latin America, Asia and Canada. Nextel
International, Inc., together with Nextel, provides service in ten of the
world's 25 largest cities.
Nextel's principal executive and administrative facility is located at 2001
Edmund Halley Drive, Reston, Virginia, and its telephone number is (703) 433-
4000.
B. Use of Proceeds
Nextel will not receive any cash proceeds from the sale of the securities
being offered by the selling security holders.
4
<PAGE>
C. The Convertible Notes
Securities Offered.......... $600,000,000 aggregate principal amount of 4 3/4%
convertible senior notes due 2007. See "V.
Description of the Convertible Notes."
Interest.................... 4 3/4% per year on the principal amount, payable
semi-annually in arrears in cash on January 1 and
July 1 of each year, beginning January 1, 2000.
The first interest payment will include interest
from June 16, 1999.
Conversion.................. The convertible notes will be convertible into
common stock of Nextel at the option of the
holder at any time after the date of original
issuance of the convertible notes and before
redemption, repurchase or maturity at a
conversion price of $47.308 per share, subject to
adjustment in specified events. See "V.
Description of the Notes--C. Conversion of the
Convertible Notes."
Optional Redemption......... At any time on or after July 6, 2002, Nextel may
redeem the convertible notes. The initial
redemption price is 102.714% of the principal
amount, plus accrued interest. The redemption
price will decline each year after July 6, 2002
as described in "V. Description of the
Convertible Notes--D. Optional Redemption by
Nextel."
Fundamental Change.......... Upon the occurrence of any "Fundamental Change,"
as described in this prospectus, and before the
maturity or redemption of the convertible notes,
each holder will have the right to require Nextel
to repurchase all or any part of that holder's
convertible notes at a price equal to 100% of the
principal amount of the convertible notes being
repurchased plus accrued interest. See "V.
Description of the Convertible Notes--E.
Repurchase at the Option of the Holder."
Sinking Fund................ None.
Ranking..................... The convertible notes will rank:
.equally with all of Nextel's other
unsubordinated, unsecured indebtedness;
.junior to all of Nextel's secured indebtedness;
and
.junior to all liabilities of Nextel's
subsidiaries. At June 30, 1999, Nextel had $5.1
billion of indebtedness, and its subsidiaries had
$4.5 billion of indebtedness and current
liabilities.
Nasdaq Symbol for Common
Stock...................... NXTL.
Risk Factors................ You should read the "Risk Factors" section
beginning on page 8 of this prospectus, as well
as the other cautionary statements throughout the
entire prospectus, to ensure that you understand
the risks associated with an investment in the
convertible notes and the common stock.
5
<PAGE>
D. Summary Consolidated Financial Information
The financial information below for the nine months ended December 31, 1994,
which reflects the change in Nextel's fiscal year end from March 31 to December
31, and the years ended December 31, 1995, 1996, 1997 and 1998, have been
derived from the audited consolidated financial statements of Nextel. The
financial information for the six months ended June 1998 and 1999 has been
derived from the unaudited financial statements of Nextel and reflects only
normal recurring adjustments necessary for the fair presentation of this
information. You should not expect the results of operations of interim periods
to be an indication of results for a full year. This information is only a
summary and should be read in conjunction with Nextel's historical financial
statements contained in reports filed with the Securities and Exchange
Commission. See "XII. Where You Can Get More Information--A. Available
Information."
Acquisitions. Nextel's results were affected by business combinations,
acquisitions and investments involving both domestic and international
companies. In July 1995, Nextel completed the acquisition of substantially all
of Motorola's 800 MHz specialized mobile radio licenses in the continental
United States and mergers with OneComm Corporation and American Mobile Systems,
Incorporated. Additional information regarding acquisitions completed in 1996,
1997 and 1998 can be found in note 2 to the consolidated financial statements
in Nextel's Annual Report on Form 10-K for the year ended December 31, 1998.
Other, net. This line item includes:
. $15.0 million write-down of the investment in Corporacion Mobilcom S.A.
de C.V., a subsidiary of Nextel, as a result of the devaluation of the
Mexican peso in 1995;
. equity in the losses of some investments accounted for under the equity
method. Additional information can be found in note 2 to the
consolidated financial statements in Nextel's Annual Report on Form 10-K
for the year ended December 31, 1998; and
. losses on interest rate protection activities of $46.9 million in 1998.
Income Tax Provision. As a result of operating results and the change in
useful lives of some intangible assets, Nextel increased its valuation
allowance for deferred tax assets resulting in a tax provision of about $258.7
million in 1997. Additional information can be found in note 10 to the
consolidated financial statements in Nextel's Annual Report on Form 10-K for
the year ended December 31, 1998.
Ratio of Earnings to Fixed Charges. For the purpose of computing the ratio
of earnings to fixed charges and preferred stock dividends, earnings consist of
loss before income taxes less income (loss) from equity method investments and
loss (income) attributable to minority interests. Fixed charges consist of:
. interest on all indebtedness and amortization of deferred financing
costs and amortization of original issue discount;
. that portion of rental expense which Nextel believes to be
representative of interest; and
. preferred stock dividends.
The deficiency of earnings to cover fixed charges and preferred stock
dividends for the nine months ended December 31, 1994 was $218.5 million; for
the year ended December 31, 1995 was $562.8 million; for the year ended
December 31, 1996 was $884.9 million; for the year ended December 31, 1997 was
$1,377.6 million; for the year ended December 31, 1998 was $1,920.0 million;
for the six months ended June 30, 1998 was $924.0 million; and for the six
months ended June 30, 1999 was $818.7 million.
Cash and Cash Equivalents. As of June 30, 1999, about $141.0 million of cash
and cash equivalents held by Nextel International and its subsidiaries were not
available to fund any of the cash needs of Nextel's domestic specialized mobile
radio businesses.
6
<PAGE>
You should review notes 12 and 13 to the consolidated financial statements
in Nextel's Annual Report on Form 10-K for the year ended December 31, 1998 for
a detailed discussion of Nextel's capital stock.
<TABLE>
<CAPTION>
Nine Months
Ended Six Months Ended
December 31, Year Ended December 31, June 30,
------------ ---------------------------------- ------------------ ---
1994 1995 1996 1997 1998 1998 1999
------------ ------- ------- ------- ------- -------- --------
(in millions, except per share and share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Operating revenues...... $ 75 $ 172 $ 333 $ 739 $ 1,847 $ 749 $ 1,457
Cost of revenues........ 52 152 248 289 516 229 329
Selling, general and
administrative 85 194 330 862 1,551 697 984
Expenses related to
corporate
reorganization......... -- 17 -- -- -- -- --
Depreciation and
amortization........... 94 236 401 526 832 379 471
---------- ------- ------- ------- ------- -------- --------
Operating loss......... (156) (427) (646) (938) (1,052) (556) (327)
Interest income
(expense), net......... (41) (90) (206) (378) (622) (276) (395)
Other, net.............. -- (15) (11) 7 (37) 3 (2)
Income tax benefit
(provision) 71 201 307 (259) 192 83 17
---------- ------- ------- ------- ------- -------- --------
Loss before
extraordinary item.... (126) (331) (556) (1,568) (1,519) (746) (707)
Extraordinary item--loss
on early retirement of
debt,
net of tax of $0....... -- -- -- (46) (133) (133) --
Mandatorily redeemable
preferred stock
dividends.............. -- -- -- (29) (149) (67) (93)
---------- ------- ------- ------- ------- -------- --------
Loss attributable to
common stockholders... $ (126) $ (331) $ (556) $(1,643) $(1,801) $ (946) $ (800)
========== ======= ======= ======= ======= ======== ========
Loss per share
attributable to common
stockholders,
basic and diluted:
Loss before
extraordinary item
attributable to common
stockholders.......... $ (1.25) $ (2.31) $ (2.50) $ (6.41) $ (5.98) $ (2.99) $ (2.69)
Extraordinary item...... -- -- -- (0.18) (0.48) (0.49) --
---------- ------- ------- ------- ------- -------- --------
$ (1.25) $ (2.31) $ (2.50) $ (6.59) $ (6.46) $ (3.48) $ (2.69)
========== ======= ======= ======= ======= ======== ========
Weighted average number
of common shares
outstanding (in
thousands)............. 100,639 143,283 222,779 249,320 278,643 271,952 297,164
Other Financial Data:
Ratio of earnings to
fixed charges and
preferred stock
dividends (see
discussion above)...... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
June 30,
1999
-------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents........... $1,418
Current assets......... 2,089
Intangible assets,
net................... 4,669
Total assets........... 12,930
Long-term debt
(excluding current
portion of $7.0
million).............. 8,334
Finance obligation
(excluding current
portion of $23.0
million).............. 532
Mandatorily redeemable
preferred stock....... 1,672
Stockholders' equity... 90
</TABLE>
7
<PAGE>
II. RISK FACTORS
You should carefully consider the specific factors listed below, as well as
the other information included and incorporated by reference in this
prospectus, before making an investment decision.
A. Risk Factors Relating to Nextel
1. Nextel Has a History of Net Losses and Negative Cash Flow and May Never Be
Able to Satisfy Its Cash Needs from Operations.
Nextel has never been profitable and has experienced negative cash flow
since its start in 1987. If this continues indefinitely, the value of the
convertible notes and common stock may be adversely affected. Nextel had net
losses attributable to common stockholders of about $1.8 billion during 1998
and about $800 million for the six months ended June 30, 1999. Nextel's
accumulated deficit was about $5.1 billion at June 30, 1999. Nextel expects
that losses will continue over the next several years. Nextel cannot know when,
if ever, net cash generated by its internal business operations will support
its growth and continued operations.
2. If Nextel Does Not Obtain Sufficient Additional Financing Commitments to
Meet Its Long-term Needs, Your Investment May be Adversely Affected.
a. Reasons Nextel will need cash.
Nextel anticipates that it will need substantial amounts of cash for:
. capital expenditures to build and enhance its digital mobile network;
. operating expenses relating to its specialized mobile radio business;
. potential acquisitions, including acquisition of rights to radio
spectrum, which Nextel requires to conduct its wireless communications
business;
. debt service requirements; and
. other general corporate purposes.
If Nextel can't fund these needs, its growth plans and operations, and the
value of the convertible notes and common stock, may be adversely affected.
Nextel expects its cash needs will exceed its cash flows from operating
activities through 1999. In addition, Nextel may need to revise its business
plan to respond to competitive and other factors, so its need for cash may
increase.
b. Nextel's current credit facilities are limited and contain restrictions
on additional financings that may restrict growth and adversely affect
operations.
Nextel's long-term cash needs are much greater than its availability under
its existing financing agreements. As a result, Nextel will have to raise
substantial amounts of additional funds, in the form of equity or debt, in the
future to support its growth and operations. If it is unable to do so, Nextel
may not be able to expand the coverage and capacity of its network to meet the
demands of Nextel's plans for sustained growth. Nextel's inability to achieve
contemplated levels of growth would adversely affect its financial results and
may adversely affect the value of the convertible notes and the common stock.
Under its bank credit agreement as in effect on June 30, 1999, Nextel may
borrow up to $3.295 billion in secured financing from its bank lenders provided
that Nextel satisfies financial and other conditions. As of June 30, 1999,
about $1.8 billion of this secured financing had been drawn. The availability
of this financing is also subject to Nextel satisfying covenants under
indentures relating to Nextel's public notes. Nextel's access to additional
funds may be limited by the terms of its existing financing agreements,
including:
. covenants that restrict the amount of additional borrowings, including
additional borrowings under existing financing arrangements;
8
<PAGE>
. covenants that restrict Nextel's grant of liens on assets that affect
Nextel's ability to obtain new secured financing; and
. existing debt service requirements.
c. Funding requirements for international operations and growth may cause
even greater cash needs, which may result in less funding available for
Nextel's domestic growth and operations.
Based on Nextel International, Inc.'s assessment of the business activity
and related cash needs of its operating subsidiaries that are controlled by or
that rely substantially on Nextel International, Inc. for further funding,
Nextel International, Inc. believes that it will have adequate funding to
continue its operations only through the end of 1999. If sufficient additional
financing does not become available at times or in amounts required to meet
Nextel International, Inc.'s needs that are not met by its existing funding
sources, Nextel may fund some or all of Nextel International, Inc.'s cash
needs. This would increase Nextel's own cash needs, which could result in a
lesser amount of cash available to Nextel for domestic use.
d. Other factors may adversely affect Nextel's access to additional
financing and Nextel may have to curtail its business if it cannot access
additional funding.
Nextel's access to additional funds also may be limited by:
. general market conditions that adversely affect the availability or cost
of financings;
. market conditions affecting the telecommunications industry in general;
and
. specific factors affecting Nextel's attractiveness as a borrower or
investment vehicle, including:
1. the terms of Nextel's arrangements with Motorola that relate to
Motorola's ownership interest in Nextel, and the terms of options
and warrants issued to others, that may make equity financings more
difficult;
2. the ability to relocate current spectrum licensees from some
frequencies in order to remove them from spectrum as to which Nextel
was the highest bidder at an auction;
3. the potential commercial opportunities and risks associated with
implementation of Nextel's business plan;
4. the market's perception of Nextel's performance and assets; and
5. the actual amount of cash needed by Nextel to pursue its business
strategy.
e. Funding for Nextel's capital needs is not assured and Nextel may have to
curtail its business if it cannot find adequate funding.
Currently, other than with respect to its existing bank facility, Nextel has
no legally binding commitments or understandings with any third parties to
obtain any material amount of additional equity or debt financing. Nextel
cannot assure you that it will be able to obtain any additional financing in
the amounts or at the times that it may require the financing, or if Nextel
does obtain any financing, that it would be on acceptable terms. As a result,
Nextel cannot assure you that it will have adequate capital to implement the
contemplated expansion and enhancement of its digital mobile network or to
maintain its current levels of operation. Nextel's failure to obtain sufficient
additional financing could result in the delay or abandonment of some or all of
its development, expansion and acquisition plans and expenditures, which could
have an adverse effect on Nextel and on the value of the convertible notes and
the common stock.
3. Nextel's Future Performance, and the Value of Your Investment, Will
Depend on Its Ability to Succeed in the Highly Competitive Wireless
Communications Transmission Industry.
Nextel's ability to compete effectively with established and prospective
wireless communications service providers depends on many factors, including:
9
<PAGE>
. If Nextel's wireless communications technology does not perform in a manner
that meets customer expectations, Nextel will be unable to attract and
retain customers, which would adversely affect your investment. Customer
acceptance of the services Nextel offers is and will continue to be affected
by technology-based differences and by the operational performance and
reliability of system transmissions on Nextel's digital mobile network. If
Nextel is unable to address and resolve satisfactorily performance or other
transmission quality issues as they arise, or if these issues limit Nextel's
ability to expand its network coverage as currently planned, or if these
issues were to place Nextel at a competitive disadvantage to other wireless
service providers in its markets, Nextel may have difficulty attracting and
retaining customers, which would adversely affect the value of the
convertible notes and the common stock.
. If Nextel cannot expand, provide and maintain its system coverage, then its
growth and operations, and the value of your investment, would be adversely
affected. Nextel will not be able to provide roaming system coverage
comparable to that currently available through roaming arrangements from
cellular and some personal communication services operators, unless and
until a nationwide digital mobile network build-out is substantially
completed. This places Nextel at a competitive disadvantage, as some other
providers currently have roaming agreements that provide coverage of each
other's markets throughout the United States. In addition, some of our
competitors provide their customers with subscriber units with both digital
and analog capability, which expands their coverage, while Nextel has only
digital capability. Nextel cannot assure you that it will be able to achieve
sufficient system coverage or that a sufficient number of customers or
potential customers will be willing to accept system coverage limitations as
a trade-off for the enhanced multi-function wireless communications package
Nextel provides on its nationwide digital mobile network.
. Nextel does not have the extensive direct and indirect channels of
distribution for its digital mobile network products and services that some
of its competitors have, which may adversely affect Nextel's operating
results and could adversely affect the value of your investment. Many of
Nextel's competitors have established extensive networks of retail locations
and multiple distribution channels, and so enjoy a competitive advantage
over Nextel in these areas. Nextel has increased the proportion of its
digital mobile network customers that it obtains through its indirect
distributor network, and Nextel currently anticipates that it will rely more
heavily on indirect distribution channels to achieve greater market
penetration for its digital wireless service offerings. However, as Nextel
expands its retail subscriber base through increased reliance on indirect
distribution channels and as price competition in the wireless industry
intensifies, Nextel's average revenue per subscriber unit may decrease and
Nextel's customer retention may be adversely affected.
. Nextel's inability to maintain pricing packages attractive to customers may
adversely affect operating results, which could adversely affect the value
of your investment.
a. Some of Nextel's competitors are financially stronger than Nextel, which
allows them to price their service packages at levels below those that
Nextel can or is willing to match.
Nextel's ability to compete based on the price of its digital mobile network
subscriber units and service offerings will be limited. This could adversely
affect Nextel's growth and the value of the convertible notes and common stock.
b. Nextel's equipment is more expensive than some competitors', which may
adversely affect growth and operating results.
Nextel currently markets multi-function subscriber handsets, providing
mobile telephone and private and group dispatch service, in addition to paging
and alphanumeric short-text messaging. Nextel's handsets are, and are likely to
remain, significantly more expensive than analog handsets and are, and are
likely to remain, somewhat more expensive than digital cellular or personal
communication services handsets that do not incorporate a comparable multi-
function capability. Although Nextel believes that its multi-function
subscriber handsets currently are competitively priced compared to multi-
function digital cellular and personal
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communication services handsets, the higher cost of Nextel's equipment may make
it more difficult or less profitable to attract customers who do not place a
high value on Nextel's unique multi-service offering. This may reduce Nextel's
growth opportunities or profitability and may adversely affect the value of the
convertible notes and common stock.
c. Nextel may face continuing pressure to reduce prices, which would
adversely affect operating results and the value of your investment.
Over the past several years as the number of wireless communications
providers in Nextel's market areas has increased, its competitors' prices in
these markets have generally decreased. Nextel may encounter further market
pressures to:
. reduce its digital mobile network service offering prices;
. restructure its digital mobile network service offering packages to
offer more value;
. respond to particular short term, market specific situations, for
example, special introductory pricing or packages that may be offered by
new providers launching their service in a particular market; or
. remain competitive if wireless service providers generally continue to
reduce the prices charged to their customers.
. Nextel's efforts to keep pace with technological change may be unsuccessful
or may adversely affect operating results, which would adversely affect the
value of your investment. Nextel's digital technology could become obsolete.
Nextel relies on digital technology that is not compatible with, and
competes with, other forms of digital and non-digital voice communication
technology. Competition among these differing technologies can:
. segment the user markets, which could reduce demand for specific
technologies, including Nextel's;
. reduce the resources devoted by third party suppliers, including
Motorola, which supplies all of Nextel's current digital technology, in
developing or improving the technology for Nextel's systems; and
. adversely affect market acceptance of Nextel's services.
Nextel cannot assure you that its digital voice technology will successfully
compete with the other forms of digital and non-digital voice communication
systems. Further, new digital or non-digital voice communication transmission
technology may develop that will cause Nextel's existing systems technology to
be obsolete or otherwise impair market acceptance of its technology.
. Nextel's growth may exceed the capabilities of its systems, hurting its
performance, and the value of your investment.
a. Nextel faces limitations on its ability to increase subscribers, which
can limit its growth and performance.
Nextel's ability to continue to increase the number of subscribers on its
digital mobile network depends on a variety of factors, including:
. the ability to successfully plan for additional system capacity at
levels needed to meet anticipated new subscribers and the related
increases in system usage;
. the ability to obtain additional radio spectrum when and where required;
and
. the availability of a sufficient quantity of cell sites, system
infrastructure equipment and subscriber units, of the appropriate models
and types, to meet the demands and preferences of potential subscribers
to the digital mobile network.
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b. Nextel may face limitations on availability of cell sites and equipment,
which may adversely affect its growth and performance.
Although Nextel believes it has secured sufficient cell sites at
appropriate locations in its markets to meet planned system coverage and
capacity targets, Nextel cannot assure you that it will meet those needs in
the future. Nextel generally has been able to obtain adequate quantities of
base radios and other system infrastructure equipment from Motorola and other
suppliers, and adequate volumes and mix of subscriber units and related
accessories from Motorola, to meet subscriber and system loading rates, but
Nextel cannot assure you that quantities will be sufficient in the future.
Additionally, Nextel has contractual arrangements with Nextel International,
Inc. and Nextel Partners, Inc. that contemplate that, in the event of
shortages of that equipment, available supplies would be allocated
proportionately among Nextel and those entities.
c. Nextel has potential systems limitations on adding customers, which may
adversely affect its growth and performance.
Other factors affecting Nextel's ability to successfully add customers to
its digital mobile network include:
. the adequacy and efficiency of Nextel's information systems, business
processes and related support functions;
. the length of time between customer order to activation of service on
the digital mobile network, which currently is much longer than that of
some of its competitors; and
. Nextel's ability to improve the efficiency and speed of the processes
for Nextel's customer service and accounts receivable collection
functions.
Customer reliance on Nextel's customer service functions may increase as
Nextel adds digital mobile network customers through indirect distribution
channels and through direct sales channels not involving direct face-to-face
contact with a sales representative, for example, phone order sales or sales
through web sites. Nextel's inability to timely and efficiently meet the
demands for its services could decrease or postpone subscriber growth, or
delay or otherwise impede billing and collection of amounts owed, which would
adversely affect Nextel.
. If competitors provide two-way radio dispatch services, Nextel will lose
a competitive advantage. Nextel's two-way radio dispatch services are
currently not available through traditional cellular or personal
communication services providers; however, if either personal
communication services or cellular operators provide two-way radio
dispatch services in the future, Nextel's competitive advantage may be
impaired.
Nextel cannot predict the competitive effect that any of these factors, or
any combination of these factors, will have on it or whether it will compete
successfully in the future.
4. Regulatory and Other Factors Could Delay or Prevent Nextel from Offering
Services in New Market Areas, Which May Adversely Affect Nextel's Growth
and the Value of Your Investment.
Before fully implementing Nextel's digital mobile network in a new market
area, Nextel must complete systems design work, find appropriate sites and
construct necessary transmission structures, receive regulatory approvals,
free up frequency channels now devoted to non-digital transmissions and begin
systems optimization. These processes take weeks or months to complete, and
may be hindered or delayed by many factors, including unavailability of
antenna sites at optimal locations, land use and zoning controversies and
limitations of available frequencies. Nextel cannot know when, if ever, its
digital technology will be available for commercial use in new markets.
5. Nextel Relies on Motorola for Substantially All of Its Equipment and
Technology and Any Failure of Motorola to Perform Would Adversely Affect
Nextel's Operating Results and the Value of Your Investment.
There is a risk that the failure by Motorola to deliver necessary
technology improvements and enhancements and system infrastructure and
subscriber equipment on a timely, cost-effective basis would have
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an adverse effect on Nextel's growth and operations and would adversely affect
your investment. Motorola is currently Nextel's sole source for the
infrastructure and subscriber handset equipment used by Nextel throughout its
markets. Nextel expects to rely on Motorola for the manufacture of a
substantial portion of the equipment necessary to construct its digital mobile
network and handset equipment for the next several years. If Motorola does not
provide the necessary equipment to Nextel, then Nextel may not be able to
service its existing subscribers or add new subscribers. Nextel expects that
for the next few years, Motorola and competing manufacturers who are licensed
by Motorola will be the only manufacturers of subscriber equipment that is
compatible with Nextel's digital mobile network.
6. Agreements With Motorola Reduce Nextel's Operational Flexibility and May
Adversely Affect Its Growth, or Operating Results, Which Would Adversely
Affect the Value of Your Investment.
Nextel's agreements with Motorola impose limitations and conditions on
Nextel's ability to use other technologies. These terms may operate to delay or
prevent Nextel from employing new or different technologies that perform better
or are available at a lower cost because of the additional economic costs and
other impediments to change arising under the Motorola agreements. For example,
the equipment purchase agreement provides that Nextel must provide Motorola
with notice of its determination that their technology is no longer suited to
our needs at least six months before publicly announcing or entering into a
contract to purchase an alternate technology.
In addition, if Motorola manufactures, or elects to manufacture, the
alternate technology that Nextel elects to deploy, Nextel must give Motorola
the opportunity to supply 50% of its infrastructure requirements for the
alternate technology for three years. Finally, if after a switch to an
alternate technology Nextel does not maintain operational Motorola
infrastructure equipment at the majority of its cell sites that are deployed at
the date the switch to an alternate technology is first publicly announced,
Motorola may require that all financing provided by Motorola to Nextel be
repaid.
7. Nextel's Interests May Conflict With Those of Motorola. Any Conflict Could
Adversely Affect Nextel's Growth, Operating Results or Strategic
Flexibility and the Value of Your Investment.
Motorola and its affiliates engage in wireless communications businesses,
and may in the future engage in additional businesses, which do or may compete
with some or all of the services Nextel offers through its digital mobile
network. Although Nextel believes that its relationship with Motorola reflects
the realities of purchasing from a competitor, Nextel cannot assure you that
the potential conflict of interest will not adversely affect Nextel in the
future. In addition, Motorola is a significant stockholder of Nextel, which
creates potential conflicts of interest, particularly with regard to
significant transactions.
8. Your Investment in Nextel, Which Operates in a Regulated Industry, May Be
Adversely Affected by Governmental Regulation.
The Federal Communications Commission regulates the licensing, operation,
acquisition and sale of Nextel's specialized mobile radio businesses. Future
changes in regulation or legislation and Congress' and the Federal
Communications Commission's continued allocation of additional commercial
mobile radio services spectrum could impose significant additional costs on
Nextel either in the form of direct out of pocket costs or additional
compliance obligations. These regulations can also have the effect of
introducing additional competitive entrants to the already crowded wireless
communications marketplace.
Nextel International, Inc.'s operations are subject to similar effects
caused by operating in a regulated industry, since its operations are regulated
by the foreign countries in which its business is conducted and are also
subject to regional and local regulation. Additional information regarding
government regulation can be found in Nextel's Annual Report on Form 10-K for
the year ended December 31, 1998.
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9. Nextel Has Significant Intangible Assets, Which May Not Be Adequate to
Satisfy Its Obligations in the Event of a Liquidation.
If Nextel defaults on debt or if Nextel were liquidated, Nextel cannot
assure you that the value of its assets will be sufficient to satisfy its
obligations. Nextel has a significant amount of intangible assets, such as
licenses granted by the Federal Communications Commission. The value of these
licenses will depend significantly upon the success of Nextel's digital mobile
network business and the growth of the specialized mobile radio and wireless
communications industries in general. Nextel had a net tangible book value
deficit of about $4.8 billion as of June 30, 1999.
10. Nextel Is Susceptible to Control by Significant Stockholders, Who Have
Rights That May Adversely Affect the Market Price of Nextel's Stock.
Significant blocks of Nextel's outstanding stock are held by Motorola and
entities controlled by Mr. Craig O. McCaw. In addition, an affiliate of Mr.
McCaw may designate at least one fourth of the board of directors of Nextel and
may select, from their representatives on the board of directors, a majority of
the operations committee of Nextel's board of directors, which has significant
authority relating to Nextel's business strategy, budgets, financing
arrangements and in the nomination and oversight of specified executive
officers. As a result, Mr. McCaw may exert significant influence over Nextel's
affairs. Under its agreements with Nextel, Motorola may nominate two directors
to the board of directors of Nextel. In addition, Motorola has agreed to
support the decisions and recommendations of the operations committee and to
vote its shares of common stock accordingly, subject to specified limitations.
If Mr. McCaw and Motorola choose to act together, they could have a
sufficient voting interest in Nextel to, among other things:
. exert effective control over the approval of amendments to Nextel's
certificate of incorporation, mergers, sales of assets or other major
corporate transactions as well as other matters submitted for
stockholder vote;
. defeat a takeover attempt; and
. otherwise control whether particular matters are submitted for a vote of
the stockholders of Nextel.
Mr. McCaw and his affiliates have and, subject to the terms of applicable
agreements, may acquire an investment or other interest in entities that
provide wireless telecommunications services that could potentially compete
with Nextel. Under the relevant agreements, Mr. McCaw and his controlled
affiliates may not, for a period of time, participate in other two-way
terrestrial-based mobile wireless communications systems in the region that
includes any part of North America or South America unless these opportunities
have first been presented to and waived or rejected by Nextel.
11. Nextel's Commitments to Issue Additional Common Stock May Adversely
Affect the Market Price of its Common Stock or May Impair Nextel's
Ability to Raise Capital.
Nextel currently has outstanding commitments in various forms, including
warrants, options and convertible securities, to issue a substantial number of
new shares of its common stock. The shares subject to these issuance
commitments, to some degree, will be issued in registered transactions and thus
will be freely tradeable. In many other instances, these shares will be subject
to grants of registration rights that, if and when exercised, would result in
those shares becoming freely tradeable. Nextel has also granted registration
rights with respect to a significant number of its outstanding shares,
including shares of common stock issuable upon conversion of securities issued
in some transactions. The exercise of registration rights by persons holding
those shares would permit those persons to sell those shares without regard to
the limitations of Rule 144 under the Securities Act of 1933. An increase in
the number of shares of Nextel's common stock that will become available for
sale in the public market may adversely affect the market price of the common
stock and, as a result, could impair Nextel's ability to raise additional
capital through the sale of its equity securities.
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12. Concerns About Health Risks Relating to the Use of Portable Handsets May
Affect Nextel's Prospects and the Value of Your Investment.
Portable communications devices have been alleged to pose health risks due
to radio frequency emissions from these devices. Studies performed by wireless
telephone equipment manufacturers have investigated these allegations, and a
major industry trade association and governmental agencies have stated publicly
that the use of these phones poses no undue health risk. The actual or
perceived risk of portable communications devices could adversely affect Nextel
through a reduced subscriber growth rate, a reduction in subscribers, reduced
network usage per subscriber or through reduced financing available to the
mobile communications industry.
13. If Nextel's Operations Are Disrupted Due to Year 2000 Readiness Issues,
There Would Be an Adverse Effect on Its Growth and Operating Results and
on the Value of Your Investment.
Nextel may be subject to risks associated with Year 2000 readiness,
including those associated with third parties. Nextel has not yet finally
determined its need for or, if and where likely to be needed finally developed,
contingency plans for resolving issues that may be identified and for which
remediation is not possible on a timely or cost-effective basis. If any of
these third parties, or Nextel, is unable to resolve material Year 2000
readiness issues on a timely or cost-effective basis, there would be an adverse
effect on Nextel, and on the value of your investment.
14. Risks Relating to Nextel's Joint Investments May Adversely Affect
Nextel's Growth and Operating Results and the Value of Your Investment.
Nextel recently has entered into a contractual joint venture and may enter
into other joint ventures or similar arrangements in the future. Outside the
United States, several of Nextel's international operations are conducted
through entities having one or more third-party owners, and some of these
entities are not controlled by Nextel. There are risks in participating in
arrangements of these types, including the risk that the other participants may
at any time have economic, business or legal interests or goals that are
inconsistent with those of the joint enterprise or Nextel. There also is the
risk that a participant may be unable to meet its economic or other obligations
to the joint enterprise and that Nextel may be required to fulfill some or all
of those obligations. Nextel also may be or become obligated to acquire all or
a portion of the ownership interest of some or all of the other participants in
these joint enterprises. In addition, to the extent that Nextel participates in
international arrangements of these types, the operations of the relevant
entity will be subject to various additional risks not present in domestic
joint enterprises.
15. Risks Relating to Nextel's Foreign Operations May Adversely Affect
Nextel's Growth and Operating Results and the Value of Your Investment.
Nextel owns interests in and operates international wireless companies
through Nextel International, Inc.. The risks that relate to these foreign
operations include:
. political, economic and social conditions in the foreign countries where
Nextel conducts operations;
. currency risks and exchange controls;
. potential inflation in the applicable foreign economies;
. the impact of import duties on the cost or prices of infrastructure
equipment and subscriber handsets;
. foreign taxation of earnings and payments received by Nextel
International, Inc. from its operating subsidiaries;
. regulatory changes affecting the telecommunications industry and
wireless communications; and
. operations being disrupted due to Year 2000 readiness issues affecting
Nextel International, Inc.
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Nextel cannot assure you that the risks associated with its foreign
operations will not adversely affect its or Nextel International, Inc.'s
operating results or prospects, particularly as these operations expand in
scope, scale and significance.
B.Risk Factors Relating to the Convertible Notes
1.Nextel May Be Unable to Pay Interest or Repay the Convertible Notes.
a. Nextel is a holding company and its subsidiaries have no obligations to
the holders of the convertible notes.
Nextel conducts substantially all of its business through its subsidiaries.
Nextel's cash flow and, consequently, its ability to pay interest in cash and
to service its debt, including the convertible notes, are dependent upon the
cash flow of its subsidiaries and the payment of funds by those subsidiaries in
the form of loans, dividends or otherwise. Nextel's subsidiaries are separate
and distinct legal entities and will have no obligation, contingent or
otherwise, to pay any amounts due on the convertible notes or to make cash
available for that purpose.
b. Nextel's subsidiaries have restrictions on what they can pay to Nextel.
Nextel and its subsidiaries have entered into financing agreements that
impose significant limits on, and are expected to continue to significantly
limit, the amount of cash available to pay dividends or make loans and cash
distributions to Nextel from its subsidiaries that operate the digital mobile
network in Nextel's market areas in the United States. Similarly, financing
arrangements and indentures entered and to be entered into by Nextel
International, Inc. and the entities in which Nextel International, Inc. holds
investments contain, or will contain, restrictions on dividends, loans,
advances and other payments to Nextel by Nextel International, Inc. and its
subsidiaries. As long as these limitations are in place, money generated by
these subsidiaries may not be available to Nextel for the payment of interest
on the convertible notes or to repay the convertible notes. If Nextel's
financing arrangements limit its ability to pay interest on the convertible
notes when required, Nextel will need to refinance amounts outstanding under
those arrangements to make interest payments. Nextel cannot assure you that it
will be able to refinance this debt. The failure of Nextel to pay interest on
the convertible notes when required could result in defaults under some of
Nextel's debt agreements. Nextel may enter into financing arrangements in the
future that could impose additional restrictions on dividends, loans, advances
and other payments by its subsidiaries. Some of Nextel's existing financing
arrangements contain restrictive covenants, including a limitation on the
amount of debt that Nextel may incur, that may limit its ability to borrow
funds to pay any amounts due under the convertible notes. Finally, some of
these agreements also contain limitations on "restricted payments," which could
represent amounts Nextel would need to receive to meet its cash interest and
debt service obligations, including those relating to the convertible notes.
2. The Liabilities of Nextel's Subsidiaries Are Effectively Senior to the
Convertible Notes.
Nextel conducts substantially all of its business through its subsidiaries,
which hold all of its operating assets. As of June 30, 1999, Nextel's
subsidiaries had outstanding indebtedness and other trade payables and other
accrued liabilities of about $4.5 billion. Assets of some of Nextel's operating
subsidiaries secure some of its senior borrowings. Borrowings by Nextel
International, Inc. or its subsidiaries or affiliates under any bank or vendor
financing agreements that may be entered into from time to time likewise may be
secured by liens on assets of Nextel International, Inc. or of those
subsidiaries and affiliates and may also be guaranteed by those entities. As a
result, the liabilities of Nextel's subsidiaries are effectively senior to the
convertible notes because the holders of those liabilities, unlike the holders
of the convertible notes, would have direct claims against the subsidiaries of
Nextel that are obligors or guarantors with respect to those liabilities, or
against the assets of those Nextel subsidiaries and/or would have security
interests in those assets.
Subject to limitations, Nextel and its subsidiaries may incur additional
debt, and that additional debt may rank senior to the convertible notes.
Nextel's subsidiaries will have no obligation to pay amounts due on the
convertible notes. These subsidiaries may use the earnings they generate, as
well as their existing assets, to
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fulfill their own direct debt service requirements. The agreements relating to
those subsidiaries' debt may restrict their ability to pay dividends or to make
loans, advances and other distributions to Nextel. The debt of these
subsidiaries may be secured by their assets.
3. Nextel's High Level of Indebtedness Could Adversely Affect Its Ability to
Meet Its Obligations, Including the Repayment of the Convertible Notes.
At June 30, 1999, Nextel had about $8.3 billion of long term debt, including
the current portion. Recorded liabilities will increase from June 30, 1999
through 2008 by about $1.7 billion due to the accretion of the original issue
discount on some of Nextel's public notes. In addition, Nextel had about $1.7
billion of mandatorily redeemable preferred stock outstanding at June 30, 1999.
The terms of Nextel's and its subsidiaries' notes, indentures, credit
agreements and preferred stock limit, but do not prohibit, the incurrence of
additional indebtedness by Nextel and specified subsidiaries. Nextel
anticipates that it and its subsidiaries will incur substantial additional
indebtedness in the future in connection with the further build-out, expansion,
and enhancement of its digital mobile network and funding cash flow deficits,
including additional borrowings under the terms of the bank financing
agreements.
Nextel's high level of indebtedness could have important consequences to
holders of the convertible notes, including limiting Nextel's ability to do the
following:
. obtain additional financing for acquisitions, working capital, capital
expenditures or other purposes;
. use operating cash flow in other areas of its business because it must
dedicate a substantial portion of these funds to make cash interest
payments and fund required principal payments on its debt;
. borrow additional funds or dispose of assets;
. compete with others in its industry who are not as highly leveraged; and
. react to changing market conditions, changes in its industry and
economic downturns.
4. If Nextel Is Unable to Refinance Its Existing Indebtedness, There Would Be
an Adverse Effect on Your Investment.
Nextel currently has substantial debt obligations that will mature before
the maturity of the convertible notes. In addition, Nextel has preferred stock
that it may be required to redeem before the maturity of the convertible notes.
Nextel has begun payment of cash interest on some of its public notes. Nextel
must also begin to pay cash interest on some other outstanding debt as well as
cash dividends on some outstanding shares of preferred stock before the
maturity of the convertible notes. Nextel does not expect to generate
sufficient funds from operations to pay or repay those obligations as they are
currently scheduled to become due. As a result, it will be necessary to
refinance those obligations at or before their respective maturities or
mandatory redemption dates. Nextel cannot assure you that it will be able to
refinance those obligations. If Nextel is unable to refinance those
obligations, or unable to obtain satisfactory terms, it may cause a default
under Nextel's outstanding indebtedness or some series of its preferred stock.
In these events, Nextel may not be able to meet its obligations under its debt
securities (including the convertible notes) or its preferred stock and the
value of the convertible notes and the underlying common stock would be
adversely affected.
5. Nextel May Be Unable to Repurchase Your Convertible Notes Upon a
Fundamental Change.
If Nextel experiences a Fundamental Change, as defined in the indenture, a
holder of the convertible notes may require Nextel to repurchase the
convertible notes at 100% of their face amount plus any accrued and unpaid
interest. The term Fundamental Change is limited to specified transactions and
may not include other events that might adversely affect Nextel's financial
condition, nor would the requirement that Nextel offer to
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repurchase the convertible notes upon the occurrence of a Fundamental Change
necessarily afford holders of the convertible notes protection if Nextel
undertakes a reorganization, merger or similar transaction in which Nextel
incurs substantial additional debt. Similar events, some of which do not
represent a Fundamental Change for purposes of the convertible notes, may also
trigger similar repurchase obligations under some of Nextel's other financing
arrangements. Nextel may not be able to pay you the required price for the
convertible notes you present to it at the time of a Fundamental Change because
Nextel may not have enough funds at that time or the terms of its other
financing agreements may prevent it from making those payments.
6. There Is No Public Market for the Convertible Notes and if a Market
Develops, Trading Prices May Be Lower than the Offering Price.
There is no existing trading market for the convertible notes. Nextel cannot
assure you that any public market for the convertible notes will develop. If a
market does develop, the convertible notes could trade at prices that may be
lower than their initial offering price depending on many factors, including
the market price of the Nextel common stock into which the convertible notes
are convertible, prevailing interest rates, Nextel's operating results and the
market for similar securities.
7. Volatility in the Price of the Convertible Notes Could Result in a Lower
Trading Price than You Paid, and Volatility in the Price of the Common
Stock Could Result in a Lower Trading Price than Your Conversion Price.
The market price of Nextel's common stock has fluctuated over a wide range
since it began trading publicly in 1992. In addition, the stock market in
recent years has experienced significant price and volume fluctuations that
have often been unrelated to the operating performance of companies. These
fluctuations have particularly affected the market prices of the stocks of
telecommunications companies. The market price of Nextel's common stock may
continue to fluctuate in the future. Negative fluctuations in the market price
of Nextel's common stock could adversely impact the trading price of the
convertible notes.
C.Nextel's Forward-Looking Statements Are Subject to a Variety of Factors That
Could Cause Actual Results to Differ Materially from Current Beliefs.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: A number of statements made in, or incorporated by reference into,
this prospectus are not historical or current facts, but deal with potential
future circumstances and developments. Those statements are qualified by the
inherent risks and uncertainties surrounding expectations generally, and also
may materially differ from Nextel's actual future experience involving any one
or more of these matters and subject areas. Nextel has attempted to identify,
in context, some of the factors that it currently believes may cause actual
future experience and results to differ from Nextel's current expectations
regarding the relevant matter or subject area. 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 elsewhere in the above "Risk Factors" section and elsewhere in this
prospectus, including, but not limited to:
. general economic conditions in the geographic areas and occupational
market segments that Nextel is targeting for its digital mobile network
service;
. 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 any issues
relating to, Nextel's digital mobile network performance;
. the continued successful performance of the technology being deployed in
Nextel's various market areas;
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. the ability to achieve and maintain market penetration and average
subscriber revenue levels sufficient to provide financial viability to
Nextel's digital mobile network business;
. 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, increased system usage
rates and growth in levels of accounts receivables being generated by
the digital mobile network customer base;
. access to sufficient debt or equity capital to meet Nextel's operating
and financing needs;
. 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 personal communication services;
. the ability to successfully develop or obtain from third parties, and
implement, Year 2000 readiness solutions in systems that are critical to
Nextel's business operations;
. future legislation or regulatory actions relating to specialized mobile
radio services, other wireless communications services or
telecommunications generally; and
. other risks and uncertainties described from time to time in Nextel's
reports and, with specific reference to risk factors relating to
international operations, in Nextel International, Inc.'s reports, filed
with the Securities and Exchange Commission, including the Annual
Reports on Form 10-K for the year ended December 31, 1998 and the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999, of Nextel and Nextel International, Inc.
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III. USE OF PROCEEDS
All sales of the convertible notes or the common stock issuable upon
conversion of the convertible notes will be by or for the account of the
selling stockholders listed on page 20 of this prospectus. Nextel will not
receive any cash proceeds from these sales of the convertible notes or the
common stock issuable upon conversion of the convertible notes.
IV. SELLING SECURITY HOLDERS
All of the convertible notes and any shares of common stock issued upon
conversion of the convertible notes are being offered by the selling security
holders listed in the table below. Only those shares of common stock issued
upon conversion of the convertible notes may be offered by the selling security
holders. Nextel issued the convertible notes to the selling security holders in
a private placement transaction exempt from registration under the Securities
Act of 1933.
No offer or sale under this prospectus may be made by a holder of the
convertible notes or shares of common stock issued upon conversion of the
convertible notes unless that holder is listed in the table below or until that
holder has notified Nextel and a supplement to this prospectus has been filed
or an amendment to the registration statement has become effective. Nextel will
supplement or amend this prospectus to include additional selling security
holders upon request and upon provision of all required information to Nextel.
The selling security holders may offer and sell, from time to time, any or
all of their convertible notes or common stock issued upon conversion of the
convertible notes. Because the selling security holders may offer all or only
some portion of the convertible notes and shares of common stock listed in the
table, no estimate can be given as to the amount or percentage of these
convertible notes and shares of common stock that will be held by the selling
security holders upon termination of the offering.
The following table lists:
. the name of each selling security holder.
. the amount of each type of security beneficially owned by that holder
before the offering; and
. the amount of securities being offered for sale by that selling security
holder.
Nextel obtained the information in the table from the identified selling
security holder. Unless otherwise disclosed in the footnotes to the table, no
selling security holder has indicated that it has held any position, office or
other material relationship with Nextel or its affiliates during the past three
years.
<TABLE>
<CAPTION>
Convertible Notes Common Stock
----------------------- ----------------
Principal
Principal Amount
Name of Amount of Number
Selling of Convertible of Number of
Security Convertible Notes Shares Shares
Holder Notes Owned Offered Owned Offered
- -------- ----------- ----------- ------ ---------
<S> <C> <C> <C> <C>
</TABLE>
On June 16, 1999, Nextel and the initial purchasers of the convertible notes
entered into a registration rights agreement. That agreement requires that
Nextel make this prospectus available to the selling security holders, subject
to the exceptions described below, until the earliest of:
. the expiration of the period referred to in Rule 144(k) of the
Securities Act of 1933 with respect to those securities held by persons
that are not affiliates of Nextel;
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<PAGE>
. the time when all of the securities have been sold under this
prospectus;
. the time when none of the securities remain outstanding; and
. June 16, 2001.
This time period is referred to as the effectiveness period.
Nextel may require the selling security holders to suspend the sales of the
securities offered by this prospectus upon the occurrence of any event that
makes any statement in this prospectus or the related registration statement
untrue in any material respect or that requires the changing of statements in
these documents in order to make statements in those documents not misleading.
Nextel will be permitted to suspend the use of this prospectus:
. in connection with pending corporate developments, public filings with
the SEC and similar events, for a period not to exceed 30 days in any
three month period or an aggregate of 90 days, whether or not
consecutive, in any twelve month period, or
. in connection with any pending or potential acquisitions, financings or
similar transactions, for a period not to exceed 60 days in any three
month period or 90 days, whether or not consecutive, in any twelve month
period.
In the event that:
. before the end of the effectiveness period, this prospectus is
unavailable for periods in excess of those set forth in the preceding
paragraph;
. Nextel fails to file amendments to the registration statement or
supplements to this prospectus necessary to permit sales of the
convertible notes or shares of common stock issued upon conversion of
the convertible notes within five business days of receipt of all
required documents from the prospective selling security holder; or
. Nextel fails to cause any required post-effective amendment to the
registration statement to be declared effective within 45 days of its
filing;
(each of these is deemed to be a registration default) then Nextel will pay the
holders of the securities entitled to be sold under this prospectus that are
affected by the registration default liquidated damages. For the period
beginning from and including the date of the registration default to but
excluding the date on which the registration default is cured, these liquidated
damages will accrue:
. in respect of the convertible notes, at a rate per year equal to 0.5% of
the principal amount of the affected convertible notes; and
. in respect of each share of common stock issued upon conversion of the
convertible notes, at a rate per year equal to 0.5% of the product of
the number of shares of common stock affected by the registration
default multiplied by the then applicable conversion price.
Persons purchasing securities in this offering will not be entitled to
liquidated damages.
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<PAGE>
V. DESCRIPTION OF THE CONVERTIBLE NOTES
Nextel issued the convertible notes under an indenture dated as of June 16,
1999, between Nextel Communications, Inc. and Harris Trust and Savings Bank, as
trustee. You may request a copy of the form of the indenture from the trustee.
Nextel has summarized portions of the indenture below. The summary is not
complete. You should read the indenture because it defines your rights as a
holder of the convertible notes. In this section, "Nextel" refers only to
Nextel Communications, Inc. and its successors under the indenture, and not to
any of its subsidiaries.
A.General
The convertible notes are unsecured general obligations of Nextel and will
be convertible into common stock of Nextel as described under "--C. Conversion
of the Convertible Notes." The convertible notes are limited to $600,000,000
aggregate principal amount and will mature on July 1, 2007 unless earlier
converted, redeemed at the option of Nextel or repurchased at the option of the
holder upon a Fundamental Change, as defined below.
The indenture does not contain any financial covenants or restrictions on
the payment of dividends, the incurrence of indebtedness, or the issuance or
repurchase of securities by Nextel. The indenture contains no covenants or
other provisions to afford protection to holders of the convertible notes in
the event of a highly leveraged transaction or a change in control of Nextel,
except to the extent described below under "--E. Repurchase at the Option of
the Holder."
The convertible notes will bear interest at the annual rate of 4 3/4% from
June 16, 1999, or from the most recent payment date to which interest has been
paid or duly provided for, payable semi-annually in arrears on January 1 and
July 1, beginning on January 1, 2000, to holders of record at the close of
business on the preceding December 15 and June 15, respectively, except:
. that the interest payable upon redemption or repurchase, unless the date
of redemption or repurchase is an interest payment date, will be payable
to the person to whom principal is payable; and
. in the case of any convertible note, or portion of any convertible note,
that is converted into common stock of Nextel during the period from,
but excluding, a record date for any interest payment date to, but
excluding, that interest payment date either:
. if the convertible note, or portion of the convertible note, has
been called for redemption on a redemption date that occurs during
that period, or is to be repurchased in connection with a
Fundamental Change on a Repurchase Date, as defined below, that
occurs during that period, Nextel will not be required to pay
interest on that interest payment date in respect of any convertible
note, or portion of any convertible note, that is so redeemed or
repurchased; or
. if otherwise, any convertible note or portion of any convertible
note that is not called for redemption is submitted for conversion
during that period must be accompanied by funds equal to the
interest payable on that interest payment date on the principal
amount so converted.
See "--C. Conversion of the Convertible Notes."
Interest will be payable at the office maintained by Nextel for these
purposes in the Borough of Manhattan, the City of New York, which is presently
an office or agency of the trustee and may, at Nextel's option, be paid either:
. by check mailed to the address of the person entitled to the interest as
it appears in the convertible note register, provided that a holder of
convertible notes with an aggregate principal amount in excess of $10.0
million will be paid by wire transfer in immediately available funds if
the holder files a written election with the trustee on or before the
relevant record date; or
22
<PAGE>
. by transfer to an account maintained by that person located in the U.S.;
provided, however, that payments to the Depository Trust Company, New
York, New York ("DTC") will be made by wire transfer of immediately
available funds to the account of DTC or its nominee.
Interest will be computed on the basis of a 360-day year composed of twelve
30-day months.
B.Form, Denomination and Registration
Nextel issued the convertible notes in fully registered form, without
coupons, in denominations of $1,000 principal amount and integral multiples of
$1,000.
Global Note, Book-Entry Form. The convertible notes that were sold to
"qualified institutional buyers," or QIBs, as defined in Rule 144A under the
Securities Act of 1933 are evidenced by one or more global notes, which were
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.
as DTC's nominee. Except as set forth below, a global note may be transferred,
in whole or in part, only to another nominee of DTC or to a successor of DTC or
its nominee.
QIBs that are participants in DTC may hold their interests in a global note
directly through DTC. Transfers between participants will be effected in the
ordinary way in accordance with DTC rules and will be settled in clearing house
funds. The laws of some states require that specified persons take physical
delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interests in the global note to those persons may be
limited.
QIBs who are not participants may beneficially own interests in a global
note held by DTC only through participants, or specified banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. So
long as Cede, as the nominee of DTC, is the registered owner of a global note,
Cede for all purposes will be considered the sole holder of the global note.
Except as provided below, owners of beneficial interests in a global note will
not be entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of certificates in
definitive registered form, and will not be considered the holders thereof.
Payment of interest on and the redemption or repurchase price of a global
note will be made to Cede, the nominee for DTC as the registered owner of the
global note, by wire transfer of immediately available funds on each interest
payment date or the redemption or repurchase date, as the case may be. Neither
Nextel, the trustee nor any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a global note or for maintaining,
supervising or reviewing any records relating to those beneficial ownership
interests.
Nextel has been informed by DTC that, with respect to any payment of
interest on, or the redemption price or repurchase price of, a global note,
DTC's practice is to credit participants' accounts on the relevant interest,
repurchase or redemption payment date with payments in amounts proportionate to
their respective beneficial interests in the principal amount represented by a
global note as shown on the records of DTC, unless DTC has reason to believe
that it will not receive payment on that payment date. Payments by participants
to owners of beneficial interests in the principal amount represented by a
global note held through that participant will be the responsibility of that
participant, as is now the case with securities held for the accounts of
customers registered in "street name."
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and specified banks, the ability of a person
having a beneficial interest in the principal amount represented by the global
note to pledge that beneficial interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of that
beneficial interest, may be affected by the lack of a physical certificate
evidencing that beneficial interest.
23
<PAGE>
Neither Nextel nor the trustee, nor any registrar, paying agent nor
conversion agent under the indenture, will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised Nextel that DTC will take any action permitted to
be taken by a holder of convertible notes, including, without limitation, the
presentation of convertible notes for exchange as described below, only at the
direction of one or more participants to whose account with DTC interests in
the global note are credited, and only in respect of the principal amount of
the convertible notes represented by the global note as to which the
participants have given direction.
DTC has advised Nextel that DTC is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered under to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC was created to hold securities for
its participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, which eliminates the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include other organizations
such as the initial purchasers. Some of these participants or their
representatives, together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with, a
participant, either directly or indirectly.
Although DTC has agreed to the above procedures in order to facilitate
transfers of interests in a global note among participants, it is under no
obligation to perform or continue to perform these procedures, and these
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
Nextel within 90 days, Nextel will cause the convertible notes to be issued in
definitive registered form in exchange for global notes.
Certificated Notes. The convertible notes that were sold to investors that
are institutional "accredited investors," as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act of 1933, were issued in definitive
registered form. In addition, QIBs may request that certificated notes be
issued in exchange for convertible notes represented by a global note.
Furthermore, certificated convertible notes may be issued in exchange for
convertible notes represented by a global note if no successor depositary is
appointed by Nextel within 90 days.
C.Conversion of the Convertible Notes
Any holder of convertible notes may, at any time until the close of business
on the business day before the date of repurchase, redemption or final maturity
of the convertible notes, as appropriate, convert the principal amount of any
convertible notes or portions of convertible notes, in denominations of $1,000
or integral multiples of $1,000, into common stock of Nextel, at a conversion
price of $47.308 per share of common stock, subject to adjustment as described
below. Except as described below, no payment or other adjustment will be made
upon conversion of any convertible notes for interest accrued on the
convertible notes or for dividends on any common stock issued upon conversion
of the convertible notes. If any convertible notes not called for redemption
are converted between a record date and the next interest payment date, those
convertible notes must be accompanied by funds equal to the interest payable on
the next interest payment date on the principal amount so converted. Nextel is
not required to issue fractional shares of common stock upon conversion of the
convertible notes and, instead, will at its election either pay a cash
adjustment based on the market price of common stock on the last business day
before the date of conversion or round the number of shares of common stock
issued upon conversion of the convertible notes up to the nearest whole share.
In the case of convertible notes called for redemption or tendered for
repurchase, conversion rights will expire at the close of business on the
business day preceding the day fixed for redemption or repurchase, unless
Nextel defaults in the payment of the redemption or repurchase price. A
convertible note that the holder has elected to be repurchased upon a
Fundamental Change may be converted only if the holder withdraws its election
to have its convertible notes repurchased in accordance with the terms of the
indenture before the close of business on the business day before the
repurchase date.
24
<PAGE>
The initial conversion price of $47.308 per share of common stock is subject
to adjustment upon specified events, including:
(1) the issuance of common stock of Nextel as a dividend or distribution
on the common stock;
(2) the issuance to all holders of common stock of rights or warrants to
purchase or subscribe for common stock at less than the Current Market
Price, as defined in the indenture;
(3) specified subdivisions and combinations of the common stock;
(4) the distribution to all holders of common stock of capital stock,
other than common stock, or evidences of indebtedness of Nextel or of
assets, including securities, but excluding those rights, warrants,
dividends and distributions referred to above or paid in cash;
(5) distributions with respect to shares of common stock consisting of
cash, excluding any quarterly cash dividend on the common stock to the
extent that the aggregate cash dividend per share of common stock in any
quarter does not exceed the greater of:
(x) the amount per share of common stock of the next preceding
quarterly cash dividend on the common stock to the extent that the
preceding quarterly dividend did not require an adjustment of the
conversion price under this clause (5), as adjusted to reflect
subdivisions or combinations of the common stock, and
(y) 3.75% of the average of the last reported sale price of the
common stock during the ten trading days immediately before the date of
declaration of that dividend,
and excluding any dividend or distribution with respect to the common
stock in connection with the liquidation, dissolution or winding up of
Nextel. If an adjustment is required to be made as set forth in this
clause (5) as a result of a distribution that is a quarterly dividend,
that adjustment would be based on the amount by which the distribution
exceeds the amount of the quarterly cash dividend permitted to be
excluded under this clause (5). If an adjustment is required to be made
as set forth in this clause (5) as a result of a distribution that is
not a quarterly dividend, that adjustment would be based on the full
amount of the distribution;
(6) payment in respect of a tender offer or exchange offer by Nextel or
any subsidiary of Nextel for the common stock, other than any tender offer
or exchange offer that is made and consummated for any and all shares of
common stock, to the extent that the cash and value of any other
consideration included in the payment per share of common stock exceeds the
Current Market Price per share of common stock on the trading day next
succeeding the last date on which tenders or exchanges may be made pursuant
to the tender or exchange offer; and
(7) payment in respect of a tender offer or exchange offer for the
common stock, other than any tender offer or exchange offer that is made
and consummated for any and all shares of common stock, by a person other
than Nextel or any subsidiary of Nextel in which, as of the closing date of
the offer, the board of directors is not recommending rejection of the
offer. The adjustment referred to in this clause (7) will only be made if:
(x) the tender offer or exchange offer is for an amount that
increases the offeror's ownership of common stock to more than 25% of
the total shares of common stock outstanding; provided, that in the
case of any offeror whose ownership percentage of the common stock is
15% or more before the commencement of the tender offer or exchange
offer, this requirement would not be met unless the tender offer or
exchange offer would increase the offeror's ownership of common stock
by more than 10% of the total shares of common stock outstanding;
(y) the cash and value of any other consideration included in the
payment per share of common stock exceeds the Current Market Price per
share of common stock on the business day next succeeding the last date
on which tenders or exchanges may be made pursuant to the tender or
exchange offer; and
25
<PAGE>
(z) the average of the daily Closing Price, as defined in the
indenture, per share of the common stock for the 10 consecutive Trading
Days, as defined in the indenture, ending ten Trading Days before the
public announcement of the tender offer or exchange offer (the "Pre-
Offer Reference Price") exceeds 105% of the average of the daily
Closing Price per share of the common stock for the ten Trading Days
commencing ten Trading Days following the last day tenders or exchanges
may be made in connection with the tender offer or exchange offer (the
"Post-Offer Reference Price").
The adjustment referred to in this clause (7) will generally not be made,
however, if, as of the closing of the offer, the offering documents with
respect to that offer disclose a plan or an intention to cause Nextel to
engage in a consolidation or merger of Nextel or a sale of all or
substantially all of Nextel's assets. The conversion price will be adjusted
under this clause (7) based on the difference between the Pre-Offer
Reference Price and the Post-Offer Reference Price.
In the case of:
. any reclassification of the common stock, or
. a consolidation, merger or combination involving Nextel or a sale or
conveyance to another person of the property and assets of Nextel as an
entirety or substantially as an entirety, in each case as a result of
which holders of common stock will be entitled to receive stock, other
securities, other property or assets, including cash, with respect to or
in exchange for all shares of common stock,
then the holders of the convertible notes then outstanding will generally be
entitled after these events to convert their convertible notes into the kind
and amount of shares of stock, other securities or other property or assets,
including cash, that they would have owned or been entitled to receive upon the
reclassification, consolidation, merger, combination, sale or conveyance if the
convertible notes been converted into common stock immediately before that
reclassification, consolidation, merger, combination, sale or conveyance,
assuming that a holder of convertible notes would not have exercised any rights
of election as to the stock, other securities or other property or assets,
including cash, receivable in connection with that transaction.
If Nextel makes a taxable distribution to holders of common stock or in
specified other circumstances requiring an adjustment to the conversion price,
the holders of convertible notes may, in specified circumstances, be deemed to
have received a distribution subject to U.S. income tax as a dividend; in
specified other circumstances, the absence of such an adjustment may result in
a taxable dividend to the holders of common stock. See "VIII. United States
Federal Income Tax Consequences."
Nextel may, from time to time and to the extent permitted by law, reduce the
conversion price by any amount for any period of at least 20 days, in which
case Nextel will give at least 15 days' notice of the reduction, if Nextel's
board of directors has made a determination that the reduction would be in
Nextel's best interests, which determination will be conclusive. Nextel may, at
its option, make any reductions in the conversion price, in addition to those
set forth above, as Nextel's board of directors deems advisable to avoid or
diminish any income tax to holders of common stock resulting from any dividend
or distribution of stock, or rights to acquire stock, or from any event treated
as dividends or distributions of, or rights to acquire, stock for income tax
purposes. See "VIII. United States Federal Income Tax Consequences."
No adjustment in the conversion price will be required unless that
adjustment would require a change of at least 1% in the conversion price then
in effect; provided that any adjustment that would otherwise be required to be
made will be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the conversion price will not be adjusted
for the issuance of common stock or any securities convertible into or
exchangeable for common stock or carrying the right to purchase any of the
foregoing.
D.Optional Redemption by Nextel
The convertible notes are not entitled to any sinking fund. At any time on
or after July 6, 2002, Nextel may redeem the convertible notes on at least 30
days' notice as a whole or, from time to time, in part at the
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<PAGE>
following prices, expressed as a percentage of the principal amount, together
with accrued interest to, but excluding, the date fixed for redemption:
. if redeemed during the period beginning July 6, 2002 and ending on June
30, 2003, at a redemption price of 102.714%;
. if redeemed during the 12-month period beginning July 1:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003.......................................................... 102.036%
2004.......................................................... 101.357
2005.......................................................... 100.679
</TABLE>
. if redeemed at or after July 1, 2006, at a redemption price of 100%,
provided that any accrued interest becoming due on the date fixed for
redemption will be payable to the holders of record on the relevant
record date of the convertible notes being redeemed.
If less than all of the outstanding convertible notes are to be redeemed,
the trustee will select the convertible notes to be redeemed in principal
amounts of $1,000 or integral multiples of $1,000 by lot or by another method
the trustee considers fair and appropriate. If a portion of a holder's
convertible notes is selected for partial redemption and that holder converts a
portion of that holder's convertible notes, the converted portion will be
deemed to be of the portion selected for redemption.
Nextel may not give notice of any redemption of convertible notes if a
default in payment of interest or premium on the convertible notes or any other
Event of Default, as defined below, has occurred and is continuing.
E.Repurchase at the Option of the Holder
If a Fundamental Change, as defined below, occurs at any time before the
maturity or redemption of the convertible notes, each holder of convertible
notes will have the right, at the holder's option, to require Nextel to
repurchase any or all of that holder's convertible notes on the date (the
"Repurchase Date") that is 30 days after the date of Nextel's notice of the
Fundamental Change. The convertible notes will be repurchased in multiples of
$1,000 principal amount.
Nextel will repurchase these convertible notes at a price equal to 100% of
the principal amount to be repurchased plus accrued interest on the repurchased
convertible notes to, but excluding, the Repurchase Date; provided that, if the
Repurchase Date is an interest payment date, then the interest payable on that
date will be paid to the holder of record of the convertible notes on the
relevant record date.
Nextel will mail to all holders of record of the convertible notes a notice
of the occurrence of a Fundamental Change and of the repurchase right arising
as a result of the Fundamental Change on or before the tenth day after the
occurrence of the Fundamental Change. Nextel is also required to deliver the
trustee a copy of that notice. To exercise the repurchase right, a holder of
convertible notes must deliver, on or before the 30th day after the date of
Nextel's notice of a Fundamental Change (the "Fundamental Change Expiration
Time"), written notice of the holder's exercise of the repurchase right,
together with the convertible notes to be so repurchased, duly endorsed for
transfer, to Nextel, or an agent designated by Nextel for this purpose. Payment
for convertible notes surrendered for repurchase and not withdrawn before the
Fundamental Change Expiration Time will be made promptly following the
Repurchase Date.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all Nextel common stock is
exchanged for, converted into, acquired for or constitutes solely the right to
receive consideration, whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise, but does not include a
27
<PAGE>
transaction or event in which at least 90% of that consideration is common
stock listed or which will be listed, upon consummation of or immediately
following the transaction or event, on a U.S. national securities exchange or
approved for quotation on the Nasdaq National Market or any similar U.S. system
of automated dissemination of quotations of securities prices.
Nextel will comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Securities Exchange Act of 1934 to the extent then
applicable in connection with the repurchase rights of the holders of
convertible notes in the event of a Fundamental Change.
The repurchase rights of the holders of convertible notes could discourage a
potential acquiror of Nextel. The Fundamental Change repurchase feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of Nextel by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by management to adopt a series of antitakeover
provisions. The term Fundamental Change is limited to specified transactions
and may not include other events that might adversely affect the financial
condition of Nextel, nor would the requirement that Nextel offer to repurchase
the convertible notes upon a Fundamental Change necessarily afford the holders
of the convertible notes protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving Nextel.
If a Fundamental Change were to occur, Nextel cannot assure you that it
would have sufficient funds to pay the repurchase price for all the convertible
notes tendered by the holders. Nextel's existing credit agreement contains, and
any future credit agreements or other agreements relating to other indebtedness
to which Nextel becomes a party may contain, restrictions or prohibitions on
Nextel's ability to repurchase convertible notes or may provide that the
occurrence of a Fundamental Change constitutes an event of default under, or
otherwise requires payment of amounts borrowed under, those agreements. See
"II. Risk Factors--B. Risk Factors Relating to the Convertible Notes--3.
Nextel's High Level of Indebtedness Could Adversely Affect Its Ability to Meet
Its Obligations, Including the Repayment of the Convertible Notes." If a
Fundamental Change occurs at a time when Nextel is prohibited from repurchasing
the convertible notes, Nextel could seek the consent of its then existing
lenders to the repurchase of the convertible notes or could attempt to
refinance the borrowings that contain the prohibition. If Nextel does not
obtain such a consent or repay the borrowings, Nextel would remain prohibited
from repurchasing the convertible notes. In that case, Nextel's failure to
repurchase tendered convertible notes would constitute an Event of Default
under the indenture and may constitute a default under the terms of other
indebtedness that Nextel may enter into from time to time.
F.Events of Default; Notice and Waiver
An "Event of Default" is defined in the indenture as being:
. a default in payment of the principal of, or any premium on, the
convertible notes upon redemption, repurchase or otherwise;
. a default for 30 days in payment of any installment of interest,
including any liquidated damages, on the convertible notes;
. a default by Nextel for 60 days after notice in the observance or
performance of any other covenants in the indenture; or
. specified events involving bankruptcy, insolvency or reorganization of
Nextel or any of its significant subsidiaries, as defined in the
indenture.
The indenture provides that the trustee may withhold notice to the holders
of the convertible notes of any default if the trustee considers it to be in
the interest of the holders of the convertible notes to do so, except for
defaults in payment of principal or any premium or interest, including any
liquidated damages, with respect to the convertible notes.
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<PAGE>
The indenture provides that if an Event of Default has occurred and is
continuing, the trustee or the holders of not less than 25% in principal amount
of the convertible notes then outstanding may declare the principal of, any
premium, and accrued interest, including any liquidated damages, on the
convertible notes to be due and payable immediately. In the case of specified
events of bankruptcy or insolvency of Nextel, the principal of, any premium and
accrued interest, including any liquidated damages, on the convertible notes
will automatically become and be immediately due and payable. However, if
Nextel cures all defaults, except the nonpayment of principal of, any premium
and interest, including any liquidated damages, on any of the convertible notes
that have become due by acceleration, and specified other conditions are met,
with specified exceptions, the declaration may be canceled and past defaults
may be waived by the holders of a majority of the principal amount of the
convertible notes then outstanding.
The indenture provides that any payment of principal, any premium or
interest, including any liquidated damages, that is not made when due will
accrue interest, to the extent legally permissible, at the annual rate set
forth on the cover page of this prospectus from the date on which the payment
was required under the terms of the indenture until the date of payment.
The holders of a majority in principal amount of the convertible notes then
outstanding will have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the trustee, subject to
limitations specified in the indenture.
The indenture provides that no holder of the convertible notes may pursue
any remedy under the indenture, except for a default in the payment of
principal, any premium, including upon redemption, or interest, including any
liquidated damages, on the convertible notes, unless that holder has previously
given to the trustee written notice of a continuing Event of Default, and the
holders of at least 25% in principal amount of the outstanding convertible
notes have made a written request and offered reasonable indemnity to the
trustee to pursue the remedy, and the trustee has not received from the holders
of a majority in principal amount of the outstanding convertible notes a
direction inconsistent with the request and failed to comply with the request
within 60 days after receipt of the request.
G.Modification of the Indenture
The indenture contains provisions permitting Nextel and the trustee, with
the consent of the holders of a majority in principal amount of the convertible
notes at the time outstanding, to modify the indenture or any supplemental
indenture or the rights of the holders of the convertible notes, except that
these modifications may not:
. extend the fixed maturity of any convertible note;
. reduce the rate or extend the time for payment of interest on the
convertible notes;
. reduce the principal amount of the convertible notes, or premium, if
any, on the convertible notes;
. reduce any amount payable upon redemption of the convertible notes;
. after the occurrence of a Fundamental Change, change the obligation of
Nextel to repurchase any convertible note because of that Fundamental
Change in a manner adverse to the holders of the convertible notes;
. impair the right of a holder to institute suit for the payment of any
convertible note;
. change the currency in which the convertible notes are payable; or
. impair the right to convert the convertible notes into common stock
subject to the terms set forth in the indenture;
without the consent of each holder of a convertible note so affected. Also,
Nextel may not reduce the percentage of convertible notes whose holders are
required to consent to any modifications of the indenture or
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any supplemental indenture without the consent of the holders of all of the
convertible notes then outstanding. The indenture provides that Nextel will not
be obligated to repurchase any convertible notes upon the occurrence of a
Fundamental Change if, before the occurrence of that Fundamental Change, the
holders of at least a majority in principal amount of the outstanding
convertible notes have waived Nextel's obligation to repurchase any convertible
notes as a result of that Fundamental Change. The indenture also provides for
specified modifications of its terms without the consent of the holders of the
convertible notes.
H.Information Concerning the Trustee
Nextel has appointed Harris Trust and Savings Bank as trustee under the
indenture and as paying agent, conversion agent, registrar and custodian with
regard to the convertible notes. Harris Trust and Savings Bank acts as trustee
for other outstanding notes of Nextel.
I.Notices
Nextel will give notice concerning any optional redemption, repurchase or
Fundamental Change by release made to Reuters Economic Services and Bloomberg
Business News.
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VI. DESCRIPTION OF CAPITAL STOCK
The following summary is not complete and is subject to, and qualified in
its entirety by, Nextel's certificate of incorporation and by-laws.
A.General
Under its certificate of incorporation, Nextel has the authority to issue
613,883,948 shares of capital stock, which are currently divided into nine
classes or series as follows:
. 515,000,000 shares of class A common stock, par value $0.001 per share
(referred to in this prospectus as the "common stock");
. 35,000,000 shares of class B nonvoting common stock, par value $0.001
per share (referred to in this prospectus as the "nonvoting common
stock");
. 26,941,933 shares of class A convertible redeemable preferred stock,
stated value $36.75 per share (referred to in this prospectus as the
"class A preferred stock");
. 82 shares of class B convertible preferred stock, stated value $1.00 per
share; (referred to in this prospectus as the "class B preferred
stock");
. 26,941,933 shares of class C convertible redeemable preferred stock,
stated value $36.75 per share; (referred to in this prospectus as the
"class C preferred stock");
. 1,600,000 shares of series D preferred stock;
. 2,200,000 shares of series E preferred stock;
. 800,000 shares of zero coupon convertible preferred stock; and
. 5,400,000 shares of undesignated preferred stock.
Equiserve LLP acts as transfer agent and registrar for the common stock.
B.Common Stock
1. Voting
Except as required by law with respect to shares of each of class A
preferred stock, class B preferred stock and class C preferred stock, and
except with respect to matters as to which shares of a class or series of
preferred stock vote separately as a class, the holders of common stock are
entitled to one vote per share on all matters to be voted on by the
stockholders of Nextel. The holders of the nonvoting common stock have no right
to vote on any matters to be voted on by the stockholders of Nextel, except as
follows and as otherwise required by law. The holders of the nonvoting common
stock do have the right to vote as a separate class, with each share having one
vote, on:
. any merger, consolidation, reorganization or reclassification of Nextel
or its shares of capital stock;
. any amendment to the certificate of incorporation; or
. any liquidation, dissolution or winding up of Nextel;
(each of these events being a "Class B Fundamental Change") in which shares of
the nonvoting common stock would be treated differently than shares of the
common stock, other than a Class B Fundamental Change in which the only
difference in the treatment is that the holders of the common stock would be
entitled to receive equity securities with full voting rights and the holders
of the nonvoting common stock would be entitled to receive equity securities
which have voting rights substantially identical to the voting rights of the
nonvoting
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common stock and are convertible in connection with any Voting Conversion
Event, as defined below, on a share for share basis, into the voting securities
to which the holders of the common stock are entitled. Nextel's certificate of
incorporation does not provide for cumulative voting in the election of
directors.
2.Dividends
Subject to the declaration and payment of dividends upon the preferred stock
of Nextel at the time outstanding, to the extent of any preference to which
that preferred stock is entitled, and after the provision for any sinking or
purchase fund or funds for any series of the preferred stock has been complied
with, the Nextel board of directors may declare and pay dividends on the common
stock and the nonvoting common stock, payable in cash or other consideration,
out of funds legally available. If dividends are declared on the common stock
that are payable in shares of common stock, then dividends payable at the same
rate in shares of nonvoting common stock must be declared on any outstanding
shares of nonvoting common stock.
Nextel has not paid any dividends on its common stock, and does not plan to
pay any dividends on its common stock for the foreseeable future.
3.Liquidation, Subdivision or Combination
In the event of any liquidation, dissolution or winding up of Nextel or upon
the distribution of the assets of Nextel, all assets and funds remaining after
payment in full of the debts and liabilities of Nextel, and after the payment
to the holders of the then outstanding preferred stock of the full preferential
amounts to which they were entitled, would be divided and distributed among the
holders of the common stock and nonvoting common stock ratably. In no event
will either common stock or nonvoting common stock be split, divided or
combined unless the other is proportionately split, divided or combined.
4.Convertibility of Nonvoting Common Stock Into Common Stock
Upon the actual or expected occurrence of any Voting Conversion Event, as
defined below, each share of nonvoting common stock which is being or has been
distributed, disposed of or sold, or is expected to be distributed, disposed of
or sold, in connection with that Voting Conversion Event will be convertible at
the option of the holder into one fully paid and nonassessable share of common
stock. If any shares of nonvoting common stock are converted into shares of
common stock in connection with a Voting Conversion Event, however, and any of
those shares of common stock are not actually distributed, disposed of or sold
according to the Voting Conversion Event, those shares of common stock that are
not distributed, disposed of or sold will be promptly converted back into the
same number of shares of nonvoting common stock.
A "Voting Conversion Event" means:
. any public offering or public sale of securities of Nextel including a
public offering registered under the Securities Act of 1933 and a public
sale pursuant to Rule 144 of the Securities and Exchange Commission or
any similar rule then in force;
. any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that sale,
that person or group of persons would in the aggregate own or control
securities that possess in the aggregate the ordinary voting power to
elect a majority of Nextel's board of directors, provided that the sale
has been approved by Nextel's board of directors or any authorized
committee;
. any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that sale,
that person or group of persons in the aggregate would own or control
securities of Nextel, excluding any nonvoting common stock being
converted and disposed of in connection with the Voting Conversion
Event, that possess in the aggregate the ordinary voting power to elect
a majority of Nextel's board of directors;
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. any sale of securities to a person or group of persons, within the
meaning of the Securities Exchange Act of 1934, if, after that sale,
that person or group of persons would not, in the aggregate, own,
control or have the right to acquire more than two percent of the
outstanding securities of any class of voting securities of Nextel; and
. any distribution, disposition or sale of any securities of Nextel to a
person or group of persons, within the meaning of the Securities
Exchange Act of 1934, in connection with a merger, consolidation or
similar transaction if, after that transaction, that person or group of
persons will own or control securities that constitute in the aggregate
the ordinary voting power to elect a majority of the surviving
corporation's directors, provided that the transaction has been approved
by Nextel's board of directors or any authorized committee.
C.Preferred Stock
Under the terms of the Securities Purchase Agreement dated as of April 4,
1995, as amended, among Nextel, Digital Radio L.L.C. and Craig O. McCaw (the
"McCaw Securities Purchase Agreement"), Nextel issued to Digital Radio L.L.C.
about 8.2 million shares of class A preferred stock (of which about 7.9 million
were outstanding on June 30, 1999), each with a stated value of $36.75 per
share, and 82 shares of class B preferred stock. These shares of class A
preferred stock are convertible, in specified circumstances, into an equal
number of shares of class C preferred stock. The currently outstanding shares
of class A preferred stock and any shares of class C preferred stock issued
upon conversion are convertible into about 23.7 million shares of common stock
in the aggregate, and the class B preferred stock is convertible into 82 shares
of common stock. In addition, Nextel has issued shares of the series D
preferred stock, the series E preferred stock and the zero coupon convertible
preferred stock. Some of the significant terms of each class and series of
preferred stock are summarized below.
1.Class A Preferred Stock
The class A preferred stock is the primary mechanism for providing Digital
Radio L.L.C. with the economic benefits and corporate governance rights
contemplated by the McCaw Securities Purchase Agreement. Holders of class A
preferred stock, voting separately as a class, are entitled to elect three
members of the board of directors or, if greater than three, the number of
directors, rounded up to the nearest whole number, equal to 25% of the entire
board of directors (the "Class A Directors"), subject to the termination of
these rights if Digital Radio L.L.C.'s equity interest in Nextel falls below
specified levels. For so long as the operations committee of Nextel's board of
directors is in existence, Digital Radio L.L.C. is entitled to have a majority
of the members of the operations committee represented by Class A Directors or
directors designated by Digital Radio L.L.C. under the terms of the class B
preferred stock or the McCaw Securities Purchase Agreement. With respect to
matters other than the election of directors, shares of class A preferred stock
vote together as a class with shares of common stock and each share of class A
preferred stock is entitled to a number of votes equal to the number of shares
of common stock into which that share is convertible.
The operations committee consists of five members, three of whom are
entitled to be selected from among Digital Radio L.L.C.'s representatives on
the board of directors, as described above. The operations committee has the
authority to formulate key aspects of Nextel's business strategy, including
decisions relating to the technology used by Nextel, subject to existing
equipment purchase agreements; acquisitions; the creation and approval of
operating and capital budgets and marketing and strategic plans; approval of
financing plans; endorsement of nominees to the board of directors; and
nomination and oversight of specified executive officers. The board of
directors, by a majority vote, may override actions taken or proposed by the
operations committee, although doing so would give rise to a $25.0 million
liquidated damages payment to Digital Radio L.L.C.; the commencement of accrual
of a 12% dividend payable on the stated value of all outstanding shares of
class A preferred stock, with an aggregate stated value of about $290.5
million; and the immediate vesting of the options to purchase 1,000,000 shares
granted to an affiliate of Digital Radio L.L.C. However, the board of
directors, by a defined super-majority vote, retains the power to override
actions taken or proposed by the
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operations committee without triggering these consequences. In addition, the
board of directors also may act to terminate the operations committee, although
this action by the board of directors would, in specified circumstances, result
in the obligation to make the $25.0 million liquidated damages payment and
result in the commencement of the 12% dividend accrual and the accelerated
vesting of the related options. The McCaw Securities Purchase Agreement, the
certificate of incorporation, and the Nextel by-laws also delineate a number of
circumstances, chiefly involving or resulting from specified events with
respect to Digital Radio L.L.C. or Mr. McCaw, in which the operations committee
could be terminated but the liquidated damages payment, dividend accrual and
vesting of options would not be required. Except for the accrual of the 12%
dividend in the circumstances described above, shares of class A preferred
stock are entitled to dividends only to the extent declared or paid with
respect to common stock, in amounts equal to the amounts that would be received
had the class A preferred stock been converted into common stock. Upon
liquidation, dissolution or winding up of Nextel, the holders of class A
preferred stock are entitled to receive a liquidation preference equal to the
stated value of the class A preferred stock plus any accrued but unpaid
dividends.
Each share of class A preferred stock is convertible at the election of the
holder into three shares of common stock, subject to specified adjustments.
Upon the occurrence of specified events, the shares of class A preferred stock
are automatically converted into shares of common stock. In addition, shares of
class A preferred stock are automatically converted into shares of class C
preferred stock on a one-for-one basis upon the occurrence of specified events,
including the reduction of Digital Radio L.L.C.'s ownership interest below
specified levels and foreclosure by a secured party upon shares of class A
preferred stock pledged to that secured party. Shares of class A preferred
stock are also redeemable at Nextel's option upon the occurrence of specified
events constituting a change in control, as defined in the terms of the
certificate of incorporation, at a redemption price equal to the stated value
of the class A preferred stock plus the amount of any accrued or declared but
unpaid dividends on the class A preferred stock.
2. Class B Preferred Stock
The purpose of the class B preferred stock is to provide a protection for
Digital Radio L.L.C.'s right to proportionate representation on the board of
directors, to the extent not provided by Digital Radio L.L.C.'s ownership of
class A preferred stock, and to establish a mechanism for the payment of the
$25.0 million liquidated damages payment contemplated by the McCaw Securities
Purchase Agreement if the board of directors takes specified actions with
respect to the operations committee that give rise to this payment. Shares of
class B preferred stock are automatically converted on a one-for-one basis to
shares of common stock if Digital Radio L.L.C.'s equity interest in Nextel
falls below specified levels or if specified transfers of class B preferred
stock occur.
3. Class C Preferred Stock
The purpose of the class C preferred stock is to protect the economic
attributes of the class A preferred stock if specified events resulting in the
termination of the corporate governance rights associated with the class A
preferred stock occur. The terms of the class C preferred stock are
substantially the same as the terms of the class A preferred stock except that
holders of class C preferred stock have no special voting rights in the
election of directors, including the appointment of directors to the operations
committee, and are not entitled to the 12% dividend in the circumstances in
which shares of class A preferred stock would be entitled to that dividend.
4. Series D Preferred Stock
The series D preferred stock ranks equally with the series E preferred stock
and the zero coupon convertible preferred stock in all respects, and ranks
equally with the class A preferred stock, the class B preferred stock and the
class C preferred stock in all respects except two. First, the series D
preferred stock is junior with respect to accruals and payments of the special
12% dividends on the class A preferred stock discussed above. Second, the
series D preferred stock is junior with respect to the $25.0 million cash
payment
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on the class B preferred stock discussed above. The circumstances under which
these payments must be made are described above. Dividends on the series D
preferred stock are cumulative at 13% per year and are payable quarterly in
cash or, on or before July 15, 2002, at the sole option of Nextel, in
additional shares of series D preferred stock. The series D preferred stock is
mandatorily redeemable on July 15, 2009. It may be redeemed at specified prices
in whole or in part at Nextel's option after December 15, 2005 and, in
specified circumstances, after July 15, 2002. The series D preferred stock is
also exchangeable, in whole but not in part, at Nextel's option at any time
after December 15, 2005, and sooner in some circumstances, into subordinated
exchange debentures.
5.Series E Preferred Stock
The series E preferred stock ranks equally with the series D preferred stock
and the zero coupon convertible preferred stock in all respects, and ranks
equally with the class A preferred stock, the class B preferred stock and the
class C preferred stock in all respects except two. First, the series E
preferred stock is junior with respect to accruals and payments of the special
12% dividends on the class A preferred stock discussed above. Second, the
series E preferred stock is junior with respect to the $25.0 million cash
payment on the class B preferred stock discussed above. The circumstances under
which these payments must be made are described above. Dividends on the series
E preferred stock are cumulative at 11.125% per year and are payable quarterly
in cash or, on or before February 15, 2003, at the sole option of Nextel, in
additional shares of series E preferred stock. The series E preferred stock is
mandatorily redeemable on February 15, 2010. It may be redeemed at specified
prices in whole or in part at Nextel's option after December 15, 2005 and, in
specified circumstances, after February 15, 2003. The series E preferred stock
is also exchangeable, in whole but not in part, at Nextel's option at any time
after December 15, 2005, and sooner in some circumstances, into subordinated
exchange debentures.
6. Zero Coupon Convertible Preferred Stock Due 2013
The zero coupon convertible preferred stock ranks equally with the series D
preferred stock and the series E preferred stock in all respects, and ranks
equally with the class A preferred stock, the class B preferred stock, and the
class C preferred stock in all respects except two. First, the zero coupon
convertible preferred stock is junior with respect to accruals and payments of
the special 12% dividends on the class A preferred stock discussed above.
Second, the zero coupon convertible preferred stock is junior with respect to
the $25.0 million cash payment on the class B preferred stock discussed above.
The circumstances under which these payments must be made are described above.
The zero coupon convertible preferred stock had an initial liquidation
preference of $253.675 per share. No dividends are payable with respect to the
zero coupon convertible preferred stock; however, the liquidation preference
accretes from the issuance date at an annual rate of 9.25% compounded
quarterly. The zero coupon convertible preferred stock is convertible at the
option of the holders before redemption or maturity into common stock at a
conversion rate of 9.7441 shares of common stock per share of zero coupon
convertible preferred stock, subject to adjustment upon the occurrence of
specific events. The zero coupon convertible preferred stock is redeemable at
Nextel's option beginning December 23, 2005 and may be tendered by the holders
for acquisition by Nextel on December 23, 2005 and 2008. The zero coupon
convertible preferred stock is mandatorily redeemable on December 23, 2013 at
the fully accreted liquidation preference of $1,000 per share. Nextel may
elect, subject to the satisfaction of specific requirements, to pay any
redemption or tender price with common stock.
D. Relevant Provisions of the Certificate of Incorporation, the By-laws and
Delaware Law
The certificate of incorporation and the by-laws contain provisions that
could make more difficult the acquisition of Nextel by means of a tender offer,
a proxy contest or otherwise. These provisions are expected to discourage
specific types of coercive takeover practices and inadequate takeover bids and
to encourage persons seeking to acquire control of Nextel to first negotiate
with Nextel. Although these provisions may have the effect of delaying,
deferring or preventing a change in control of Nextel, Nextel believes that the
benefits of
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increased protection of Nextel's potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure
Nextel outweigh the disadvantages of discouraging these proposals because,
among other things, negotiation of such proposals could result in an
improvement of their terms. The description below is intended as a summary only
and is qualified in its entirety by reference to the certificate of
incorporation and the by-laws.
1.Board of Directors
The certificate of incorporation provides that the Nextel board of directors
is divided into three classes of directors, with each class having a number of
directors as nearly equal as possible and with the term of each class expiring
in a different year. The by-laws of Nextel provide that the Nextel board of
directors will consist of one or more members, and that the number of directors
will be determined by resolution of the Nextel board of directors or by the
stockholders at their annual meeting or a special meeting. Nextel is a party to
agreements with some of its stockholders that entitle specified stockholders to
name specified nominees to be elected to the Nextel board of directors; the
agreements might require Nextel to increase the size of the Nextel board of
directors. Additionally, the holders of class A preferred stock, voting
separately as a class, are entitled to elect a specified number of members of
the Nextel board of directors. Under the terms of the McCaw Securities Purchase
Agreement, Nextel cannot increase the size of the Nextel board of directors to
be greater than sixteen (16) members without the consent of Digital Radio
L.L.C. The Nextel board of directors currently consists of ten directors.
Subject to any rights of holders of preferred stock, a majority of the Nextel
board of directors then in office has the sole authority to fill any vacancies
on the Nextel board of directors. Under Delaware law, stockholders may remove
members of a classified board only for cause.
2. Stockholder Actions and Special Meetings
The certificate of incorporation provides that stockholder action can be
taken only at an annual or special meeting of stockholders and prohibits
stockholder action by written consent instead of a meeting. The by-laws provide
that, subject to the rights of holders of any series of preferred stock,
special meetings of stockholders may be called only by the president of Nextel,
at the request of a majority of the Nextel board of directors or at the request
of stockholders owning a majority of the entire capital stock of Nextel issued
and outstanding and entitled to vote.
3. Anti-Takeover Statute
Section 203 of the Delaware General Corporation Law ("DGCL") is applicable
to corporate takeovers in Delaware. Subject to specified exceptions listed in
this statute, Section 203 of the DGCL provides that a corporation may not
engage in any business combination with any "interested stockholder" for a
three-year period following the date that the stockholder becomes an interested
stockholder unless:
. prior to that date, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;
. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding specified shares; or
. on or subsequent to that date, the business combination is approved by
the board of directors of the corporation and by the affirmative vote of
at least 66 2/3% of the outstanding voting stock that is not owned by
the interested stockholder.
Except as specified in Section 203 of the DGCL, an interested stockholder is
defined to include any person that is:
. the owner of 15% or more of the outstanding voting stock of the
corporation,
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. an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time
within three years immediately prior to the relevant date, and
. the affiliates and associates of the above.
Under specific circumstances, Section 203 of the DGCL makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may, by adopting an amendment to the corporation's certificate of
incorporation or bylaws, elect not to be governed by this section, effective
twelve months after adoption. Nextel's certificate of incorporation and by-laws
do not exclude Nextel from the restrictions imposed under Section 203 of the
DGCL. It is anticipated that the provisions of Section 203 of the DGCL may
encourage companies interested in acquiring Nextel to negotiate in advance with
the Nextel board of directors since the stockholder approval requirement would
be avoided if a majority of the directors then in office approve either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder.
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VII. DILUTION
The following table provides information concerning net tangible book value
and pro forma dilution as of June 30, 1999. The net tangible book value deficit
of the common stock as of June 30, 1999 was about $4.8 billion or $14.28 per
share. Net tangible book value deficit per share represents the amount of
Nextel's stockholders' equity, less intangible assets, divided by about
338,791,206 shares of common stock outstanding on June 30, 1999, after giving
effect to the conversion of the outstanding shares of Nextel's non-voting
common stock, the class A preferred stock and the class B preferred stock.
For purposes of the following table, net tangible book value dilution per
share represents the difference between $47.308, which is the initial
conversion price of the convertible notes, and the net tangible book value
deficit per share of common stock as of June 30, 1999. After giving effect to
the conversion of the convertible notes and assuming conversion of all of the
convertible notes and taking into account the expenses to Nextel, the net
tangible book value deficit per share of Nextel as of June 30, 1999 would have
been $12.06. The following table illustrates this pro forma per share dilution:
<TABLE>
<S> <C> <C>
Initial conversion price of the convertible notes......... $ 47.31
Net tangible book value deficit per share before
conversion.............................................. $(14.28)
Increase per share attributable to conversion of the
convertible notes....................................... $ 2.22
-------
Pro forma net tangible book value deficit per share after
conversion of the convertible notes...................... $(12.06)
-------
Dilution of net tangible book value per share to holders
of the convertible notes................................. $ 59.37
-------
</TABLE>
VIII. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Jones, Day, Reavis & Pogue, the following are the material
United States federal income tax consequences relating to the purchase,
ownership, and disposition of the convertible notes and the common stock into
which the convertible notes may be converted. For purposes of this discussion,
the Internal Revenue Service is referred to as the "IRS."
This discussion:
. does not purport to be a complete analysis of all the potential tax
consequences that may be material to an investor based on his or her
particular tax situation;
. is based on the provisions of the Internal Revenue Code of 1986, as
amended, which is referred to in this summary as the "Code," the
applicable Treasury Regulations promulgated or proposed under the Code,
which are referred to in this summary as the "Treasury Regulations," and
judicial authority and current administrative rulings and practice, all
of which are subject to change, possibly on a retroactive basis;
. deals only with the beneficial owner, or "holder," of a convertible note
that will hold convertible notes and Nextel common stock into which the
convertible notes may be converted as "capital assets" within the
meaning of Section 1221 of the Code;
. does not address tax consequences applicable to holders that may be
subject to special tax rules, such as banks, tax-exempt organizations,
pension funds, insurance companies, dealers in securities or foreign
currencies, persons that will hold convertible notes as a position in a
hedging transaction, "straddle" or "conversion transaction" for tax
purposes, or persons that have a "functional currency" other than the
U.S. dollar; and
. does not address the tax consequences to persons other than U.S.
holders, as defined below.
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Nextel has not sought any ruling from the IRS with respect to the statements
made and the conclusions reached in the following summary, and Nextel cannot
assure you that the IRS will agree with those statements and conclusions. In
addition, the IRS may not be precluded from successfully adopting a contrary
position. This summary does not consider the effect of any applicable foreign,
state, local or other tax laws.
Investors considering the purchase of convertible notes should consult their
own tax advisors with respect to the application of the United States federal
income and estate tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction or under any applicable tax treaty.
As used in this prospectus, the term "U.S. holder" means a beneficial owner
of a convertible note or Nextel common stock into which a convertible note is
converted that is, for United States federal income tax purposes:
. an individual who is a citizen or resident, as defined in Section
7701(b) of the Code, of the United States;
. a corporation or partnership created or organized under the laws of the
United States or a political subdivision of the United States;
. an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
. in general, a trust subject to the primary supervision of a United
States court and the control of one or more United States persons.
Payment of Interest
Interest on a convertible note generally will be includable in the income of
a U.S. holder as ordinary income at the time the interest is received or
accrued, according to the holder's method of accounting for United States
federal income tax purposes. Nextel is obligated to pay liquidated damages to
holders of the convertible notes in circumstances described under "Selling
Security Holders." According to Treasury Regulations, the possibility of an
additional payment on the convertible notes will not affect the amount of
interest income recognized by a holder, or the timing of this recognition, if
the likelihood of the additional payment is remote as of the date the debt
obligations are issued, Nextel believes that the likelihood of the payment of
liquidated damages is remote and does not intend to treat this possibility as
affecting the yield to maturity of any convertible note. Notwithstanding the
above, if liquidated damages are paid, the payments will be treated as interest
income when received. Similarly, Nextel intends to take the position that the
likelihood of a redemption or a repurchase upon a Fundamental Change is remote
under the Treasury Regulations, and likewise does not intend to treat the
possibility of such a redemption or repurchase as affecting the yield to
maturity of any convertible note.
Market Discount
If a U.S. holder purchases a convertible note for an amount less than its
principal amount, then the difference will be treated as market discount. Under
the market discount rules, a U.S. holder will be required, subject to a de
minimis exception, to treat any principal payment on a convertible note or any
gain on the sale, exchange, retirement or other disposition of a convertible
note, as ordinary income to the extent of the market discount which has not
previously been included in income and which is treated as having accrued on
such convertible note at the time of such payment or disposition. If a
convertible note with accrued market discount is converted into common stock of
Nextel pursuant to the conversion feature, the amount of such accrued market
discount generally will be taxable as ordinary income upon the disposition of
the common stock. In addition, the U.S. holder may be required to defer, until
the maturity of the convertible note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such convertible note.
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<PAGE>
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the convertible note,
unless the U.S. holder elects to accrue on a constant interest method. A U.S.
holder of a convertible note may elect to include market discount in income
currently as it accrues (on either a ratable or constant interest method), in
which case the rule described above regarding deferral of interest deductions
will not apply. This election to include market discount in income currently,
once made, applies to all market discount obligations acquired on or after the
first day of the first taxable year to which the election applies and may not
be revoked without the consent of the IRS.
Amortizable Bond Premium
If a U.S. holder purchases a convertible note for an amount in excess of its
stated principal amount, plus accrued interest, the holder generally will be
considered to have purchased the convertible note with "amortizable bond
premium". A U.S. holder generally may elect to amortize such premium from the
purchase date to the convertible note's maturity date under a constant yield
method. Amortizable bond premium generally is treated as an offset to interest
income on the convertible note and not as a separate deduction.
Amortizable bond premium, however, will not include any premium attributable
to the convertible note's conversion feature. The premium attributable to the
conversion feature is the excess, if any, of the convertible note's purchase
price over what the convertible note's fair market value would be if there was
no conversion feature. Also, because the convertible notes may be redeemed at
the option of Nextel at a price in excess of their principal amount, a holder
may be required to amortize any premium based on an earlier call date and the
call price payable at that time. An election to amortize amortizable bond
premium on a constant yield method, once made, generally applies to all debt
obligations held or subsequently acquired by the holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
Sale, Exchange or Redemption of the Convertible Notes
Except as described below under "--Conversion of the Convertible Notes,"
upon the sale, exchange or redemption of a convertible note, a U.S. holder
generally will recognize capital gain or loss equal to the difference between:
. the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption, except to the extent the
amount is attributable to accrued interest on the convertible note not
previously included in income, which is taxable as ordinary interest
income, and
. the holder's adjusted tax basis in the convertible note.
A U.S. holder's adjusted tax basis in a convertible note generally will
equal the cost of the note to the holder, less any principal payments on the
convertible note previously received by the holder. The capital gain or loss
will be long-term if the holder's holding period is more than one year and will
be short-term if the holding period is equal to or less than one year. In the
case of specified noncorporate taxpayers, including individuals, long-term
capital gains are taxed at a maximum rate of 20% and short-term capital gains
are taxed at a maximum rate of 39.6%. Corporate taxpayers are subject to a
maximum regular tax rate of 35% on all capital gains and ordinary income. The
deductibility of capital losses is subject to specified limitations.
Constructive Dividends on the Convertible Notes
Under specified circumstances, a change in the conversion price of the
convertible notes pursuant to the antidilution provisions or otherwise may
result in taxable dividends to U.S. holders under Section 305 of the Code.
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<PAGE>
For example, if at any time:
. Nextel makes a distribution of cash or property to its stockholders or
purchases common stock and that distribution or purchase would be
taxable to those stockholders as a dividend for United States federal
income tax purposes (e.g., distributions of evidences of indebtedness or
assets of Nextel, but generally not stock dividends or rights to
subscribe for common stock) and, pursuant to the anti-dilution
provisions, the conversion price of the convertible notes is reduced, or
. the conversion price of the convertible notes is reduced at the
discretion of Nextel,
the reduction in the conversion price may be deemed to be the payment of a
taxable dividend, to the extent of Nextel's current or accumulated earnings and
profits, to holders of convertible notes under Section 305 of the Code. The
holders of convertible notes could therefore have taxable income as a result of
an event pursuant to which they received no cash or property. Further, in other
circumstances, the failure to decrease the conversion price may result in a
taxable dividend to U.S. holders of Nextel common stock acquired upon
conversion of a convertible note or otherwise. While Nextel believes it
currently does not have any current or accumulated earnings and profits, the
actual amount of earnings and profits at any time will depend upon the actions
and financial performance of Nextel.
Conversion of the Convertible Notes
A U.S. holder generally will not recognize any income, gain or loss upon
conversion of a convertible note into common stock of Nextel, except to the
extent the common stock is considered attributable to accrued interest not
previously included in income, which is taxable as ordinary income, or with
respect to cash received instead of a fractional share of common stock. The
holder's tax basis in Nextel common stock received upon conversion of a
convertible note will be the same as the holder's adjusted tax basis of the
note at the time of conversion, reduced by any basis allocable to a fractional
share interest, and the holding period for the common stock received upon
conversion generally will include the holding period of the convertible note
converted. However, a holder's tax basis in shares of Nextel common stock
considered attributable to accrued interest as described above generally will
equal the amount of the accrued interest included in income, and the holding
period for those shares will begin as of the date of conversion of the
convertible notes.
Cash received instead of a fractional share of Nextel common stock upon
conversion will be treated as a payment in exchange for the fractional share of
common stock. Accordingly, the receipt of cash instead of a fractional share of
Nextel common stock generally will result in capital gain or loss, measured by
the difference between the cash received for the fractional share and the
holder's adjusted tax basis in the fractional share.
Dividends on Common Stock
Generally, distributions will be treated first as a dividend, subject to tax
as ordinary income, so long as and to the extent that Nextel has current or
accumulated earnings and profits, and then as a tax-free return of capital to
the extent of the U.S. holder's tax basis in the Nextel common stock, and after
that as gain from the sale or exchange of the stock. The portion of any
distribution treated as a non-taxable return of capital will reduce the
holder's tax basis on the common stock.
In general, a distribution on Nextel common stock that qualifies as a
dividend because Nextel has earnings and profits may qualify for the 70%
dividends received deduction to a corporate holder if the holder owns less than
20% of the voting power and value of Nextel's stock, other than any non-voting,
non-convertible, non-participating preferred stock, and specified other
requirements are satisfied. A corporate holder that owns 20% or more of the
voting power and value of Nextel's stock, other than any non-voting, non-
convertible, non-participating preferred stock, generally may qualify for an
80% dividends received deduction. While Nextel believes it currently does not
have any current or accumulated earnings and profits, the actual amount of
earnings and profits at any time will depend upon the actions and financial
performance of Nextel.
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<PAGE>
Sale of Common Stock
Upon the sale or exchange of Nextel common stock, a U.S. holder generally
will recognize capital gain or loss equal to the difference between:
. the amount of cash and the fair market value of any property received
upon the sale or exchange, and
. the holder's adjusted tax basis in the common stock.
This capital gain or loss will be long-term if the holder's holding period is
more than one year and will be short-term if the holding period is equal to or
less than one year. In the case of specified non-corporate taxpayers, including
individuals, long-term capital gains are taxed at a maximum rate of 20% and
short-term capital gains are taxed at a maximum rate of 39.6%. A U.S. holder's
basis and holding period in Nextel common stock received upon conversion of a
convertible note are determined as discussed above under "--Conversion of the
Convertible Notes." Corporate taxpayers are subject to a maximum regular tax
rate of 35% on all capital gains and ordinary income. The deductibility of
capital losses is subject to specified limitations.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a convertible note, payments of
dividends on common stock, payments of the proceeds of the sale of a
convertible note and payments of the proceeds of the sale of common stock to
specified holders, unless an exception applies. Further, the payer will be
required to withhold backup withholding tax at the rate of 31% if:
. the payee fails to furnish a taxpayer identification number, or "TIN,"
to the payer or establish an exemption from backup withholding;
. the IRS notifies the payer that the TIN furnished by the payee is
incorrect;
. there has been a notified payee under-reporting with respect to
interest, dividends or original issue discount described in Section
3406(c) of the Code; or
. there has been a failure of the payee to certify under the penalty of
perjury that the payee is not subject to backup withholding under the
Code.
Some U.S. holders, including corporations, will be exempt from this backup
withholding. Any amounts withheld under the backup withholding rules from a
payment to a holder will be allowed as a credit against the holder's United
States federal income tax and may entitle the holder to a refund, provided that
the required information is furnished to the IRS.
Treasury regulations that are generally effective with respect to payments
made after December 31, 2000 modify the currently effective information
reporting and backup withholding procedures and requirements, and provide
presumptions regarding the status of holders when payments to the holders
cannot be reliably associated with appropriate documentation provided to the
payer. With respect to payments made after December 31, 2000, these "Final
Withholding Regulations" will require holders to provide certifications, if
applicable, that conform to the requirements of the Final Withholding
Regulations. Because the application of the Final Withholding Regulations will
vary depending on the holder's particular circumstances, holders are urged to
consult their tax advisors regarding the application of the Final Withholding
Regulations.
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IX. PLAN OF DISTRIBUTION
The securities being offered by this prospectus may be sold from time to
time to purchasers directly by the selling security holders listed in the table
set forth in "IV. Selling Security Holders" or, alternatively, through
underwriters, broker-dealers or agents. The selling security holders may offer
the securities at fixed prices, at prevailing market prices at the time of
sale, at varying prices or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions:
. on any national securities exchange or quotation service on which the
convertible notes or common stock may be listed or quoted at the time of
sale;
. in the over-the-counter market;
. in transactions otherwise than on an exchange or over-the-counter
market; and
. through the writing of options.
In connection with sales of the securities, the selling security holders may
enter into hedging transactions with broker-dealers, who may in turn engage in
short sales of the securities in the course of hedging the positions they
assume. The selling security holders may also sell the securities short and
deliver them to close out the short positions, or loan or pledge the securities
to broker-dealers that in turn may sell them.
The selling security holders and any of their brokers, dealers or agents who
participate in the distribution of the securities may be deemed to be
"underwriters", and any profits on the sale of the securities by them and any
discounts, commissions, or concessions received by any brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.
To the best knowledge of Nextel, there are currently no plans, arrangements
or understandings between any selling security holders and any broker, dealer,
agent or underwriter regarding the sale of the securities by the selling
security holders.
At any time a particular offer of the securities is made, a revised
prospectus or supplement, if required, will be distributed that will set forth
the aggregate amount and type of securities being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents,
any discounts, commissions and other items constituting compensation from the
selling security holders and any discounts, commissions or concessions allowed
or reallowed or paid to dealers. Any supplement and, if necessary, a post-
effective amendment to the registration statement, of which this prospectus is
a part, will be filed with the Securities and Exchange Commission to reflect
the disclosure of additional information with respect to the distribution of
the securities. In addition, the securities covered by this prospectus may be
sold in private transactions or under Rule 144 rather than under this
prospectus.
Nextel has agreed to indemnify the selling security holders against
specified liabilities under the Securities Act of 1933 and to pay substantially
all of the expenses incidental to the registration, offering and sale of the
securities to the public other than commissions, fees and discounts of
underwriters, brokers, dealers and agents.
X. LEGAL MATTERS
Jones, Day, Reavis & Pogue, Atlanta, Georgia, will pass upon the validity of
the securities offered by this prospectus.
XI. EXPERTS
The consolidated financial statements and related financial statement
schedules of Nextel that are incorporated into this prospectus by reference
from Nextel's Annual Report on Form 10-K for the year ended December 31, 1998
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated by reference into this prospectus, and have
been so incorporated in reliance upon the report of that firm given upon their
authority as experts in accounting and auditing.
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XII. WHERE YOU CAN GET MORE INFORMATION
A.Available Information
Nextel files reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy this information at
the public reference facilities maintained by the Commission at:
. The Commission's Public Reference Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549.
. The Commission's regional offices at:
. 7 World Trade Center, 13th Floor, New York, New York 10048, and
. Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
You may obtain information on the operation of the public reference room by
calling the Commission at 1-800-SEC-0330. Nextel's filings are also available
on the Commission's web site on the Internet at http://www.sec.gov.
Statements in this prospectus concerning the contents of any contract,
agreement or other document are not necessarily complete. If Nextel filed as an
exhibit to any of its public filings any of the contracts, agreements or other
documents referred to in this prospectus, you should read the exhibit for a
more complete understanding of the document or matter involved.
B.Incorporation of Documents by Reference
Nextel has incorporated information into this prospectus by reference. This
means Nextel has disclosed information to you by referring you to another
document filed by Nextel with the Commission. Nextel will make those documents
available to you without charge upon your oral or written request. Requests for
these documents should be directed to Nextel Communications, Inc., 2001 Edmund
Halley Drive, Reston, Virginia 20191, Attention: Investor Relations, telephone:
(703) 433-4000.
The information in the following documents filed by Nextel with the
Commission (File No. 0-19656) is incorporated by reference in this prospectus:
. Annual Report on Form 10-K for the year ended December 31, 1998, dated
and filed with the Commission on March 30, 1999;
. Current Reports on Form 8-K:
. dated and filed with the Commission on February 24, 1999;
. dated and filed with the Commission on April 1, 1999;
. dated May 12, 1999 and filed with the Commission on May 13, 1999;
. dated and filed with the Commission on June 15, 1999;
. dated and filed with the Commission on June 23, 1999;
. dated and filed with the Commission on August 12, 1999;
. dated and filed with the Commission on August 18, 1999;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999,
dated and filed with the Commission on May 17, 1999;
. Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, dated
and filed with the Commission on August 16, 1999;
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. Proxy Statement, dated as of April 7, 1999, filed with the Commission in
definitive form on April 8, 1999 with respect to the information
required by Items 401 (management), 402 (executive compensation), 403
(securities ownership) and 404 (certain relationships and related
transactions) of Regulation S-K promulgated under the Securities Act of
1933 and the Securities Exchange Act of 1934; and
. The description of the common stock contained in the registration
statement on Form 8-A dated January 16, 1992 including the information
incorporated by reference into that registration statement from the
registration statement on Form S-1, as amended, dated as of January 27,
1992.
Nextel is also incorporating by reference additional documents it may file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 after the date of this prospectus and before the termination of the
offering. This additional information is a part of this prospectus from the
date of filing of those documents.
Any statements made in this prospectus or in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference
in this prospectus modifies or supersedes the statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
This information relating to Nextel contained in this prospectus should be
read together with the information in the documents incorporated by reference.
In addition, some of the information, including financial information,
contained in this prospectus or incorporated in this prospectus by reference
should be read in conjunction with documents filed with the Commission by
Nextel International, Inc.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses and costs to be incurred
by Nextel Communications, Inc. in connection with the sale and distribution of
the securities offered hereby, other than underwriting discounts and
commissions which will be borne by the selling security holders. All the
amounts shown are estimated except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $166,800
Printing expenses............................................... $ 45,000
Legal fees and expenses......................................... $ 70,000
Accounting fees and expenses.................................... $ 15,000
Trustee fees and expenses....................................... $ 3,500
Miscellaneous expenses.......................................... $ 700
--------
Total......................................................... $301,000
</TABLE>
Item 15. Indemnification of Directors and Officers
Set forth below is a description of certain provisions of the Restated
Certificate of Incorporation, as amended (the "Nextel Charter"), of Nextel
Communications, Inc. ("Nextel"), the Amended and Restated By-laws of Nextel
(the "Nextel By-laws"), and the Delaware General Corporation Law (the "DGCL").
This description is intended as a summary only and is qualified in its entirety
by reference to the Nextel Charter, the Nextel By-laws, and the DGCL.
Elimination of Liability in Certain Circumstances. The Nextel Charter
provides that, to the full extent provided by law, a director will not be
personally liable to Nextel or its stockholders for or with respect to any acts
or omissions in the performance of his or her duties as a director. The DGCL
provides that a corporation may limit or eliminate a director's personal
liability for monetary damages to the corporation or its stockholders, except
for liability (1) for any breach of the director's duty of loyalty to such
corporation or its stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) for
paying a dividend or approving a stock repurchase in violation of Section 174
of the DGCL or (4) for any transaction from which the director derived an
improper personal benefit.
While Article 7 of the Nextel Charter provides directors with protection
from awards for monetary damages for breaches of the duty of care, it does not
eliminate the directors' duty of care. Accordingly, Article 7 will have no
effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of the duty of care. The provisions of
Article 7 as described above apply to officers of Nextel only if they are
directors of Nextel and are acting in their capacity as directors, and do not
apply to officers of Nextel who are not directors.
Indemnification and Insurance. Under the DGCL, directors and officers as
well as other employees and individuals may be indemnified against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
in connection with specified actions, suits, or proceedings, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation as a derivative action) if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Article 6 of the Nextel Charter and Article VII of the Nextel By-laws
provide to directors and officers indemnification to the full extent provided
by law, thereby affording the directors and officers of Nextel the
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<PAGE>
protections available to directors and officers of Delaware corporations.
Article VII of the Nextel By-laws also provides that expenses incurred by a
person in defending a civil or criminal action, suit or proceeding by reason of
the fact that he or she is or was a director or officer shall be paid in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by Nextel as authorized by relevant Delaware law. Nextel has
obtained directors and officers liability insurance providing coverage to its
directors and officers.
On September 12, 1991, the Board of Directors of Nextel unanimously adopted
resolutions authorizing Nextel to enter into an Indemnification Agreement (the
"Indemnification Agreement") with each director of Nextel. Nextel has entered
into an Indemnification Agreement with each of its directors and officers.
One of the purposes of the Indemnification Agreements is to attempt to
specify the extent to which persons entitled to indemnification thereunder (the
"Indemnitees") may receive indemnification under circumstances in which
indemnity would not otherwise be provided by the DGCL. Pursuant to the
Indemnification Agreements, an Indemnitee is entitled to indemnification as
provided by Section 145 of the DGCL and to indemnification for any amount which
the Indemnitee is or becomes legally obligated to pay relating to or arising
out of any claim made against such person because of any act, failure to act,
or neglect or breach of duty, including any actual or alleged error,
misstatement, or misleading statement, which such person commits, suffers,
permits, or acquiesces in while acting in the Indemnitee's position with
Nextel. The Indemnification Agreements are in addition to and are not intended
to limit any rights of indemnification which are available under the Nextel
Charter or the Nextel By-laws, any policy of insurance or otherwise. Nextel is
not required under the Indemnification Agreements to make payments in excess of
those expressly provided for in the DGCL in connection with any claim against
the Indemnitee:
(1) which results in a final, nonappealable order directing the
Indemnitee to pay a fine or similar governmental imposition which Nextel is
prohibited by applicable law from paying; or
(2) based upon or attributable to the Indemnitee gaining in fact a
personal profit to which he was not legally entitled including, without
limitation, profits made from the purchase and sale by the Indemnitee of
equity securities of Nextel which are recoverable by Nextel pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and profits arising from transactions in publicly traded
securities of Nextel which were effected by the Indemnitee in violation of
Section 10(b) of the Exchange Act or Rule 10b-5 promulgated thereunder.
In addition to the rights to indemnification specified therein, the
Indemnification Agreements are intended to increase the certainty of receipt by
the Indemnitee of the benefits to which he or she is entitled by providing
specific procedures relating to indemnification.
The Indemnification Agreements are also intended to provide increased
assurance of indemnification by prohibiting Nextel from adopting any amendment
to the Nextel Charter or the Nextel By-laws which would have the effect of
denying, diminishing or encumbering the Indemnitee's rights pursuant thereto or
to the DGCL or any other law as applied to any act or failure to act occurring
in whole or in part prior to the effective date of such amendment.
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Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
4.1.1 --Restated Certificate of Incorporation of Nextel (filed on July 31,
1995 as Exhibits No. 4.1.1 and 4.1.2 to Nextel's Post-Effective
Amendment No. 1 on Form S-8 to Registration Statement No. 33-91716 on
Form S-4 (the "Nextel S-8 Registration Statement") and incorporated
herein by reference).
4.1.2 --Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of 13% Series D
Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions Thereof (filed on July 21, 1997 as Exhibit 4.1 to the
Current Report on Form 8-K dated on July 21, 1997 and incorporated
herein by reference).
4.1.3 --Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of 11.125% Series E
Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions Thereof (filed on February 12, 1998 as Exhibit 4.1 to
the Current Report on Form 8-K dated on February 11, 1998 (the
"February 11 Form 8-K") and incorporated herein by reference).
4.1.4 --Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of Zero Coupon
Convertible Preferred Stock due 2013 and Qualifications, Limitations
and Restrictions Thereof (filed on February 10, 1999 as Exhibit 4.16
to Nextel's Registration Statement on Form S-4 (the "February 1999
Form S-4") and incorporated herein by reference).
4.2 --Amended and Restated By-laws of Nextel (filed on July 31, 1995 as
Exhibit No. 4.2 to the Nextel S-8 Registration Statement and
incorporated herein by reference).
4.3.1 --Indenture between Old Nextel and The Bank of New York, as Trustee,
dated August 15, 1993 (the "August Indenture") (filed on December 23,
1993 as Exhibit 4.13 to Old Nextel's Registration Statement No. 33-
73388 on Form S-4 and incorporated herein by reference).
4.3.2 --Supplemental Indenture, dated as of June 30 1995, to the August
Indenture between Nextel and The Bank of New York (filed on November
14, 1995 as Exhibit 4.1 to Nextel's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995 (the "November 14 Form 10-Q")
and incorporated herein by reference).
4.3.3 --Second Supplemental Indenture, dated as of July 28, 1995, to the
August Indenture between ESMR, Inc. (now known as Nextel), as
Successor by Merger to Nextel and The Bank of New York (relating to
the August Indenture) (filed on November 14, 1995 as Exhibit 4.3 to
the November 14 Form 10-Q and incorporated herein by reference).
4.3.4 --Third Supplemental Indenture, dated as of June 13, 1997, to the
August Indenture between Nextel Communications, Inc. and The Bank of
New York, as Trustee (filed on June 17, 1997 as Exhibit 4.1 to the
Current Report on Form 8-K dated June 13, 1997 (the "June 13 Form 8-
K") and incorporated herein by reference).
4.3.5 --Fourth Supplemental Indenture, dated March 24, 1998, to the August
Indenture between Nextel Communications, Inc. and The Bank of New
York, as Trustee (filed on May 13, 1998 as Exhibit 4.3 to Nextel's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
(the "May 13 Form 10-Q") and incorporated herein by reference).
4.4.1 --Indenture between Old Nextel and the Bank of New York, as Trustee,
dated as of February 15, 1994 (the "February Indenture") (filed on
March 1, 1994 as Exhibit 4.1 to Old Nextel's Current Report on Form
8-K dated February 16, 1994 and incorporated herein by reference).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
4.4.2 --Supplemental Indenture dated as of June 30, 1995 to the February
Indenture between Old Nextel and The Bank of New York (filed on
November 14, 1995 as Exhibit 4.2 to the November 14 Form 10-Q and
incorporated herein by reference).
4.4.3 --Second Supplemental Indenture, dated as of July 28, 1995, to the
February Indenture between ESMR, Inc. (now known as Nextel), as
Successor by Merger to Old Nextel and The Bank of New York (relating
to the February Indenture) (filed on November 14, 1995 as Exhibit 4.4
to the November 14 Form 10-Q and incorporated herein by reference).
4.4.4 --Third Supplemental Indenture, dated as of June 13, 1997, to the
February Indenture between Nextel Communications, Inc., and The Bank
of New York, as Trustee (filed on June 17, 1997 as Exhibit 4.2 to the
June 13 Form 8-K and incorporated herein by reference).
4.5.1 --Indenture for Senior Redeemable Discount Notes due 2004, dated as of
January 13, 1994, between OneComm Corporation (formerly called
CenCall Communications Corp.) and The Bank of New York (the "OneComm
Indenture") (filed on June 7, 1995 as Exhibit 99.2 to Nextel's
Registration Statement No. 33-93182 on Form S-4 (the "OneComm S-4
Registration Statement") and incorporated herein by reference).
4.5.2 --Supplemental Indenture, dated as of June 30, 1995, to the OneComm
Indenture between OneComm Corporation (formerly called CenCall
Communications Corp.) and The Bank of New York (filed on November 14,
1995 as Exhibit 10.12 to the November 14 Form 10-Q and incorporated
herein by reference).
4.5.3 --Second Supplemental Indenture, dated as of July 28, 1995, to the
OneComm Indenture between Nextel (formerly known as ESMR, Inc.), as
successor to OneComm Corporation and The Bank of New York (filed on
November 14, 1995 as Exhibit 10.13 to the November 14 Form 10-Q and
incorporated herein by reference).
4.5.4 --Third Supplemental Indenture, dated as of June 13, 1997, to the
OneComm Indenture between Nextel and The Bank of New York (filed on
June 17, 1997 as Exhibit 4.5 to the June 13 Form 8-K and incorporated
herein by reference).
4.6.1 --Indenture for Senior Redeemable Discount Notes due 2004, dated as of
April 25, 1994, between Dial Call Communications, Inc. and The Bank
of New York (the "Dial Call 2004 Indenture")
(filed on June 7, 1995 as Exhibit 99.4 to the OneComm S-4
Registration Statement and incorporated herein by reference).
4.6.2 --Supplemental Indenture, dated as of August 7, 1995, to the Dial Call
2004 Indenture between Dial Call Communications, Inc. and The Bank of
New York (filed on December 5, 1995 as Exhibit 99.3 to the Nextel's
Registration Statement No. 33-80021 on Form S-4 (the "Dial Page S-4
Registration Statement") and incorporated herein by reference).
4.6.3 --Second Supplemental Indenture, dated as of January 30, 1996, to the
Dial Call 2004 Indenture between Dial Page, Inc. (as successor to
Dial Call Communications, Inc.) and The Bank of New York (filed on
April 1, 1996 as Exhibit 4.26 to Nextel's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "1995 Form 10-K") and
incorporated herein by reference).
4.6.4 --Third Supplemental Indenture, dated as of January 30, 1996, to the
Dial Call 2004 Indenture between Nextel (as successor to Dial Page,
Inc.) and The Bank of New York (filed on April 1, 1996 as Exhibit
4.27 to the 1995 Form 10-K and incorporated herein by reference).
4.6.5 --Fourth Supplemental Indenture, dated as of June 13, 1997, to the
Dial Call 2004 Indenture between Nextel and The Bank of New York
(filed on June 17, 1997 as Exhibit 4.3 to the June 13 Form 8-K and
incorporated herein by reference).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
4.6.6 --Fifth Supplemental Indenture, dated March 24, 1998, to the Dial Call
2004 Indenture between Nextel and The Bank of New York (filed on May
13, 1998 as Exhibit 4.4 to the May 13 Form 10-Q and incorporated
herein by reference).
4.7.1 --Indenture for Senior Discount Notes due 2005, dated as of December
22, 1993, between Dial Call Communications, Inc. and The Bank of New
York (the "Dial Call 2005 Indenture") (filed as Exhibit 99.3 to the
OneComm S-4 Registration Statement and incorporated herein by
reference).
4.7.2 --Supplemental Indenture, dated as of April 25, 1994, to the Dial Call
2005 Indenture between Dial Call Communications, Inc. and The Bank of
New York (filed on April 1, 1996 as Exhibit 4.29 to the 1995 Form 10-
K and incorporated herein by reference).
4.7.3 --Supplemental Indenture, dated as of June 30, 1995, to the Dial Call
2005 Indenture between Dial Call Communications, Inc. and The Bank of
New York (filed on December 5, 1995 as Exhibit 99.4 to the Dial Page
S-4 Registration Statement and incorporated herein by reference).
4.7.4 --Third Supplemental Indenture, dated as of January 30, 1996, to the
Dial Call 2005 Indenture between Dial Page Inc. (as successor to Dial
Call Communications, Inc.) and The Bank of New York (filed on April
1, 1996 as Exhibit 4.31 to the 1995 Form 10-K and incorporated herein
by reference).
4.7.5 --Fourth Supplemental Indenture, dated as of January 30, 1996, to the
Dial Call 2005 Indenture between Nextel (as successor to Dial Page,
Inc.) and The Bank of New York (filed on April 1, 1996 as Exhibit
4.32 to the 1995 Form 10-K and incorporated herein by reference).
4.7.6 --Fifth Supplemental Indenture, dated as of June 13, 1997, to the Dial
Call 2005 Indenture between Nextel and The Bank of New York (filed on
June 17, 1997 as Exhibit 4.4 to the June 13 Form 8-K and incorporated
herein by reference).
4.8.1 --Indenture for Senior Discount Notes due 2007, dated as of March 6,
1997, between McCaw International, Ltd. (now known as Nextel
International) and The Bank of New York, as Trustee (the "NI 2007
Indenture") (filed on March 31, 1997 as Exhibit 4.24 to Nextel's
Annual Report on Form 10-K for the year ended December 31, 1996 (the
"1996 Form 10-K") and incorporated herein by reference).
4.8.2 --Warrant Agreement, dated as of March 6, 1997, between McCaw
International, Ltd. and The Bank of New York (filed on March 31, 1997
as Exhibit 4.26 to the 1996 Form 10-K and incorporated herein by
reference).
4.9 --Indenture dated September 17, 1997 between Nextel Communications,
Inc. and Harris Trust and Savings Bank, as Trustee, relating to
Nextel's 10.65% Senior Redeemable Discount Notes due 2007 (filed on
September 22, 1997 as Exhibit 4.1 to Nextel's Current Report on Form
8-K dated September 22, 1997 and incorporated herein by reference).
4.10 --Indenture dated as of October 22, 1997 between Nextel
Communications, Inc. and Harris Trust and Savings Bank, as Trustee,
relating to Nextel's 9.75% Senior Serial Redeemable Discount Notes
due 2007 (filed on October 23, 1997 as Exhibit 4.1 to Nextel's
Current Report on Form 8-K dated October 23, 1997 and incorporated
herein by reference).
<CAPTION>
4.11 --Indenture dated as of February 11, 1998, between Nextel
Communications, Inc. and Harris Trust and Savings Bank, as Trustee,
relating to Nextel's Senior Serial Redeemable Discount Notes due 2008
(filed on February 12, 1998 as Exhibit 4.2 to the February 11 Form 8-
K and incorporated herein by reference).
<C> <S>
4.12 --Indenture dated as of November 4, 1998 between Nextel
Communications, Inc. and Harris Trust and Savings Bank, as Trustee,
relating to Nextel's 12.0% Senior Serial Redeemable Notes due 2008
(filed on February 10, 1999 as Exhibit 4.13.1 to the February 1999 S-
4 and incorporated herein by reference).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
4.13 --Indenture for Senior Discount Notes due 2008, dated March 12, 1998
between Nextel International, Inc. and The Bank of New York (filed on
May 14, 1998 as Exhibit 4.1 to Nextel International Inc.'s Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998 and
incorporated herein by reference).
4.14 --Registration Rights Agreement, dated December 23, 1998, by and
between Nextel, Goldman, Sachs & Co., Morgan Stanley & Co.,
Incorporated and Nationsbanc Montgomery Securities LLC (filed on
March 30, 1999 as Exhibit 4.13 to Nextel's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (the "1998 Form 10-K")
and incorporated herein by reference).
4.15.1 --Credit Agreement dated as of March 12, 1998 among Nextel, NFC, the
Restricted Companies party thereto, the Lenders party thereto,
Toronto Dominion (Texas) Inc., as Administrative Agent, and The Chase
Manhattan Bank as Collateral Agent (filed as Exhibit 4.12 to Nextel's
Annual Report on Form 10-K for the year ended December 31, 1997 and
incorporated by reference herein).
4.15.2 --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 (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).
4.15.3 --Amendment No. 2, dated as of December 21, 1998, amending the Credit
Agreement dated as of March 12, 1998, between Nextel Communications,
Inc., Nextel Finance Company, the other restricted companies parties
thereto, the lenders party thereto and the Administrative Agent and
Collateral Agent (filed on March 30, 1999 as Exhibit 4.14.3 to the
1998 Form 10-K and incorporated herein by reference).
4.15.4 --Amendment No. 3, dated as of March 23, 1999, amending the Credit
Agreement dated as of March 12, 1998, between Nextel Communications,
Inc., Nextel Finance Company, the other restricted companies parties
thereto, the lenders thereto and the Administrative Agent and
Collateral Agent (filed on May 17, 1999 as Exhibit 4.1 to the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
and incorporated herein by reference.)
4.16 --Indenture, dated as of June 16, 1999, between Nextel Communications,
Inc. and Harris Trust and Savings Bank, as Trustee, relating to
Nextel's 4% Convertible Senior Notes due 2007 (filed on June 23, 1999
as Exhibit 4.1 to the Current Report on Form 8-K dated and filed with
the Commission on June 23, 1999 and incorporated herein by
reference.)
*5 --Form of Opinion of Jones, Day, Reavis & Pogue regarding validity.
*8 --Form of Opinion of Jones, Day, Reavis & Pogue regarding certain tax
matters.
*12 --Statement regarding computation of earnings to fixed charges and
preferred stock dividends.
23.1 --Consent of Jones, Day, Reavis & Pogue (included in Exhibits 5 and
8).
*23.2 --Consent of Deloitte & Touche LLP.
*24 --Powers of Attorney.
*25 --Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- --------
*Filed herewith.
II-6
<PAGE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) ((S) 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3 ((S)
239.13 of this chapter), Form S-8 ((S) 239.16b of this chapter) or Form F-3
((S) 239.33 of this chapter), and the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Reston, in the Commonwealth of Virginia, on October
14, 1999.
Nextel Communications, Inc.
By: /s/ Thomas J. Sidman
-------------------------------
Thomas J. Sidman
Senior Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
* Chairman of the Board and
___________________________________________ Director
Daniel F. Akerson
* President, Chief Executive
___________________________________________ Officer and Director
Timothy M. Donahue
* Executive Vice President
___________________________________________ and Chief Financial
Steven M. Shindler Officer (Principal
Financial Officer)
* Vice President and
___________________________________________ Controller (Principal
William G. Arendt Accounting Officer)
* Vice Chairman of the Board
___________________________________________ and Director
Morgan E. O'Brien
* Director
___________________________________________
Keith J. Bane
* Director
___________________________________________
William E. Conway
* Director
___________________________________________
Frank M. Drendel
* Director
___________________________________________
William A. Hoglund
* Director
___________________________________________
Craig O. McCaw
* Director
___________________________________________
Keisuke Nakasaki
* Director
___________________________________________
Dennis M. Weibling
/s/ Thomas J. Sidman Attorney-in-fact October 14, 1999
___________________________________________
* Thomas J. Sidman
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibits Page
------- ----------------------- ----
<C> <S> <C>
*5 --Form of Opinion of Jones, Day, Reavis & Pogue regarding
validity.
*8 --Form of Opinion of Jones, Day, Reavis & Pogue regarding
certain tax matters.
*12 --Statement regarding computation of earnings to fixed charges
and preferred stock dividends.
23.1 --Consent of Jones, Day, Reavis & Pogue (included in Exhibits 5
and 8).
*23.2 --Consent of Deloitte & Touche L.L.P.
*24 --Powers of Attorney.
*25 --Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- --------
* filed herewith
II-9
<PAGE>
EXHIBIT 5
Form of Opinion
JONES, DAY, REAVIS & POGUE
3500 SunTrust Plaza
303 Peachtree Street
Atlanta, Georgia 30308-3242
(404)521-3939
October ___, 1999
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, Virginia 20191
Re: Registration Statement for 4 3/4% Convertible Senior Notes due 2007
Dear Sirs:
We have acted as counsel to Nextel Communications, Inc., a Delaware
corporation (the "Company"), and in such capacity have examined the Company's
registration statement on Form S-3 (the Form S-3, including any amendments and
supplements thereto, is referred to collectively herein as the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") on October 14, 1999 under the Securities Act of 1933, as
amended. The Registration Statement relates to the proposed registration for
resale by certain selling security holders identified in the Registration
Statement (the "Selling Security Holders") of $600,000,000 aggregate principal
amount of 4 3/4% Convertible Senior Notes due 2007 (the "Notes") and at least
12,682,844 shares of Class A common stock, par value $.001 per share (the
"Common Stock"), issuable upon conversion of the Notes.
As counsel for the Company and for purposes of this opinion, we have made
those examinations and investigations of legal and factual matters we deemed
advisable and have examined originals or copies, certified or otherwise
identified to our satisfaction as true copies of the originals, of those
corporate records, certificates, documents, and other instruments which, in our
judgment, we considered necessary or appropriate to enable us to render the
opinions expressed below, including the Company's Certificate of Incorporation,
as amended to date; the Company's Bylaws, as amended to date; and the minutes of
meetings of the Company's Board of Directors and other corporate proceedings
relating to the authorization and issuance of the Selling Security Holders'
securities. We have assumed, without independent verification, the genuiness and
authorization of all signatures the conformity to the originals of all copies
submitted to us or inspected by us as certified, conformed, or photostatic
copies. Also, we have assumed full and proper payment to the Company for the
Notes being registered in the Registration Statement.
<PAGE>
We express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America and the General Corporation Law of the
State of Delaware as in effect on the date hereof, and also express no opinion
with respect to the blue sky or securities laws of any state, including
Delaware.
Based upon the foregoing, we are of the opinion that (i) the $600,000,000
aggregate principal amount of Notes being registered for resale by the
Registration Statement are duly authorized, executed by proper officers of the
Company, authenticated by the trustee, and delivered, and are validly issued and
outstanding obligations of the Company, entitled to the benefits of the
indenture; and (ii) to the extent that shares of Common Stock are issued upon
conversion of the Notes, such shares of Common Stock will be duly authorized,
validly issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Legal Matters" in the prospectus which is part of the
Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 8
Form of Opinion
JONES, DAY, REAVIS & POGUE
3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, Georgia 30308-3242
(404) 521-3939
October __, 1999
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, Virginia 20191
Re: Registration Statement for 4 3/4% Convertible Senior Notes Due 2007
Dear Sirs:
We have acted as counsel to Nextel Communications, Inc. (the "Company") in
connection with the registration statement on Form S-3 (the "Registration
Statement"), to which this opinion appears as Exhibit 8, which includes the
prospectus of the Company relating to the offering by the selling security
holders named therein of the Company's 4 3/4% Convertible Senior Notes Due 2007
(the "Notes") and the Class A common stock, par value $.001 per share, issuable
upon conversion of the Notes.
We hereby confirm that the opinion expressed in "Important United States
Federal Income Tax Consequences" is our opinion.
We hereby consent to the filing with the Securities and Exchange Commission of
this opinion as an exhibit to the Registration Statement and to the reference to
this firm in the prospectus constituting part of the Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 12
NEXTEL COMMUNICATIONS INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
(dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Year Nine Months Six Months
Ended Ended Ended
March 31 December 31, Year Ended December 31, June 30,
1994 1994 1995 1996 1997 1998 1998 1999
----------- ------------- --------- --------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loss from continuing operations
before income tax benefit,
equity in unconsolidated
subsidiaries, and
minority interests (78,341) (197,194) (531,767) (852,041) (1,298,341) (1,715,713) (829,795) (706,755)
Add:
Interest expense on indebtedness
(including amortization
of debt expense and discount) 29,891 69,491 115,034 227,495 407,805 656,080 297,133 407,131
Portion of rent expense
representative of
interest (30%) 2,456 11,100 17,670 25,350 35,820 54,510 24,757 30,132
------- -------- -------- -------- --------- ---------- ------- --------
Earnings as adjusted (45,994) (116,603) (399,063) (599,196) (854,716) (1,005,123) 507,905 (269,492)
======= ======== ======== ======== ========= ========== ======= ========
Preferred stock dividends -- -- -- -- 29,119 149,161 67,469 93,361
Effective income tax (benefit)
provision rate 78.5% 73.4% 72.6% 73.8% 124.6% 100.0% 100.0% 100.0%
------- -------- -------- -------- --------- ---------- ------- --------
Preferred stock dividends on
pretax basis -- -- -- -- 36,290 149,161 67,469 93,361
Fixed Charges:
Interest expense on indebtedness
(including amortization of
debt expense and discount) 29,891 69,491 115,034 227,495 407,805 656,080 297,133 407,131
Portion of rent expense
representative of
interest (30%) 2,456 11,100 17,670 25,350 35,820 54,510 24,757 30,132
Capitalized interest 7,800 21,300 31,000 32,900 43,000 55,200 26,776 18,611
------- -------- -------- -------- --------- ---------- ------- --------
Fixed charges and preferred
stock dividends 40,147 101,891 163,704 285,745 522,915 914,951 416,135 549,235
======= ======== ======== ======== ========= ========== ======= ========
Ratio of earnings
to fixed charges and
preferred stock dividends (1.15) (1.14) (2.44) (2.10) (1.63) (1.10) (1.22) (0.49)
Deficiency 86,141 218,494 562,767 884,941 1,377,631 1,920,074 924,040 818,727
</TABLE>
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Nextel Communications, Inc. on Form S-3 of our report dated February 22, 1999,
appearing in the Annual Report on Form 10-K of Nextel Communications, Inc. for
the year ended December 31, 1998, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
McLean, Virginia
October 13, 1999
/s/ Deloitte & Touche LLP
<PAGE>
EXHIBIT 24
DIRECTOR AND/OR OFFICER OF
NEXTEL COMMUNICATIONS, INC.
REGISTRATION STATEMENT ON FORM S-3
POWER OF ATTORNEY
The undersigned director and/or officer of Nextel Communications, Inc., a
Delaware corporation (the "Corporation"), hereby constitutes and appoints Steven
M. Shindler, Thomas J. Sidman and Daniel F. Akerson, and each of them, with full
power of substitution and resubstitution, as attorneys-in-fact or attorney-in-
fact of the undersigned, for him or her and in his or her name, place and stead,
to sign and file with the Securities and Exchange Commission under the
Securities Act of 1933 (the "Securities Act") one or more Registration
Statement(s) on Form S-3 relating to the registration of the Corporation's 4
3/4% Convertible Senior Notes due 2007 and the underlying shares of Common
Stock, with any and all amendments, supplements and exhibits thereto, including
pre-effective and post-effective amendments or supplements or any additional
registration statement filed pursuant to Rule 462 promulgated under the
Securities Act, with full power and authority to do and perform any and all acts
and things whatsoever required, necessary or desirable to be done in the
premises, hereby ratifying and approving the act of said attorneys and any of
them and any such substitute.
EXECUTED as of October 5, 1999.
/s/ Timothy M. Donahue /s/ Steven M. Shindler
- ------------------------------------- ---------------------------------
Timothy M. Donahue Steven M. Shindler
President, Chief Executive Officer Executive Vice President and Chief
and Director Financial Officer
(Principal Executive Officer) (Principal Financial Officer)
/s/ Daniel F. Akerson /s/ Morgan E. O'Brien
- ------------------------------------- ---------------------------------
Daniel F. Akerson Morgan E. O'Brien
Chairman of the Board and Director Vice Chairman of the Board
and Director
/s/ William G. Arendt /s/ Craig O. McCaw
- ------------------------------------- ---------------------------------
William G. Arendt Craig O. McCaw
Vice President and Controller Director
(Principal Accounting Officer)
/s/ Keith J. Bane /s/ William E. Conway, Jr.
- ------------------------------------- ---------------------------------
Keith J. Bane William E. Conway, Jr.
Director Director
/s/ Frank M. Drendel /s/ William A. Hoglund
- ------------------------------------- ---------------------------------
Frank M. Drendel William A. Hoglund
Director Director
/s/ Keisuke Nakasaki /s/ Dennis M. Weibling
- ------------------------------------- ---------------------------------
Keisuke Nakasaki Dennis M. Weibling
Director Director
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) X
-----
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
(312) 461-2908 phone (312) 461-3525 facsimile
(Name, address and telephone number for agent for service)
NEXTEL COMMUNICATIONS, INC.
(Obligor)
Delaware 36-3939651
(State of Incorporation) (I.R.S. Employer Identification No.)
1505 Farm Credit Drive
McLean, VA 22012
(Address of principal executive offices)
4 3/4% Convertible Senior Notes, Due 2007
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164
West Jackson Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of Governors
of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise
corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. through 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation, File
No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
1
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 23rd day of September, 1999.
HARRIS TRUST AND SAVINGS BANK
By: /s/ DGDonovan
-----------------------
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ DGDonovan
-----------------------
D. G. Donovan
Assistant Vice President
2
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1999, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[LOGO] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on June 30, 1999, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
Cash and balances due from depository institutions:
<S> <C> <C>
Non-interest bearing balances and currency and coin..................... $1,223,957
Interest bearing balances............................................... $159,159
Securities:....................................................................
a. Held-to-maturity securities $0
b. Available-for-sale securities $5,664,104
Federal funds sold and securities purchased under agreements to resell $193,550
Loans and lease financing receivables:
Loans and leases, net of unearned income................................ $9,665,676
LESS: Allowance for loan and lease losses.............................. $110,414
-------------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b).................................................... $9,555,262
Assets held in trading accounts................................................ $126,028
Premises and fixed assets (including capitalized leases)....................... $268,415
Other real estate owned........................................................ $644
Investments in unconsolidated subsidiaries and associated companies............ $80
Customer's liability to this bank on acceptances outstanding................... $45,535
Intangible assets.............................................................. $249,724
Other assets................................................................... $1,268,631
----------------
TOTAL ASSETS $18,755,089
================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C> <C>
In domestic offices.......................................................... $9,627,629
Non-interest bearing.................................................... $3,074,637
Interest bearing........................................................ $6,552,992
In foreign offices, Edge and Agreement subsidiaries, and IBF's............... $1,940,306
Non-interest bearing.................................................... $25,877
Interest bearing........................................................ $1,914,429
Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBF's:
Federal funds purchased & securities sold under agreements to repurchase....... $3,592,929
Trading Liabilities 41,548
Other borrowed money:..........................................................
a. With remaining maturity of one year or less $1,634,473
b. With remaining maturity of more than one year $0
Bank's liability on acceptances executed and outstanding $45,535
Subordinated notes and debentures.............................................. $225,000
Other liabilities.............................................................. $396,941
TOTAL LIABILITIES $17,504,361
=========================
EQUITY CAPITAL
Common stock................................................................... $100,000
Surplus........................................................................ $609,314
a. Undivided profits and capital reserves..................................... $636,420
b. Net unrealized holding gains (losses) on available-for-sale securities ($95,006)
TOTAL EQUITY CAPITAL $1,250,728
Total liabilities, limited-life preferred stock, and equity capital............ $18,755,089
=========================
</TABLE>
I, Christy Wipper, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
CHRISTY WIPPER
7/28/99
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
ALAN G. McNALLY,
EDWARD W. LYMAN,
LEO M. HENIKOFF
Directors.
4
