EXHIBIT 99.1
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is between Nextel Communications, Inc.
("Nextel"), Unrestricted Subsidiary Funding Company ("USFC") and Option
Acquisition, L.L.C. ("Option Acquisition"), and is dated as of April 11, 1997.
I. Current Status.
A. USFC, a wholly-owned subsidiary of Nextel, has acquired from an
affiliate of Comcast Corporation ("Comcast") options held by such Comcast
affiliate to acquire 25 million shares of Nextel (the "Comcast Options"). The
purchase price paid for such Comcast Options was $1.00 per share, or a total of
$25 million.
B. Option Acquisition wishes to enter into a transaction with Nextel
and USFC wherein Option Acquisition would obtain from USFC certain rights in and
to the Comcast Options, which rights would in turn be exchanged with (or
surrendered for cancellation to) Nextel, for the issuance by Nextel to Option
Acquisition of new options to acquire 25 million shares of Nextel (the "New
Options"), which New Options would have terms and conditions that would
generally parallel those of the Comcast Options but would also contain certain
terms and conditions additional to, or different from, those contained in the
Comcast Options.
II. Acquisition of New Options.
A. Option Acquisition would pay USFC a total of $25 million in cash in
return for the right to cause the Comcast Options to be exchanged or canceled in
connection with the issuance of the New Options as described below in this
Section II. The closing of the transaction respecting the Comcast Options
described in this paragraph
A would be contingent upon and subject to the contemporaneous closing of the
transactions relating to the issuance of the New Options connected therewith, as
described below in this Section II.
B. Simultaneously with the transactions described in paragraph A
above, and without the payment of any additional amount by Option Acquisition
(but in consideration of the agreements and commitments of Option Acquisition
set forth herein and of Digital Radio L.L.C. set forth in a Memorandum of
Understanding with Nextel of even date), Nextel will issue and Option
Acquisition will acquire the New Options. The New Options will permit the holder
thereof to purchase up to a total of 25 million Nextel shares, of which 15
million of such New Options would be exercisable to acquire 15 million Nextel
shares at an exercise price of $16.00 per share, and the remaining 10 million of
such New options would be exercisable to acquire 10 million Nextel shares at an
exercise price of $18.00 per share, and such New Options will provide that they
may be exercised at any time prior to 6:00 p.m. New York local time on July 28,
1998.
C. Subject to applicable securities laws, the New Options or
any shares obtained on exercise of the New Options ("New Shares") may be sold or
otherwise transferred by Option Acquisition in accordance with the following:
(i) if the proposed transfer (or series of related proposed transfers) relates
to New Options and/or New Shares representing less than 5,000,000 shares of
Nextel Common Stock, or to a proposed transfer of any number of New Shares to be
effected pursuant to a broadly-disseminated underwritten secondary public
offering, such proposed transfer may be effected by Option Acquisition in its
sole discretion and (ii) in any other case, such proposed transfer shall not be
effected without the prior consent of Nextel, which shall not be unreasonably
withheld or delayed. Transfers of equity interests in Option
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Acquisition (which as of the Closing will be wholly owned, directly or
indirectly, by Xxxxx X. XxXxx, his brothers and mother) shall be treated, on a
proportionate and derivative basis, as transfers of the New Options and/or New
Shares held by Option Acquisition at the relevant time. A transferee of New
Options and/or New Shares received in accordance with clause (ii) above shall be
required to agree that future transfers by such transferee shall be subject to
the same standards and procedures as outlined above for proposed transfers by
Option Acquisition.
D. Any party to which the New Options or any New Shares may be
transferred by Option Acquisition, having exercised such New Options and
continuing to hold no fewer than 10 million New Shares shall be entitled to
election of one director of Nextel as designated by such investor; provided that
the person so designated must undergo the normal process and meet reasonable
criteria for approval as a proposed director, involving both the Operations
Committee and the full Board of Directors of Nextel; and further provided that
(i) such right may not be transferred to or exercised by a controlled affiliate
of Xxxxx X. XxXxx, (ii) such right may not be transferred to or exercised by any
person or entity that has a 5% or greater equity ownership interest in any
entity that provides terrestrial - based wireless communications services in
competition with Nextel in any of its markets, unless approved by at least
two-thirds of the Nextel directors (excluding directors who have been designated
to the Nextel Board by Xxxxx X. XxXxx or his controlled affiliates), (iii) such
right shall terminate automatically, and such designated director shall have
agreed to resign from the Nextel Board at Nextel's request, when the relevant
investor ceases to hold the requisite threshold level of Nextel equity and (iv)
such right shall be transferable only by Option Acquisition to a single
investor, and shall not be capable of further transfer or assignment.
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E. So long as Option Acquisition is directly or indirectly controlled
by Xxxxx X. XxXxx, Nextel will permit any and all of the New Shares held by
Option Acquisition to be included as "Registrable Securities" (as such term is
defined in and for purposes of the Registration Rights Agreement entered into as
of July 28, 1995, as amended, by and among Nextel and Digital Radio L.L.C. (the
"Registration Agreement")) for purposes of any exercise of demand or piggyback
registration rights pursuant to such Registration Agreement. In addition, Nextel
shall grant to Option Acquisition two additional demand registration rights and
unlimited piggyback rights exercisable by such investor with respect to any and
all of the New Shares. The minimum number of New Shares which may utilize such
right is 3,000,000 New Shares. Such registration rights shall be at Nextel's
expense and shall be included in a separate agreement in form and substance
similar in all material respects to the Registration Agreement, and which shall
be entered into by Nextel and Option Acquisition at or prior to the closing of
the acquisition of the New Options. The registration rights under such agreement
shall be assignable by Option Acquisition, in whole or in part, to not more than
two additional non-affiliated entities who receive from Option Acquisition New
Options or New Shares representing (as to each such entity) at least 3,000,000
shares of Nextel Common Stock. No entity (including, without limitation, Option
Acquisition) may exercise registration rights with respect to the New Shares (x)
prior to January 1, 1999 or (y) if such entity, in reliance on Rule 144 (or any
amended or replacement rule then in effect), could dispose of the New Shares
sought to be registered in the ninety (90) day period commencing on the date of
the relevant registration request.
F. The transactions contemplated by this Section II shall be
conditioned upon Nextel obtaining the required consents of the holders of each
outstanding issue of
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Nextel's public notes (the "Notes") to amendments to the indentures governing
the Notes (the "Indentures") that would permit Nextel to incur additional
borrowings. Such amendments shall be on terms and conditions reasonably
satisfactory to Option Acquisition and shall allow Nextel (i) to incur debt
evidenced by unsecured notes issued on or prior to December 31, 1997 for which
Nextel will receive gross proceeds of up to $350 million, (ii) to incur
additional debt in an aggregate amount up to two times the aggregate net
proceeds received by Nextel from the issuance of certain qualifying equity
securities (excluding the proceeds received in connection with the exercise by
Digital Radio, L.L.C. of the options expiring on July 28, 1997), and (iii) to
incur certain additional categories of permitted debt in an aggregate amount of
up to $2.5 billion.
III. Future Documentation.
The parties hereto and their respective representatives and advisors
will use their best efforts in good faith to prepare and finalize appropriate
definitive documentation as soon as is practicable to implement the undertakings
and related matters contemplated by this Memorandum of Understanding. Such
definitive documentation shall be in all respects consistent with the terms and
conditions set forth herein, shall contain representations and warranties as
indicated in Section IV below and such other representations, warranties,
covenants and other terms and conditions as are customary and appropriate for
transactions of this type and otherwise shall be reasonably acceptable to each
of the parties. The parties each shall use their respective best efforts in good
faith to obtain all necessary governmental, judicial and third party consents
required to implement any of the matters contemplated herein, and agree that
such parties' mutual objective is enter into definitive documentation (subject
to the matters discussed above) as soon as is practicable.
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IV. Representations and Warranties
A. Nextel shall make reasonable representations and warranties as
to the current status of its business, as to the consummation of acquisition of
the Comcast Options, and as to other matters reasonably requested by Option
Acquisition.
B. Option Acquisition shall make representations as to its
authority and power, and such other representations as may reasonably be
requested by Nextel.
C. The final documentation shall provide that, assuming compliance
with any relevant federal or state securities and antitrust laws, no decision by
Option Acquisition to exercise and/or to transfer any of the New Options shall
be subject to the need to seek or obtain any consent or approval of, or make any
notice to or filing with, any third party (other than the consent of Nextel, if
relevant, as provided in Section II.C. above) or any governmental agency, court
or similar governmental or judicial body.
NEXTEL COMMUNICATIONS, INC.
By: /s/Xxxxxx Xxxxxxxx
Its: Xxxxxx Xxxxxxxx, Senior Vice President & CFO
UNRESTRICTED SUBSIDIARY
FUNDING COMPANY
By: /s/Xxxxxx Xxxxxxxx
Its: Xxxxxx Xxxxxxxx, Senior Vice President & CFO
OPTION ACQUISITION, L.L.C.
By: /s/Xxxxxx Xxxxxxxx
Its: President
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