<PAGE>
As filed with the Securities and Exchange Commission on January 26, 1999
Registration No. 333-70827
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
the Securities Act of 1933
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Motorola, Inc.
Motorola Capital Trust I
(Exact name of Registrant as specified in its charter)
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Delaware
Delaware 36-1115800
(State or other jurisdiction of 51-6509317
incorporation) (I.R.S. Employer Identification No.)
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1303 East Algonquin Road
Schaumburg, Illinois 60196
(847) 576-5000
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
--------------
Carl F. Koenemann
Executive Vice President
and Chief Financial Officer
1303 East Algonquin Road
Schaumburg, Illinois 60196
(847) 576-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
Carol H. Forsyte Gerald T. Nowak Michael A. Campbell
Senior Corporate Counsel Kirkland & Ellis Mayer, Brown & Platt
1303 East Algonquin Road 200 East Randolph Drive 190 South LaSalle Street
Schaumburg, Illinois Chicago, Illinois Chicago, Illinois 60603
60196 (312) 861-2000 (312) 782-0600
(847) 576-7646
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after 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. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please 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
under the Securities Act of 1933, please check the following box. [_]
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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 Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. This +
+prospectus is not an offer to sell these securities and it is not soliciting +
+an offer to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated January 26, 1999
PROSPECTUS
20,000,000 Preferred Securities
Motorola Capital Trust I
% Trust Originated Preferred SecuritiesSM ("TOPrSSM")
(Liquidation Amount $25 per Preferred Security)
Fully and Unconditionally Guaranteed by
[MOTOROLA, INC. LOGO]
------------
A brief description of the preferred securities can be found under "Summary
Information--Q&A" in this prospectus.
We urge you to carefully read the "Risk Factors" section beginning on page
11, where we describe specific risks associated with these preferred
securities, along with the rest of this prospectus before you make your
investment decision.
The preferred securities have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the trading
symbol "MOT PrA." We expect that the preferred securities will begin trading on
the New York Stock Exchange within 30 days after they are first issued.
------------
<TABLE>
<CAPTION>
Per Preferred
Security Total
------------- -----
<S> <C> <C>
Public Offering Price (1)....................... $ $
Underwriting Commission to be paid by Motorola,
Inc. (2)....................................... $ $
Proceeds to the Trust........................... $ $
</TABLE>
(1) Plus accrued distributions from , 1999, if settlement occurs
after that date.
(2) For sales of 10,000 or more preferred securities to a single
purchaser, the underwriting commission will be $ per preferred
security and, to the extent of such sales, the total underwriting
commission will be less than that set forth in the table above.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The preferred securities will be ready for delivery in book-entry form only
through The Depository Trust Company on or about , 1999.
------------
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
Goldman, Sachs & Co.
Morgan Stanley Dean Witter
PaineWebber Incorporated
Prudential Securities Incorporated
Salomon Smith Barney
------------
The date of this prospectus is , 1999.
SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Where You Can Find More Information....................................... 3
Summary Information--Q&A.................................................. 5
Risk Factors.............................................................. 11
Motorola Capital Trust I.................................................. 16
Motorola.................................................................. 18
Recent Developments....................................................... 20
Use of Proceeds........................................................... 21
Ratios of Earnings to Fixed Charges....................................... 21
Capitalization............................................................ 22
Selected Financial Data................................................... 23
Description of the Preferred Securities................................... 24
Description of the Subordinated Debentures................................ 36
Description of the Trust Guarantee........................................ 45
Effect of Obligations Under the Subordinated Debentures and the Trust
Guarantee................................................................ 48
United States Federal Income Taxation..................................... 50
Underwriting.............................................................. 55
Legal Matters............................................................. 57
Experts................................................................... 57
Index of Defined Terms.................................................... 58
</TABLE>
-----------------
You should rely only on the information incorporated by reference or
set forth in this prospectus. Neither we nor the underwriters have authorized
anyone else to provide you with different information. We are only offering
these securities in states where the offer is permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front cover.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Our SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities. Our SEC
filings are also available at the office of the New York Stock Exchange (the
"NYSE"). For further information on obtaining copies of our public filings at
the NYSE, you should call (212) 656-5060.
We "incorporate by reference" into this prospectus the information we
file with the SEC, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus and information that we file
subsequently with the SEC will automatically update this prospectus. We
incorporate by reference the documents listed below and any filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the initial filing
of the registration statement that contains this prospectus and prior to the
time that we sell all the securities offered by this prospectus:
. Motorola, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (the "Form 10-K").
. Motorola, Inc.'s Quarterly Reports on Form 10-Q for the quarters
ended March 28, 1998, June 27, 1998 and September 26, 1998.
. Motorola, Inc.'s Current Reports on Form 8-K dated June 4, 1998
and November 5, 1998.
You may request a copy of these filings (other than exhibits, unless that
exhibit is specifically incorporated by reference into that filing) at no cost,
by writing to or telephoning us at the following address:
A. Peter Lawson
Secretary, Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Telephone: (847) 576-5000
There are no separate financial statements of Motorola Capital Trust I
(the "Trust") in this prospectus. We do not believe such financial statements
would be helpful because:
. The Trust is a direct wholly-owned subsidiary of Motorola, Inc.,
which files consolidated financial information under the Exchange
Act.
. The Trust does not have any independent operations other than
issuing the Preferred Securities and Common Securities and
purchasing the Subordinated Debentures (each as defined under
"Summary Information--Q&A").
. The obligations of Motorola, Inc. under the Subordinated
Debentures and the Trust Guarantee (as defined under "Summary
Information--Q&A--What is the nature of Motorola's guarantee of
the Preferred Securities?") have the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations
under the Preferred Securities. Holders of Preferred Securities
may, under certain circumstances, enforce these obligations
directly against Motorola, Inc. See "Description of the Trust
Guarantee" and "Effect of Obligations Under the Subordinated
Debentures and the Trust Guarantee."
3
<PAGE>
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the registration statement that contains
this prospectus, although it intends to seek and expects to receive an
exemption therefrom. If the Trust did not receive such an exemption, the
expenses of operating the Trust would increase, as would the likelihood that
Motorola would exercise its option to liquidate the Trust early. See
"Description of the Preferred Securities--Distribution of the Subordinated
Debentures."
4
<PAGE>
SUMMARY INFORMATION--Q & A
This summary includes questions and answers that highlight selected
information from the prospectus to help you understand the Trust Originated
Preferred Securities (the "Preferred Securities"). This summary may not contain
all the information that may be important to you. You should carefully read the
prospectus to fully understand the terms of the Preferred Securities, as well
as the tax and other considerations that are important to you in making a
decision about whether to invest in the Preferred Securities. You should pay
special attention to the "Risk Factors" section to determine whether an
investment in the Preferred Securities is appropriate for you. You should also
read the documents described under "Where You Can Find More Information" to
learn more about Motorola's business, financial condition and results of
operations.
As used in this prospectus, the term "Motorola" refers to Motorola, Inc.
and not to any of its consolidated subsidiaries, and the term the "Company"
refers to Motorola and its consolidated subsidiaries. Certain other terms used
in this summary are defined elsewhere in this prospectus. See "Index of Defined
Terms" for a cross reference to the location in this prospectus where such
terms are defined.
What are the Preferred Securities?
Each Preferred Security represents a preferred undivided beneficial
interest in the assets of the Trust. The Trust will offer 20,000,000 Preferred
Securities to the public at a price of $25 per Preferred Security and will sell
its common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") to Motorola. The Trust will use the
proceeds from these sales to buy a series of % Deferrable Interest Junior
Subordinated Debentures due , 2039 (the "Subordinated Debentures")
from Motorola with the same payment terms as the Preferred Securities.
Who is the Trust?
The Trust is a Delaware statutory business trust recently created by
Motorola for the sole purpose of issuing the Trust Securities and investing the
proceeds in the Subordinated Debentures and engaging in incidental activities.
The Trust's principal executive offices are located at 1303 East Algonquin
Road, Schaumburg, Illinois 60196 and its telephone number at that address is
(847) 576-5000.
There are four trustees of the Trust (the "Trustees"). Two of the
Trustees are officers of Motorola. Harris Trust and Savings Bank ("Harris")
will act as the property trustee of the Trust (the "Property Trustee") and
First Union Trust Company, National Association ("First Union"), will act as
the Delaware trustee of the Trust (the "Delaware Trustee"). Harris will also
act as trustee under the Indenture (as defined under "Description of the
Subordinated Debentures") governing the Subordinated Debentures (the "Indenture
Trustee").
Who is Motorola?
Motorola is a global leader in advanced electronic systems and services.
It liberates the power of technology by creating software-enhanced products
that provide integrated customer solutions and Internet access via wireless and
satellite communications, as well as computing, networking and automotive
electronics. Motorola also provides essential digital building blocks in the
form of embedded semiconductors, controls and systems. The Company's net sales
in 1998 were $29.4 billion. Its principal executive offices are located at 1303
East Algonquin Road, Schaumburg, Illinois 60196 and its telephone number at
that address is (847) 576-5000.
5
<PAGE>
What distributions will you receive?
If you purchase the Preferred Securities, you will be entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per Preferred Security. Distributions will accumulate from
, 1999. Distributions will be paid quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, beginning on ,
1999, subject to deferral as described below. The initial cash distribution
payable on , 1999, will equal $ for each $25 Preferred Security.
Subsequent cash distributions will equal $ for each $25 Preferred Security.
Can distributions be deferred?
So long as no event of default under the Subordinated Debentures has
occurred and is continuing, Motorola has the right, at one or more times, to
defer interest payments on the Subordinated Debentures for up to 20 consecutive
quarters, but not beyond the maturity date of the Subordinated Debentures.
If, and to the extent that, Motorola defers interest payments on the
Subordinated Debentures, the Trust will also defer distributions on the
Preferred Securities. During any deferral period distributions will not be paid
on a current basis. However, you will still accumulate distributions at an
annual rate of % of the liquidation amount of $25 per Preferred Security,
plus you will accumulate additional distributions at the same rate, compounded
quarterly, on any unpaid distributions (to the extent permitted by law).
During any period in which Motorola defers interest payments on the
Subordinated Debentures, Motorola will not be permitted to (with limited
exceptions described under "Description of the Subordinated Debentures--Option
to Extend Interest Payment Period"):
. declare or pay dividends or make other distributions on its capital
stock;
. redeem, purchase or acquire, or make liquidation payments with respect
to, its capital stock;
. pay interest, principal or premium on, or repay, repurchase or redeem,
any of its debt securities that rank equal with or junior to the
Subordinated Debentures; or
. make guarantee payments with respect to the foregoing.
If Motorola defers payments of interest on the Subordinated Debentures,
the Preferred Securities will be treated as being issued with original issue
discount ("OID") for United States federal income tax purposes. This means you
will be required to recognize interest income with respect to distributions
(even if they are deferred) and include such amounts in your gross income for
United States federal income tax purposes before you receive any cash
distributions relating to such interest income. See "Risk Factors--Motorola's
Ability to Defer Interest Payments Has Tax Consequences For You and May Affect
the Trading Price of the Preferred Securities," "Description of the
Subordinated Debentures--Option to Extend Interest Payment Period" and "United
States Federal Income Taxation."
What will affect the distributions you receive?
The ability of the Trust to pay distributions to you is entirely
dependent on its receipt of payments on the Subordinated Debentures from
Motorola.
What are the Subordinated Debentures?
The Subordinated Debentures are long-term loans made by the Trust to
Motorola. Motorola's obligations under the Subordinated Debentures are
subordinated to its Senior Indebtedness (as defined
6
<PAGE>
under "Description of the Subordinated Debentures--Subordination") and will be
effectively subordinated to all existing and future liabilities and obligations
of Motorola's subsidiaries. As of December 31, 1998, the aggregate amount of
Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries
that would have effectively ranked senior to the Subordinated Debentures was
approximately $10.6 billion.
When do the Subordinated Debentures mature?
The Subordinated Debentures mature on , 2039, which date may be
extended at any time at the election of Motorola for one or more periods, but
in no event to a date later than the earlier of (i) , 2048
or (ii) the Interest Deduction Date (as defined under "Description of the
Subordinated Debentures--Option to Change Scheduled Maturity Date"), provided
certain conditions are met. The maturity date may be shortened to a date not
earlier than , 2004 if Motorola chooses to liquidate the Trust and
distribute the Subordinated Debentures. See "Description of the Subordinated
Debentures--Option to Change Scheduled Maturity Date."
The Preferred Securities may be redeemed, in whole or in part, if certain
tax events occur or if there is a change in the Investment Company Act of 1940
(the "1940 Act") that requires the Trust to register under the 1940 Act. See
"Description of the Preferred Securities--Special Event Redemption."
When can the Preferred Securities be redeemed?
The Trust must redeem the Preferred Securities when the Subordinated
Debentures are paid at maturity or when and to the extent they are redeemed by
Motorola. Motorola has the option at any time on or after , 2004 to redeem
the Subordinated Debentures, in whole or in part. In addition, Motorola may
redeem the Subordinated Debentures at any time at its option, in whole or in
part, if certain tax events occur or if there is a change in the 1940 Act that
requires the Trust to register under that law. Upon any redemption, you will
receive the liquidation amount of $25 per Preferred Security plus any unpaid
distributions to the date of redemption (the "Redemption Price"). See
"Description of the Preferred Securities--Special Event Redemption."
What is the nature of Motorola's guarantee of the Preferred Securities?
Motorola's obligations relating to the Preferred Securities include:
. its obligations to make payments on the Subordinated Debentures;
. its obligations under the trust guarantee (the "Trust Guarantee"); and
. its obligations under the Declaration (as defined under "Motorola
Capital Trust I").
Taken together, these obligations represent a full and unconditional guarantee
of amounts due under the Preferred Securities, subject only to the limitations
described in this prospectus. For a discussion of Motorola's obligations listed
above, see "Description of the Trust Guarantee" and "Effect of Obligations
Under the Subordinated Debentures and the Trust Guarantee."
The Trust Guarantee will not apply to any payment of distributions on the
Preferred Securities except to the extent the Trust shall have funds available
therefor. If Motorola does not make interest or principal payments on the
Subordinated Debentures, the Trust will not pay distributions on the Preferred
Securities and will not have sufficient funds available to make such
distributions. As a result, you will not be able to rely upon the Trust
Guarantee for payment of these amounts. Instead, you or the Property Trustee
may enforce the rights of the Trust under the Subordinated Debentures directly
against Motorola. See "Risk Factors--Payments on the Preferred Securities Are
Entirely
7
<PAGE>
Dependent on Motorola Making Payments on the Subordinated Debentures; The Trust
Guarantee Covers Payments Only if the Trust Has Cash Available."
Motorola's obligations under the Subordinated Debentures and the Trust
Guarantee are subject to payment on its Senior Indebtedness, which includes
obligations under all outstanding series of its Liquid Yield Option(TM) Notes
("LYONs(TM)"), and will be effectively subordinated to all existing and future
liabilities and obligations of Motorola's subsidiaries. As of December 31,
1998, the aggregate amount of Senior Indebtedness and liabilities and
obligations of Motorola's subsidiaries that would have effectively ranked
senior to the Subordinated Debentures was approximately $10.6 billion.
When can the Trust be liquidated?
Motorola will have the right at any time to liquidate the Trust and cause
the Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust.
What happens if the Trust is liquidated and the Subordinated Debentures are
distributed?
If Motorola elects to liquidate the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Trust Securities in
liquidation of the Trust, Motorola shall have the right to shorten the maturity
of such Subordinated Debentures to a date not earlier than , 2004. In
addition, Motorola would retain the right to extend the maturity of such
Subordinated Debentures to a date not later than the earlier of (i) ,
2048 or (ii) the Interest Deduction Date, provided, that it can extend the
maturity only if certain conditions are met on the date Motorola exercises such
right and on the Maturity Date (as defined under "Description of the
Subordinated Debentures--Option to Change Scheduled Maturity Date") in effect
prior to such proposed extension.
If the Subordinated Debentures are distributed, Motorola will use its
best efforts to list them on the NYSE, or such other exchange on which the
Preferred Securities are then listed.
What happens if the Trust is liquidated and the Subordinated Debentures are not
distributed?
In the event of the involuntary or voluntary liquidation, dissolution,
winding up or termination of the Trust, the holders of the Preferred Securities
will be entitled to receive, for each Preferred Security, a liquidation amount
of $25 plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment (the "Liquidation Distribution"), unless, in
connection with such liquidation, dissolution, winding up or termination, the
Subordinated Debentures are distributed to the holders of the Preferred
Securities.
What is an event of default and what are the consequences?
The following are events of default under both the Indenture and the
Declaration:
. Motorola's failure to pay principal of (or premium, if any) on the
Subordinated Debentures when due;
. Motorola's failure to pay any installment of interest on the
Subordinated Debentures when due (other than pursuant to its deferral
rights), which continues for 30 days;
. Motorola's failure to perform any other covenant in the Indenture which
continues for 60 days after notice; and
. certain bankruptcy, insolvency or reorganization events.
8
<PAGE>
If any of these events of default occurs and is continuing, either the
Indenture Trustee or the holders of at least 25% of the principal amount of the
Subordinated Debentures may declare the principal of and interest on the
Subordinated Debentures to be due and payable immediately, unless the event of
default is the result of certain bankruptcy, insolvency or reorganization
events, in which case the principal amount of and interest on the Subordinated
Debentures will automatically become due and payable immediately. Since the
Trust initially will hold all of the Subordinated Debentures, upon an event of
default, the Property Trustee will have the authority to declare the principal
of and interest on the Subordinated Debentures due and payable.
If the Property Trustee fails to enforce its rights, any holder of the
Preferred Securities may proceed directly against Motorola to enforce the
Property Trustee's rights. In addition, if the event of default arises due to
the failure of Motorola to pay principal or interest on the Subordinated
Debentures, any holder of Preferred Securities may proceed directly against
Motorola to collect its pro rata share of unpaid principal and interest.
Holders of Preferred Securities have similar rights in the event of a default
by Motorola under the Trust Guarantee.
The holders of a majority of the principal amount of the Subordinated
Debentures may, under certain circumstances, rescind and annul any acceleration
as a result of an event of default. See "Description of the Preferred
Securities--Declaration Events of Default" and "--Voting Rights" and
"Description of the Subordinated Debentures--Indenture Events of Default."
If an event of default has occurred under the Declaration or if Motorola
has defaulted on its obligations under the Trust Guarantee, Motorola will not
be permitted to (with limited exceptions described under "Description of the
Trust Guarantee--Certain Covenants of Motorola"):
. declare or pay dividends or make other distributions on its capital
stock;
. redeem, purchase or acquire, or make liquidation payments with respect
to, its capital stock;
. pay interest, principal or premium on, or repay, repurchase or redeem,
any of its debt securities that rank equal with or junior to the
Subordinated Debentures; or
. make guarantee payments with respect to the foregoing.
Will you have voting rights?
Generally, holders of the Preferred Securities will not have any voting
rights, except under the limited circumstances described under "Description of
the Preferred Securities--Voting Rights." The holders of a majority in
liquidation amount of the Preferred Securities, however, have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or direct the exercise of any trust or power
conferred upon the Property Trustee.
Will you receive a certificate representing the Preferred Securities?
No. The Preferred Securities will be represented by a global security
that will be deposited with and registered in the name of The Depository Trust
Company, New York, New York ("DTC") or its nominee. This means that you will
not receive a certificate for the Preferred Securities.
Where will the Preferred Securities be listed?
The Preferred Securities have been approved for listing on the NYSE,
subject to official notice of issuance, under the trading symbol "MOT PrA." We
expect that the Preferred Securities will begin trading on the NYSE within 30
days after they are first issued.
9
<PAGE>
How will the proceeds be used?
All of the proceeds of the sale of the Preferred Securities, together
with the proceeds of the sale of the Common Securities to Motorola, will be
invested by the Trust in the Subordinated Debentures. Motorola will, in turn,
use the proceeds from the sale of the Subordinated Debentures to repay short-
term indebtedness and for general corporate purposes.
10
<PAGE>
RISK FACTORS
Your investment in the Preferred Securities will involve certain risks.
You should carefully read the following risk factors and the other sections of
this prospectus, and the documents incorporated by reference herein, before
purchasing any Preferred Securities. You should also consider risks relating to
Motorola's business, as described in our 1998 Proxy Statement on pages F-8 and
F-9, in our other SEC filings and elsewhere in this prospectus.
Motorola's Obligations under the Trust Guarantee and the Subordinated
Debentures are Subordinated
Motorola's obligations under the Trust Guarantee are unsecured and will
rank in priority of payment:
. junior to all of Motorola's other liabilities, except those liabilities
made equal with or subordinate to such obligations by their terms;
. equal with Motorola's most senior preferred and preference stock now or
hereafter issued and equal with Motorola's obligations under other
similar trust guarantees; and
. senior to Motorola's common stock.
This means that Motorola cannot make any payments on the Trust Guarantee
if it defaults on a payment of any of its other liabilities, except those
liabilities made equal with or subordinate to the Trust Guarantee by their
terms. In the event of the bankruptcy, liquidation or dissolution of Motorola,
its assets would be available to pay obligations under the Trust Guarantee only
after all payments had been made on its other liabilities, except those
liabilities made equal with or subordinate to the Trust Guarantee by their
terms.
Motorola's obligations under the Subordinated Debentures are unsecured
and will rank junior in priority of payment to Motorola's Senior Indebtedness
(whether now existing or hereafter incurred) and effectively will rank junior
to all existing and future liabilities and obligations of Motorola's
subsidiaries. This means that Motorola cannot make any payments of principal
(including redemption payments) or interest on the Subordinated Debentures if
it defaults on a payment on its Senior Indebtedness. In the event of the
bankruptcy, liquidation or dissolution of Motorola, its assets would be
available to pay obligations under the Subordinated Debentures only after all
payments had been made on its Senior Indebtedness. At December 31, 1998, the
aggregate amount of Senior Indebtedness and liabilities and obligations of
Motorola's subsidiaries that would have effectively ranked senior to the
Subordinated Debentures was approximately $10.6 billion.
The Preferred Securities, the Subordinated Debentures and the Trust
Guarantee do not limit the ability of Motorola or any of its subsidiaries to
incur additional indebtedness, including indebtedness that ranks senior to the
Subordinated Debentures and the Trust Guarantee. For more information please
refer to "Description of the Trust Guarantee--Status of the Trust Guarantee"
and "Description of the Subordinated Debentures--Subordination."
The Subordinated Debentures and the Trust Guarantee will be obligations
exclusively of Motorola. Since the operations of Motorola are partially
conducted through subsidiaries, its cash flow and consequent ability to service
debt, including the Subordinated Debentures, and to satisfy its other
obligations, including those under the Trust Guarantee, are partially dependent
upon the earnings of its subsidiaries. The subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Subordinated Debentures or the Trust Guarantee
or to make funds available therefor, whether by dividends, loans or other
payments. In addition, the payment of dividends and the making of loans and
advances to Motorola by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those
subsidiaries and are subject to various business considerations.
11
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Any right of Motorola to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the right of the holder(s) of the
Subordinated Debentures or a party seeking to enforce the Trust Guarantee to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the extent
that Motorola is itself recognized as a creditor of such subsidiary, in which
case the claims of Motorola would be subordinate to any security interests in
the assets of such subsidiary and any indebtedness of such subsidiary senior to
that held by Motorola. As of December 31, 1998, Motorola's subsidiaries had
outstanding approximately $4.0 billion of liabilities.
Payments on the Preferred Securities Are Entirely Dependent on Motorola Making
Payments on the Subordinated Debentures; The Trust Guarantee Covers Payments
Only if the Trust Has Cash Available
The ability of the Trust to timely pay distributions on the Preferred
Securities and the Liquidation Distribution is entirely dependent upon
Motorola's making the related payments on the Subordinated Debentures when due.
If Motorola defaults on its obligation to pay principal of or interest on
the Subordinated Debentures, the Trust will not have sufficient funds to pay
distributions or the $25 per Preferred Security Liquidation Distribution. In
those circumstances, you will not be able to rely upon the Trust Guarantee for
payment of these amounts. Instead, you may directly sue Motorola or seek other
remedies to collect your pro rata share of payments owed or rely on the
Property Trustee to enforce the Trust's rights under the Subordinated
Debentures.
For more information, please refer to "Description of the Subordinated
Debentures--Subordination" and "Description of the Trust Guarantee--Status of
the Trust Guarantee."
There Are Limitations Regarding the Enforcement of Certain Rights by Holders of
the Preferred Securities
If an event of default under the Subordinated Debentures occurs and is
continuing, such event would also be an event of default under the Preferred
Securities. In that case, the holders of the Preferred Securities would rely on
the enforcement by the Property Trustee of its rights as holder of the
Subordinated Debentures against Motorola. The holders of a majority in
liquidation amount of the Preferred Securities will have the right to direct
the Property Trustee to exercise its remedies, and if the Property Trustee does
not enforce its rights to the fullest extent permitted by law, any holder of
Preferred Securities may take action directly against Motorola to enforce the
Property Trustee's rights. If an event of default under the Preferred
Securities occurs that is attributable to Motorola's failure to pay interest or
principal on the Subordinated Debentures, any holder of the Preferred
Securities may proceed directly against Motorola to collect its pro rata share
of unpaid principal and interest. The holders of Preferred Securities will not
be able to exercise directly any other remedies available to the holders of the
Subordinated Debentures unless the Property Trustee fails to do so. See
"Description of the Preferred Securities--Declaration Events of Default" and
"Description of the Subordinated Debentures--Indenture Events of Default."
Motorola's Ability to Defer Interest Payments Has Tax Consequences for You and
May Affect the Trading Price of the Preferred Securities
So long as no event of default under the Subordinated Debentures has
occurred and is continuing, Motorola has the right, at one or more times, to
defer interest payments on the Subordinated Debentures for up to 20 consecutive
quarters, but not beyond the maturity date of the Subordinated Debentures.
If Motorola defers interest payments on the Subordinated Debentures, the
Trust will also defer distributions on the Preferred Securities. During this
deferral period, you will still accumulate
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<PAGE>
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, plus you will accumulate additional distributions at the
same rate, compounded quarterly, on any unpaid distributions (to the extent
permitted by law).
During a deferral period, you will be required to accrue interest income
(in the form of OID) for United States federal income tax purposes in respect
of your pro-rata share of the Subordinated Debentures. As a result, you must
include the accrued interest in your gross income for United States federal
income tax purposes prior to your receiving cash. You will not receive the cash
distribution related to any accrued and unpaid interest from the Trust if you
sell the Preferred Securities before the end of any deferral period.
During a deferral period, accrued but unpaid distributions will increase
your tax basis in the Preferred Securities. If you sell the Preferred
Securities during a deferral period, your increased tax basis will decrease the
amount of any capital gain or increase the amount of any capital loss that you
may have otherwise realized on the sale. A capital loss, except in certain
limited circumstances, cannot be applied to offset ordinary income.
Motorola has no current intention of exercising its right to defer
interest payments on the Subordinated Debentures. However, if Motorola
exercises this right in the future, the market price of the Preferred
Securities may not fully reflect the value of accrued but unpaid interest on
the Subordinated Debentures. If you sell the Preferred Securities during an
interest deferral period, you may receive a lower return on your investment
than someone who continued to hold the Preferred Securities.
See "United States Federal Income Taxation" for more information
regarding the tax consequences of purchasing the Preferred Securities.
Preferred Securities May Be Redeemed Before , 2004 if a Special Event
Occurs
The occurrence of (i) certain adverse tax consequences to the Trust or
Motorola or (ii) the Trust being considered an "investment company" under the
1940 Act would constitute a "Special Event." At any time a Special Event occurs
and is continuing, Motorola has the right to redeem the Subordinated
Debentures, in whole or in part. The redemption of the Subordinated Debentures
will cause a mandatory redemption of an equivalent amount of the Trust
Securities on a pro rata basis within 90 days of the event at an amount equal
to the Redemption Price of the Trust Securities. See "Description of the
Preferred Securities--Special Event Redemption" for more information.
Preferred Securities May Be Redeemed After , 2004 At Motorola's Option
At the option of Motorola, the Subordinated Debentures may be redeemed,
in whole or in part, at any time on or after , 2004, at an amount equal
to the Redemption Price. See "Description of the Subordinated Debentures--
Optional Redemption." You should assume that Motorola will exercise its
redemption option if Motorola is able to refinance its obligations at a lower
interest rate or it is otherwise beneficial to Motorola to redeem the
Subordinated Debentures. If the Subordinated Debentures are redeemed, the Trust
must redeem Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of Subordinated Debentures so redeemed. See
"Description of the Preferred Securities--Mandatory Redemption."
The Maturity Date of the Preferred Securities Could Be Extended
Motorola also has the option to extend the maturity date of the
Subordinated Debentures for one or more periods, but in no event to a date
later than the earlier of (i) , 2048 and (ii) the Interest Deduction
Date, provided certain conditions are met. See "Description of the Subordinated
Debentures--Option to Change Scheduled Maturity Date." You should assume that
Motorola will exercise its option to extend the term of the Subordinated
Debentures if Motorola is unable to refinance its obligations at a lower
interest rate or it is otherwise beneficial to Motorola to extend the maturity
of
13
<PAGE>
the Subordinated Debentures. The Preferred Securities will not be redeemed
until the Subordinated Debentures have been repaid or redeemed. See
"Description of the Preferred Securities--Mandatory Redemption."
Distribution of the Subordinated Debentures May Have An Adverse Effect on
Market Price and May Have Tax Consequences for You
The Trust may be terminated at any time before its expiration on
, 2054, at Motorola's option. As a result, and subject to the terms
of the Declaration, the Trustees may distribute the Subordinated Debentures to
the holders of the Trust Securities. Although Motorola has agreed to use its
best efforts to list the Subordinated Debentures on the NYSE, or such other
exchange on which the Preferred Securities are then listed, if this occurs,
there can be no assurance that the Subordinated Debentures will be approved for
listing or that a liquid trading market will develop for the Subordinated
Debentures.
If the Trustees distribute the Subordinated Debentures after the
dissolution of the Trust, Motorola may shorten the maturity of the Subordinated
Debentures to a date not earlier than , 2004. In addition, Motorola
would retain the right to extend the maturity of such Subordinated Debentures
to any date up to the earlier of (i) , 2048 and (ii) the Interest
Deduction Date, provided, that it can only extend the maturity if certain
conditions are met. See "Description of the Subordinated Debentures--Option to
Change Scheduled Maturity Date."
Under current United States federal income tax laws, a distribution of
the Subordinated Debentures to you upon the dissolution of the Trust would not
be a taxable event to you. Nevertheless, if the Trust is classified for United
States federal income tax purposes as an association taxable as a corporation
at the time it is dissolved, the distribution of the Subordinated Debentures
would be a taxable event to you. In addition, if there is a change in law, a
distribution of the Subordinated Debentures upon the dissolution of the Trust
could be a taxable event to you. See "United States Federal Income Taxation--
U.S. Holders--Receipt of Subordinated Debentures or Cash Upon Liquidation of
the Trust" where we discuss applicable United States federal income tax
consequences.
Motorola cannot predict the market prices for the Subordinated Debentures
that may be distributed. Accordingly, the Subordinated Debentures that you
receive upon a distribution or the Preferred Securities you hold pending such a
distribution may trade at a discount to the price that you paid to purchase the
Preferred Securities. Because you may receive Subordinated Debentures, you must
make an investment decision with regard to the Subordinated Debentures in
addition to the Preferred Securities. You should carefully review all the
information regarding the Subordinated Debentures contained in this prospectus.
Motorola has no current intention of causing the termination of the Trust
and the distribution of the Subordinated Debentures. However, there are no
restrictions on its ability to do so at any time. Motorola anticipates that it
would consider exercising this right in the event that expenses associated with
maintaining the Trust were substantially greater than currently expected, such
as if a Special Event occurred or if the Trust did not, as expected, receive an
exemption from the information reporting requirements of the Exchange Act, or
if the accounting treatment currently given to securities such as the Preferred
Securities and the Subordinated Debentures were changed such that such
securities were treated as liabilities for financial reporting purposes. See
"Motorola Capital Trust I--Accounting Treatment." Motorola cannot predict other
circumstances under which this right would be exercised.
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights primarily
in connection with directing the activities of the Property Trustee as the
holder of the Subordinated Debentures and will not be entitled to vote to
appoint, remove or replace, or to increase or decrease the number of Trustees,
which
14
<PAGE>
voting rights are vested exclusively in the holder of the Common Securities.
See "Description of the Preferred Securities--Voting Rights."
Potential Tax Law Changes
From time to time, certain tax law changes have been proposed that would
deny interest deductions to corporate issuers of debt instruments with terms
that include certain of the terms of the Subordinated Debentures. In addition,
the Internal Revenue Service ("IRS") has challenged taxpayers' treatment as
indebtedness of securities issued with characteristics similar to the
Subordinated Debentures. To date, such tax law change proposals have not been
enacted and the only known challenge that has advanced as far as litigation was
settled short of trial, with a resolution favorable to the taxpayer's position.
However, if any similar tax law change were enacted or any such challenge by
the IRS were upheld, such event could give rise to a Tax Event (as defined
under "Description of the Preferred Securities--Special Event Redemption")
which could result in an early redemption of the Preferred Securities. See
"Description of the Preferred Securities--Special Event Redemption."
Absence of Prior Public Market
Prior to this offering, there has been no public market for the Preferred
Securities. Although the Preferred Securities have been approved for listing on
the NYSE, subject to official notice of issuance, there can be no assurance
that an active trading market will develop. Furthermore, even if such a market
develops, there can be no assurance that the market price will equal or exceed
the public offering price set forth on the cover page of this prospectus. The
price at which the Preferred Securities may trade may not fully reflect the
value of any accumulated but unpaid distributions on the Preferred Securities.
In addition, in the event that Motorola exercised its right to defer payment on
the Subordinated Debentures, the market price of the Preferred Securities may
be adversely affected.
15
<PAGE>
MOTOROLA CAPITAL TRUST I
General
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust to be amended and restated on the
closing date of this offering (as so amended and restated, the "Declaration"),
executed by Motorola, as sponsor (the "Sponsor"), and the Trustees of the Trust
and (ii) a certificate of trust, as filed with the Secretary of State of the
State of Delaware on January 19, 1999. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities--Book-Entry Issuance--The Depository Trust Company."
Motorola will directly or indirectly acquire all of the issued and outstanding
Common Securities, which will be in an aggregate liquidation amount equal to at
least 3% of the total capital of the Trust. The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Subordinated Debentures and (iii) engaging in only
those other activities necessary, appropriate, convenient or incidental
thereto. The Trust has a term of approximately 55 years, but may be terminated
earlier as provided in the Declaration.
Pursuant to the Declaration, the number of Trustees initially is four.
Two of the Trustees (the "Regular Trustees") will be persons who are officers
of Motorola. The third Trustee will be a financial institution unaffiliated
with Motorola that will serve as Property Trustee under the Declaration and as
indenture trustee for the purposes of the Trust Indenture Act. The fourth
Trustee will be a legal entity which maintains its principal place of business
in the State of Delaware and meets the requirements of applicable law. Harris
will act as the Property Trustee and First Union will act as the Delaware
Trustee, in each case until removed or replaced by the holder of the Common
Securities. For purposes of compliance with the provisions of the Trust
Indenture Act, Harris will also act as trustee under the Trust Guarantee (in
such capacity, the "Guarantee Trustee") and as Indenture Trustee. See
"Description of the Trust Guarantee."
The Trust's business and affairs will be conducted by the Trustees. The
Property Trustee will hold title to the Subordinated Debentures for the benefit
of the Trust and the holders of the Trust Securities and, so long as the
Subordinated Debentures are held by the Trust, the Property Trustee will have
the power to exercise all rights, powers and privileges of a holder of
Subordinated Debentures under the Indenture. In addition, the Property Trustee
will maintain exclusive control of a segregated non-interest bearing bank
account (the "Property Trustee Account") to hold all payments made in respect
of the Subordinated Debentures for the benefit of the holders of the Trust
Securities. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Trustee Account. The Guarantee
Trustee will hold the Trust Guarantee for the benefit of the holders of the
Preferred Securities. Motorola, as the direct or indirect holder of all the
Common Securities, will have the right to appoint, remove or replace any
Trustee (subject to the limitations set forth in the Declaration) and to
increase or decrease the number of Trustees, provided that the number of
Trustees shall be at least three. Motorola will pay all fees, expenses, debts
and obligations (other than with respect to the Trust Securities) related to
the Trust and the offering of the Trust Securities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"), the
Indenture and the Trust Indenture Act. See "Description of the Preferred
Securities."
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Accounting Treatment
The financial statements of the Trust will be reflected in Motorola's
consolidated financial statements, with the Preferred Securities shown as
"company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely company-guaranteed debentures" in the same caption as
minority interest in consolidated subsidiaries. A footnote to Motorola's
audited financial statements will include a statement that the Trust is wholly-
owned by Motorola and that the sole asset of the Trust is the Subordinated
Debentures (indicating the principal amount, interest rate and maturity date
thereof). See "Capitalization."
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<PAGE>
MOTOROLA
Motorola is a corporation organized under the laws of the State of
Delaware as the successor to an Illinois corporation organized in 1928.
Motorola is a global leader in advanced electronic systems and services. It
liberates the power of technology by creating software-enhanced products that
provide integrated customer solutions and Internet access via wireless and
satellite communications, as well as computing, networking and automotive
electronics. Motorola also provides essential digital building blocks in the
form of embedded semiconductors, controls and systems. The Company's net sales
in 1998 were $29.4 billion."Motorola" is a registered trademark.
Cellular Products
The Cellular Subscriber Sector ("CSS") primarily designs, manufactures,
distributes, markets and services subscriber radio-telephone equipment for
cellular and personal communications networks. In addition, CSS resells
cellular line service in the United States. CSS's products include mobile,
personal and wearable cellular telephones and related accessories.
The Cellular Infrastructure Group ("CIG") primarily designs,
manufactures, distributes, installs, markets and services wireless
infrastructure equipment. CIG's products include electronic exchanges (i.e.,
telephone switches), base site controllers and radio base stations for Code
Division Multiple Access (CDMA), Personal Communication Systems (PCS), Personal
Digital Cellular (PDC), Global System for Mobile Communications (GSM), wireless
local loop (WILL(R)) and analog technologies.
The Company also is a joint venture partner in cellular operating systems
in a number of international jurisdictions and is an investor in IRIDIUM(R)
gateway companies.
Semiconductor Products
The Semiconductor Products Sector ("SPS") offers multiple DigitalDNA(TM)
solutions which enable its customers in the consumer, networking and computing,
transportation and wireless communications markets to create new business
opportunities.
Semiconductors control and amplify electrical signals and are used in a
broad range of electronic products, including consumer electronic products,
computers, communications equipment, solid-state ignition systems and other
automotive electronic products, major home appliances, industrial controls,
robotics, aircraft, space vehicles, calculators and automatic controls.
Land Mobile Products
The Land Mobile Products Sector ("LMPS") designs, manufactures and sells
analog and digital two-way voice and data products and systems for a variety of
worldwide applications. As a principal supplier of mobile and portable FM two-
way radio products and systems, LMPS provides equipment and systems to meet the
communication needs of individuals and many different types of business,
institutional and governmental organizations. LMPS products provide voice and
data communications between vehicles, persons and base stations. Also, LMPS
provides network services for two-way radio subscribers in international
markets through joint ventures.
The principal customers for two-way radio products and systems include
public safety agencies, such as police, fire, highway maintenance departments
and forestry services; petroleum companies; gas, electric and water utilities;
telephone companies; diverse industrial companies; mining companies;
transportation companies such as railroads, airlines, taxicab operations and
trucking firms; institutions, such as schools and hospitals; and companies in
the construction, vending machine and service businesses. Also, there is an
emerging consumer two-way radio market using the products for personal and
family communications needs.
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<PAGE>
Messaging, Information and Media Products
The Messaging, Information and Media Sector ("MIMS") manufactures,
distributes and sells paging subscriber, paging infrastructure and related
products, such as paging software and accessories. MIMS also provides network
services for paging and wireless data. It also manufactures and sells modems,
analog and digital transmission devices and other data communication devices.
In addition, MIMS manufactures equipment that enables voice, video and high-
speed data communications over cable networks. It offers handwriting and speech
recognition software for various applications and provides equipment and
systems to meet the communication needs of many different types of business,
institutional and governmental organizations.
Other Products
Integrated Electronic Systems Sector
The Integrated Electronic Systems Sector (formerly the Automotive,
Component, Computer and Energy Sector) ("IESS") manufactures and sells products
in four major categories: automotive and industrial electronics; energy storage
products and systems; ceramic and quartz electronic components and electronic
fluorescent ballasts; and multi-function embedded board and computer system
products. IESS includes the Motorola Computer Group, which develops,
manufactures, sells and services multi-function computer systems and board
level products, together with operating systems and system enablers based on
the Motorola 68000, 88000, PowerPC(TM) series microprocessors and Intel
Pentium(TM) microprocessors. In addition, IESS now contains the Telematics
Communications Group, which focuses resources on creating products designed to
provide security, information, convenience and entertainment from a central
service center to drivers and their passengers. IESS has also established a
Flat Panel Display Division to develop the next generation of flat panel
displays and is involved in several joint ventures.
Space and Systems Technology Group
The Space and Systems Technology Group ("SSTG") is engaged in the design,
development and production of advanced electronic communication systems and
products for a host of international and domestic commercial and government
users. SSTG's government business operations primarily perform research,
development and production work under contracts with governmental agencies, but
also conduct independent research and development programs. The satellite
communications business, Satellite Communications Group ("SCG"), designs,
builds and markets space-based telecommunications systems. Currently, SCG is
fulfilling the terms of contracts with Iridium LLC, an entity of which Motorola
owns approximately 19%, to build, deploy, operate and maintain a satellite
communications network, known as the IRIDIUM(R) system, as well as undertaking
research and development on other communications systems. The IRIDIUM system is
designed to provide global digital service to handheld telephones and related
equipment.
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<PAGE>
RECENT DEVELOPMENTS
Recent Earnings
On January 13, 1999, Motorola reported unaudited financial results for
the fiscal quarter and year ended on December 31, 1998.
. Motorola reported sales of $8.34 billion in the fourth quarter of 1998,
up 1 percent from $8.28 billion a year earlier.
. Net earnings were $159 million in the fourth quarter of 1998, or 26
cents per share, compared with net earnings of $321 million, or 53 cents
per share, in the fourth quarter of 1997. The year-earlier quarter
included special charges against pre-tax earnings of $110 million, or 12
cents per share after-tax, largely from decisions to exit several
unprofitable businesses that no longer had strategic value to the
Company. Excluding special charges, fourth-quarter 1997 earnings would
have been $393 million, or 65 cents per share after-tax. There were no
special charges in the fourth quarter of 1998.
. For the full year 1998, sales decreased 1 percent to $29.4 billion from
$29.8 billion in 1997.
. The full-year loss for 1998, including special charges, was $1.0
billion, or $1.61 per share after-tax, compared with earnings of $1.2
billion, or $1.94 per share after-tax, in 1997. 1998's loss includes
special charges of $1.9 billion pre-tax, or $2.19 per share after-tax,
as a result of the Company's manufacturing consolidation, cost reduction
and restructuring programs. The year-earlier period also includes
special charges against pre-tax earnings of $306 million, or 32 cents
per share after-tax. Excluding special charges, earnings for all of 1998
were $347 million, or 58 cents per share after-tax, compared with $1.4
billion, or $2.26 per share after-tax in 1997.
Restructuring Program
Last June, Motorola announced a restructuring program to improve its
long-term profitability and efficiency. In connection with that program, in the
second quarter of 1998 the Company recorded a pre-tax restructuring charge of
$1.98 billion. Steps included in the restructuring program are: (i) reductions
in worldwide employment, (ii) consolidation of manufacturing operations, (iii)
exiting non-strategic and poorly performing businesses and (iv) the writedown
of assets that have become impaired.
Last July, Motorola announced the realignment of its communications-
related businesses into one organization called the Motorola Communications
Enterprise. The new structure links together all of the Company's
communications-related businesses so that they can easily share resources and
cooperate on key business and technology issues. Business segments in the
Motorola Communications Enterprise include cellular, space, land mobile, and
messaging, information and media, which together accounted for about three-
fourths of the Company's $29.4 billion in sales in 1998.
During 1998, IESS sold its printed circuit board business located in
Singapore and signed definitive agreements to sell its component products
business. The sale of the component products business is expected to be
completed in the first quarter of 1999, although there can be no assurance that
the pending transaction will be completed.
SPS closed four major semiconductor facilities in North Carolina,
California, Arizona and the Philippines and exited four different semiconductor
business segments during 1998. MIMS closed a major paging facility in Puerto
Rico and IESS closed a quartz and ceramics-based components manufacturing
facility in Costa Rica.
Motorola also continues to evaluate several strategic options with
respect to its semiconductor components business and its cellular
infrastructure business. No decision has been made and no assurances can be
made that any action will be taken with respect to these businesses.
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At the end of the fourth quarter, the Company had reduced its employee
headcount by approximately 17,000 people and, assuming the pending sale of
IESS's component products business is completed during the first quarter, there
will be a resulting additional reduction in the Company's employee population
of approximately 4,500 people.
Iridium Financing
In December, Iridium LLC announced that it received significant new
financing to replace existing credit lines. Motorola has increased its
guarantee of such bank financing by $475 million to a total of $750 million,
the majority of which matures on December 31, 2000 and the remainder of which
matures on December 31, 2001. Motorola has also agreed to extend the
availability date for Iridium LLC to draw on its existing standby guarantee of
$350 million of bank financing to October 1, 1999. The Company is also
providing $400 million of additional financial support to Iridium LLC.
USE OF PROCEEDS
All of the proceeds of the sale of the Trust Securities will be invested
by the Trust in the Subordinated Debentures. Motorola will, in turn, use the
proceeds from the sale of the Subordinated Debentures to repay short-term
indebtedness and for general corporate purposes. On January 22, 1999, Motorola
had outstanding approximately $2.876 billion of commercial paper, with a
weighted average maturity of approximately 82 days and bearing a weighted
average interest rate of approximately 5.00% per annum.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the unaudited consolidated ratios of earnings to fixed
charges for each of the years in the five-year period ended December 31, 1998:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
-- (a) 6.4 6.1 11.6 9.8
</TABLE>
- --------
(a) Earnings were inadequate to cover fixed charges by $1.4 billion.
For purposes of computing the ratios of earnings to fixed charges, we
have divided earnings (loss) before income tax expense (excluding interest
costs capitalized) plus fixed charges by fixed charges. Fixed charges consist
of interest costs (including interest costs capitalized) and estimated interest
included in rentals (one-third of net rental expense).
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<PAGE>
CAPITALIZATION
The following table sets forth the consolidated short-term debt and
capitalization of Motorola as of December 31, 1998, and as adjusted to give
effect to the sale of the Preferred Securities (after deducting underwriting
compensation and estimated offering expenses) and the anticipated application
of the net proceeds from such sale to reduce short-term indebtedness. From time
to time, Motorola may issue additional debt or equity securities. The following
information should be read in conjunction with Motorola's consolidated
financial statements, including the notes thereto, which are incorporated
herein by reference. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
December 31, 1998
----------------------------
Actual As Adjusted
------------ --------------
(in millions of dollars)
<S> <C> <C>
Short-Term Debt
Commercial paper............................... $ 2,739 $ 2,255
Notes payable and other short-term debt........ 162 162
Current portion of long-term debt.............. 8 8
------------ ------------
Total short-term debt........................ $ 2,909 $ 2,425
============ ============
Long-Term Debt (a)
Senior notes and debentures.................... $ 2,481 $ 2,481
Other senior debt.............................. 160 160
Less current portion of long-term debt......... (8) (8)
------------ ------------
Total long-term debt......................... 2,633 2,633
------------ ------------
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely company-guaranteed debentures (b)........ -- 500
------------ ------------
Stockholders' Equity (c)
Common stock................................... 1,804 1,804
Preferred stock................................ -- --
Additional paid-in-capital..................... 2,164 2,164
Retained earnings.............................. 8,254 8,254
------------ ------------
Total stockholders' equity................... 12,222 12,222
------------ ------------
Total capitalization......................... $ 14,855 $ 15,355
============ ============
</TABLE>
- --------
(a) See Notes 3 and 4 of the Notes to Consolidated Financial Statements for
December 31, 1997, incorporated by reference in the Form 10-K and
incorporated herein by reference, for additional information on long-term
debt.
(b) The sole assets of the Trust will be the Subordinated Debentures. Upon
prepayment of the Subordinated Debentures, the related Preferred Securities
will be mandatorily redeemable.
(c) See the Consolidated Financial Statements for December 31, 1997,
incorporated by reference in the Form 10-K and incorporated herein by
reference, and Notes 5 and 9 thereto for additional information on
stockholders' equity.
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SELECTED FINANCIAL DATA
MOTOROLA, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997(1) 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Operating Results:
Net sales............................ $29,398 $29,794 $27,973 $27,037 $22,245
------- ------- ------- ------- -------
Manufacturing and other cost of
sales............................... 20,886 20,003 18,990 17,545 13,760
Selling, general and administrative
expenses............................ 5,493 5,188 4,715 4,642 4,381
Depreciation expense................. 2,197 2,329 2,308 1,919 1,525
Restructuring charges................ 1,980 327 -- -- --
Interest expense, net................ 216 131 185 149 142
------- ------- ------- ------- -------
Total costs and expenses............. 30,772 27,978 26,198 24,255 19,808
------- ------- ------- ------- -------
Net gain on Nextel asset exchange.... -- -- -- 443 --
------- ------- ------- ------- -------
Earnings (loss) before income taxes.. (1,374) 1,816 1,775 3,225 2,437
Income tax (benefit) provision....... (412) 636 621 1,177 877
------- ------- ------- ------- -------
Net earnings (loss).................. $ (962) $ 1,180 $ 1,154 $ 2,048 $ 1,560
======= ======= ======= ======= =======
Per Share Data (2):
Basic earnings (loss)................ $ (1.61) $ 1.98 $ 1.95 $ 3.47 $ 2.76
Diluted earnings (loss).............. (1.61) 1.94 1.90 3.37 2.66
Dividends declared................... $ 0.48 $ 0.48 $ 0.46 $ 0.40 $ 0.31
<CAPTION>
As of December 31,
----------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance Sheet:
Total assets......................... $28,728 $27,278 $24,076 $22,738 $17,495
Working capital...................... 2,091 4,181 3,324 2,717 3,008
Long-term debt....................... 2,633 2,144 1,931 1,949 1,127
Total debt........................... 5,542 3,426 3,313 3,554 2,043
Total stockholders' equity........... $12,222 $13,272 $11,795 $10,985 $ 9,055
</TABLE>
- --------
(1) Certain amounts have been reclassified to conform with the 1998
presentation.
(2) Per share data reflects the requirements of Statement of Financial
Accounting Standard No. 128.
23
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
Set forth below is a summary of the material terms of the Preferred
Securities that will be issued by the Trust pursuant to the terms of the
Declaration, which will be qualified as an indenture under the Trust Indenture
Act. The Property Trustee will act as the indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Preferred Securities will include those stated in the Declaration, including
those required to be made part of the Declaration by the Trust Indenture Act.
The following summary of the material terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, the Trust Act and the Trust
Indenture Act.
General
The Declaration authorizes the Regular Trustees to cause the Trust to
issue the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned directly or
indirectly by Motorola. The Common Securities will have equivalent terms to and
will rank equal with, and payments will be made thereon on a pro rata basis
with, the Preferred Securities, except as described under "--Subordination of
Common Securities." In addition, holders of the Common Securities have the
exclusive right (subject to the terms of the Declaration) to appoint, replace
or remove any of the Trustees and to increase or decrease the number of
Trustees, provided that the number of Trustees shall be at least three. The
Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust.
Pursuant to the Declaration, the Property Trustee will hold the
Subordinated Debentures purchased by the Trust for the benefit of the holders
of the Trust Securities. The payment of distributions out of money held by the
Trust, and payments upon redemption of the Preferred Securities or liquidation
of the Trust, are guaranteed by Motorola to the extent described under
"Description of the Trust Guarantee." The Trust Guarantee, when taken together
with the back-up undertakings, consisting of obligations of Motorola as set
forth in the Declaration (including the obligation to pay expenses of the
Trust), the Indenture and any applicable supplemental indentures thereto and
the Subordinated Debentures issued to the Trust, provide a full and
unconditional guarantee by Motorola of the amounts due on the Preferred
Securities. The Trust Guarantee will be held by the Guarantee Trustee for the
benefit of the holders of the Preferred Securities. The Trust Guarantee only
covers payment of distributions when Motorola has made the corresponding
payment of interest or principal on the Subordinated Debentures held by the
Trust. In the absence of such payment of interest or principal, the remedy of
any holder of Preferred Securities is to direct the Property Trustee to enforce
against Motorola the Property Trustee's rights as the holder of the
Subordinated Debentures, except in the limited circumstances where the holder
may take direct action against Motorola. See "--Voting Rights."
Distributions; Option to Extend Interest Payment Period
Rate
Distributions on the Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will (to the extent
permitted by applicable law) accrue interest at the rate per annum of %
thereof compounded quarterly. The term "distributions" as used herein includes
any such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarter, on the
basis of the actual number of days elapsed in such 90-day quarter.
Dates
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1999 and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing , 1999
when, as and if available for payment by the Property Trustee, except as
otherwise described below. The initial cash distribution payable on ,
1999, will equal
24
<PAGE>
$ for each $25 Preferred Security. Subsequent cash distributions will equal
$ for each $25 Preferred Security.
Right to Defer
Motorola has the right under the Indenture to defer payments of interest
on the Subordinated Debentures by extending the interest payment period from
time to time on the Subordinated Debentures, which, if exercised, would
automatically defer quarterly distributions on the Preferred Securities.
However, since interest would continue to accrue on the Subordinated Debentures
during any such extension period (each, an "Extension Period"), to the extent
permitted by law, such distributions would continue to accrue with interest.
Such right to extend the interest payment period for the Subordinated
Debentures is limited to a period not exceeding 20 consecutive quarters or
extending beyond the Maturity Date of the Subordinated Debentures. In the event
that Motorola exercises this right, then during any Extension Period Motorola
may not (a) declare or pay dividends on, make distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, (b) make any payment of interest, principal or premium, if
any, on, or repay, repurchase or redeem, any debt securities issued by Motorola
that rank equal with or junior to the Subordinated Debentures or (c) make
guarantee payments with respect to the foregoing (other than pursuant to the
Trust Guarantee); provided, however, that the restriction in clause (a) does
not apply to (i) purchases or acquisitions of Motorola's capital stock in
connection with the satisfaction of its obligations under any employee benefit
plans, stock option plans, employee stock purchase plans or direct reinvestment
plans as may be in effect from time to time or the satisfaction of its
obligations pursuant to any contract or security outstanding on the date of
such event requiring Motorola to purchase its capital stock (other than a
contractual obligation ranking equal with or junior to the Subordinated
Debentures), (ii) reclassifications of Motorola's capital stock or the exchange
or conversion of one class or series of Motorola's capital stock for another
class or series of Motorola's capital stock, provided that such
reclassification, exchange or conversion does not result in a change in the
priority vis-a-vis the Preferred Securities of any class or series of capital
stock that is being so reclassified or that is the subject of such exchange or
conversion, (iii) purchases of fractional interests in shares of Motorola's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) stock dividends paid
by Motorola where the dividend stock is the same stock as that on which the
dividend is being paid or (v) redemptions or purchases of any rights pursuant
to purchase rights contained in any rights agreement as shall be in effect from
time to time, which purchase rights are substantially similar to those
contained in Motorola's current rights agreement. Prior to the termination of
any such Extension Period, Motorola may further extend the interest payment
period; provided that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 20 consecutive quarters and may
not extend beyond the Maturity Date of the Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
Motorola may commence a new Extension Period, subject to the above
requirements. See "Description of the Subordinated Debentures--Interest" and
"--Option to Extend Interest Payment Period." If distributions are deferred,
the deferred distributions and accrued interest thereon shall be paid to
holders of record of the Preferred Securities as they appear on the books and
records of the Trust on the record date for distributions due at the end of
such deferral period. Motorola has no present intention of exercising its right
to defer payments of interest by extending the interest payment date of the
Subordinated Debentures.
Availability of Funds
Distributions on the Preferred Securities must be paid on the dates
payable only to the extent that the Trust has funds available for the payment
of such distributions in the Property Trustee Account. The Trust's funds
available for distribution to the holders of the Preferred Securities will be
limited to payments received from Motorola under the Subordinated Debentures.
See "Description of the Subordinated Debentures" and "Risk Factors--Payments on
the Preferred Securities Are Entirely Dependent on Motorola Making Payments on
the Subordinated Debentures; The Trust Guarantee Covers Payments Only if the
Trust Has Cash Available."
25
<PAGE>
Record Holders
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in global form,
will be one Business Day (as defined below) prior to the relevant payment
dates. Such distributions will be paid through the Property Trustee, who will
hold amounts received in respect of the Subordinated Debentures in the Property
Trustee Account for the benefit of the holders of the Trust Securities. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each such payment will be made as described under "--Book-Entry Issuance--The
Depository Trust Company" below. In the event that the Preferred Securities do
not continue to remain in global form, the relevant record dates for the
Preferred Securities shall conform to the rules of any securities exchange on
which the Preferred Securities are listed and, if none, shall be selected by
the Regular Trustees, which dates shall be at least ten Business Days but less
than 60 Business Days prior to the relevant payment dates. Distributions
payable on any Preferred Securities that are not punctually paid on any
distribution payment date will cease to be payable to the person in whose name
such Preferred Securities are registered on the relevant record date, and such
defaulted distribution will instead be payable to the person in whose name such
Preferred Securities are registered on the special record date or other
specified date determined in accordance with the Declaration. In the event that
any date on which distributions are to be made on the Preferred Securities is
not a Business Day, then payment of the distributions payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such record date. A "Business Day" shall mean
any day other than a day on which banking institutions in New York, New York
are authorized or required by law to close.
Subordination of Common Securities
Payment of distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, shall be made pro rata based
on the Liquidation Distribution of the Preferred Securities and Common
Securities; provided, however, that if on any payment date for distributions or
the Redemption Price an Indenture Event of Default (as defined under "--
Declaration Events of Default") shall have occurred and be continuing, no
payment of any distribution on, or applicable Redemption Price of, any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of the Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid distributions on all of
the outstanding Preferred Securities for all distribution periods terminating
on or prior thereto, or in the case of payment of the Redemption Price, the
full amount of such Redemption Price, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all distributions on, or the Redemption Price of,
the Preferred Securities then due and payable.
In the case of any Declaration Event of Default (as defined under "--
Declaration Events of Default"), Motorola as holder of the Common Securities
will be deemed to have waived any right to act with respect to such Declaration
Event of Default until the effect of such Declaration Event of Default shall
have been cured, waived or otherwise eliminated. Until any such Declaration
Event of Default has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Preferred
Securities and not on behalf of Motorola as holder of the Common Securities,
and only the holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.
Mandatory Redemption
Upon the repayment of the Subordinated Debentures, whether at maturity or
upon redemption, the proceeds from such repayment or redemption shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the
26
<PAGE>
Subordinated Debentures so repaid or redeemed at the Redemption Price; provided
that, holders of Trust Securities shall be given not less than 30 nor more than
60 days' notice of such redemption. See "--Special Event Redemption." The
Subordinated Debentures will mature on , 2039 unless the Maturity
Date is changed at the option of Motorola (provided in the case of an extension
of the Maturity Date that certain financial conditions are met), and may be
redeemed, in whole or in part, at any time on or after , 2004 or at
any time, in whole or in part, upon the occurrence of a Special Event. See
"Description of the Subordinated Debentures--Optional Redemption" and "--Option
to Change Scheduled Maturity Date." In the event that fewer than all of the
outstanding Trust Securities are to be redeemed, the Trust Securities will be
redeemed pro rata to each holder according to the aggregate liquidation amount
of Trust Securities held by the relevant holder in relation to the aggregate
liquidation amount of all Trust Securities outstanding. See "--Book-Entry
Issuance--The Depository Trust Company" below for a description of DTC's
procedures in the event of redemption.
Special Event Redemption
If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "Special Event") shall occur and be continuing, Motorola shall
have the right, upon not less than 30 nor more than 60 days' notice, to redeem
the Subordinated Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debentures so redeemed shall be redeemed
by the Trust at the Redemption Price on a pro rata basis.
"Tax Event" means that the Regular Trustees shall have received an
opinion of an independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date thereof,
subject to United States federal income tax with respect to interest accrued or
received on the Subordinated Debentures, (ii) the Trust is, or will be within
90 days after the date thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges, or (iii) interest payable to the
Trust on the Subordinated Debentures is not, or within 90 days of the date
thereof will not be, deductible, in whole or in part, by the Company for United
States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in practice under the
1940 Act, to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than insubstantial risk that the Trust
is or will be considered an "investment company" which is required to be
registered under the 1940 Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities.
Redemption Procedures
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption. If a partial redemption of the Preferred
Securities would result in the delisting of the Preferred Securities by a
national securities exchange or other organization on which the Preferred
Securities are listed, then, pursuant to the Indenture, Motorola may only
redeem the Subordinated Debentures in whole and, as a result, the Trust may
only redeem the Preferred Securities in whole.
27
<PAGE>
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Motorola has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the Trust will
irrevocably deposit with DTC or its nominee funds sufficient to pay the
applicable Redemption Price and will give DTC irrevocable instructions to pay
the Redemption Price to the holders of the Preferred Securities. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding
Business Day (without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that Motorola fails to repay the Subordinated Debentures on maturity or payment
of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust or by Motorola pursuant to
the Trust Guarantee, distributions on such Preferred Securities will continue
to accrue at the then applicable rate from the original redemption date to the
actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed as described
below under "--Book-Entry Issuance--The Depository Trust Company."
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), Motorola or its
subsidiaries may at any time, and from time to time, purchase outstanding
Preferred Securities by tender offer, in the open market or by private
agreement.
Distribution of the Subordinated Debentures
At any time, Motorola will have the right to terminate the Trust and,
after satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust.
Under current United States federal income tax law and interpretations
and assuming, as expected, the Trust is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in such law, a
change in the legal interpretation thereof, a Special Event or other
circumstances, however, the distribution of the Subordinated Debentures could
be a taxable event to the holders of the Preferred Securities. In addition, a
dissolution of the Trust in which holders of the Preferred Securities receive
cash would be a taxable event to such holders. See "United States Federal
Income Taxation--US Holders--Receipt of Subordinated Debentures or Cash Upon
Liquidation of the Trust."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Motorola will use its best efforts to cause the
Subordinated Debentures to be listed on the NYSE or on such other exchange,
interdealer quotation system or other organization as the Preferred Securities
are then listed.
After the date for any distribution of Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) DTC or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates
28
<PAGE>
representing Preferred Securities not held by DTC or its nominee will be deemed
to represent Subordinated Debentures having an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and accrued and unpaid interest equal to accrued
and unpaid distributions on, such Preferred Securities until such certificates
are presented to Motorola or its agent for transfer or reissuance.
If Motorola elects to liquidate the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of the Trust, Motorola shall have the right to
shorten the maturity of such Subordinated Debentures to a date not earlier than
, 2004. In addition, Motorola would retain the right to extend the
maturity of such Subordinated Debentures to a date not later than the earlier
of (i) , 2048 or (ii) the Interest Deduction Date, provided that it
can extend the maturity only if certain conditions are met. See "Description of
the Subordinated Debentures--Option to Change Scheduled Maturity Date."
There can be no assurance as to the market prices for either the
Preferred Securities or the Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Subordinated Debentures that an investor may receive if a dissolution
and liquidation of the Trust were to occur, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby.
Liquidation Distribution upon Dissolution
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each, a "Liquidation"), the then
holders of the Preferred Securities will be entitled to receive on a pro rata
basis solely out of the assets of the Trust, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, a Liquidation
Distribution in an amount equal to the aggregate of the stated liquidation
amount of $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment, unless, in connection with such Liquidation,
Subordinated Debentures in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Preferred Securities have been distributed on a
pro rata basis to the holders of the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
the Trust on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Preferred Securities,
except that if an Indenture Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities
with respect to such distributions.
Termination
Pursuant to the Declaration, the Trust shall dissolve upon the earliest
of (i) , 2054, (ii) the bankruptcy of Motorola, (iii) the filing of a
certificate of dissolution or its equivalent with respect to Motorola or the
revocation of the charter of Motorola and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) the distribution of
the Subordinated Debentures from the Trust, (v) the entry of a decree of a
judicial dissolution of Motorola or the Trust, (vi) the redemption of all the
Trust Securities, (vii) the occurrence and continuance of a Special Event
pursuant to which the Trust shall have been dissolved and all Subordinated
Debentures shall have been distributed or (viii) before the issuance of any
Trust Securities, when all Regular Trustees and the Sponsor shall have
consented.
29
<PAGE>
Declaration Events of Default
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that, pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until
all Declaration Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated. See "Description of the
Subordinated Debentures--Indenture Events of Default." Until such Declaration
Event of Default with respect to the Preferred Securities has been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the holders of the Preferred Securities and only the
holders of the Preferred Securities will have the right to direct the Property
Trustee with respect to certain matters under the Declaration, and therefore
the Indenture.
Upon the occurrence of a Declaration Event of Default, the Indenture
Trustee or the Property Trustee, as the holder of the Subordinated Debentures,
will have the right under the Indenture to declare the principal of and
interest on the Subordinated Debentures to be immediately due and payable.
Motorola and the Trust are each required to file annually with the Property
Trustee an officer's certificate as to its compliance with all conditions and
covenants under the Declaration.
Voting Rights
Except as described herein or under "Description of the Trust Guarantee--
Modification of the Trust Guarantee; Assignment," as otherwise provided under
the Trust Act or the Trust Indenture Act or as otherwise required by law or the
Declaration, the holders of the Preferred Securities will have no voting
rights.
Subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority of the Preferred Securities have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or direct the exercise of any trust
or power conferred upon the Property Trustee under the Declaration, including
the right to direct the Property Trustee, as holder of the Subordinated
Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Subordinated Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Subordinated Debentures,
where such consent would be required; provided, however, that, where a consent
or action under the Indenture would require the consent or act of the holders
of greater than a majority in principal amount of Subordinated Debentures
affected thereby (a "Super Majority"), the Property Trustee may only give such
consent or take such action at the written direction of the holders of at least
the proportion of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Subordinated Debentures
outstanding. The Property Trustee shall, within 90 days after the occurrence of
an Indenture Event of Default, notify all holders of the Preferred Securities
of any notice of default received from the Indenture Trustee with respect to
the Subordinated Debentures. Except with respect to directing the time, method
and place of conducting a proceeding for a remedy, the Property Trustee shall
not take any of the actions described in clauses (i), (ii), (iii) or (iv) above
unless the Property Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
consent under the
30
<PAGE>
Indenture would require the consent of a Super Majority, the Property Trustee
may only give such consent at the direction of the holders of at least the
proportion in liquidation amount of the Trust Securities which the relevant
Super Majority represents of the aggregate principal amount of the Subordinated
Debentures outstanding. The Property Trustee shall not take any such action in
accordance with the directions of the holders of the Trust Securities unless
the Property Trustee has obtained an opinion of tax counsel to the effect that
the Trust will not be classified as other than a grantor trust for United
States federal income tax purposes on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth the following information: (i) the date
of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Preferred Securities will be required for the
Trust to redeem and cancel Preferred Securities or distribute Subordinated
Debentures in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Motorola or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Motorola, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise
their voting rights are described under "--Book-Entry Issuance--The Depository
Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the Trustees, who may be appointed, removed or replaced solely by
Motorola as the direct or indirect holder of all of the Common Securities.
Modification of the Declaration
The Declaration may be modified and amended if approved by a majority of
the Regular Trustees (and, in certain circumstances, the Property Trustee
and/or the Delaware Trustee), provided that, if any proposed amendment provides
for, or the Regular Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority of the Trust Securities affected thereby;
provided that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made
to the Declaration if such amendment or modification would (i) cause the Trust
to be classified as other than a grantor trust for United States federal income
tax purposes, (ii) reduce or otherwise adversely affect the powers of the
Property Trustee or (iii) cause a Special Event.
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Mergers, Consolidations or Amalgamations
The Trust may not consolidate, amalgamate, merge with or into or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Property Trustee or the Delaware Trustee, consolidate, amalgamate, merge with
or into, or be replaced by a trust organized as such under the laws of any
State; provided that, (i) such successor entity either (A) expressly assumes
all of the obligations of the Trust under the Trust Securities or (B)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities"), so long as the
Successor Securities rank the same as the Trust Securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii)
Motorola expressly acknowledges a trustee of such successor entity possessing
the same powers and duties as the Property Trustee as the holder of the
Subordinated Debentures, (iii) the Preferred Securities or any Successor
Securities with respect to the Preferred Securities are listed, or any such
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities with respect to the Preferred
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in
the new entity), (vi) such successor entity has a purpose identical to that of
the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, Motorola has received an opinion of an independent counsel to the
Trust experienced in such matters to the effect that, (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and (C) the Trust will continue to be classified as
a grantor trust for federal income tax purposes, and (viii) Motorola guarantees
the obligations of such successor entity under the Successor Securities at
least to the extent provided by the Trust Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of all holders of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced
by any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified
as other than a grantor trust for United States federal income tax purposes or
each holder of the Trust Securities not to be treated as owning an undivided
interest in the Subordinated Debentures.
Book-Entry Issuance--The Depository Trust Company
DTC will act as securities depository for the Preferred Securities. The
Preferred Securities initially will be issued only as fully registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully registered global Preferred Securities certificates, representing the
total aggregate number of Preferred Securities, will be issued and delivered to
DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC has advised Motorola and the Trust that DTC is (i) a limited-purpose
trust company organized under the New York Banking Law, (ii) a "banking
organization" within the meaning of the New York Banking Law, (iii) a member of
the Federal Reserve System, (iv) a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and (v) a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants
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("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the NYSE, the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or
indirect custodial relationship with a Direct Participant ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
Purchases of Preferred Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities
deposited by Participants with DTC are registered in the name of DTC's nominee,
Cede & Co. The deposit of Preferred Securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Preferred Securities. DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in such Preferred Securities to be
redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). Motorola and the Trust believe that the arrangements among
DTC, Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in the Trust.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in
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bearer form or registered in "street name," and such payments will be the
responsibility of such Participant and not of DTC, the Trust or Motorola,
subject to any statutory or regulatory requirements that may be in effect from
time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as depository with respect to
the Preferred Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depository
is not obtained, Preferred Securities certificates would be required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
the Company) may decide to discontinue use of the system of book-entry
transfers through DTC (or any successor depository) with respect to the
Preferred Securities. In that event, certificates for the Preferred Securities
would be printed and delivered.
We have been informed by DTC that its management is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems." We have also been informed
by DTC that it has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payments of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. According to DTC, this program includes a technical
assessment and a remediation plan, each of which is complete. Additionally, DTC
has informed us that its plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, we have been informed by DTC that its ability to perform
properly its services is also dependent upon other parties, including but not
limited to issuers and their agents, as well as third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunications and
electrical utility service providers, among others. DTC has informed us that it
is contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (1) impress upon them the importance of such services
being Year 2000 compliant; and (2) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC has informed us that it is in the process of developing such
contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Motorola and the Trust believe to be
reliable, but neither Motorola nor the Trust takes responsibility for the
accuracy thereof.
Information Concerning the Property Trustee
The Property Trustee, prior to the occurrence of an event of default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration, in the terms of the Trust Securities
or in the Trust Indenture Act and, after default, shall exercise the same
degree of care as a prudent individual would exercise in the conduct of his or
her own affairs. Subject to such provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by
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the Declaration at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of Preferred
Securities will not be required to offer such indemnity in the event such
holders, by exercising their voting rights, direct the Property Trustee to take
any action following a Declaration Event of Default. The Property Trustee also
serves as Guarantee Trustee.
Harris is trustee under indentures with Motorola (i) dated as of March
15, 1985 relating to its 8.40% Debentures due August 15, 2031, (ii) dated as of
October 1, 1991 relating to its 7.60% Notes due January 1, 2007 and 6 1/2%
Notes due March 1, 2008 and (iii) dated as of May 1, 1995 relating to its 5.80%
Notes due October 15, 2008, 7 1/2% Debentures due May 15, 2025, 6 1/2%
Debentures due September 1, 2025, 6 1/2% Debentures due November 15, 2028 and
5.22% Debentures due October 1, 2097. Harris has also extended credit
facilities to Motorola and a subsidiary of Motorola and conducts business with
Motorola and certain of its affiliates, including cash management and stock
transfer services. Harris also serves as the rights agent under Motorola's
Rights Agreement dated as of November 5, 1998.
Paying Agent
In the event that the Preferred Securities do not remain in book-entry
form, the following provisions would apply:
. The Property Trustee will act as paying agent, and may designate an
additional or substitute paying agent at any time.
. Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or Motorola may require) in
respect of any tax or other government charges that may be imposed in
relation to it.
. The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have
been called for redemption.
Governing Law
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or be characterized as other than a grantor trust
for United States federal income tax purposes. Motorola is authorized and
directed to conduct its affairs so that the Subordinated Debentures will be
treated as indebtedness of Motorola for United States federal income tax
purposes. In this connection, Motorola and the Regular Trustees are authorized
to take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the restated certificate of incorporation of Motorola, as
amended, that each of Motorola and the Regular Trustees determines in their
discretion to be necessary or desirable to achieve such end, as long as such
action does not adversely affect the interests of the holders of the Preferred
Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
References in this prospectus to any payment, distribution or treatment
as being "pro rata" means pro rata to each holder of Trust Securities according
to the aggregate liquidation amount of the Trust Securities held by the
relevant holder in relation to the aggregate liquidation amount of all Trust
Securities outstanding unless, in relation to a payment, a Declaration Event of
Default has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each holder of
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the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the holders of the Preferred Securities, to
each holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant holder relative to
the aggregate liquidation amount of all Common Securities outstanding. When the
Property Trustee is making payments on the Trust Securities, it is entitled to
assume that no Declaration Event of Default has occurred and is continuing
unless the Declaration Event of Default is actually known to a responsible
officer of the Property Trustee.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Set forth below is a description of the material terms of the
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. The following description does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, dated as of January , 1999, as supplemented by a
Supplemental Indenture, dated as of January , 1999, between Motorola and
Harris as Indenture Trustee (the "Indenture"), each of which is filed as an
exhibit to the registration statement of which this prospectus forms a part.
Certain capitalized terms used herein are defined in the Indenture.
At any time, Motorola will have the right to liquidate the Trust and
cause the Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. See "Description of the Preferred
Securities--Distribution of the Subordinated Debentures."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Motorola will use its best efforts to have the
Subordinated Debentures listed on the NYSE or on such other exchange on which
the Preferred Securities are then listed.
General
The Subordinated Debentures:
. will be issued as unsecured subordinated debt securities under the
Indenture;
. will be limited in aggregate principal amount to approximately $515
million, such amount being the sum of the aggregate stated liquidation
amount of the Preferred Securities and the capital contributed by
Motorola in exchange for the Common Securities (the "Company Payment");
and
. will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compounded Interest (as defined under
"--Option to Extend Interest Payment Period"), if any, on , 2039,
subject to the election of Motorola to shorten or extend the scheduled
Maturity Date of the Subordinated Debentures, which election in the case
of an extension of the scheduled Maturity Date is subject to Motorola's
satisfying certain financial conditions. See "--Option to Change
Scheduled Maturity Date."
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, it is
presently anticipated that such Subordinated Debentures will initially be
issued in the form of one or more Global Securities (as defined under "--Book-
Entry and Settlement"). As described herein, under certain limited
circumstances, Subordinated Debentures may be issued in definitive certificated
form in exchange for a Global Security. See "--Book-Entry and Settlement"
below. In the event that Subordinated Debentures are issued in definitive
certificated form, such Subordinated Debentures will be in denominations of $25
and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Subordinated Debentures issued as a Global
Security will be made to DTC or its nominee, or a successor depository or its
nominee. In the event Subordinated Debentures are issued in definitive
certificated form, principal and interest will be
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payable, the transfer of the Subordinated Debentures will be registrable and
Subordinated Debentures will be exchangeable for Subordinated Debentures of
other denominations of a like aggregate principal amount at the corporate trust
offices of the Indenture Trustee in Chicago, Illinois or that of any successor
Trustee; provided that payment of interest may be made at the option of
Motorola by check mailed to the address of the persons entitled thereto.
The Indenture does not contain provisions that afford holders(s) of the
Subordinated Debentures protection in the event of a highly leveraged
transaction involving Motorola or other similar transaction that may adversely
affect such holders. The Subordinated Debentures are not entitled to the
benefit of any sinking fund provisions.
Subordination
The Indenture provides that the Subordinated Debentures are subordinated
and junior in right of payment to the prior payment in full of all Senior
Indebtedness of Motorola whether now existing or hereafter incurred. In the
event and during the continuation of any default by Motorola in the payment of
principal, premium, interest or any other payment due on any Senior
Indebtedness of Motorola, or in the event that the maturity of any Senior
Indebtedness of Motorola has been accelerated because of a default, then in
either case, no payment will be made by Motorola with respect to the principal
(including redemption payments) of or interest on the Subordinated Debentures.
Upon any distribution of assets of Motorola to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness
of Motorola must be paid in full before the holders of Subordinated Debentures
are entitled to receive or retain any payment. In the event that the
Subordinated Debentures are declared due and payable before the Maturity Date,
then all amounts due or to become due on all Senior Indebtedness shall have
been paid in full before holders of the Subordinated Debentures are entitled to
receive or retain any payment. Upon satisfaction of all claims of all Senior
Indebtedness then outstanding, the rights of the holders of the Subordinated
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness of Motorola to receive payments or distributions applicable to
Senior Indebtedness until all amounts owing on the Subordinated Debentures are
paid in full.
The term "Senior Indebtedness" means all indebtedness of Motorola,
whether now existing or hereafter created, but excluding trade accounts payable
arising in the ordinary course of business, and includes all series of
Motorola's outstanding LYONs(TM). Without limiting the generality of the
foregoing, "Senior Indebtedness" shall include the principal of, premium, if
any, and interest on: (i) all indebtedness of Motorola outstanding, created,
incurred or assumed, which is for money borrowed, or evidenced by a note or
similar instrument given in connection with the acquisition of any business,
properties or assets, including securities; (ii) any indebtedness of others of
the kinds described in the preceding clause (i) for the payment of which
Motorola is responsible or liable as guarantor or otherwise; and (iii)
amendments, renewals, extensions and refundings of any such indebtedness,
unless in any instrument or instruments evidencing or securing such
indebtedness or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding, it is expressly provided that such
indebtedness is not superior in right of payment to the Subordinated
Debentures. "Senior Indebtedness" does not include any indebtedness of Motorola
to any of its Subsidiaries. Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of the Senior
Indebtedness or extension or renewal of the Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Motorola. At December 31, 1998, the aggregate amount of
Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries
that would have effectively ranked senior to the Subordinated Debentures was
approximately $10.6 billion.
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The Indenture does not limit the amount of additional indebtedness
Motorola or any of its subsidiaries may incur. The Subordinated Debentures will
be obligations exclusively of Motorola. Since the operations of Motorola are
partially conducted through subsidiaries, its cash flow and consequent ability
to service debt, including the Subordinated Debentures, are partially dependent
upon the earnings of its subsidiaries. The subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Subordinated Debentures or to make funds
available therefor, whether by dividends, loans or other payments. In addition,
the payment of dividends and the making of loans and advances to Motorola by
its subsidiaries may be subject to statutory or contractual restrictions, are
contingent upon the earnings of those subsidiaries, and are subject to various
business considerations.
Any right of Motorola to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the right of the holder(s) of the
Subordinated Debentures to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that Motorola is itself recognized as a
creditor of such subsidiary, in which case the claims of Motorola would be
subordinate to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by Motorola. As of December
31, 1998, Motorola's subsidiaries had outstanding approximately $4.0 billion of
liabilities.
Optional Redemption
Motorola shall have the right to redeem the Subordinated Debentures (i)
at any time, in whole or in part, from time to time, on or after , 2004 or
(ii) at any time, in whole or in part, upon the occurrence of a Special Event
as described under "Description of the Preferred Securities--Special Event
Redemption," upon not less than 30 nor more than 60 days' notice, at an amount
equal to the Redemption Price. If a partial redemption of the Preferred
Securities resulting from a partial redemption of the Subordinated Debentures
would result in the delisting of the Preferred Securities, Motorola may only
redeem the Subordinated Debentures in whole.
Interest
Each Subordinated Debenture shall bear interest at the rate of % per
annum from the original date of issuance, or from the most recent interest
payment date to which interest has been paid or provided for, payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of each year
(each an "Interest Payment Date"), commencing , 1999, to the person in
whose name such Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Preferred Securities are no longer in
book-entry only form, or if the Subordinated Debentures shall be distributed to
the holders of the Preferred Securities and shall not be in book-entry form,
Motorola shall have the right to select record dates, which shall conform to
the rules of any securities exchange on which the Subordinated Debentures are
then listed and shall be at least ten Business Days but less than 60 Business
Days prior to the Interest Payment Date. Any installment of interest not
punctually paid will cease to be payable to the holders of the Subordinated
Debentures on the regular record date and may be paid to the person in whose
name the Subordinated Debentures are registered at the close of business on a
special record date to be fixed by the Indenture Trustee for the payment of
such defaulted interest, notice of which shall be given to the holders of the
Subordinated Debentures not less than ten days prior to such special record
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange, interdealer quotation system
or other organization on which the Subordinated Debentures may be listed, and
upon such notice as may be required by such exchange, system or organization.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed, will be computed on the basis of the actual number of days elapsed
per 90-day quarter. In the event that any date on which interest is payable on
the Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding Business Day (and
without any interest or other payment in respect of any such delay),
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except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
Option to Change Scheduled Maturity Date
The "Scheduled Maturity Date" of the Subordinated Debentures is ,
2039. Motorola, however, may extend such maturity date ( , 2039 or the
maturity date then in effect, as the case may be, is referred to herein as the
"Maturity Date") for one or more periods but in no event later than the earlier
of (i) , 2048 or (ii) the Interest Deduction Date. The "Interest
Deduction Date" shall mean the date which is six months earlier than the ending
date of the maximum term (beginning on the date of issue of the Subordinated
Debentures and including any extensions thereof), as determined under any
federal statute applicable by its terms to the Subordinated Debentures which is
enacted at any time after the issuance of the Subordinated Debentures
(including, but not limited to, at any time after an extension of the Maturity
Date), of a debt instrument for which interest is deductible for federal income
tax purposes. In no event shall the extended Maturity Date be later than the
Interest Deduction Date even if the Maturity Date has previously been extended
to a date beyond the Interest Deduction Date. Motorola must exercise its right
to extend the term at least 90 days prior to the Maturity Date then in effect
and must satisfy the following conditions on the date Motorola exercises such
right and on the Maturity Date then in effect prior to such proposed extension:
(a) Motorola is not in bankruptcy or otherwise insolvent, (b) Motorola is not
in default on any Subordinated Debenture issued to the Trust or to any trustee
of the Trust in connection with an issuance of Trust Securities by the Trust,
(c) Motorola has made timely payments on the Subordinated Debentures for the
immediately preceding six quarters without deferrals, (d) the Trust is not in
arrears on payments of distributions on the Trust Securities, (e) the
Subordinated Debentures or Preferred Securities are rated investment grade by
any one of Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., Moody's Investors Service, Inc., Fitch Investor Services, Duff
& Phelps Credit Rating Company or any other nationally recognized statistical
rating organization and (f) the final maturity of such Subordinated Debentures
is not later than , 2048. Pursuant to the Declaration, the Regular
Trustees are required to give notice of Motorola's election to change the
Maturity Date to the holders of the Preferred Securities.
In addition, if Motorola exercises its right to liquidate the Trust and
distribute the Subordinated Debentures as discussed above under "Description of
the Preferred Securities--Distribution of the Subordinated Debentures,"
effective upon such exercise the Maturity Date of the Subordinated Debentures
may be changed to any date elected by Motorola that is no earlier than ,
2004. In addition, the Company would retain the right to extend the maturity of
the Subordinated Debentures to any date elected by Motorola which is not later
than the earlier of (a) , 2048 or (b) the Interest Deduction Date;
provided that on the date Motorola exercises such right and on the Maturity
Date in effect prior to such proposed extension the conditions specified in the
previous paragraph are satisfied.
Option to Extend Interest Payment Period
Motorola has the right at any time, and from time to time, during the
term of the Subordinated Debentures to defer payments of interest by extending
the interest payment period for a period not exceeding 20 consecutive quarters,
at the end of which Extension Period, Motorola shall pay all interest then
accrued and unpaid, together with interest thereon compounded quarterly at the
rate specified for the Subordinated Debentures to the extent permitted by
applicable law ("Compounded Interest"); provided that no Extension Period shall
extend beyond the Maturity Date; and provided further that, during any such
Extension Period, Motorola may not (a) declare or pay dividends on, make
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by Motorola that rank equal with or junior to
the Subordinated Debentures or (c) make guarantee payments with respect to the
foregoing (other than pursuant to the Trust Guarantee);
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provided, further, that the restriction in clause (a) does not apply to (i)
purchases or acquisitions of Motorola's capital stock in connection with the
satisfaction of its obligations under any employee benefit plans, stock option
plans, employee stock purchase plans or direct reinvestment plans as may be in
effect from time to time or the satisfaction of its obligations pursuant to any
contract or security outstanding on the date of such event requiring Motorola
to purchase its capital stock (other than a contractual obligation ranking
equal with or junior to the Subordinated Debentures), (ii) reclassifications of
Motorola's capital stock or the exchange or conversion of one class or series
of Motorola's capital stock for another class or series of Motorola's capital
stock, provided that such reclassification, exchange or conversion does not
result in a change in the priority vis-a-vis the Preferred Securities of any
class or series of capital stock that is being so reclassified or that is the
subject of such exchange or conversion, (iii) purchases of fractional interests
in shares of Motorola's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(iv) stock dividends paid by Motorola where the dividend stock is the same
stock as that on which the dividend is being paid or (v) redemptions or
purchases of any rights pursuant to purchase rights contained in any rights
agreement as shall be in effect from time to time, which purchase rights are
substantially similar to those contained in Motorola's current rights
agreement. Prior to the termination of any such Extension Period, Motorola may
further defer payments of interest by extending the interest payment period;
provided, however, that such Extension Period, including all such previous and
further extensions, may not exceed 20 consecutive quarters or extend beyond the
Maturity Date. Upon the termination of any Extension Period and the payment of
all amounts then due, Motorola may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. Motorola has no present
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Subordinated Debentures.
If the Property Trustee shall be the sole holder of the Subordinated
Debentures, Motorola shall give the Regular Trustees and the Property Trustee
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Preferred Securities are payable
or (ii) the date the Regular Trustees are required to give notice to holders of
the Preferred Securities (or to any national securities exchange or other
organization on which the Preferred Securities are listed) of the record date
or the date such distribution is payable. The Regular Trustees shall give
notice of Motorola's selection of such Extension Period to the holders of the
Preferred Securities. If the Property Trustee shall not be the sole holder of
the Subordinated Debentures, Motorola shall give the holders of the
Subordinated Debentures notice of its selection of such Extension Period ten
Business Days prior to the earlier of (i) the next succeeding Interest Payment
Date or (ii) the date upon which Motorola is required to give notice to holders
of the Subordinated Debentures (or to any national securities exchange or other
organization on which the Subordinated Debentures are listed) of the record or
payment date of such related interest payment.
Additional Interest
If the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges (other than withholding taxes),
Motorola will pay as additional interest on the Subordinated Debentures held by
the Property Trustee, such additional amounts as shall be required so that the
net amounts received and retained by the Trust and the Property Trustee after
paying such taxes, duties, assessments or other governmental charges will be
equal to the amounts the Trust and the Property Trustee would have received had
no such taxes, duties, assessments or other governmental charges been imposed.
Certain Covenants
Motorola has covenanted, with respect to the Subordinated Debentures,
that for so long as the Preferred Securities and the Common Securities remain
outstanding Motorola will (i) maintain 100% direct or indirect ownership of the
Common Securities; provided, however, that any permitted successor of Motorola
under the Indenture may succeed to Motorola's ownership of the Common
Securities, (ii) not voluntarily dissolve, wind-up or terminate the Trust,
except in connection with the distribution of
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Subordinated Debentures or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, (iii) timely perform its duties as
sponsor of the Trust, (iv) use its reasonable efforts to cause the Trust (a) to
remain a business trust, except in connection with a distribution of the
Subordinated Debentures, the redemption of all of the Preferred Securities and
Common Securities of the Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) otherwise continue
not to be treated as an association taxable as a corporation or partnership for
United States federal income tax purposes and (v) to use its reasonable efforts
to cause each holder of Preferred Securities and Common Securities to be
treated as owning an individual beneficial interest in the Subordinated
Debentures.
Consolidation, Merger, Conveyance, Transfer or Lease
Motorola, without the consent of any holder of Subordinated Debentures,
may consolidate or merge with or into, or transfer or lease its assets
substantially as an entirety to, any entity, and any other entity may
consolidate or merge with or into, or transfer or lease its assets
substantially as an entirety to, Motorola; provided that (i) the entity (if
other than Motorola) formed by such consolidation or into which Motorola is
merged or which acquires or leases such assets of Motorola is organized and
existing under the laws of any United States jurisdiction and assumes
Motorola's obligations on the Subordinated Debentures and under the Indenture,
(ii) after giving effect to such transaction, no Indenture Event of Default,
and no event which, after notice or lapse of time or both, would become an
Indenture Event of Default, shall have happened and be continuing and (iii)
certain other conditions are met.
Indenture Events of Default
The following are Indenture Events of Default: (a) failure to pay
principal of (or premium, if any) on the Subordinated Debentures when due; (b)
failure to pay any installment of interest on the Subordinated Debentures when
due (other than pursuant to Motorola's deferral rights), which failure shall
continue for 30 days; (c) failure to perform any other covenant of Motorola in
the Indenture (other than a covenant included in the Indenture solely for the
benefit of any series of securities other than the Subordinated Debentures),
continued for 60 days after written notice as provided in the Indenture; and
(d) certain events in bankruptcy, insolvency or reorganization. If an Indenture
Event of Default with respect to the Subordinated Debentures shall occur and be
continuing, either the Indenture Trustee or the holders of at least 25% in
principal amount of the Subordinated Debentures may declare the principal
amount of and interest on the Subordinated Debentures (including any Compounded
Interest and any other amounts payable under the Indenture) to be due and
payable immediately; provided that, in the case of certain events of
bankruptcy, insolvency or reorganization, such principal amount (or portion
thereof) shall automatically become due and payable. However, at any time after
an acceleration with respect to the Subordinated Debentures has occurred, but
before a judgment or decree based on such acceleration has been obtained, the
holders of a majority in principal amount of the Subordinated Debentures may,
under certain circumstances, rescind and annul such acceleration.
The Indenture provides that, subject to the duty of the Indenture Trustee
during default to act with the required standard of care, the Indenture Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Indenture Trustee reasonable security or
indemnity. Subject to such provisions for indemnification of the Indenture
Trustee and certain other limitations, the holders of a majority in principal
amount of the Subordinated Debentures will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee, or exercising any trust or power conferred on the Indenture
Trustee, with respect to the Subordinated Debentures.
An Indenture Event of Default also constitutes a Declaration Event of
Default. If any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Subordinated Debentures, will have the
right to declare the principal of and the interest on the Subordinated
Debentures (including any Compounded Interest and any other amounts payable
under the Indenture) to be forthwith due and payable immediately and to enforce
its other rights as a creditor with respect to the Subordinated
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Debentures. If the Property Trustee fails to enforce its rights with respect to
the Subordinated Debentures held by the Trust to the fullest extent permitted
by law, any holder of Preferred Securities may institute legal proceedings
directly against Motorola to enforce the Property Trustee's rights under such
Subordinated Debentures without first instituting any legal proceedings against
the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Motorola to pay interest or
principal on the Subordinated Debentures issued to the Trust on the date such
interest or principal is otherwise payable, then any holder of Preferred
Securities may institute a proceeding directly against Motorola for enforcement
of payment to the holder of the Preferred Securities of the principal of or
interest on the Subordinated Debentures on or after the respective due dates
specified in the Subordinated Debentures (taking into account any Extension
Periods), and the amount of the payment will be based on the holder's pro rata
share of the amount due and owing on all of the Preferred Securities. The
holders of Preferred Securities in certain circumstances have the right to
direct the Property Trustee to exercise its rights, with respect to other than
principal and interest payments on the Subordinated Debentures, as the holder
of the Subordinated Debentures. See "Description of the Preferred Securities--
Declaration Events of Default" and "Description of the Preferred Securities--
Voting Rights."
The rights of the holders of Preferred Securities and the Property
Trustee upon the occurrence of an Indenture Event of Default or a Declaration
Event of Default are subject to the subordination provisions of the Indenture,
as described under "--Subordination."
Motorola will be required to furnish to the Indenture Trustee annually a
statement as to the performance by Motorola of certain of its obligations under
the Indenture and as to any default in such performance.
Defeasance and Covenant Defeasance
The Indenture provides that Motorola may elect either (A) to defease and
be discharged from any and all obligations in respect of the Subordinated
Debentures (except for certain obligations to register the transfer or exchange
of the Subordinated Debentures, to replace temporary, destroyed, stolen, lost
or mutilated certificates, to maintain paying agencies and to hold monies for
payment in trust) ("defeasance") or (B) to omit to comply with substantially
all of the restrictive covenants in the Indenture ("covenant defeasance"), in
either case upon the deposit with the Indenture Trustee (or other qualifying
trustee), in trust, of money and/or U.S. government obligations, which through
the payment of interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay the principal of
(and premium, if any) and each installment of interest, if any, on the
Subordinated Debentures as and when due. Such a trust may only be established
if, among other things, Motorola has delivered to the Indenture Trustee an
opinion of counsel (who may be counsel for Motorola) to the effect that the
holders of the Subordinated Debentures will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred. Such opinion, in the case of
defeasance under clause (A) above, must refer to and be based upon a ruling of
Internal Revenue Service or a change in applicable Federal income tax law
occurring after the date of the Indenture.
In the event Motorola exercises its option to omit compliance with
certain covenants of the Indenture as described above and the Subordinated
Debentures are declared due and payable because of the occurrence of any
Indenture Event of Default, the amount of money and U.S. government obligations
on deposit with the Indenture Trustee would be sufficient to pay amounts due on
the Subordinated Debentures as and when due, but might not be sufficient to pay
amounts due on the Subordinated Debentures at the time of the acceleration
resulting from such Indenture Event of Default. However, Motorola would remain
liable for such payments.
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Modification and Waiver
Modifications and amendments of the Indenture may be made by Motorola and
the Indenture Trustee with the consent of the holders of a majority in
principal amount of the Subordinated Debentures; provided, however, that no
such modification or amendment may, without the consent of the holder(s) of
each of the Subordinated Debentures, (a) change the stated maturity date of the
principal of, or any installment of principal of or interest on, any
Subordinated Debenture, (b) reduce the principal amount of (or premium, if any)
or interest, if any, on, any Subordinated Debenture, (c) change the place or
currency of payment of principal of (or premium, if any) or interest, if any,
on, any Subordinated Debenture, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Subordinated Debenture or
(e) reduce the percentage in principal amount of the Subordinated Debentures,
the consent of the holders of which is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults.
The holders of a majority in principal amount of the Subordinated
Debentures may on behalf of the holders of all Subordinated Debentures waive
compliance by Motorola with certain restrictive provisions of the Indenture.
The holders of a majority in principal amount of the Subordinated Debentures
may on behalf of the holders of all Subordinated Debentures waive any past
default under the Indenture with respect to the Subordinated Debentures except
a default in the payment of the principal of (or premium, if any) or interest,
if any, on any Subordinated Debenture or in respect of any provision which
under the Indenture cannot be modified or amended without the consent of the
holder(s) of each Subordinated Debenture.
Book-Entry and Settlement
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust,
it is presently anticipated that the Subordinated Debentures will be issued in
the form of one or more global certificates (each a "Global Security")
registered in the name of DTC or its nominee. Except under the limited
circumstances described below, Subordinated Debentures represented by the
Global Security will not be exchangeable for, and will not otherwise be
issuable as, Subordinated Debentures in definitive form. The Global Securities
described above may not be transferred except by the depository to a nominee of
the depository or by a nominee of the depository to the depository or another
nominee of the depository or to a successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below under "--Discontinuance of Depository Services,"
owners of beneficial interests in such a Global Security will not be entitled
to receive physical delivery of Subordinated Debentures in definitive form and
will not be considered the holders (as defined in the Indenture) thereof for
any purpose under the Indenture, and no Global Security representing
Subordinated Debentures shall be exchangeable, except for another Global
Security of like denomination and tenor to be registered in the name of the
depository or its nominee or to a successor depository or its nominee.
Accordingly, each beneficial owner must rely on the procedures of the
depository or if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest to exercise any rights
of a holder under the Indenture.
The Depository
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depository for the Subordinated Debentures. For a description of
DTC and the specific terms of the depository arrangements, see "Description of
the Preferred Securities--Book-Entry Issuance--The Depository Trust Company."
As of
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the date of this prospectus, the description therein of DTC's book-entry system
and DTC's practices as they relate to purchases, transfers, notices and
payments with respect to the Preferred Securities apply in all material
respects to any debt obligations represented by one or more Global Securities
held by DTC. Motorola may appoint a successor to DTC or any successor
depository in the event DTC or such successor depository is unable or unwilling
to continue as the depository for the Global Securities.
None of Motorola, the Trust, the Indenture Trustee, any paying agent and
any other agent of Motorola or the Indenture Trustee 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 Security
for such Subordinated Debentures or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Discontinuance of the Depository's Services
A Global Security shall be exchangeable for Subordinated Debentures in
definitive certificated form registered in the names of persons other than the
depository or its nominee only if (i) the depository notifies Motorola that it
is unwilling or unable to continue as a depository for such Global Security and
no successor depository shall have been appointed, (ii) the depository, at any
time, ceases to be a clearing agency registered under the Exchange Act at which
time the depository is required to be so registered to act as such depository
and no successor depository shall have been appointed or (iii) Motorola, in its
sole discretion, determines that such Global Security shall be so exchangeable.
Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Subordinated Debentures registered in such names as
the depository shall direct. It is expected that such instructions will be
based upon directions received by the depository from its Participants with
respect to ownership of beneficial interests in such Global Security.
Governing Law
The Indenture and the Subordinated Debentures will be governed by, and
construed in accordance with, the internal laws of the State of New York.
Miscellaneous
Motorola will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Subordinated Debentures, (ii) the organization,
maintenance and dissolution of the Trust, (iii) the retention of the Trustees
and (iv) the enforcement by the Property Trustee of the rights of the holders
of the Preferred Securities.
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DESCRIPTION OF THE TRUST GUARANTEE
Set forth below is a summary of the material terms of the Trust Guarantee
that will be executed and delivered by Motorola for the benefit of the holders
of Preferred Securities. The Trust Guarantee will be qualified as an indenture
under the Trust Indenture Act. Harris will act as independent indenture trustee
for Trust Indenture Act purposes under the Trust Guarantee. The terms of the
Trust Guarantee will be those set forth in the Trust Guarantee itself and those
made part of such Trust Guarantee by the Trust Indenture Act. The following
summary does not purport to be complete and is subject to and qualified in its
entirety by reference to the provisions of the Trust Guarantee, a copy of which
has been filed as an exhibit to the Registration Statement of which this
prospectus forms a part, and the Trust Indenture Act. The Trust Guarantee will
be held by the Guarantee Trustee for the benefit of the holders of the
Preferred Securities.
General
Pursuant to the Trust Guarantee, Motorola will agree, to the extent set
forth therein, to pay in full to the holders of the Preferred Securities, the
Guarantee Payments (as defined below) (except to the extent paid by the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim
which the Trust may have or assert. The following payments or distributions
with respect to the Preferred Securities (the "Guarantee Payments"), to the
extent not paid by the Trust, will be subject to the Trust Guarantee (without
duplication): (i) any accrued and unpaid distributions that are required to be
paid on such Preferred Securities, to the extent the Trust shall have funds
available therefor, (ii) the Redemption Price, to the extent the Trust has
funds available therefor, with respect to any Preferred Securities called for
redemption by the Trust and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with a
distribution of the Subordinated Debentures to the holders of Preferred
Securities or the redemption of all of the Preferred Securities upon maturity
or redemption of the Subordinated Debentures) the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent the Trust has funds
available therefor or (b) the amount of assets of the Trust remaining for
distribution to holders of such Preferred Securities in liquidation of the
Trust. Motorola's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by Motorola to the holders of Preferred
Securities or by causing the Trust to pay such amounts to such holders.
The Trust Guarantee will not apply to any payment of distributions except
to the extent the Trust shall have funds available therefor. If Motorola does
not make interest or principal payments on the Subordinated Debentures, the
Trust will not pay distributions on the Preferred Securities issued by the
Trust and will not have funds available therefor. As a result, holders of
Preferred Securities will not be able to rely upon the Trust Guarantee for
payment of these amounts. Instead, holders of Preferred Securities or the
Property Trustee may enforce the rights of the Trust under the Subordinated
Debentures directly against Motorola.
Certain Covenants of Motorola
In the Trust Guarantee, Motorola will covenant that, so long as any
Preferred Securities issued by the Trust remain outstanding, if there shall
have occurred any event of default under the Trust Guarantee or under the
Declaration, then Motorola may not (a) declare or pay dividends on, make
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by Motorola that rank equal with or junior to
the Subordinated Debentures or (c) make any guarantee payments with respect to
the foregoing (other than pursuant to the Trust Guarantee); provided, however,
that the restriction in clause (a) does not apply to (i) purchases or
acquisitions of Motorola's capital stock in connection with the satisfaction of
its obligations under any employee benefit plans, stock option plans, employee
stock purchase plans or direct reinvestment plans as may be in effect from time
to time or the satisfaction of its obligations pursuant to any contract or
security outstanding on the date of such event requiring Motorola to purchase
its capital stock (other than a contractual obligation ranking equal with or
junior to the Subordinated Debentures),
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(ii) reclassifications of Motorola's capital stock or the exchange or
conversion of one class or series of Motorola's capital stock for another class
or series of Motorola's capital stock, provided that such reclassification,
exchange or conversion does not result in a change in the priority vis-a-vis
the Preferred Securities of any class or series of capital stock that is being
so reclassified or that is the subject of such exchange or conversion, (iii)
purchases of fractional interests in shares of Motorola's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (iv) stock dividends paid by Motorola
where the dividend stock is the same stock as that on which the dividend is
being paid or (v) redemptions or purchases of any rights pursuant to purchase
rights contained in any rights agreement as shall be in effect from time to
time, which purchase rights are substantially similar to those contained in
Motorola's current rights agreement.
Modification of the Trust Guarantee; Assignment
Except with respect to any changes that do not adversely affect the
rights of holders of Preferred Securities (in which case no consent of such
holders will be required), the Trust Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation amount
of the outstanding Preferred Securities. All guarantees and agreements
contained in the Trust Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Motorola and shall inure to the benefit of the
holders of the Preferred Securities then outstanding.
Events of Default
An event of default under the Trust Guarantee will occur upon the failure
of Motorola to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the outstanding Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect of
the Trust Guarantee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Trust Guarantee.
If the Guarantee Trustee fails to enforce the Trust Guarantee to the
fullest extent permitted by law, any holder of Preferred Securities may
institute a legal proceeding directly against Motorola to enforce the Guarantee
Trustee's rights under the Trust Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if Motorola has failed to make a
Guarantee Payment under the Trust Guarantee, a holder of Preferred Securities
may directly institute a proceeding against Motorola for enforcement of the
Trust Guarantee for such payment to the holder of the Preferred Securities of
the principal of or interest on the Subordinated Debentures on or after the
respective due dates specified in the Subordinated Debentures, and the amount
of the payment will be based on such holder's pro rata share of the amounts due
and owing on all of the Preferred Securities. Motorola has waived any right or
remedy to require that any action be brought first against the Trust or any
other person or entity before proceeding directly against Motorola.
The rights of the holders of Preferred Securities and the Guarantee
Trustee upon the occurrence of an event of default under the Trust Guarantee
are subject to the subordination provisions of the Trust Guarantee, as
described under "--Status of the Trust Guarantee," below.
Motorola will be required to provide annually to the Guarantee Trustee a
statement as to the performance by Motorola of certain of its obligations under
the Trust Guarantee and as to any default in such performance.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of an event of default
with respect to the Trust Guarantee, undertakes to perform only such duties as
are specifically set forth in the Trust Guarantee and, after an event of
default with respect to the Trust Guarantee, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Trust
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Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
Termination
The Trust Guarantee will terminate as to the Preferred Securities issued
by the Trust upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) distribution of the Subordinated Debentures to the holders of
all of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. Notwithstanding
the foregoing, the Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities issued by the Trust must restore payment of any sums paid under the
Preferred Securities or the Trust Guarantee.
Status of the Trust Guarantee
The Trust Guarantee will constitute an unsecured obligation of Motorola
and will rank (i) subordinate and junior in right of payment to all other
liabilities of Motorola, including all series of Motorola's outstanding
LYONs(TM), except those made equal or subordinate by their terms, (ii) equal
with the most senior preferred or preference stock now or hereafter issued by
Motorola and with any guarantee now or hereafter entered into by Motorola in
respect of any preferred or preference stock of any affiliate of Motorola,
(iii) senior to Motorola's Common Stock and (iv) effectively subordinated to
the liabilities and obligations of Motorola's subsidiaries to the same extent
as the Subordinated Debentures, as described below. The terms of the Preferred
Securities provide that each holder of Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of the Trust
Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against Motorola to enforce its rights under such Trust Guarantee
without instituting a legal proceeding against any other person or entity).
The Indenture does not limit the amount of additional indebtedness
Motorola or any of its subsidiaries may incur. The Subordinated Debentures and
the Trust Guarantee will be obligations exclusively of Motorola. Since the
operations of Motorola are partially conducted through subsidiaries, its cash
flow and consequent ability to service debt and satisfy its other obligations,
including those under the Trust Guarantee, are partially dependent upon the
earnings of its subsidiaries. The subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts
due pursuant to the Subordinated Debentures or the Trust Guarantee or to make
funds available therefor, whether by dividends, loans or other payments. In
addition, the payment of dividends and the making of loans and advances to
Motorola by its subsidiaries may be subject to statutory or contractual
restrictions, are contingent upon the earnings of those subsidiaries, and are
subject to various business considerations.
Any right of Motorola to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the consequent right of the holder(s)
of the Subordinated Debentures or a party seeking to enforce the Trust
Guarantee to participate in those assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except
to the extent that Motorola is itself recognized as a creditor of such
subsidiary, in which case the claims of Motorola would be subordinate to any
security interests in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by Motorola. As of December 31, 1998,
Motorola's subsidiaries had outstanding approximately $4.0 billion of
liabilities.
Governing Law
The Trust Guarantee will be governed by, and construed in accordance
with, the internal laws of the State of New York.
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<PAGE>
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED
DEBENTURES AND THE TRUST GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to (i)
issue the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, (ii) invest the proceeds from such issuance and sale in
the Subordinated Debentures and (iii) engage in only those other activities
necessary or incidental thereto.
As long as payments of interest and other payments are made when due on
the Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because: (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the Preferred Securities; (iii) Motorola shall pay all, and the Trust
shall not be obligated to pay, directly or indirectly, any, costs, expenses,
debts and obligations (other than with respect to the Trust Securities) related
to the Trust; and (iv) the Declaration provides that the Trustees shall not
cause or permit the Trust to, among other things, engage in any activity that
is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available)
and other payments due on the Preferred Securities (to the extent funds
therefor are available) are guaranteed by Motorola as and to the extent set
forth above under "Description of the Trust Guarantee." If Motorola does not
make interest and/or principal payments on the Subordinated Debentures
purchased by the Trust, the Trust will not have sufficient funds to pay
distributions on the Preferred Securities. The Trust Guarantee will not apply
to the payment of distributions and other payments on the Preferred Securities
when the Trust does not have sufficient funds to make such distributions or
other payments. As a result, holders of Preferred Securities will not be able
to rely upon the Trust Guarantee for payment of these amounts. Instead, holders
of Preferred Securities or the Property Trustee may enforce the rights of the
Trust under the Subordinated Debentures directly against Motorola.
The Trust Guarantee will constitute an unsecured obligation of Motorola
and will rank (i) subordinate and junior in right of payment to all other
liabilities of Motorola, including all series of Motorola's outstanding
LYONs(TM), except those made equal or subordinate by their terms, (ii) equal
with the most senior preferred or preference stock now or hereafter issued by
Motorola and with any guarantee now or hereafter entered into by Motorola in
respect of any preferred or preference stock of any affiliate of Motorola,
(iii) senior to Motorola's Common Stock and (iv) effectively subordinated to
the liabilities and obligations of Motorola's subsidiaries to the same extent
as the Subordinated Debentures, as described below.
The Indenture does not limit the amount of additional indebtedness
Motorola or any of its subsidiaries may incur. The Subordinated Debentures and
the Trust Guarantee will be obligations exclusively of Motorola. Since the
operations of Motorola are partially conducted through subsidiaries its cash
flow and consequent ability to service debt, including the Subordinated
Debentures, and to satisfy its other obligations, including those under the
Trust Guarantee, are partially dependent upon the earnings of its subsidiaries.
The subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
Subordinated Debentures or the Trust Guarantee or to make funds available
therefor, whether by dividends, loans or other payments. In addition, the
payment of dividends and the making of loans and advances to Motorola by its
subsidiaries may be subject to statutory or contractual restrictions, are
contingent upon the earnings of those subsidiaries, and are subject to various
business considerations.
Any right of Motorola to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the right of the holder(s) of the
Subordinated Debentures or a party seeking to enforce the Trust Guarantee to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the extent
that Motorola is itself
48
<PAGE>
recognized as a creditor of such subsidiary, in which case the claims of
Motorola would be subordinate to any security interests in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by
Motorola. As of December 31, 1998, Motorola's subsidiaries had outstanding
approximately $4.0 billion of liabilities.
The Trust Guarantee, when taken together with the back-up undertakings,
consisting of obligations of Motorola as set forth in the Declaration
(including the obligation to pay expenses of the Trust), the Indenture and any
applicable supplemental indentures thereto, and the Subordinated Debentures
issued to the Trust, provide a full and unconditional guarantee by Motorola of
the amounts due on the Preferred Securities. If Motorola fails to make interest
or other payments on the Subordinated Debentures when due (taking into account
any Extension Period), the Declaration provides a mechanism whereby the holders
of the Preferred Securities, using the procedures described in "Description of
the Preferred Securities--Book-Entry Issuance--The Depository Trust Company"
and "Description of the Preferred Securities--Voting Rights," may direct the
Property Trustee to enforce its rights under the Subordinated Debentures. If
the Property Trustee fails to enforce its rights under the Subordinated
Debentures to the fullest extent permitted by law, any holder of Preferred
Securities may institute a legal proceeding against Motorola to enforce the
Property Trustee's rights under the Subordinated Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of Motorola to pay interest or principal on the Subordinated Debentures
on the date such interest or principal is otherwise payable (taking into
account any Extension Periods), then any holder of Preferred Securities may
directly institute a legal proceeding against Motorola for payment of its pro
rata share of principal and interest. Motorola, under the Trust Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Trust Guarantee on
behalf of the holders of the Preferred Securities. If Motorola fails to make
payments under the Trust Guarantee, the Trust Guarantee provides a mechanism
whereby the holders of the Preferred Securities may direct the Guarantee
Trustee to enforce its rights thereunder. Notwithstanding the foregoing, if
Motorola has failed to make a payment under the Trust Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against Motorola
for enforcement of the Trust Guarantee with respect to payment to the record
holder of the Preferred Securities of the principal or interest on the
Subordinated Debentures held by the Trust on or after the respective due dates
specified in the Subordinated Debentures (taking into account any Extension
Periods), without first instituting a legal proceeding against the Trust, the
Guarantee Trustee, or any other person or entity.
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UNITED STATES FEDERAL INCOME TAXATION
General
This general summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations thereunder, and administrative and
judicial interpretations thereof, each as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. The authorities on which
this general summary is based are subject to various interpretations, and the
opinions expressed herein are not binding on the IRS or the courts, either of
which could take a contrary position. Moreover, no rulings have been or will be
sought from the IRS with respect to the transactions described herein.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Except as otherwise stated, this general summary deals only with
Preferred Securities held as a capital asset (within the meaning of section
1221 of the Code) by a holder who or which (i) purchased the Preferred
Securities upon original issuance at their original offering price and (ii) is
a US Holder (as defined below). This summary does not address all the tax
consequences that may be relevant to a US Holder, nor does it address the tax
consequences, except as stated below, to holders that are not US Holders ("Non-
US Holders") or to holders that may be subject to special tax treatment (such
as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in securities or
currencies, other financial institutions, tax-exempt organizations, persons
holding the Preferred Securities as a position in a "straddle," or as part of a
"synthetic security," "hedging," as part of a "conversion" transaction or other
integrated investment, persons having a functional currency other than the U.S.
Dollar, and certain United States expatriates). Further, this summary does not
address (a) the income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of the Preferred Securities, (b) the United States
federal alternative minimum tax consequences of the purchase, ownership or
disposition of the Preferred Securities, or (c) any state, local or foreign tax
consequences of the purchase, ownership and disposition of Preferred
Securities.
A "US Holder" is a holder of the Preferred Securities who or which is (i)
a citizen or individual resident (or is treated as a citizen or individual
resident under the Code) of the United States for income tax purposes, (ii) a
corporation or partnership created or organized (or treated as created or
organized for federal income tax purposes) in or under the laws of the United
States or any political subdivision thereof (other than any such partnership
treated as foreign under U.S. Treasury regulations which may be issued under a
recently enacted amendment to the Code), (iii) an estate the income of which is
includible in its gross income for United States federal income tax purposes
without regard to its source, or (iv) a trust if (a) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (b) one or more United States persons have the authority to control
all substantial decisions of the trust.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
Classification of the Subordinated Debentures
In the opinion of Kirkland & Ellis, legal counsel for Motorola and the
Trust, the Subordinated Debentures will be classified for United States federal
income tax purposes as indebtedness of Motorola under current law. By
acceptance of Preferred Securities, each holder covenants to treat the
Subordinated Debentures as indebtedness and the Preferred Securities as
evidence of an indirect beneficial ownership interest in the Subordinated
Debentures. No assurance can be given, however, that the classification of the
Subordinated Debentures as debt will not be challenged by the IRS or, if
challenged, that such a
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<PAGE>
challenge will not be successful. A successful IRS challenge to the
classification of the Subordinated Debentures as debt would prevent Motorola
from deducting the interest paid or accrued on the Subordinated Debentures for
United States federal income tax purposes and could constitute a Tax Event.
Additionally, if the interest on the Subordinated Debentures is not deductible
it could adversely affect Motorola's ability to make payments on the
Subordinated Debentures. The remainder of this discussion assumes that the
Subordinated Debentures will be classified as indebtedness of Motorola for
United States federal income tax purposes.
Classification of the Trust
In the opinion of Kirkland & Ellis, legal counsel for Motorola and the
Trust, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation
under current law and assuming full compliance with the terms of the
Declaration. Accordingly, for United States federal income tax purposes, each
holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Subordinated Debentures and each US Holder will be
required to include in gross income all interest on (including OID accrued, if
any) or gain recognized for United States federal income tax purposes with
respect to its allocable share of the Subordinated Debentures.
US Holders
Interest Income and Original Issue Discount
Under applicable Treasury regulations (the "Regulations"), remote
contingencies that stated interest will not be timely paid are ignored in
determining whether a debt instrument is issued with OID. If the Subordinated
Debentures are treated as issued with OID, such OID must be included in income
by all holders as it accrues economically on a daily basis, without regard to
when it is paid in cash or whether a particular holder generally uses the cash
method of accounting. Motorola has concluded that the likelihood of its
exercising its option to defer payments of interest is remote. This conclusion
is based on Motorola's analysis, as of the date of issue of the Subordinated
Debentures, of various facts and circumstances deemed relevant to exercising
such deferral option, including, among other things, the inability of Motorola
(a) to declare or pay a dividend, or engage in certain other capital
transactions, with respect to its capital stock, or (b) to make any payment of
principal of or interest or premium, if any, on, or repay, repurchase or
redeem, any debt of Motorola that ranks equal with or junior to the
Subordinated Debentures if the deferral option is exercised. Based upon this
conclusion and in the absence of any specific definition of "remote" in the
applicable Regulations, in the opinion of Kirkland & Ellis, although the matter
is not entirely free from doubt, the Subordinated Debentures will not be
subject to the OID rules unless Motorola exercises its option to extend the
interest payment period. As a consequence, holders of the Preferred Securities
should report interest under their own methods of accounting (e.g., cash or
accrual) instead of under the daily economic accrual rules for OID instruments.
Under the Regulations, if Motorola exercises its option to defer payments
of interest, the Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum of the remaining interest payments on the
Subordinated Debentures would thereafter be treated as OID, which would accrue,
and be includible in a US Holder's taxable income, on an economic accrual basis
(regardless of the US Holder's method of accounting for income tax purposes)
over the remaining term of the Subordinated Debentures (including any period of
interest deferral), without regard to the timing of payments under the
Subordinated Debentures.
The IRS could take the position that the likelihood that Motorola would
exercise its right to defer payments of interest is not a "remote" contingency
for purposes of the OID rules, in which case, the Subordinated Debentures would
be treated as initially issued with OID in an amount equal to the aggregate
stated interest over the term of the Subordinated Debentures. That OID would
generally be includible in a US Holder's taxable income, over the term of the
Subordinated Debentures, on an economic accrual basis.
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<PAGE>
Characterization of Income
Because the income underlying the Preferred Securities will not be
classified as dividends for income tax purposes, corporate US Holders of
Preferred Securities will not be entitled to a dividends-received deduction for
any income recognized with respect to the Preferred Securities.
Sales of Preferred Securities
A US Holder that sells Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the
Preferred Securities and such holder's adjusted tax basis in such Preferred
Securities. To the extent of any accrued but unpaid interest, the amount
realized on the sale of such Preferred Securities will be treated as ordinary
income. Assuming Motorola does not defer interest on the Subordinated
Debentures by extending the interest payment period, a US Holder's "adjusted
tax basis" in the Preferred Securities generally will equal its initial
purchase price. If Motorola elects to defer interest payments, a US Holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price increased by any OID previously included in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities after Motorola exercises its option to extend the current
interest payment period and prior to the date of disposition. Any gain or loss
recognized generally will be a capital gain or loss. The highest marginal
individual federal income tax rate (which applies to ordinary income and gain
from sales or exchanges of capital assets held for one year or less) is 39.6%.
The maximum regular federal income tax rate on capital gains derived by
individual taxpayers is 20% for sales and exchanges of capital assets held for
more than one year. All net capital gain of a corporate taxpayer is subject to
tax at ordinary corporate income tax rates of up to 35%.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of Preferred Securities between
record dates for payments of distributions thereon will be required to include
in income (to the extent not previously included in income) as ordinary income
amounts attributable to accrued and unpaid interest on the Subordinated
Debentures through the date of disposition and the amount realized on
disposition excludes the portion of the sales price treated as interest. To the
extent the selling price is less than the holder's adjusted tax basis, a holder
will recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
If Motorola elects to defer payments of interest, the market value of the
Preferred Securities will likely fall. Furthermore, the market value of the
Preferred Securities may not reflect the accumulated distribution that will be
paid at the end of the Extension Period. A US Holder who disposes of Preferred
Securities during an Extension Period will be required to include as ordinary
income the accrued OID on the Subordinated Debentures through the date of
disposition as ordinary income and add such amount to the US Holder's adjusted
basis in the pro rata share of Preferred Securities disposed of. To the extent
the selling price is less than the US Holder's adjusted tax basis, the US
Holder will recognize capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
Receipt of Subordinated Debentures or Cash Upon Liquidation of the Trust
Under certain circumstances described herein (see "Description of the
Preferred Securities--Distribution of the Subordinated Debentures"), the Trust
may distribute the Subordinated Debentures to holders in exchange for the
Preferred Securities and in liquidation of the Trust. Except as discussed
below, such a distribution would not be a taxable event for United States
federal income tax purposes, and each US Holder would have an aggregate
adjusted basis in its Subordinated Debentures for United States federal income
tax purposes equal to such holder's aggregate adjusted basis in its Preferred
Securities. (For a description of adjusted basis in the Preferred Securities,
see discussion above in "--Sales of Preferred Securities.") For United States
federal income tax purposes, a US Holder's
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<PAGE>
holding period in the Subordinated Debentures received in such a liquidation of
the Trust would include the period during which the Preferred Securities were
held by the holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities" and "Description of the Subordinated Debentures"), the
Subordinated Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Preferred Securities.
Such a redemption would be taxable for United States federal income tax
purposes, and a US Holder would recognize gain or loss as if it had sold the
Preferred Securities for cash. See "--Sales of Preferred Securities" above.
Potential Tax Law Changes
From time to time, certain tax law changes have been proposed that would
deny interest deductions to corporate issuers of debt instruments with terms
that include certain of the terms of the Subordinated Debentures. In addition,
the IRS has challenged taxpayers' treatment as indebtedness of securities
issued with characteristics similar to the Subordinated Debentures. To date,
such tax law change proposals have not been enacted and the only known
challenge that has advanced as far as litigation was settled short of trial,
with a resolution favorable to the taxpayer's position. However, if any similar
tax law change were enacted or any such challenge by the IRS were upheld, such
event could give rise to a Tax Event which could result in an early redemption
of the Preferred Securities. See "Description of the Preferred Securities--
Special Event Redemption."
Non-US Holders
Payments to a Non-US holder will generally not be subject to withholding
of income tax, provided that such holder of the Preferred Securities (a) does
not (directly or indirectly, actually or constructively) own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (b) is not a controlled foreign corporation that is related to the
Company through stock ownership and (c) is not a bank receiving interest
described in section 881(c)(3)(A) of the Code. To qualify for this exemption
from withholding taxation, the last United States payor in the chain of payment
prior to payment to a Non-US Holder (the "Withholding Agent") must have
received in the year in which a payment of interest or principal occurs prior
to such payment, or in either of the two preceding calendar years, a statement
that (a) is signed by the holder of the Preferred Securities under penalties of
perjury, (b) certifies that such holder is not a US Holder and (c) provides the
name and address of the holder. The statement may be made on an IRS Form W-8 or
a substantially similar form, and the holder must inform the Withholding Agent
of any change in the information on the statement within 30 days of such
change. If the Preferred Securities are held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the holder to the organization or
institution.
As discussed above (see "--Potential Tax Law Changes"), changes in
legislation, if any, affecting the income tax consequences of the Subordinated
Debentures could adversely affect the ability of Motorola to deduct the
interest payable on the Subordinated Debentures. Moreover, any such legislation
could adversely affect Non-US Holders by characterizing income derived from the
Subordinated Debentures as dividends, generally subject to a 30% income tax (on
a withholding basis) when paid to a Non-US Holder, rather than as interest
which, as discussed above, is generally exempt from income tax in the hands of
a Non-US Holder.
A Non-US Holder of a Preferred Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of Preferred Securities.
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A Non-US Holder that holds Preferred Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Subordinated Debentures.
Backup Withholding
Backup withholding of United States federal income tax at a rate of 31%
may apply to payments made in respect of the Preferred Securities to registered
owners who are not "exempt recipients" and who fail to provide certain
identifying information (such as the registered owner's taxpayer identification
number) in the required manner. Generally, individuals are not exempt
recipients, whereas corporations and certain other entities generally are
exempt recipients. Payments made in respect of the Preferred Securities to a US
Holder must be reported to the IRS, unless the US Holder is an exempt recipient
or establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those Non-US Holders who are not exempt recipients.
In addition, upon the sale of the Preferred Securities to (or through) a
broker, the broker must withhold 31% of the entire purchase price, unless
either (i) the broker determines that the seller is a corporation or other
exempt recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a Non-US Holder, certifies that
such seller is a Non-US Holder (and certain other conditions are met). Such a
sale must also be reported by the broker to the IRS, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
certifies its Non-U.S. status (and certain other conditions are met).
Certification of the registered owner's Non-U.S. status would be made normally
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.
Final Withholding Regulations
Recently promulgated Treasury regulations (the "Final Regulations"),
effective for payments made after December 31, 1999, provide alternative
methods for satisfying the certification requirements described above under
"Non-US Holders" and "Backup Withholding." The Final Regulations also will
require, in the case of Preferred Securities held by foreign partnerships, that
(i) the certification described above be provided by the partners rather than
the foreign partnership (unless the foreign partnership agrees to become a
"withholding foreign partnership") and (ii) the partnership provides certain
information, including a US taxpayer identification number. A look-through rule
will apply in the case of tiered partnerships. Prospective investors are urged
to consult their own tax advisors regarding the Final Regulations.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
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UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement") among Motorola, the Trust and each of
the underwriters named below (collectively, the "Underwriters"), the Trust has
agreed to sell to each of the Underwriters named herein, and each of the
Underwriters for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G.
Edwards & Sons, Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated, Prudential Securities Incorporated and Salomon Smith
Barney Inc. are acting as representatives (the "Representatives"), has
severally agreed to purchase from the Trust, the respective number of Preferred
Securities set forth below opposite its name. In the Underwriting Agreement,
the several Underwriters have agreed, subject to the terms and conditions set
forth therein, to purchase all of the Preferred Securities offered hereby if
any of the Preferred Securities are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
Number of
Preferred
Underwriter Securities
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
A.G. Edwards & Sons, Inc.......................................
Goldman, Sachs & Co............................................
Morgan Stanley & Co. Incorporated..............................
PaineWebber Incorporated.......................................
Prudential Securities Incorporated.............................
Salomon Smith Barney Inc.......................................
----------
Total..................................................... 20,000,000
==========
</TABLE>
The Underwriters propose initially to offer the Preferred Securities to
the public at the public offering price set forth on the cover page of this
prospectus, and to certain dealers at such price less a concession not in
excess of $ per Preferred Security. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $ per Preferred
Security to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used by the Trust to purchase the Subordinated Debentures of
Motorola, the Underwriting Agreement provides that Motorola will pay as
compensation ("Underwriters' Compensation") to the Underwriters arranging the
investment therein of such proceeds, an amount of $ per
Preferred Security (or $ in the aggregate) for the accounts of
the several Underwriters; provided that, such compensation for sales of 10,000
or more Preferred Securities to any single purchaser will be $ per
Preferred Security. Therefore, to the extent of such sales, the actual amount
of Underwriters' Compensation will be less than the aggregate amount specified
in the preceding sentence.
During a period of 30 days from the date of this prospectus, neither the
Trust nor the Company will, without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated on behalf of the Underwriters, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any Preferred Securities, Subordinated Debentures or Trust
Guarantee, any security convertible into or exchangeable into or exercisable
for any of such securities or any securities substantially similar to any of
such securities (except for the Preferred Securities, Subordinated Debentures
and Trust Guarantee offered hereby).
55
<PAGE>
Prior to this offering, there has been no public market for the Preferred
Securities. The Preferred Securities have been approved for listing on the
NYSE, subject to official notice of issuance. Trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. The Representatives have advised
the Trust that they intend to make a market in the Preferred Securities prior
to the commencement of trading on the NYSE. The Representatives have no
obligation to make a market in the Preferred Securities, however, and may cease
market making activities, if commenced, at any time. No assurance can be given
as to the liquidity of the trading market for the Preferred Securities.
In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
Until the distribution of the Preferred Securities is completed, the
rules of the SEC may limit the ability of the Underwriters to bid for and
purchase the Preferred Securities. As an exception to these rules, the
Underwriters will be permitted to engage in certain transactions that stabilize
the price of the Preferred Securities. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Preferred Securities.
If the Underwriters create a short position in the Preferred Securities
in connection with this offering, i.e., if they sell more Preferred Securities
than are set forth on the cover page of this prospectus, the Representatives
may reduce that short position by purchasing Preferred Securities in the open
market.
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Preferred Securities they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those Preferred Securities as part of this offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.
Neither the Company nor the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Preferred Securities. In addition,
neither the Company nor the Underwriters make any representation that the
Underwriters will engage in such transactions. Any such transactions, once
commenced, may be discontinued at any time without notice.
The Company and the Trust have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
From time to time, the Underwriters and certain of their affiliates have
engaged, and may in the future engage, in transactions with, and perform
services for, Motorola and its affiliates in the ordinary course of business.
Motorola will pay all expenses associated with the offer and sale of the
Preferred Securities. Motorola estimates that such expenses, excluding
Underwriters' Compensation, will be approximately $550,000.
56
<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Trust by Richards, Layton &
Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Trust. The
validity of the Subordinated Debentures, the Trust Guarantee and certain
matters relating thereto, will be passed upon on behalf of the Company and the
Trust by Carol H. Forsyte of the Company's Law Department. As of January 19,
1999, Ms. Forsyte owned approximately 160 shares of Common Stock and held
options to purchase 10,600 shares of Common Stock, of which options to purchase
3,000 shares were currently exercisable. Certain legal matters will be passed
upon for the Company and the Trust by Kirkland & Ellis (a partnership including
professional corporations), Chicago, Illinois. Certain legal matters will be
passed upon for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements and schedules of the Company and
its consolidated subsidiaries as of December 31, 1997 and 1996 and for each of
the years in the three-year period ended December 31, 1997 have been
incorporated by reference in this prospectus and in the registration statement
in reliance upon the reports of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in auditing and accounting.
57
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
1940 Act.................................................................... 7
Beneficial Owner............................................................ 33
Business Day................................................................ 26
Change in 1940 Act Law...................................................... 27
Code........................................................................ 50
Common Securities........................................................... 5
Company..................................................................... 5
Company Payment............................................................. 36
Compounded Interest......................................................... 39
covenant defeasance......................................................... 42
Declaration................................................................. 16
Declaration Event of Default................................................ 30
defeasance.................................................................. 42
Delaware Trustee............................................................ 5
Direct Participants......................................................... 33
DTC......................................................................... 9
DTC Services................................................................ 34
Exchange Act................................................................ 3
Extension Period............................................................ 25
Final Regulations........................................................... 54
First Union................................................................. 5
Form 10-K................................................................... 3
Global Security............................................................. 43
Guarantee Payments.......................................................... 45
Guarantee Trustee........................................................... 16
Harris...................................................................... 5
Indenture................................................................... 36
Indenture Event of Default.................................................. 30
Indenture Trustee........................................................... 5
Indirect Participants....................................................... 33
Industry.................................................................... 34
Interest Deduction Date..................................................... 39
Interest Payment Date....................................................... 38
Investment Company Event.................................................... 27
IRS......................................................................... 15
Liquidation................................................................. 29
Liquidation Distribution.................................................... 8
LYONs....................................................................... 8
Maturity Date............................................................... 39
Motorola.................................................................... 5
Non-US Holder............................................................... 50
NYSE........................................................................ 3
OID......................................................................... 6
Participants................................................................ 33
Preferred Securities........................................................ 5
Property Trustee............................................................ 5
Property Trustee Account.................................................... 16
Redemption Price............................................................ 7
Regular Trustees............................................................ 16
Regulations................................................................. 51
Representatives............................................................. 55
Scheduled Maturity Date..................................................... 39
SEC......................................................................... 3
</TABLE>
58
<PAGE>
<TABLE>
<S> <C>
Senior Indebtedness......................................................... 37
Special Event............................................................... 13
Sponsor..................................................................... 16
Subordinated Debentures..................................................... 5
Successor Securities........................................................ 32
Super Majority.............................................................. 30
Systems..................................................................... 34
Tax Event................................................................... 27
Trust....................................................................... 3
Trust Indenture Act......................................................... 16
Trust Guarantee............................................................. 7
Trust Securities............................................................ 5
Trustees.................................................................... 5
Underwriters................................................................ 55
Underwriters' Compensation.................................................. 55
Underwriting Agreement...................................................... 55
US Holder................................................................... 50
Withholding Agent........................................................... 53
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20,000,000
Preferred Securities
Motorola Capital
Trust I
% Trust Originated
Preferred SecuritiesSM
("TOPrSSM")
Fully and Unconditionally
Guaranteed by
[MOTOROLA, INC. LOGO]
-----------------
PROSPECTUS
-----------------
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
Goldman, Sachs & Co.
Morgan Stanley Dean Witter
PaineWebber Incorporated
Prudential Securities Incorporated
Salomon Smith Barney
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the Registrant in connection with the issuance and
distribution of the securities being registered:
<TABLE>
<S> <C>
Registration Fee........................................ $139,000
Legal Fees and Expenses................................. 100,000
Trustee Fees and Expenses............................... 23,000
Accounting Fees and Expenses............................ 30,000
Blue Sky Fees and Expenses.............................. 10,000
Printing Fees........................................... 100,000
Rating Agency Fees...................................... 37,000
Listing Fees............................................ 100,000
Miscellaneous........................................... 11,000
--------
Total............................................... $550,000
========
</TABLE>
- --------
* Estimated pursuant to instruction to Item 511 of Regulation S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law contains detailed
provisions for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation.
The Registrant's Restated Certificate of Incorporation and its directors'
and officers' liability insurance policy provide for indemnification of its
directors and officers against certain liabilities.
Under the Declaration, the Trust will agree to indemnify each of the
Trustees and to hold each Trustee harmless against, any loss, damage, claims,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Declaration, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties under the Declaration.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation, as amended, including
Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A (incorporated by reference
to Exhibit 3(b)(i) to the Registrant's Quarterly Report on Form 10-
Q for the quarter ended April 2, 1994 (File No. 1-7221)).
3.2 By-Laws of Motorola, Inc., as amended (incorporated by reference to
Exhibit 3(ii) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 27, 1998 (File No.
1-7221)).
***3.3 Certificate of Designations, Preferences and Rights of Junior
Participating Preferred Stock, Series B.
**4.1 Certificate of Trust of Motorola Capital Trust I.
**4.2 Declaration of Trust of Motorola Capital Trust I.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
*4.3 Form of Amended and Restated Declaration of Trust.
*4.4 Form of Preferred Securities Guarantee Agreement.
*4.5 Form of Preferred Security.
*4.6 Form of % Subordinated Deferrable Interest Debenture.
*4.7 Form of Subordinated Indenture.
*4.8 Form of Supplemental Indenture.
**4.9 Specimen 6 1/2% Debenture due November 15, 2028.
*5.1 Opinion and Consent of Carol H. Forsyte, Esq.
**5.2 Opinion and Consent of Richards, Layton & Finger, P.A.
**8 Opinion and Consent of Kirkland & Ellis.
***12 Statement re: Computation of ratio of earnings to fixed charges.
*23.1 Consent of Carol H. Forsyte (included as part of Exhibit 5.1).
**23.2 Consent of Richards, Layton & Finger, P.A. (included as part of
Exhibit 5.2).
**23.3 Consent of Kirkland & Ellis (included as part of Exhibit 8).
**23.4 Consent of KPMG LLP.
24 Powers of Attorney (included on signature page).
**25 Statement of Eligibility of Harris Trust and Savings Bank, as
Trustee, on Form T-1.
</TABLE>
- --------
*To be filed by amendment.
**Filed herewith.
***Previously Filed
ITEM 17. UNDERTAKINGS
(a) The 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 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.
(b) The Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act ("Act") in accordance with the
rules and regulations prescribed by the Securities and Exchange Commission
under Section 305(b)(2) of the Act.
(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.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4)
II-2
<PAGE>
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Village of Schaumburg and the State of Illinois, on the
25th day of January, 1999.
Motorola, Inc.
*
By: _______________________________
Carl F. Koenemann
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chief Executive Officer January 25,
_________________________________ and Director (Principal 1999
Christopher B. Galvin Executive Officer)
* Executive Vice President January 25,
_________________________________ and Chief Financial 1999
Carl F. Koenemann Officer (Principal
Financial Officer)
* Corporate Vice President January 25,
_________________________________ and Controller (Principal 1999
Anthony Knapp Accounting Officer)
* Director January 25,
_________________________________ 1999
Ronnie C. Chan
* Director January 25,
_________________________________ 1999
H. Laurance Fuller
* Director January 25,
_________________________________ 1999
Robert W. Galvin
* Director January 25,
_________________________________ 1999
Robert L. Growney
* Director January 25,
_________________________________ 1999
Anne P. Jones
* Director January 25,
_________________________________ 1999
Donald R. Jones
* Director January 25,
_________________________________ 1999
Judy C. Lewent
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director January 25,
_________________________________ 1999
Walter E. Massey
* Director January 25,
_________________________________ 1999
Thomas J. Murrin
* Director January 25,
_________________________________ 1999
Nicholas Negroponte
* Director January 25,
_________________________________ 1999
John E. Pepper, Jr.
* Director January 25,
_________________________________ 1999
Samuel C. Scott III
* Director January 25,
_________________________________ 1999
Gary L. Tooker
* Director January 25,
_________________________________ 1999
B. Kenneth West
Director
_________________________________
John A. White
</TABLE>
/s/ Garth L. Milne
*By: _______________________
Garth L. Milne
as Attorney-In-Fact
II-5
<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 has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Schaumburg and the State of
Illinois, on the 25th day of January, 1999.
Motorola Capital Trust I
/s/ Garth L. Milne As
Attorney-In-Fact
By: _______________________________
Carl F. Koenemann
Regular Trustee
/s/ Garth L. Milne
By: _______________________________
Garth L. Milne
Regular Trustee and asAttorney-
In-Fact
II-6
<PAGE>
Exhibit 1.1
FORM OF
MOTOROLA, INC.
(a Delaware corporation)
MOTOROLA CAPITAL TRUST I
(a Delaware business trust)
20,000,000 Trust Preferred Securities
Trust Originated Preferred Securities/SM/ ("TOPrS/SM/")
(Liquidation Preference $25 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
January __, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Motorola Capital Trust I (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et
seq.) and Motorola, Inc. (the "Company" and, together with the Trust, the
"Offerors"), confirm their agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter
- ---------------
/SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
1
<PAGE>
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch and ___________ are acting as representative (in such capacity, the
"Representatives") with respect to the issue and sale by the Offerors and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of the Trust's preferred securities (liquidation preference
$25 per preferred security) representing preferred undivided beneficial
interests in the assets of the Trust ("TOPrS" or the "Trust Preferred
Securities") set forth in said Schedule A.
The payment of periodic cash distributions with respect to the Trust
Preferred Securities and payments on liquidation or redemption with respect to
such Trust Preferred Securities will be each guaranteed by the Company on behalf
of the Trust (the "Preferred Securities Guarantee"), in each case only out of
funds held by the Trust, pursuant to the Preferred Securities Guarantee
Agreement (the "Preferred Securities Guarantee Agreement"), to be entered into
between the Company and a guarantee trustee (the "Guarantee Trustee"), and
entitled to the benefits of certain backup undertakings described in the
Prospectus (as defined below) with respect to the Company's agreement pursuant
to the Indenture (as defined below) to pay all expenses relating to
administration of the Trust (the "Undertakings"). The Trust Preferred
Securities and the related Preferred Securities Guarantee are referred to herein
as the "Offered Securities."
The Offerors understand that the Underwriters propose to make a public
offering of the Offered Securities as soon as the Representatives deem advisable
after this Agreement has been executed and delivered.
The entire proceeds from the sale of the Offered Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its undivided common beneficial interests in the Trust's assets represented by
common securities (the "Common Securities") and will be used by the Trust to
purchase the unsecured junior subordinated deferrable interest debentures (the
"Subordinated Debentures") of the Company issued by the Company to the Trust.
The Trust Preferred Securities and the Common Securities for the Trust will be
issued pursuant to an amended and restated Declaration of Trust of the Trust
(the "Declaration"), among the Company, as Sponsor, _____________(the "Regular
Trustees"), Harris Trust and Savings Bank, a ____________, as property trustee
(the "Property Trustee"), and First Union Bank of Delaware, a Delaware
corporation (the "Delaware Trustee" and, together with the Regular Trustees and
the Property Trustee, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Subordinated
2
<PAGE>
Debentures will be issued pursuant to an indenture (the "Indenture"), between
the Company and Harris Trust and Savings Bank, as trustee (the "Debt Trustee").
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. _________) for the
registration of up to a combination of $500,000,000 of (i) Trust Preferred
Securities, (ii) Preferred Securities Guarantees, and (iii) Subordinated
Debentures under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering thereof under the 1933 Act. Such registration statement has been
declared effective by the Commission and the Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such
registration statement (as so amended, if applicable), including the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") (the "Rule 430A Information") or Rule 434(d) of the 1933 Act
Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus relating to the offering of
the Offered Securities, in the form first furnished to the Underwriters by the
Company for use in connection with the offering of the Offered Securities, is
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall also be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the
execution of this Agreement; provided, further, that if the Offerors file a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then, after such
filing, all references to the "Registration Statement" shall also be deemed to
include the Rule 462(b) Registration Statement; and provided, further, that if
the Company elects to rely upon Rule 434 of the 1933 Act Regulations, then all
references to the "Prospectus" shall also be deemed to include the final or
preliminary prospectus and the applicable term sheet or abbreviated term sheet
(the "Term Sheet"), as the case may be, in the form first furnished to the
Underwriters by the Company in reliance upon Rule 434 of the 1933 Act
Regulations, and all references in this Agreement to the date of the Prospectus
shall mean the date of the Term Sheet. A "preliminary prospectus" shall be
deemed to refer to any prospectus used before the Registration Statement became
effective and any prospectus that omitted, as applicable, the Rule 430A
Information, the Rule 434 Information or other information to be included upon
pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations and was used after such effectiveness and
prior to the execution and
3
<PAGE>
delivery of this Agreement. For purposes of this Agreement, all references to
the Registration Statement, Prospectus, Term Sheet or preliminary prospectus or
to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" (or other
references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be, prior to the execution of this Agreement; and all references
in this Agreement to amendments or supplements to the Registration Statement,
Prospectus or preliminary prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act which is incorporated by reference in
the Registration Statement, Prospectus or preliminary prospectus, as the case
may be, after the execution of this Agreement.
SECTION 1. Representations and Warranties.
(a) Each Offeror jointly and severally represents and warrants to each
Underwriter as of the date hereof and as of the Closing Time referred to in
Section 2(b) hereof (each such date being hereinafter referred to as a
"Representation Date") and agrees with each Underwriter as follows:
(i) Each of the Offerors meets the requirements for use of Form S-3
under the 1933 Act. The Registration Statement (including any Rule 462(b)
Registration Statement) has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement (including any Rule
462(b) Registration Statement) and any post-effective amendments thereto
(including the filing of the Company's most recent Annual Report on Form
10-K with the Commission (the "Annual Report on Form 10-K")) became
effective and at each Representation Date, the Registration
4
<PAGE>
Statement (including any Rule 462(b) Registration Statement) and any
amendments thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations. At the date
of the Prospectus and at the Closing Time (as defined below), neither the
Prospectus nor any amendments and supplements thereto included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter, or on behalf of any Underwriter by the Representatives,
expressly for use in the Registration Statement or the Prospectus. If the
Offerors elect to rely upon Rule 434 of the 1933 Act Regulations, the
Offerors will comply with the requirements of Rule 434.
(ii) The documents incorporated by reference in the Prospectus, at
the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934 Act
Regulations") and, when read together and with the other information in the
Prospectus, at the time the Registration Statement and any amendments
thereof became or become effective under the 1933 Act and at the Closing
Time did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they are made, not misleading.
(iii) The Company and its subsidiaries considered as a whole have not
sustained since the date of the latest financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its
5
<PAGE>
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth, incorporated by
reference or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated or incorporated therein, there
has not been any change in the capital stock (other than upon exercise of
outstanding stock options or upon conversion of convertible securities
outstanding on the date of the most recent balance sheet included in the
Prospectus or pursuant to the Company's employee stock ownership plan or
pursuant to the Company's employee stock purchase plans or the Company's
employee savings and profit sharing plan), any significant increase in the
long-term debt of the Company and its subsidiaries taken as a whole, or any
material adverse change, or any development which the Company has
reasonable cause to believe will involve a prospective material adverse
change, in or affecting the general affairs, management, consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries considered as a whole, or, other than the
Company's regular quarterly dividend, any dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(iv) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to conduct its business as described in
the Prospectus with only such exceptions as are not material to the
business of the Company and its subsidiaries considered as a whole.
(v) The authorized capitalization is as set forth or incorporated by
reference in the Prospectus and all of the issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable.
(vi) The execution, delivery and performance of this Agreement, the
Declaration, the Indenture, the Preferred Securities, the Common
Securities, the Subordinated Debentures, the Preferred Securities
Guarantee, and the Preferred Securities Guarantee Agreement, and the
consummation of the transactions contemplated herein and therein have been
duly authorized by all necessary corporate action and will not conflict
with or constitute a breach of, or a default under, any
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material contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company is a party or by which
the Company is bound; nor will such action result in a violation of the
provisions of the Company's Restated Certificate of Incorporation or bylaws
of the Company, as amended, or any applicable law, rule, regulation,
judgment, order or administrative or court decree; and the Company has
corporate power and authority to purchase, own and hold the Common
Securities.
(vii) Other than (a) as set forth, incorporated by reference, or
contemplated in the Prospectus and (b) litigation incident to the kind of
business conducted by the Company and its subsidiaries, which in the case
of those items in (b) individually and in the aggregate is not material to
the Company and its subsidiaries considered as a whole, there are no legal
or governmental proceedings pending to which the Company and its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or its subsidiaries, the Company has reasonable cause to believe
would individually or in the aggregate have a material adverse effect on
the consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries considered as a whole; and,
to the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(viii) No consent, approval or authorization of any court or
governmental authority or agency is necessary in connection with the sale
of the Offered Securities or the consummation of the other transactions
contemplated by this Agreement, the Declaration, the Indenture or the
Preferred Securities Guarantee Agreement, except as may be required under
the 1933 Act or 1933 Act Regulations, the 1934 Act or 1934 Act Regulations,
the 1939 Act or state securities laws.
(ix) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities, the Common
Securities and the Declaration; the Trust is duly qualified to transact
business as a foreign company and is in good standing in any other
jurisdiction in which such qualification is necessary, except to the extent
that the
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failure to so qualify or be in good standing would not have a material
adverse effect on the Trust; the Trust is not a party to or otherwise bound
by any agreement other than those described in the Prospectus; the Trust is
and will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation; and the
Trust is and will be treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
(x) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Registration Statement and
Prospectus, will be validly issued and (subject to the terms of the
Declaration) fully paid and non-assessable undivided beneficial interests
in the assets of the Trust and will conform to all statements relating
thereto contained in the Prospectus; the issuance of the Common Securities
is not subject to preemptive or other similar rights; and at the Closing
Time all of the issued and outstanding Common Securities of the Trust will
be directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(xi) This Agreement has been duly authorized, executed and delivered
by each of the Offerors.
(xii) The Declaration has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company
and the Regular Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware
Trustee, the Declaration will, at the Closing Time, be a valid and binding
obligation of the Company and the Regular Trustees, enforceable against the
Company and the Regular Trustees in accordance with its terms, except to
the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors rights generally or by general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity)
(the "Bankruptcy Exceptions") and will conform in all material respects to
all statements relating thereto in the Prospectus.
(xiii) The Preferred Securities Guarantee Agreement has been duly
authorized by the Company and, at the Closing Time will have been duly
executed and delivered by the Company, and, assuming due authorization,
execution and delivery of the
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Preferred Securities Guarantee Agreement by the Guarantee Trustee, will
constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and the
Preferred Security Guarantee and the Preferred Securities Guarantee
Agreement will conform in all material respects to all statements relating
thereto contained in the Prospectus.
(xiv) The Trust Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered pursuant to this Agreement
against payment of the consideration set forth in Section 2, will be
validly issued and (subject to the terms of the Declaration) fully paid and
non-assessable undivided beneficial interests in the Trust, will be
entitled to the benefits of the Declaration and will conform to all
statements relating thereto contained in the Prospectus and such
description conforms to the provisions of the Declaration; the issuance of
the Trust Preferred Securities is not subject to preemptive or other
similar rights; and (subject to the terms of the Declaration) holders of
Trust Preferred Securities will be entitled to the same limitation of
personal liability under Delaware law as extended to stockholders of
private corporations for profit.
(xv) The Indenture has been duly authorized by the Company and, at
the Closing Time will have been duly executed and delivered by the Company,
will constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; and the
Indenture will conform in all material respects to all statements relating
thereto contained in the Prospectus.
(xvi) The Subordinated Debentures have been duly authorized by the
Company and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions, will
be in the form contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to all statements
relating thereto in the Prospectus.
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(xvii) The Company's obligations under the Preferred Securities
Guarantee are subordinate and junior in right of payment to all liabilities
of the Company and are pari passu with the most senior preferred stock
issued by the Company.
(xviii) The Subordinated Debentures are subordinated and junior in
right of payment to all "senior indebtedness" (as defined in the Indenture)
of the Company.
(xix) Each of the Regular Trustees is an employee of the Company and
has been duly authorized by the Company to execute and deliver the
Declaration; the Declaration has been duly executed and delivered by the
Regular Trustees and is a valid and binding obligation of each Regular
Trustee, enforceable against such Regular Trustee in accordance with its
terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xx) The Trust is not in violation of its Declaration or its
certificate of trust as filed with the State of Delaware (the "Certificate
of Trust"); the Trust is not in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust is a party or by which it may be bound, or to
which any of the property or assets of the Trust is subject; and the
execution, delivery and performance of this Agreement, the Declaration, the
Preferred Securities, the Common Securities, the Indenture, the
Subordinated Debentures, the Preferred Securities Guarantee Agreement and
the Preferred Securities Guarantee and the consummation of the transactions
contemplated herein and therein and compliance by the Offerors with their
respective obligations hereunder and thereunder have been duly authorized
by all necessary action (corporate or otherwise) on the part of the Trust
and do not and will not result in any violation of the Declaration or
Certificate of Trust and do not and will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Trust under (A) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Trust is a party or by which it may be bound or to which any of
its properties or assets may be subject, or (B) any existing applicable
law, rule, regulation, judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, or any
regulatory body or administrative agency or other governmental body having
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jurisdiction over the Trust or any of its respective properties or assets.
(xxi) The Indenture, the Preferred Securities Guarantee Agreement and
the Declaration have each been duly qualified under the 1939 Act.
(xxii) None of the Offerors is, and upon the issuance and sale of the
Offered Securities and the issuance of the Subordinated Debentures and the
Common Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxiii) Each Offeror has complied and will comply with the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes,
1987, as amended, and all regulations promulgated thereunder relating to
issuers doing business in Cuba.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Offered Securities shall be deemed a representation and warranty
by the Company as to the matters covered thereby to each Underwriter.
SECTION 2. Sale and Delivery to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Offerors agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Offerors, at the price and on such
terms set forth in Schedule B, the number of Offered Securities set forth in
Schedule A opposite the name of such Underwriter.
(b) Payment of the purchase price for, and delivery of, any Offered
Securities to be purchased by the Underwriters shall be made at the offices of
Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois, or at such
other place as shall be agreed upon by the Representatives and the Company, on
the third business day (unless postponed in accordance with the provisions of
Section 9) after the date hereof, unless the Offered Securities are priced after
4:30 p.m. New York time in which case such payment and delivery will be made on
the fourth business day following the date hereof (unless postponed in
accordance with the provisions of
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Section 9), or such other time not later than ten business days after such date
as shall be agreed upon by the Representatives and the Company (such time and
date being referred to as a "Closing Time"). Payment shall be made to the Trust
by wire transfer of immediately available funds to a bank account designated by
the Company, against delivery to the Representatives for the respective accounts
of the Underwriters of the Offered Securities to be purchased by them. It is
understood that each Underwriter has authorized Merrill Lynch, for its account,
to accept delivery of, receipt for, and make payment of the purchase price for,
the Offered Securities which it has severally agreed to purchase. Merrill Lynch,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Offered Securities
to be purchased by any Underwriter whose funds have not been received by the
Closing Time but such payment shall not relieve such Underwriter from its
obligations hereunder.
As compensation to the Underwriters for their commitments hereunder and in
view of the fact that the proceeds of the sale of the Trust Preferred Securities
will ultimately be used to purchase the Subordinated Debentures of the Company,
the Company hereby agrees to pay at Closing Time to Merrill Lynch, for the
accounts of the several Underwriters, a commission per Trust Preferred Security
set forth on Schedule B hereto. At the Closing Time, the Company will pay, or
cause to be paid, the commission payable at such time to the Underwriters under
this Section 2 by wire transfer of immediately available funds to a bank account
designated by Merrill Lynch for the account of the Underwriters.
(c) Certificates for the Offered Securities shall be in such denominations
and registered in such names as the Representatives may request in writing at
least one business day before the Closing Time. The certificates for the
Offered Securities, which may be in temporary form, will be made available for
examination and packaging by the Representatives in New York City not later than
10:00 a.m. (Eastern Time) on the last business day prior to the Closing Time.
SECTION 3. Covenants. Each of the Offerors jointly and severally covenant
with the Representatives and with each Underwriter as follows:
(a) The Offerors, subject to Section 3(b), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations, if and as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, of (i) the effectiveness of any
post-effective
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amendment to the Registration Statement or the filing of any supplement or
amendment to the Prospectus, (ii) the receipt of any comments on the
Registration Statement or the Prospectus from the Commission, (iii) any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Offered Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Offerors will promptly effect the filings necessary pursuant
to Rule 424 and will take such steps as it deems necessary to ascertain promptly
whether the Prospectus transmitted for filing under Rule 424 was received for
filing by the Commission and, in the event that it was not, it will promptly
file the Prospectus. The Offerors will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Each Offeror will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b) of the 1933 Act Regulations) or any amendment,
supplement or revision to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(c) The Company, during the period when the Prospectus is required to be
delivered under the 1933 Act, will file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act.
(d) The Company will deliver to each of the Representatives two copies of
the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and, if
applicable, documents incorporated by reference into the Prospectus pursuant to
Item 12 of Form S-3 under the 1933 Act) and will also deliver to the
Representatives, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, as many conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (without exhibits)
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<PAGE>
as the Representatives may reasonably request. The Registration Statement and
each amendment thereto furnished to the Underwriters will be identical to any
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) The Company has delivered to each Underwriter, without charge, as many
copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Offerors hereby consent to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter, without
charge, prior to 1:00 p.m., New York City time, on the business day next
succeeding the date of this Agreement and from time to time during the period
when the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriters will be identical to any electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(f) The Offerors will comply with the 1933 Act and the 1933 Act Regulations
and the 1934 Act and the 1934 Act Regulations so as to permit the completion of
the distribution of the Offered Securities as contemplated in this Agreement and
in the Registration Statement and the Prospectus. If at any time when the
Prospectus is required by the 1933 Act to be delivered in connection with sales
of the Offered Securities any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company will forthwith amend or supplement the
Prospectus (in form and substance satisfactory to your counsel) so that, as so
amended or supplemented, the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, and the Company will furnish to the
Representatives a reasonable number of copies of such amendment or supplement.
(g) The Offerors will endeavor, in cooperation with the Underwriters, to
qualify the Offered Securities and the Subordinated Debentures for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Representatives may designate; provided, however, that the Offerors shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation in any jurisdiction
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<PAGE>
in which it is not so qualified. In each jurisdiction in which the Offered
Securities have been so qualified, the Offerors will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required to complete the
distribution of the Offered Securities.
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the 1933 Act) covering a twelve-month period beginning, in each case,
not later than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(i) Each Offeror will use or cause to be used the net proceeds received by
it from the sale of the Offered Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(j) The Company will use its best efforts to effect the listing of the
Offered Securities, prior to the Closing Time, on the New York Stock Exchange,
and to cause the Offered Securities to be registered under the 1934 Act.
(k) During a period of ___ days from the date of the Prospectus, the
Offerors and the Company's subsidiaries will not, without the prior written
consent of Merrill Lynch, directly or indirectly, pledge, issue, sell, offer or
contract to sell, grant or sell any option or contract for the sale or purchase
of, or otherwise transfer or dispose of, any Offered Securities, any
Subordinated Debentures, any securities substantially similar thereto, or any
securities convertible into or exercisable or exchangeable for Offered
Securities, Subordinated Debentures or any securities substantially similar
thereto, or file any registration statement under the 1933 Act with respect to
any of the foregoing.
(l) So long as any Offered Securities are outstanding, the Trust will
continue its existence in good standing as a business trust under the Delaware
Act with power and authority to own property and conduct its business as
described in the Prospectus and the Trust will remain duly qualified to transact
business as a foreign corporation in good standing in each jurisdiction in which
such qualification is necessary, except to the extent that the failure to so
qualify would not, singly or in the aggregate, materially adversely affect the
operations of the Trust.
(m) The Trust will make generally available to its security holders and to
the Representatives as soon as practicable, but not
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later than 90 days after the period covered thereby, an earnings statement of
the Company (in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a twelve-month period beginning not later than the first
day of the Trust's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of the Offerors' obligations under this Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the copying of this
Agreement, any agreement among Underwriters, the Indenture, the Declaration, the
Preferred Securities, the Common Securities, the Subordinated Debentures, the
Preferred Securities Guarantee Agreement and the Preferred Securities Guarantee
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Offered Securities, (iii) the
preparation, issuance and delivery of the certificates for the Offered
Securities to the Representatives, the Common Securities to the Company and the
Subordinated Debentures to the Trust, including any transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of such securities,
(iv) the fees and disbursements of the Company's counsel and accountants, (v)
the qualification of the Offered Securities and the Subordinated Debentures
under securities laws in accordance with the provisions of Section 3(g),
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky surveys, (vi) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto, of the preliminary prospectus, of any Term Sheet and of the Prospectus
and any amendments or supplements thereto, (vii) the printing and delivery to
the Underwriters of copies of the Blue Sky surveys, (viii) the fees and expenses
of the Property Trustee, the Delaware Trustee, the Guarantee Trustee and the
Debt Trustee, including the fees and disbursements of their respective counsel,
(ix) any fees payable in connection with the rating of the Offered Securities,
(x) the fees and expenses incurred with respect to the listing of the Offered
Securities on the New York Stock Exchange, (xi) the filing fees incident to the
review, if any, by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Offered Securities, (xii) the cost of
qualifying the Trust Preferred Securities with The Depository Trust Company, and
(xiii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. Except as provided in this Section and in Sections 6 and 7, the
Underwriters will pay all of their own costs
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and expenses, including fees and disbursements of their counsel, stock transfer
taxes on resale of any of the Offered Securities by them, and any advertising
expenses which they may incur.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Section 5 (other than Section 5(j)) or Section 9(a)(i) hereof,
the Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the Offered Securities.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Offered Securities pursuant to this
Agreement are subject to the accuracy of the representations and warranties of
the Company and the Offerors contained in Section 1 hereof, to the performance
by the Offerors of their covenants and other obligations hereunder, and to the
following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or be
pending or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel for the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b)(or any required post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A), or, if the Company has elected
to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the
Rule 434 Information shall have been filed with the Commission in accordance
with Rule 424(b)(7).
(b) At Closing Time, the Representative shall have received:
(i) The opinion, dated as of Closing Time, of Carol H. Forsyte,
Senior Counsel, of the Law Department of the Company, or another attorney
who is employed by the Company who is
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acceptable to the Representatives (the "Company Counsel"), in form and
substance reasonably satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to conduct its
business as described in the Prospectus.
(2) The authorized capitalization of the Company is as set forth
or incorporated by reference in the Prospectus and all of the issued
and outstanding shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid and non-
assessable.
(3) This Agreement has been duly authorized, executed and
delivered by the Company.
(4) The Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Company and, assuming it is
duly authorized, executed, and delivered by the Guarantee Trustee, is
a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(5) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution,
and delivery thereof by the Debt Trustee, is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(6) The Declaration has been duly authorized, executed and
delivered by the Company and duly executed and delivered by the
Regular Trustees and constitutes a valid and binding obligation of
each of the Company and the Trust, enforceable against the Company and
the Trust in accordance with its terms, except to the extent that the
enforcement thereof may be limited by the Bankruptcy Exceptions.
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(7) The Subordinated Debentures are in the form established
pursuant to the Indenture, have been duly authorized, executed and
delivered by the Company and, when duly authenticated by the Debt
Trustee in the manner provided for in the Indenture and delivered
against payment therefor as provided in the Declaration, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the
benefits provided by the Indenture, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(8) The Registration Statement (including any Rule 462(b)
Registration Statement) has been declared effective under the 1933
Act. Any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period required by
Rule 424(b). To the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act
and no proceedings for that purpose have been initiated or threatened
by the Commission.
(9) At the time the Registration Statement (including any Rule
462(b) Registration Statement) became effective and at the Closing
Time, the Registration Statement and the Prospectus (other than the
financial statements and other financial data and supporting schedules
included therein and in the documents incorporated by reference into
the Prospectus, as to which no opinion need be rendered) complied as
to form in all material respects with the applicable requirements of
the 1933 Act and the 1933 Act Regulations and the 1939 Act and the
rules and regulations thereunder and, if applicable, the Rule 434
Prospectus conforms to the requirements of Rule 434 of the 1933 Act
Regulations in all material respects; the documents incorporated by
reference into the Prospectus (other than the financial statements and
other financial data and supporting schedules included therein, as to
which no opinion need be rendered), when they were filed with the
Commission, complied as to form in all material respects with the
applicable requirements of the 1934 Act and the 1934 Act Regulations;
and to the best of such counsel's knowledge and information, there are
no contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in
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the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed
or incorporated by reference thereto and the descriptions thereof or
references thereto are correct.
(10) The information in the Prospectus under "Risk Factors,"
"Motorola Capital Trust I," "Description of the Preferred Securities,"
"Description of the Subordinated Debentures," "Description of the
Trust Guarantee," "Effect of Obligations under the Subordinated
Debentures and the Trust Guarantee" and the information contained in
the Registration Statement pursuant to Item 15, to the extent that
such information constitutes summaries of statutes, documents or legal
proceedings, the Company's Restated Certificate of Incorporation or
by-laws or the Declaration, has been reviewed by such counsel and is
correct in all material respects.
(11) The Common Securities, the Trust Preferred Securities, the
Subordinated Debentures, the Preferred Securities Guarantee, the
Declaration, the Indenture and the Preferred Securities Guarantee
Agreement conform to the descriptions thereof contained in the
Prospectus.
(12) To the best of such counsel's knowledge, other than as set
forth, incorporated by reference or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject, other than
litigation incident to the kind of business conducted by the Company
and its subsidiaries, which litigation incident to the Company's
business individually and in the aggregate is not material to the
Company and its subsidiaries considered as a whole; and, to the best
of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(13) No consent, approval, authorization, order, registration or
qualification of any court or governmental authority or agency is
required for the due authorization, execution or delivery by the
Company of this Agreement or for the performance by the Company of the
transactions contemplated by the Prospectus, this Agreement, the
Indenture, the Declaration, the Preferred Securities, the Common
Securities, the Subordinated
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Debentures, the Preferred Securities Guarantee Agreement, and the
Preferred Securities Guarantee, other than under the 1933 Act, the
1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the 1939
Act and the 1939 Act Regulations, which have already been made,
obtained or rendered, as applicable, or state securities laws.
(14) The execution and delivery of this Agreement, the
Declaration, the Preferred Securities, the Common Securities, the
Indenture, the Subordinated Debentures and the Preferred Securities
Guarantee Agreement, the issuance and sale of the Preferred Securities
Guarantee and the Subordinated Debentures, the compliance by the
Company with all of the provisions of this Agreement, the Declaration,
the Subordinated Debentures, the Indenture and the Preferred
Securities Guarantee Agreement and the consummation of the
transactions contemplated herein, therein and in the Prospectus do not
and will not conflict with or constitute a breach of, or default
under, (1) the Restated Certificate of Incorporation or by-laws of the
Company; (2) any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument known to such counsel to which
the Company is a party or by which the Company is bound; or (3) any
applicable law, rule, regulation, judgment, order or administrative or
court decree known to such counsel.
(15) The Indenture, the Preferred Securities Guarantee Agreement
and the Declaration have each been duly qualified under the 1939 Act.
(16) Neither the Company nor the Trust is, nor upon the issuance
and sale of the Preferred Securities and the issuance of the
Subordinated Debentures and the Common Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Prospectus will be, an "investment company" or a
company controlled by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(17) Each of the Offerors meets the registrant requirements for
use of Form S-3 under the 1933 Act Regulations.
(18) To the best of such counsel's knowledge and information,
all of the issued and outstanding Common
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Securities are directly owned by the Company free and clear of any
lien, encumbrance, equity or claim.
Such opinion of Company Counsel shall additionally state that nothing has
come to his or her attention that has caused him or her to believe that the
Registration Statement (including any Rule 462(b) Registration Statement) or any
post-effective amendment thereto (other than the financial statements, financial
data and schedules included therein, as to which no belief need be expressed),
at the time the Registration Statement (including any Rule 462(b) Registration
Statement) or any post-effective amendment thereto (including the filing of the
Company's Annual Report on Form 10-K with the Commission) became effective or at
the Closing Time contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto (other than the financial statements, financial data and
schedules included therein, as to which no belief need be expressed), at the
time the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such opinion shall be
limited to the laws of the State of New York, the State of Illinois, the General
Corporation Law of the State of Delaware and the federal law of the United
States, and the rules and regulations thereunder.
At the Closing Time, the Representatives shall also have received the
opinion, dated as of the Closing Time, of Kirkland & Ellis, counsel for the
Offerors, in form and substance reasonably satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters, regarding such Federal tax, ERISA and other related
matters of the type ordinarily included in similar transactions or reasonably
requested by counsel for the Underwriters.
(ii) The opinion, dated as of the Closing Time, of ________________,
special Delaware counsel to the Offerors, in form and substance reasonably
satisfactory to counsel for the Underwriters, to the effect that:
(1) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act and all
filings required under the laws of the State of Delaware with respect
to the creation and valid existence of the Trust as a business trust
have
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been made. Under the Delaware Act and the Declaration, the Trust
has the trust power and authority to own property and to conduct its
business, all as described in the Prospectus, to execute and deliver
and perform its obligations under this Agreement, the Trust Preferred
Securities and the Common Securities and to purchase and hold the
Subordinated Debentures.
(2) The Common Securities have been duly authorized by the
Declaration and are duly and validly issued undivided beneficial
interests in the assets of the Trust and, under the Delaware Act and
the Declaration, the issuance of the Common Securities is not subject
to preemptive or other similar rights.
(3) Under the Delaware Act, the certificate attached to the
Declaration as Exhibit A-1 is an appropriate form of certificate to
evidence ownership of the Trust Preferred Securities. The Trust
Preferred Securities have been duly authorized by the Declaration and
are duly and validly issued, and, subject to the qualifications set
forth herein, fully paid and non-assessable undivided beneficial
interests in the assets of the Trust. The holders of the Trust
Preferred Securities will be entitled to the same limitation of
personal liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware; and, under the Delaware Act and the Declaration, the
issuance of the Trust Preferred Securities is not subject to
preemptive or other similar rights. Such counsel may note that the
Trust Preferred Securities holders may be obligated, pursuant to the
Declaration, to (a) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Trust Preferred Securities and the issuance of replacement Trust
Preferred Securities, and (b) provide security and indemnity in
connection with requests of or directions to the Property Trustee to
exercise its rights and powers under the Declaration.
(4) Under the Declaration and the Delaware Act, this Agreement
has been duly authorized by all necessary trust action on the part of
the Trust.
(5) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or
Delaware governmental
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authority or agency is necessary or required solely for the due
authorization, execution or delivery by the Trust of this Agreement or
for the performance by the Trust of the transactions contemplated
under the Prospectus, this Agreement, the Declaration, the Preferred
Securities and the Common Securities.
(6) The issuance and sale by the Trust of the Trust Preferred
Securities and the Common Securities, the purchase by the Trust of the
Subordinated Debentures, the execution, delivery and performance by
the Trust of this Agreement, the consummation by the Trust of the
transactions contemplated hereby and thereby and compliance by the
Trust with its obligations hereunder and thereunder do not violate (A)
any of the provisions of the Certificate of Trust or the Declaration
or (B) any applicable Delaware law or administrative regulation.
(7) The Declaration constitutes a valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company
and the Trustees, in accordance with its terms.
(iii) The favorable opinion, dated as of Closing Time, of
__________________________, counsel for the Property Trustee, the Delaware
Trustee, the Debt Trustee and the Guarantee Trustee, in form and substance
satisfactory to counsel for the Underwriters to the effect that:
(1) ________________ is a national banking association with trust
powers, duly organized, validly existing and in good standing under
the laws of the United States with all necessary power and authority
to execute and deliver, and to carry out and perform its obligations
under the terms of the Declaration and the Preferred Securities
Guarantee Agreement.
(2) The execution, delivery and performance by the Property
Trustee of the Declaration and the execution, delivery and performance
by the Guarantee Trustee of the Preferred Securities Guarantee
Agreement have been duly authorized by all necessary corporate action
on the part of the Property Trustee and the Guarantee Trustee,
respectively. The Declaration and the Preferred Securities Guarantee
Agreement have been duly executed and delivered by the Property
Trustee and the Guarantee Trustee, respectively, and constitute the
legal, valid and binding obligations of the Property Trustee and the
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Guarantee Trustee, respectively, enforceable against the Property
Trustee and the Guarantee Trustee, respectively, in accordance with
their terms, except as enforcement thereof may be limited by the
Bankruptcy Exceptions.
(3) The execution, delivery and performance of the Declaration
and the Preferred Securities Guarantee Agreement by the Property
Trustee and the Guarantee Trustee, respectively, do not conflict with
or constitute a breach of the Articles of Organization or Bylaws of
the Property Trustee and the Guarantee Trustee, respectively.
(4) No consent, approval or authorization of, or registration
with or notice to, any federal banking authority is required for the
execution, delivery or performance by the Property Trustee and the
Guarantee Trustee of the Declaration and the Preferred Securities
Guarantee Agreement.
(5) The Statements of Eligibility on Forms T-1 with respect to
each of the Property Trustee, the Debt Trustee, and the Guarantee
Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(6) The Declaration constitutes a valid and binding obligation of
the Property Trustee and the Delaware Trustee and is enforceable
against the Property Trustee and the Delaware Trustee in accordance
with its terms, except to the extent that the enforcement thereof may
be limited by the Bankruptcy Exceptions.
(iv) The opinion, dated as of Closing Time, of Mayer, Brown & Platt,
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, with respect to the matters
set forth in (1) (insofar as it relates to the existence and good standing
of the Company), (3) to (7) (it being understood that any opinion required
with respect to the Trust Preferred Securities or the Common Securities, as
the case may be, not being subject to preemptive or other similar rights of
the securityholders shall be limited to such rights arising by operation of
law or under the Declaration), (8), (9) (insofar as it relates as to
compliance of the Registration Statement and the Prospectus as to form),
(10) (solely as to the information in the Prospectus under "Description of
the Preferred Securities," "Description of Subordinated Debentures," and
"Description of the Trust Guarantee"), (11)
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and the penultimate paragraph of subsection (b)(i) of this Section. In
giving such opinion, such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York, the
State of Illinois, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.
(c) (i) The Company and its subsidiaries considered as a whole shall have
not sustained since the date of the latest financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth, incorporated by reference or
contemplated in the Prospectus, and (ii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus there
shall not have been any change in the capital stock (other than upon exercise of
outstanding stock options or upon conversion of convertible securities
outstanding at the date of the most recent balance sheet included in the
Prospectus or pursuant to the Company's employee stock ownership plan or
pursuant to the Company's employee stock purchase plans or the Company's
employee savings and profit sharing plan) or any significant increase in long-
term debt of the Company and its subsidiaries considered as a whole or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries considered
as a whole, otherwise than as set forth or incorporated by reference or
contemplated in the Prospectus, the effect of which, in any such case described
in clause (i) or (ii), is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Offered Securities on the terms and in the manner contemplated in the
Prospectus.
(d) On or after the date of this Agreement (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act and (ii) no such
organization shall have publicly announced that it has under
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surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities.
(e) You shall have received a certificate of the Vice Chairman and Chief
Executive Officer, the President or another senior officer acceptable to you of
the Company and of the Chief Financial Officer, Controller, Treasurer or
Assistant Treasurer of the Company, dated as of the Closing Time, to the effect
that (i) the Company and its subsidiaries shall not have sustained any loss or
interference with its business of the type specified in Section 5(c)(i) and
there shall not have occurred any change of the type specified in Section
5(c)(ii), (ii) there shall not have occurred any downgrading of the type
specified in Section 5(d), (iii) the applicable representations and warranties
in Section 1 are true and correct with the same force and effect as though
expressly made at and as of such Closing Time, (iv) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to such Closing Time, and (v) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commission.
(f) At the time of the execution of this Agreement, you shall have received
from KPMG Peat Marwick a letter dated such date, in form and substance
satisfactory to you, to the effect that (i) they are independent public
accountants with respect to the Company and its subsidiaries within the meaning
of the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion that the
financial statements and supporting schedules included in or incorporated by
reference into the Registration Statement or the Prospectus and covered by their
opinions therein comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations and the
1934 Act and the 1934 Act Regulations; (iii) based upon limited procedures set
forth in detail in such letter, nothing has come to their attention which causes
them to believe that (A) the unaudited financial statements and supporting
schedules of the Company and its subsidiaries included in or incorporated by
reference into the Registration Statement or the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act
Regulations, as the case may be, or are not presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in or
incorporated by reference into the Registration Statement or the Prospectus or
(B) at a specified date not more than three days prior to the date of this
Agreement, there has been any change in the capital stock of the Company (other
than
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upon exercise of outstanding stock options or upon conversion of convertible
securities outstanding on the date of the most recent balance sheet included in
or incorporated by reference into the Prospectus or pursuant to the Company's
employee stock ownership plan or pursuant to the Company's stock purchase plans
or the Company's employee savings and profit sharing plan) or any increase in
the consolidated long term debt of the Company and its subsidiaries or any
decrease in consolidated net current assets or net assets as compared with the
amounts shown in the most recent balance sheet included in or incorporated by
reference into the Prospectus or, during the period from the date of the most
recent financial statements included in or incorporated by reference into the
Prospectus to a specified date not more than three days prior to the date of
this Agreement, there were any decreases, as compared with the corresponding
period in the preceding year, in consolidated net sales, net earnings or net
earnings per share of the Company and its subsidiaries, except in all instances
for changes, increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and (iv) in addition to the
examination referred to in their opinions and the limited procedures referred to
in clause (iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information which are included in or incorporated by reference into
the Registration Statement and Prospectus and which are specified by you, and
have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of the
Company and its subsidiaries identified in such letter.
(g) At Closing Time, the Representatives shall have received from KPMG Peat
Marwick a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (f) of this
Section, except that the specified date referred to shall be a date not more
than three business days prior to Closing Time.
(h) At Closing Time counsel for the Underwriters shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Offered Securities, as
contemplated herein, and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Offerors
in connection with the issuance and sale of the Offered Securities and the
issuance of the Subordinated Debentures shall be reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters.
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(i) At Closing Time, the Offered Securities shall have been approved for
listing, subject only to official notice of issuance, on the New York Stock
Exchange.
(j) If the Registration Statement or an offering of Offered Securities is
required to be and has been filed with the NASD for review, the NASD shall not
have raised any objection that remains unresolved at Closing Time with respect
to the fairness and reasonableness of the underwriting terms and arrangements.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing Time
and such termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall
survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) The Offerors agree jointly and severally to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information deemed to be part of the Registration Statement, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based
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upon any such untrue statement or omission or any such alleged untrue
statement or omission; provided that any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel
chosen by the Representatives), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and further provided that this indemnity agreement does not apply to
any loss, liability, claim, damage or expense arising out of any untrue
statement or omission or alleged untrue statement or omission made in a
preliminary prospectus but eliminated or remedied in the Prospectus if a copy of
the Prospectus (excluding documents incorporated therein by reference) was not
delivered by you to the person asserting the claim arising from such untrue
statement or omission or such alleged untrue statement or omission, at or prior
to the time required by the 1933 Act.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Offerors, each of the Company's directors, the Trustees, each of the Offerors'
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information deemed to be a
part thereof, if applicable, or any preliminary prospectus or the
30
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Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Offerors and you shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
you, as incurred, in such proportions that you are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Offerors are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act shall have the same right to contribution
as you, and each director of the Company, the Trustees, each officer of the
Offerors who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Offerors.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company or any of its subsidiaries
submitted pursuant hereto or thereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Offerors, and shall
survive delivery of and payment for the Offered Securities.
SECTION 9. Termination of Agreement.
(a) Merrill Lynch may terminate this Agreement, by notice to the Company,
at any time at or prior to the Closing Time, if (i) the Company and its
subsidiaries considered as a whole shall have sustained since the date of the
latest financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth, incorporated by reference or contemplated in the Prospectus, or since the
respective dates as of which information is given in the Registration Statement
and the Prospectus there shall have been any change in the capital stock (other
than upon exercise of outstanding stock options or upon conversion of
convertible securities outstanding at the date of the most recent balance sheet
included in the Prospectus or pursuant to the Company's employee stock ownership
plan or pursuant to the Company's employee stock purchase plans or the Company's
employee savings and profit sharing plan) or any significant increase in long-
term debt of the Company and its subsidiaries considered as a whole or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries considered
as a whole, otherwise than as set forth or incorporated by reference or
contemplated in the Prospectus, the effect of which, in any such case described
in this clause (i), is in your judgment so material
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and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Offered Securities on the terms and in
the manner contemplated in the Prospectus, or (ii) there has occurred any
material adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the reasonable judgment
of Merrill Lynch, impracticable or inadvisable to market the Offered Securities
or to enforce contracts for the sale of the Offered Securities, or (iii) a
suspension or material limitation in trading in the Company's Common Stock, the
Trust Preferred Securities or securities generally on the New York Stock
Exchange, or (iv) a general moratorium on commercial banking activities in New
York or Illinois has been declared by either Federal or state authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8
shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Offered
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), then the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters reasonably acceptable to the
Representatives, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Offered Securities to be
purchased on such date, the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities exceeds 10%
of the aggregate principal amount of Offered Securities
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to be purchased on such date pursuant to this Agreement, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or the Prospectus or
in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Merrill Lynch at Merrill Lynch & Co., 5500
Sears Tower, Chicago, Illinois 60606, Attention: Robert Schmeideler; notices to
the Company or the Trust shall be directed to it at: 1303 East Algonquin Road,
Schaumburg, Illinois 60106, Attention: Treasurer.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Offerors, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Offered
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
34
<PAGE>
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
35
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
Agreement, along with all counterparts, will become a binding agreement between
the Underwriters and the Offerors in accordance with its terms.
Very truly yours,
MOTOROLA, INC.
By:
-----------------------------
Title: Authorized Officer
MOTOROLA CAPITAL TRUST I
By: Motorola, Inc. as Sponsor
By:
-----------------------
Title: Authorized Officer
CONFIRMED AND ACCEPTED
as of the date first above written:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:
-----------------------------
Title: Authorized Officer
For themselves and as Representatives
of the other Underwriters named in
Schedule A hereto
36
<PAGE>
SCHEDULE A
Preferred Securities Commission
-------------------- ----------
Merrill Lynch, Pierce Fenner
& Smith Incorporated
-------------------- ----------
A-1
<PAGE>
SCHEDULE B
The Trust Preferred Securities shall have the following terms:
Title: ____ % Trust Originated Preferred Securities.
Ratings: ___- by Standard & Poor's; ___ by Moody's Investment Services.
Liquidation Preference: $25 per Trust Preferred Security.
Distribution rate or formula: Annual rate of ____ % of the liquidation amount of
$25 per Trust Preferred Security.
Distribution payment dates: _______________________.
Regular record dates: Distributions on the Trust Preferred Securities will be
payable to the holders thereof as they appear on the books and records of the
Trust on the relevant record dates, which, as long as the Trust Preferred
Securities remain in book-entry only form, will be one Business Day prior to the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Subordinated Debentures. In the event the Trust Preferred
Securities do not continue to remain in book-entry only form, the Regular
Trustees will have the right to select relevant record dates which will be,
subject to the requirements of any applicable exchange, at least one Business
Day, but less than 60 Business Days, prior to the relevant payment dates. In
the event that any date on which distributions are to be made on the Trust
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" means
any day other than a day on which banking institutions in Chicago, Illinois or
New York, New York are authorized or required by law to close.
Stated maturity date: The Trust Preferred Securities do not have a stated
maturity date, but they will be redeemed upon the stated maturity of the
Subordinated Debentures.
Redemption provisions: If the Subordinated Debentures are redeemed, the Trust
must redeem Trust Securities on a pro rata basis having
B-1
<PAGE>
an aggregate liquidation amount equal to the aggregate principal amount of
Subordinated Debentures so redeemed.
Listing requirements: The Trust Preferred Securities will be listed on the New
York Stock Exchange.
Fixed or Variable Price Offering: Fixed Price Offering
Purchase price per security: 100% of liquidation amount, plus accrued
Distributions, if any, from January ___, 1999.
Commissions payable to Underwriters: $____________
Form: Global Certificate
QIU Issues: N/A
B-2
<PAGE>
The Subordinated Debentures shall have the following terms:
Title: ____ % Junior Subordinated Deferrable Interest Debentures.
Interest rate or formula: Each Subordinated Debenture will bear interest at the
rate of ____ % per annum from the original date of issuance.
Interest payment dates: _______________________.
Regular record dates: Interest is payable to the person in whose name such
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day preceding such interest payment date. If
the Subordinated Debentures do not remain in book-entry only form, the Company
has the right to select record dates which may not be less than fifteen days
prior to each interest payment date.
Stated maturity date: The Subordinated Debentures have a stated maturity date
of _________________, which may be extended at any time by the Company to any
date not later than _________________; provided, that at the time such election
is made and at the time of extension (i) the Company is not in bankruptcy,
otherwise insolvent or in liquidation, (ii) the Company is not in default in the
payment of any interest or principal on the Subordinated Debentures, and (iii)
in the case of Subordinated Debentures held by the Trust, the Trust is not in
arrears on payments of distributions on the Trust Preferred Securities and no
deferred distributions are accumulated.
Redemption provisions: The Company has the right to redeem the Subordinated
Debentures, in whole or in part, from time to time, on or after
_________________, or at any time in whole but not in part in certain
circumstances upon the occurrence of a Tax Event as described under "Description
of the Trust Preferred Securities - Tax Event Redemption" in the Prospectus
dated January __, 1999, upon not less than 30 nor more 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Trust Preferred Securities
resulting from a partial redemption of the Subordinated Debentures would result
in the delisting of the Trust Preferred Securities, the Company may only redeem
the Subordinated Debentures in whole.
Listing requirements: If Subordinated Debentures are distributed to the holders
of the Trust Preferred Securities, the Company shall use its best efforts to
have the Subordinated Debentures listed on
B-3
<PAGE>
the New York Stock Exchange or on such other exchange as the Trust Preferred
Securities are then listed.
Fixed or Variable Price Offering: Fixed Price Offering
Form: Global Note
QIU Issues: N/A
B-4
<PAGE>
Exhibit 4.1
CERTIFICATE OF TRUST OF
MOTOROLA CAPITAL TRUST I
THIS Certificate of Trust of Motorola Capital Trust I (the "Trust") is
being duly executed and filed on behalf of the Trust by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C (S) 3801 et seq.) (the "Act").
1. Name. The name of the Trust is Motorola Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware are First Union Trust Company, National
Association, 920 King Street, 1st Floor, Wilmington, Delaware 19801-7475, Attn:
Corporate Trust Group.
3. Effective Date. This Certificate of Trust shall be effective on
January 19, 1999.
IN WITNESS WHEREOF, the undersigned have duly executed this
Certificate of Trust in accordance with Section 3811(a)(1) of the Act.
FIRST UNION TRUST COMPANY
NATIONAL ASSOCIATION, as Trustee
By: /s/ EDWARD L. TRUITT, JR.
---------------------------
Name: EDWARD L. TRUITT, JR.
Title: VICE PRESIDENT
/s/ CARL F. KOENEMANN
------------------------------
CARL F. KOENEMANN, as Trustee
/s/ GARTH L. MILNE
------------------------------
GARTH L. MILNE, as Trustee
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:30 AM 01/19/1999
991020519 - 2994024
RLF3-1088727-1
<PAGE>
- -------------------------------------------------------------------------------
DECLARATION OF TRUST
OF
MOTOROLA CAPITAL TRUST I
Dated as of January 19, 1999
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS..........................................................1
SECTION 1.1 Definitions..................................................1
ARTICLE II ORGANIZATION........................................................3
SECTION 2.1 Name.........................................................3
SECTION 2.2 Office.......................................................4
SECTION 2.3 Purpose......................................................4
SECTION 2.4 Authority....................................................4
SECTION 2.5 Title to Property of the Trust...............................4
SECTION 2.6 Powers of the Trustee........................................4
SECTION 2.7 Filing of Certificate of Trust...............................5
SECTION 2.8 Duration of Trust............................................6
SECTION 2.9 Responsibilities of the Sponsor..............................6
SECTION 2.10 Declaration Binding on Securities Holders....................6
ARTICLE III TRUSTEES...........................................................6
SECTION 3.1 Trustees.....................................................6
SECTION 3.2 Regular Trustees.............................................7
SECTION 3.3 Delaware Trustee.............................................7
SECTION 3.4 Property Trustee.............................................8
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration...8
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS........................................................8
SECTION 4.1 Exculpation..................................................8
SECTION 4.2 Fiduciary Duty...............................................8
SECTION 4.3 Indemnification..............................................9
SECTION 4.4 Outside Businesses..........................................12
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS..............................13
SECTION 5.1 Amendments..................................................13
SECTION 5.2 Termination of Trust........................................13
SECTION 5.3 Governing Law...............................................14
SECTION 5.4 Headings....................................................14
SECTION 5.5 Successors and Assigns......................................14
SECTION 5.6 Partial Enforceability......................................14
SECTION 5.7 Counterparts................................................14
</TABLE>
<PAGE>
DECLARATION OF TRUST OF MOTOROLA CAPITAL TRUST I
DECLARATION OF TRUST ("Declaration") dated and effective as of January
19, 1999 by the undersigned Trustees (as defined in Section 1.1), Motorola,
Inc., a Delaware corporation, as trust sponsor (in such capacity, the
"Sponsor"), and the holders, from time to time, of undivided beneficial
interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a trust (the
"Trust") pursuant to the Business Trust Act (as defined in Section 1.1);
WHEREAS, the sole purpose of the Trust shall be to issue and sell
certain securities representing undivided beneficial interests in the assets of
the Trust and to invest the proceeds thereof in certain Debentures of the
Debenture Issuer (as those terms are hereinafter defined) and, except as
otherwise limited herein, to engage in only those other activities necessary,
appropriate, convenient or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout.
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration of Trust as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections are to
Articles and Sections of this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice versa.
1
<PAGE>
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking institutions
in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss.3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to, or amendment and restatement of, this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates and (b) any holder of Securities.
"Debenture Issuer" means Motorola, Inc. in its capacity as the issuer of
the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued under the
Indenture by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means Harris Trust and Savings Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section 4.3(b).
"Holder" means the Person in whose name a certificate representing a
Security is registered.
2
<PAGE>
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the indenture dated as of January __, 1999 entered into
among Motorola, Inc. and Harris Trust and Savings Bank, as trustee and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing a preferred undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Trust Company" shall mean First Union Trust Company, National Association
or any successor Delaware Trustee in its individual capacity.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Motorola Capital Trust I."
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
3
<PAGE>
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o General
Counsel, Motorola, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196.
At any time, the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust. In dealing with
the Regular Trustees acting on behalf of the Trust, no person shall be required
to inquire into the authority of the Regular Trustees to bind the Trust. Persons
dealing with the Trust and entitled to rely conclusively on the power and
authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the Trust.
SECTION 2.6 Powers of the Trustee.
The Regular Trustees shall have the exclusive power and authority to cause
the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust may issue
no more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred Securities and
Common Securities;
4
<PAGE>
(b) in connection with the issue and sale of the Preferred Securities, at
the direction of the Sponsor, to:
(i) execute and file with the Commission a registration statement on
Form S-3 prepared by the Sponsor, including any amendments
thereto in relation to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the Preferred Securities
in any State in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to The
New York Stock Exchange or any other national stock exchange or
the Nasdaq Stock Market's National Market for listing upon
notice of issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration statement on
Form 8-A, including any amendments thereto, prepared by the
Sponsor relating to the registration of the Preferred Securities
under Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement and pricing
agreement providing for the sale of the Preferred Securities;
(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary, appropriate, convenient or
incidental to carry out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary, appropriate, convenient or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the Regular Trustees
shall cause the filing of the Certificate of Trust for the Trust in the form
attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
<PAGE>
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of Section 5.2,
shall have existence for fifty-five (55) years from the date hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issuance and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a registration
statement on Form S-3 in relation to the Preferred Securities, including any
amendments thereto;
(b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Preferred Securities and to do any and
all such acts, other than actions which must be taken by the Trust, and advise
the Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to The New York
Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A relating to the registration of the class of Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of an underwriting agreement and pricing
agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security or any
interest therein in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be bound
by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3) and, upon appointment
of the Property Trustee pursuant to Section 3.4, shall be four (4); thereafter
the number of Trustees shall be such
6
<PAGE>
number as shall be fixed from time to time by a written instrument signed by the
Sponsor. The Sponsor is entitled to appoint or remove without cause any Trustee
at any time; provided, however, that the number of Trustees shall in no event be
less than two (2); provided, further, that one Trustee, in the case of a natural
person, shall be a person who is a resident of the State of Delaware or that, if
not a natural person, is an entity which has its principal place of business in
the State of Delaware (in its Trustee capacity, the "Delaware Trustee");
provided, further, that there shall be at least one trustee who is an employee
or officer of, or is affiliated with the Sponsor (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be: Carl F. Koenemann and Garth L.
Milne.
(a) Except as expressly set forth in this Declaration, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents which the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 2.6;
provided that, the registration statement referred to in Section 2.6(b)(i),
including any amendments thereto, shall be signed by at least a majority of the
Regular Trustees; and
(c) A Regular Trustee may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purposes of signing any documents which the Regular Trustees have power
and authority to cause the Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be: First Union Trust Company, National
Association.
Notwithstanding any other provision of this Declaration, the Delaware
Trustee shall not be entitled to exercise any of the powers, nor shall the
Delaware Trustee have any of the duties and responsibilities of, the Regular
Trustees described in this Declaration, or any other duties and
responsibilities except as expressly stated in this Section 3.3. The Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807(a) of the Business Trust Act. Notwithstanding
anything in this Declaration to the contrary, neither the Trust Company nor the
Delaware Trustee shall be liable for the acts, or omissions to act, of the
Delaware Trustee, of the Trust, of the Sponsor or any of the Regular Trustees
except to the Trust and the beneficial owners of the Trust for the gross
negligence or willful misconduct of the Delaware Trustee. The Delaware Trustee
may resign upon thirty (30) days written notice to the Sponsor.
7
<PAGE>
SECTION 3.4 Property Trustee.
Prior to the issuance of the Preferred Securities and Common Securities,
the Sponsor shall appoint a trustee (the "Property Trustee") meeting the
requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to, or an amendment and restatement
of, this Declaration executed by the Regular Trustees, the Sponsor, the Property
Trustee and the Delaware Trustee.
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the value or condition
of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions; and
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such information, opinions, reports or
statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
holders of Securities might properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other
8
<PAGE>
Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between Covered
Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act
in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made, taken or provided
by the Indemnified Person shall not constitute a breach of this Declaration or
any other agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person;
or
(ii) in "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed
by this Declaration or by applicable law.
SECTION 4.3 Indemnification.
(a) The Sponsor shall indemnify, to the fullest extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines
9
<PAGE>
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(i) The Sponsor shall indemnify, to the fullest extent permitted by
law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to
procure a judgment in its favor by reason of the fact that he is
or was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified
Person shall have been adjudged to be liable to the Trust unless
and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall
deem proper.
(ii) to the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or
proceeding referred to in paragraphs (i) and (ii) of this
Section 4.3(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the fullest extent
permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iii) Any indemnification under paragraphs (i) and (ii) of this
Section 4.3(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular
Trustees by a majority
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<PAGE>
vote of a quorum consisting of such Regular Trustees who were
not parties to such action, suit or proceeding, (2) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a)
shall be paid by the Sponsor in advance of the final disposition
of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person
to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the Sponsor as
authorized in this Section 4.3(a). Notwithstanding the
foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based upon
the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such
Company Indemnified Person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal
proceeding, that such Company Indemnified Person believed or had
reasonable cause to be believe his conduct was unlawful. In no
event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or the Common Security
Holder reasonably determine that such person deliberately
breached his duty to the Trust or its Common or Preferred
Security Holders.
(v) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 4.3(a)
shall not be deemed exclusive of any other rights to which those
seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or
disinterested directors of the Sponsor or Preferred Security
Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this
Section 4.3(a) shall be deemed to be provided by a contract
between the Sponsor and each Company Indemnified Person who
serves in such capacity at any time while this Section 4.3(a) is
in effect. Any repeal or modification of this Section 4.3(a)
shall not affect any rights or obligations then existing.
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(vi) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the
provisions of this Section 4.3(a).
(vii) For purposes of this Section 4.3(a), references to "the
Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions
of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(viii) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as
to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Sponsor agrees to indemnify (i) the Trust Company and the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Company and the Delaware Trustee
(each of the Persons in (i) through (iii) being referred to as a "Fiduciary
Indemnified Person") for, and to defend and hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred without gross
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder or the performance
hereof or exercise of its rights hereunder, including, without limitation, the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its rights, powers or duties hereunder. The
obligation to indemnify as set forth in this Section 4.3(b) shall survive the
termination of this Declaration and the resignation of the Delaware Trustee.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor, any Regular Trustee, any Trust Company and
the Delaware Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
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independent ventures or the income or profits derived therefrom and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, any Regular
Trustee, any Trust Company or the Delaware Trustee shall be obligated to present
any particular investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust, could be taken
by the Trust, and any Covered Person, the Sponsor, any Regular Trustee, any
Trust Company and the Delaware Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, any
Regular Trustee, any Trust Company and the Delaware Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for or
may act on any committee or body of holders of, securities or other obligations
of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this Declaration may be
amended by, and only by, a written instrument executed by all of the Regular
Trustees and the Sponsor, provided, however, if the amendment affects the
rights, powers, duties, obligation, benefits, privileges, protections,
indemnities or immunities of the Trust Company or the Delaware Trustee, the
amendment shall also be approved by the Trust Company and the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or the revocation of the
Sponsor's charter or of the Trust's certificate of trust;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the consent of all of
the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 5.2(a), the Regular Trustees shall pay or make reasonable provision
for the payment of all liabilities of the
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Trust and execute and file a certificate of cancellation with the Secretary of
State of the State of Delaware and the Trust shall terminate.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
MOTOROLA, INC., as Sponsor and
Debenture Issuer
By: /s/ Carl F. Koenemann
-------------------------------
Name: Carl F. Koenemann
Title: Senior Vice President and
Chief Financial Officer
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Delaware Trustee
By: /s/ Edward L. Truitt, Jr.
-------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
By: /s/ Carl F. Koenemann
-------------------------------
Carl F. Koenemann, as Regular Trustee
By: /s/ Garth L. Milne
-------------------------------
Garth L. Milne, as Regular Trustee
15
<PAGE>
Exhibit 4.9
SPECIMEN
MOTOROLA, INC.
6 1/2% Debenture Due November 15, 2028
Number R-1 CUSIP NO.: 620076 AP 4
Unless and until this certificate is exchanged in whole or in part for
Debentures in definitive registered form, this Debenture may not be transferred
except as a whole by The Depository Trust Company, a New York corporation ("DTC"
or the "Depositary"), to its nominee or by its nominee to DTC or another nominee
of DTC or by DTC or any such nominee to a successor depository or a nominee of
such successor depository. Any certificate issued in exchange herefor shall be
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment in respect hereof shall be
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC).
MOTOROLA, INC., a Delaware corporation (the "Issuer", which term includes
any successor corporation under the Senior Indenture hereafter referred to), for
value received, hereby promises to pay to Cede & Co. or registered assigns, at
the office or agency of the Issuer in the Borough of Manhattan, The City of New
York, or at such other locations as the Issuer may from time to time designate,
the principal sum of FOUR HUNDRED FORTY-FIVE MILLION DOLLARS on November 15,
2028, in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semiannually on May 15 and November 15 of each year, commencing
May 15, 1999, on the original principal amount hereof at said office or agency,
in like coin or currency, at the rate per annum specified in the title of this
Debenture, from the May 15 or the November 15, as the case may be, next
preceding the date of this Debenture to which interest has been paid or duly
provided for, unless the date hereof is a date to which interest has been paid
or duly provided for, in which case from the date of this Debenture, or unless
no interest has been paid on the Debentures (as defined below) or duly provided
for, in which case from November 23, 1998, until payment of the principal amount
hereof has been made or duly provided for; provided, that payment of interest
may be made at the option of the Issuer by check mailed by first class mail to
the address of the person entitled thereto as such address shall appear on the
Security register. Notwithstanding the foregoing, if the date hereof is after
May 1 or November 1 as the case may be, and before the following May 15 or
November 15, this Debenture shall bear interest from such May 15 or November 15;
provided, that if the Issuer shall default in the payment of interest due on
such May 15 or November 15, then this Debenture shall bear interest from the
next preceding May 15 or November 15, to which interest has been paid or duly
provided for or, if no interest has been paid on the Debentures or duly provided
for, from November 23, 1998. The interest so payable on any May 15 or November
15 will, subject to certain exceptions provided in the Senior Indenture referred
to on the reverse hereof, be paid to the person in whose name this Debenture (or
one or more predecessor Debentures) is registered at the close of business on
the May 1 or November 1 (whether or not a Business Day), as the case may be,
next preceding such May 15 or November 15. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
<PAGE>
Reference is made to the further provisions of this Debenture set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been executed by the
Trustee under the Senior Indenture referred to on the reverse hereof by manual
signature.
IN WITNESS WHEREOF, Motorola, Inc. has caused this instrument to be signed
by one of its duly authorized officers and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted hereon.
MOTOROLA, INC.
By:
-----------------------
Its:
-----------------------
ATTEST:
- ---------------------------
Its:
-----------------------
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred to in
the within-mentioned Senior Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:
-----------------------
Its:
-----------------------
<PAGE>
[REVERSE OF DEBENTURE]
MOTOROLA, INC.
6 1/2% Debenture due November 15, 2028
This Debenture is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to a Senior Indenture dated as of May 1, 1995 (herein called
the "Senior Indenture"), duly executed and delivered by the Issuer to Harris
Trust and Savings Bank, as Trustee (herein called the "Trustee"), to which
Senior Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations, duties
and immunities thereunder of the Trustee, the Issuer and the Holders of the
Securities. The Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions (if any) and may otherwise vary as provided
in the Senior Indenture. This Debenture is one of a series designated as the
6 1/2% Debentures due November 15, 2028 (the "Debentures") of the Issuer,
limited in aggregate principal amount at maturity to $445,000,000.
Except as otherwise provided in the Senior Indenture, this Debenture will
be issued in global form only registered in the name of the Depositary or its
nominee. This Debenture will not be issued in definitive form, except as
otherwise provided in the Senior Indenture, and ownership of this Debenture
shall be maintained in book-entry form by the Depositary for the accounts of
participating organizations of the Depositary.
In case an Event of Default with respect to the Debentures shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Senior Indenture.
The Senior Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series issued under such
Senior Indenture then Outstanding and affected, voting as one class, to add any
provisions to, or change in any manner or eliminate any of the provisions of,
such Senior Indenture or modify in any manner the rights of the Holders of the
Securities of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the Holder of each Security affected thereby,
(i) extend the stated maturity of the principal of any Security, or reduce the
principal amount thereof or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption thereof or change
the currency in which the principal thereof (including any amount in respect of
original issue discount), premium, if any, or interest thereon is payable or
reduce the amount of any original issue discount security payable upon
acceleration or provable in bankruptcy or impair the right to institute suit for
the enforcement of any payment on any Security when due or (ii) reduce the
aforesaid percentage in principal amount of Securities of any series issued
under such Senior Indenture, the consent of the Holders of which is
<PAGE>
required for any such modification. It is also provided in the Senior Indenture
that, with respect to certain defaults or Events of Default regarding the
Securities of any series, prior to any declaration accelerating the maturity of
such Securities, the Holders of a majority in aggregate principal amount
Outstanding of the Securities of such series (or, in the case of certain
defaults or Events of Default, all or certain series of the Securities) may on
behalf of the Holders of all the Securities of such series (or all or certain
series of the Securities, as the case may be) waive any such past default or
Event of Default and its consequences. The preceding sentence shall not,
however, apply to a default in the payment of the principal or interest on any
of the Securities. Any such consent or waiver by the Holder of this Debenture
(unless revoked as provided in the Senior Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Debenture and any Debentures which may be issued in exchange or substitution
hereof or on registration of transfer hereof, irrespective of whether or not any
notation thereof is made upon this Debenture or such other Debentures.
No reference herein to the Senior Indenture and no provision of this
Debenture or of the Senior Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Debenture in the manner, at the respective times, at the rate
and in the coin or currency herein prescribed.
The Debentures are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof at the office or
agency of the Issuer in the Borough of Manhattan, The City of New York, or at
such other locations as the issuer may from time to time designate, and in the
manner and subject to the limitations provided in the Senior Indenture, but
without the payment of any service charge, Debentures may be exchanged for a
like aggregate principal amount of Debentures of other authorized denominations.
The Debentures shall be redeemable at the option of the Issuer, in whole at
any time or in part from time to time (each a "Redemption Date"), at a
redemption price equal to the greater of (i) 100% of their principal amount and
(ii) the sum, as determined by the Independent Investment Banker, of the present
values of the principal amount and the remaining scheduled payments of interest
on the Debentures to be redeemed (exclusive of interest accrued to such
Redemption Date), discounted from the scheduled payment dates to the Redemption
Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 15 basis points plus, in each case, accrued
but unpaid interest thereon to the Redemption Date. Notwithstanding the
foregoing, installments of interest on Debentures that are due and payable on an
interest payment date falling on or prior to the relevant Redemption Date will
be payable to the holders of such Debentures registered as such at the close of
business on the relevant record date according to their terms and the provisions
of the Senior Indenture.
Notice of any redemption must be given at least 30 days but not more than
60 days before the Redemption Date to each holder of Debentures to be redeemed.
If money sufficient to pay the redemption price of and accrued interest on the
Debentures (or portion thereof) to be redeemed on the Redemption Date is
deposited on or before the Redemption Date and the other conditions set
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<PAGE>
forth in the Senior Indenture are satisfied, then on and after such date,
interest will cease to accrue on the Debentures called for redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Debentures to be redeemed.
"Comparable Treasury Price" means, with respect to any Redemption Date, the
average of the Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Merrill Lynch Government
Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated
together with their affiliates and their respective successors and any other
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer") selected by the Company in addition to, or in substitution for, any of
such firms; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, the Company will substitute another Primary Treasury
Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Debentures, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third business day preceding
such Redemption Date.
"Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated on the third business day preceding such Redemption
Date using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
Redemption Date.
The Debentures are not entitled to any sinking fund.
Upon due presentment for registration of transfer of this Debenture at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, or at such other locations as the Issuer may from time to time designate,
a new Debenture or Debentures of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
3
<PAGE>
to the limitations provided in the Senior Indenture, without charge except for
any tax or other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner of
this Debenture (whether or not this Debenture shall be overdue and
notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and
subject to the provisions on the face hereof, interest hereon, and for all other
purposes, and none of the Issuer, the Trustee or any authorized agent of the
Issuer or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Issuer in the Senior Indenture or any indenture supplemental thereto or in any
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, of the Issuer or of any successor corporation, either directly or through
the Issuer or any successor corporation, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance hereof and as part of the consideration of the
issue hereof.
This Debenture shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
Terms used herein which are defined in the Senior Indenture shall have the
respective meanings assigned thereto in the Senior Indenture.
* * * *
4
<PAGE>
FOR VALUE RECEIVED, the undesigned hereby sell(s), assign(s) and transfer(s)
unto:
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number of assignee)
- --------------------------------------------------------------------------------
(Please print or type name and address including zip code of assignee)
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing such person attorney to transfer such Debenture on the books of
the Issuer, with full power of substitution in the premises.
Dated: Signed:
-------------------- ----------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Debenture in every particular without
alteration or enlargement or any change whatsoever.
Signature Guarantee:
5
<PAGE>
Exhibit 5.2
[RICHARDS, LAYTON & FINGER, P.A. LETTERHEAD]
January 25, 1999
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Re: Motorola Capital Trust I
------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Motorola, Inc., a
Delaware corporation (the "Company") and Motorola Capital Trust I, a Delaware
business trust (the "Trust") in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, as filed with the office of
the Secretary of State of the State of Delaware (the "Secretary of State") on
January 19, 1999;
(b) The Declaration of Trust, dated as of January 19, 1999, among the
Company and the trustees named therein;
(c) The Registration Statement, (the "Registration Statement"), on
Form S-3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the Preferred Securities of the Trust representing
preferred undivided beneficial interests in the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as filed by the Company
and the Trust as set forth therein with the Securities and Exchange Commission;
<PAGE>
Motorola Capital Trust I
January 25, 1999
Page 2
(d) The Amended and Restated Declaration of Trust to be entered into
by the Company and the trustees of the Trust named therein (the "Declaration"),
in the form attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated January 22,
1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate of Trust
will be in full force and effect and will not have been amended, (ii) except to
the extent provided in paragraph 1 below, the due organization or due formation,
as the case may be, and valid existence in good standing of each party to the
documents examined by us under the laws of the jurisdiction governing its
organization or formation, (iii) the legal capacity of natural persons who are
parties to the documents examined by us, (iv) that each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (v) the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(vi) the receipt by each Person to whom a Preferred Security is to be issued by
the Trust (collectively, the "Preferred Security Holders") of a Preferred
Security Certificate for such Preferred Security and the payment for such
Preferred Security, in accordance with the Declaration and the Prospectus and
(vii) that the Preferred Securities have been issued and sold to the Preferred
Security Holders in accordance with the Declaration and the Prospectus. We have
not participated in the preparation of the Registration Statement or the
Prospectus and assume no responsibility for their contents.
<PAGE>
Motorola Capital Trust I
January 25, 1999
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable beneficial interests in the assets of the Trust.
3. The Preferred Securities Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Securities
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. We also consent to Kirkland &
Ellis' relying as to matters of Delaware law upon this opinion in connection
with opinions to be rendered by them with respect to the Preferred Securities.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
EAM/sek
<PAGE>
Exhibit 8
[Kirkland & Ellis]
January 25, 1999
Motorola, Inc.
Motorola Capital Trust I
1303 East Algonquin Road
Schamburg, Illinois 60196
Re: Motorola, Inc.; Motorola Capital Trust I
Registration Statement on Form S-3 (Registration No. 333-70827)
Dear Ladies and Gentlemen:
In connection with the preparation of the Registration Statement (as
defined below) for the registration under the Securities Act of 1933, as amended
(the "Act"), of 20,000,000 shares of Preferred Securities (the "Preferred
Securities") of Motorola Capital Trust I, you have requested our opinion
concerning certain statements set forth in the Form S-3 Registration Statement
filed with the Securities and Exchange Commission under the Act (the
"Registration Statement").
Based on the foregoing, we hereby confirm to you that the statements
of law and legal conclusions set forth in the Registration Statement under the
caption "United States Federal Income Taxation" regarding the tax consequences
to such holders of the Preferred Securities represent, subject to the
qualifications and limitations set forth therein, the opinion of Kirkland &
Ellis, counsel to the Issuer and the Company (as such terms are defined in the
Registration Statement).
The opinions set forth herein are based on the applicable provisions
of the Internal Revenue Code of 1986, as amended; the Treasury Regulations
promulgated or proposed thereunder; current positions of the Internal Revenue
Service (the "IRS") contained in published revenue rulings, revenue procedures
and announcements; existing judicial decisions; and other applicable
authorities.
In conclusion, we should note that unlike a ruling from the IRS,
opinions of counsel are not binding on the IRS. Hence, no assurance can be
given that the opinion stated in this letter will not be successfully challenged
by the IRS or rejected by a court. We express no opinion concerning any Federal
income tax matter other than that discussed herein.
Very truly yours,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Motorola, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-3 of Motorola, Inc. of our reports dated January 12, 1998, relating to
the consolidated balance sheets of Motorola, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of earnings,
stockholders' equity, and cash flows and related financial statement schedule
for each of the years in the three-year period ended December 31, 1997, which
reports appear in or are incorporated by reference in the annual report on Form
10-K of Motorola, Inc. for the year ended December 31, 1997.
KPMG LLP
Chicago, Illinois
January 25, 1999
<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) ______
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)
Carolyn Potter, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2531 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
MOTOROLA, INC.
MOTOROLA CAPITAL TRUST I
(Obligor)
Delaware 36-11158000
Delaware applied for
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 East Algonquin Road
Schaumburg Illinois 60196
(Address of principal executive offices)
Preferred Securities
Deferrable Interest Junior Subordinated Debentures
Guarantee
(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 20th day of January, 1999.
HARRIS TRUST AND SAVINGS BANK
/s/ J. Bartolini
By: ____________________________
J. Bartolini
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
/s/ J. Bartolini
By: ____________________________
J. Bartolini
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 September 30, 1998, 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 September 30, 1998, 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
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin............... $1,097,714
Interest bearing balances......................................... $213,712
Securities:..............................................................
a. Held-to-maturity securities........................................... $0
b. Available-for-sale securities......................................... $5,036,734
Federal funds sold and securities purchased under agreements to resell... $48,950
Loans and lease financing receivables:
Loans and leases, net of unearned income.......................... $9,111,098
LESS: Allowance for loan and lease losses........................ $104,900
----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b).............................................. $9,006,198
Assets held in trading accounts.......................................... $202,008
Premises and fixed assets (including capitalized leases)................. $245,290
Other real estate owned.................................................. $365
Investments in unconsolidated subsidiaries and associated companies...... $41
Customer's liability to this bank on acceptances outstanding............. $34,997
Intangible assets........................................................ $260,477
Other assets............................................................. $1,148,163
-----------
TOTAL ASSETS $17,294,649
===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C> <C>
In domestic offices........................................................................... $9,467,895
Non-interest bearing..................................................................... $2,787,471
Interest bearing......................................................................... $6,680,424
In foreign offices, Edge and Agreement subsidiaries, and IBF's................................ $1,268,759
Non-interest bearing..................................................................... $ 23,329
Interest bearing......................................................................... $1,245,430
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........................ $3,118,548
Trading Liabilities............................................................................. 110,858
Other borrowed money:
a. With remaining maturity of one year or less.................................................. $1,202,050
b. With remaining maturity of more than one year................................................ $0
Bank's liability on acceptances executed and outstanding........................................ $34,997
Subordinated notes and debentures............................................................... $225,000
Other liabilities............................................................................... $530,224
-----------
TOTAL LIABILITIES $15,958,331
===========
EQUITY CAPITAL
Common stock.................................................................................... $100,000
Surplus......................................................................................... $604,834
a. Undivided profits and capital reserves....................................................... $580,271
b. Net unrealized holding gains (losses) on available-for-sale securities....................... $51,213
-----------
TOTAL EQUITY CAPITAL $1,336,318
===========
Total liabilities, limited-life preferred stock, and equity capital............................. $17,294,649
===========
</TABLE>
I, Pamela Piarowski, 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.
PAMELA PIAROWSKI
10/29/98
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.
EDWARD W. LYMAN,
ALAN G. McNALLY,
CHARLES SHAW
Directors.
4
