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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
QUALCOMM INCORPORATED
QUALCOMM FINANCIAL TRUST I
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 95-3685934
DELAWARE 52-6845046
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
6455 LUSK BOULEVARD
SAN DIEGO, CALIFORNIA 92121
(619) 587-1121
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEVEN R. ALTMAN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
QUALCOMM INCORPORATED
6455 LUSK BOULEVARD
SAN DIEGO, CALIFORNIA 92121-2779
(619) 587-1121
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPIES TO:
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FREDERICK T. MUTO, ESQ. SCOTT N. WOLFE, ESQ.
THOMAS A. COLL, ESQ. LATHAM & WATKINS
COOLEY GODWARD LLP 701 B STREET
4365 EXECUTIVE DRIVE, SUITE 1100 SAN DIEGO, CA 92101
SAN DIEGO, CA 92121 TELEPHONE: (619) 236-1234
TELEPHONE: (619) 550-6000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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==================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
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Trust Convertible Preferred Securities of
QUALCOMM Financial Trust I............... 13,200,000 $551,100,000(1) $41.75(1)(2) $167,000.00
- ----------------------------------------------------------------------------------------------------------------------------------
Convertible Subordinated Debentures of
QUALCOMM Incorporated.................... (3) (3) (3) (3)
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Common Stock, par value of $0.0001 per
share, of QUALCOMM Incorporated.......... 9,084,240(4) (4) (4) (4)
- ----------------------------------------------------------------------------------------------------------------------------------
Convertible Preferred Securities Guarantee
of
QUALCOMM Incorporated.................... (5) (5) (5) (5)
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee based on the average of the bid and asked prices of the
5 3/4% Trust Convertible Preferred Securities as reported on the PORTAL
market on April 23, 1997, in accordance with Rule 457(c) of the Securities
Act of 1933.
(2) Exclusive of accrued interest and distributions, if any.
(3) $680,452,500 in aggregate principal amount of 5 3/4% Convertible
Subordinated Debentures due February 24, 2012 (the "Convertible Subordinated
Debt Securities") of QUALCOMM Incorporated ("QCOM" and, together with its
subsidiaries, "QUALCOMM" or the "Company") were issued and sold to QUALCOMM
Financial Trust I (the "Trust") in connection with the issuance by the Trust
of 13,200,000 of its 5 3/4% Trust Convertible Preferred Securities (the
"Convertible Preferred Securities"). The Convertible Subordinated Debt
Securities may be distributed, under certain circumstances, to the holders
of the Convertible Preferred Securities for no additional consideration.
(4) The Convertible Preferred Securities are convertible into Convertible
Subordinated Debt Securities, which are convertible into common stock, par
value $0.0001 per share, of QCOM (the "Common Stock"). Each Convertible
Preferred Security is initially convertible into 0.6882 shares of Common
Stock, subject to adjustment under certain circumstances. Shares of Common
Stock issued upon conversion of the Convertible Preferred Securities will be
issued without the payment of additional consideration.
(5) No separate consideration will be received for the Guarantee. The Guarantee
includes rights of holders of the Convertible Preferred Securities under the
Guarantee, the Convertible Subordinated Debt Securities and certain back-up
undertakings, comprised of obligations of QCOM under the Indenture and
pursuant to the Declaration to provide certain indemnities in respect of,
and be responsible for certain costs, expenses, debts and liabilities of,
the Trust, as described in the Registration Statement. All obligations under
the Declaration, including the indemnity obligation, are included in the
back-up undertakings.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 29, 1997
PROSPECTUS
13,200,000 5 3/4% TRUST CONVERTIBLE PREFERRED SECURITIES
QUALCOMM FINANCIAL TRUST I
(LIQUIDATION AMOUNT $50 PER CONVERTIBLE PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AND CONVERTIBLE INTO THE COMMON STOCK OF
[QUALCOMM LOGO]
This Prospectus relates to the resale of the 5 3/4% Trust Convertible
Preferred Securities (the "Convertible Preferred Securities"), liquidation
amount $50 per Convertible Preferred Security, which represent preferred
undivided beneficial interests in the assets of QUALCOMM Financial Trust I, a
statutory business trust created under the laws of the State of Delaware (the
"Trust"), and the shares of common stock, par value $0.0001 per share ("Common
Stock"), of QUALCOMM Incorporated, a Delaware corporation ("QCOM" and, together
with its subsidiaries, "QUALCOMM" or the "Company"), issuable upon conversion of
the Convertible Preferred Securities. The Convertible Preferred Securities were
issued and sold (the "Original Offering") on February 25, 1997 (the "Original
Closing Date") and March 10, 1997 (together with the Original Closing Date, the
"Original Offering Date") to the Initial Purchasers (as defined herein) and were
simultaneously sold by the Initial Purchasers in transactions exempt from the
Securities Act of 1933, as amended (the "Securities Act"), in the United States
to persons reasonably believed by the Initial Purchasers to be qualified
institutional buyers as defined in Rule 144A under the Securities Act, in the
United States to a limited number of other institutional "accredited investors"
(as defined in Rule 501(A)(1), (2), (3) or (7) under the Securities Act) and
outside the United States to non-U.S. persons in offshore transactions in
reliance on Regulation S under the Securities Act. All of the beneficial
interests in the assets of the Trust represented by common securities of the
Trust (the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities") are owned by QCOM. The Trust exists for the exclusive
purposes of issuing the Trust Securities and investing the proceeds of the sale
thereof in 5 3/4% Convertible Subordinated Debentures due February 24, 2012 of
QCOM (the "Convertible Subordinated Debt Securities") in an aggregate principal
amount equal to the aggregate liquidation amount of the Trust Securities. The
Convertible Subordinated Debt Securities are unsecured obligations of QCOM and
are subordinate and junior in right of payment to certain other indebtedness of
QCOM as described herein. Upon an event of default under the Declaration (as
defined herein), the holders of the Convertible Preferred Securities will have a
preference over the holders of the Common Securities with respect to payments in
respect of distributions and payments upon liquidation, redemption and
otherwise.
Each Convertible Preferred Security is convertible in the manner described
herein at the option of the holder, at any time beginning April 28, 1997 and
prior to the Conversion Expiration Date (as defined herein), into shares of
Common Stock, at the rate of 0.6882 shares of Common Stock for each Convertible
Preferred Security (equivalent to a conversion price of $72.6563 per share of
Common Stock), subject to adjustment in certain circumstances. See "Description
of the Convertible Preferred Securities -- Conversion Rights." The last reported
sale price of Common Stock, which is reported under the symbol "QCOM" on the
Nasdaq National Market, on April 25, 1997, was $45 1/8 per share. (Continued on
next page)
------------------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
"RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF
DISTRIBUTIONS ON THE CONVERTIBLE PREFERRED SECURITIES MAY BE DEFERRED AND THE
RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL , 1997
<PAGE> 3
The Convertible Preferred Securities and the Common Stock issuable upon
conversion of the Convertible Preferred Securities (the "Offered Securities")
may be offered and sold from time to time by the holders named herein or by
their transferees, pledgees, donees or their successors (collectively, the
"Selling Holders") pursuant to this Prospectus. The Offered Securities may be
sold by the Selling Holders from time to time directly to purchasers or through
agents, underwriters or dealers. See "Plan of Distribution" and "Selling
Holders." If required, the names of any such agents or underwriters involved in
the sale of the Offered Securities and the applicable agent's commission,
dealer's purchase price or underwriter's discount, if any, will be set forth in
an accompanying supplement to this Prospectus (each, a "Prospectus Supplement").
The Selling Holders will receive all of the net proceeds from the sale of the
Offered Securities and will pay all underwriting discounts and selling
commissions, if any, applicable to any such sale. No portion of the net proceeds
of this offering will be received by QCOM or the Trust. QCOM is responsible for
payment of all other expenses incident to the offer and sale of the Offered
Securities. The Selling Holders and any broker-dealers, agents or underwriters
which participate in the distribution of the Offered Securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Offered Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" for a description of
indemnification arrangements.
Holders of the Convertible Preferred Securities are entitled to receive
cumulative cash distributions at an annual rate of 5 3/4% of the liquidation
amount of $50 per Convertible Preferred Security, accruing from February 25,
1997 and payable quarterly in arrears on March 1, June 1, September 1 and
December 1, commencing June 1, 1997 ("distributions"). The distribution payable
on June 1, 1997, which will be calculated at the above rate and based on a
period that is longer than a full quarter, will be in the amount of $0.7667 per
Convertible Preferred Security. The distribution rate and the distribution and
other payment dates for the Convertible Preferred Securities will correspond to
the interest rate and interest and other payment dates on the Convertible
Subordinated Debt Securities, which will be the sole asset of the Trust. As a
result, if principal or interest is not paid on the Convertible Subordinated
Debt Securities, no amounts will be paid on the Convertible Preferred
Securities. The payment of distributions out of moneys held by the Trust, and
payments on liquidation of the Trust or the redemption of Convertible Preferred
Securities, as set forth below, are guaranteed by QCOM (the "Guarantee") to the
extent described herein and under "Description of the Guarantee." The Guarantee
covers payments of distributions and other payments on the Convertible Preferred
Securities only if and to the extent the Trust has funds available therefor,
which will not be the case unless QCOM has made a payment of interest or
principal or other payments on the Convertible Subordinated Debt Securities held
by the Trust as its sole asset. QCOM's obligations under the Guarantee, taken
together with its obligations under the Convertible Subordinated Debt Securities
and the Indenture (as defined herein) and its obligations under the Declaration,
including its liabilities to pay costs, expenses, debts and obligations of the
Trust (other than with respect to the Trust Securities), constitute a full and
unconditional guarantee by QCOM of amounts due on the Convertible Preferred
Securities. See "Effect of Obligations Under the Convertible Subordinated Debt
Securities and the Guarantee" and "Description of the Guarantee."
The obligations of QCOM under the Guarantee are subordinate and junior in
right of payment to all other liabilities of QCOM and will rank pari passu with
the most senior preferred stock issued by QCOM from time to time, if any, and
with any guarantee that may be entered into by QCOM with respect to any
preferred stock of any subsidiary or affiliate of QCOM. If QCOM does not make
principal or interest payments on the Convertible Subordinated Debt Securities,
the Trust will not have sufficient funds to redeem or make distributions on the
Convertible Preferred Securities, in which event holders of the Convertible
Preferred Securities would not be able to rely on the Guarantee for payment of
such redemption or distributions until the Trust has sufficient funds available
therefor. The obligations of QCOM under the Convertible Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of QCOM.
So long as QCOM shall not be in default under the Convertible Subordinated
Debt Securities, QCOM has the right to defer payments of interest on the
Convertible Subordinated Debt Securities by extending the interest payments
period on the Convertible Subordinated Debt Securities, at any time, for up to
20
2
<PAGE> 4
consecutive quarters (each, and "Extension Period"). If interest payments are so
deferred, distributions on the Convertible Preferred Securities also will be
deferred. Despite such deferral, during an Extension Period distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law) at an annual rate of 5 3/4% per annum, compounded quarterly, and
during any Extension Period, holders of Convertible Preferred Securities will be
required to include deferred interest income in their gross income for United
States federal income tax purposes in advance of receipt of the cash
distributions attributable to such deferred income. There could be multiple
Extension Periods of varying lengths throughout the term of the Convertible
Subordinated Debt Securities. Accrued interest will not be paid on the
Convertible Subordinated Debt Securities that are converted, provided, however,
that if a Convertible Subordinated Debt Security is converted on or after a
record date for payment of interest thereon, the interest payable on the related
payment date with respect to such Convertible Subordinated Debt Securities shall
be paid to the Trust (which will distribute such interest to the holder of the
converted Convertible Preferred Securities as of the record date) or other
holder of Convertible Subordinated Debt Securities as of the record date, as the
case may be, despite such conversion. See "Description of the Convertible
Subordinated Debt Securities -- Option to Extend Interest Payment Period," "Risk
Factors -- Risks Relating to Securities -- Option to Extent Interest Payment
Period; Tax Consequences" and "Certain United States Federal Income Tax
Consequences -- Original Issue Discount, Premium and Market Discount." In the
event of any such deferral of interest payments, the holders of the Convertible
Preferred Securities do not have the right to appoint a special representative
or trustee or otherwise act to protect their interests.
The Convertible Subordinated Debt Securities are redeemable at the option
of QCOM (in whole or in part) from time to time, on or after March 4, 2000 or at
any time in certain circumstances upon the occurrence of a Tax Event (as defined
herein). If QCOM redeems Convertible Subordinated Debt Securities, the Trust
must redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Convertible Subordinated Debt Securities so
redeemed at the prices set forth herein (the "Redemption Price") plus accrued
and unpaid distributions thereon to the date fixed for redemption. See
"Description of the Convertible Preferred Securities -- Redemption." In
addition, upon the occurrence of a Special Event (as defined herein) arising
from a change in law or a change in legal interpretation, unless the Convertible
Subordinated Debt Securities are redeemed in the limited circumstances described
below and subject to certain conditions, the Trust may be dissolved (with the
consent of QCOM) with the result that the Convertible Subordinated Debt
Securities would be distributed (with the consent of QCOM) to the holders of the
Convertible Preferred Securities, on a pro rata basis, in lieu of any cash
distribution. If QCOM declines to consent to such dissolution and distribution,
QCOM may incur an obligation to pay Additional Interest (as defined herein). See
"Description of the Convertible Subordinated Debt Securities -- Additional
Interest." In the case of the occurrence of a Special Event that is a Tax Event,
QCOM will have the right in certain circumstances to redeem the Convertible
Subordinated Debt Securities at 100% of the principal amount thereof plus
accrued and unpaid interest thereon, which would result in the redemption by the
Trust of Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Convertible Subordinated Debt Securities so
redeemed, on a pro rata basis. The outstanding Convertible Preferred Securities
will be redeemed upon maturity of the Convertible Subordinated Debt Securities.
The Convertible Subordinated Debt Securities mature on February 24, 2012. See
"Description of the Convertible Preferred Securities -- Special Event Redemption
or Distribution" and "Description of the Convertible Subordinated Debt
Securities." At any time, QCOM will have the right to terminate the Trust and
cause the Convertible Subordinated Debt Securities purchased by the Trust to be
distributed pro rata to holders of the Convertible Preferred Securities and
Common Securities in connection with the dissolution of the Trust.
In the event of the voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, after satisfaction of creditors of the
Trust, if any, the holders of the Convertible Preferred Securities will be
entitled to receive, for each Convertible Preferred Security, a liquidation
amount of $50 plus accrued and unpaid distributions thereon (including interest,
if any, thereon) to the date of payment, unless in connection with such
liquidation, dissolution, winding-up or termination to the Convertible
Subordinated Debt Securities are distributed to the holders of the Convertible
Preferred Securities. See "Description of the Convertible Preferred
Securities -- Liquidation Distribution Upon Termination."
3
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE LITIGATION REFORM
ACT 1995 WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF THE COMPANY, INCLUDING, WITHOUT LIMITATION, STATEMENTS UNDER THE
CAPTIONS "RISK FACTORS" AND "THE COMPANY" INCLUDED HEREIN, AS WELL AS
"MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" IN THE COMPANY'S QUARTERLY AND ANNUAL REPORTS ON FORMS 10-Q AND
10-K, RESPECTIVELY. THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES, AND AS SUCH MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESS OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS
PROSPECTUS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO
RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD
THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED. FURTHER INFORMATION ON OTHER FACTORS THAT COULD AFFECT THE
FINANCIAL RESULTS OF THE COMPANY AND SUCH FORWARD-LOOKING STATEMENTS IS INCLUDED
IN THE SECTION HEREIN ENTITLED "RISK FACTORS."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Reports,
proxy statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at 500 West Madison, Suite 1400, Chicago, Illinois 60661. Copies of
such materials also may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. They are also available through the Commission's World Wide Web site
(http://www.sec.gov).
QCOM and the Trust have filed with the Commission a Registration Statement
(which term shall encompass any amendments thereto) on Form S-3 under the
Securities Act with respect to the securities offered by this Prospectus (the
"Registration Statement"). This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to QCOM and the Trust and the
securities offered by this Prospectus, reference is made to the Registration
Statement, including the exhibits thereto, and the financial statements and
notes thereto filed or incorporated by reference as a part thereof, which are on
file at the offices of the Commission and may be obtained upon payment of the
fee prescribed by the Commission, or may be examined without charge at the
offices of the Commission. Statements made in this Prospectus concerning the
contents of the any document referred to herein are not necessarily complete,
and, in each such instance, are qualified in all respects by reference to the
applicable documents filed with the Commission. The Registration Statement and
the exhibits thereto filed by QCOM and the Trust with the Commission may be
inspected and copied at the locations described above.
4
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No separate financial statements of the Trust have been included herein.
The Trust and QCOM do not consider that such financial statements would be
material to potential investors because the Trust is a newly organized special
purpose entity, has no operating history or independent operations and is not
engaged in and does not propose to engage in any activity other than holding as
trust assets the Convertible Subordinated Debt Securities of QCOM and issuing
the Convertible Preferred Securities and Common Securities, and QCOM has fully
and unconditionally guaranteed all of the Trust's obligations under the
Convertible Preferred Securities. See "The Trust," "Description of the
Convertible Preferred Securities," "Description of the Guarantee" and
"Description of the Convertible Subordinated Debt Securities."
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: the Company's Annual Report on Form 10-K for
the year ended September 29, 1996, Quarterly Report on Form 10-Q for the quarter
ended December 29, 1996, the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders filed pursuant to Rule 14a-6 of the Exchange Act, and
Forms 8-K dated February 25, 1997 and March 7, 1997 filed with the Commission,
are hereby incorporated by reference in this Prospectus except as superseded or
modified herein. All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
and prior to the termination of the offering of the Convertible Preferred
Securities made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the filling of such documents. Any
statement contained in any document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that as to the text contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus. The Company will provide without charge to
each person to whom this Prospectus is delivered, upon written request of such
person, a copy of any or all of the foregoing documents incorporated by
reference into this Prospectus (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be delivered to the Treasurer at the Company's
principal executive offices located at 6455 Lusk Boulevard, San Diego,
California 92121-2779; telephone: (619) 587-1121.
CD-7000(R), CoveragePLUS(R), Digital by QUALCOMM(R), Eudora(R), Eudora
Light(TM), Eudora Pro(TM), Expert Dispatch(R), Expert Swap(R), InTRACS(R),
JTRACS(R), JTRACS Pro(TM), OmniTRACS(R), OnTRACS(TM), PureVoice(TM), QASPR(R),
QCELP(TM), QCELP-13(TM), QCMobility(TM), QCP-800(TM), QCP-900(TM), QCP-1900(TM),
QCP-2700(TM), QCPilot(R), QCPlan(R), QCT-2000(TM), QCT-1000(TM), QCT-6000(TM),
QCT-8000(TM), QCTel(TM), QDSS(R), QEDesign(R), QMATCH(R), QSWAP(R), QTOPS(TM),
QTRACS(R), QUALCOMM(R), SensorTRACS(R), SmartRate(TM) and TrailerTRACS(R), are
trademarks and/or servicemarks of the Company. All other trademarks or
servicemarks appearing in this Prospectus or incorporated by reference herein
are the property of their respective holders.
5
<PAGE> 7
RISK FACTORS
Prospective purchasers of the Offered Securities should carefully consider
the following risk factors in addition to the other information contained in
this Prospectus. Also see "Glossary of Terms" for definitions of certain terms
used in the Prospectus.
RISKS RELATING TO THE COMPANY
Uncertainty and Fluctuations of Operating Results. The Company has
experienced quarterly variability in revenues and profitability. There can be no
assurance that the Company will sustain profitability on a quarterly or annual
basis in the future. The Company's future results will depend in part on
continued success of its OmniTRACS operations; the timing and magnitude of
licensing fees and royalties from the Company's code division multiple access
("CDMA") licensees; the successful large-scale implementation of the Company's
CDMA technology and equipment; the continuation of the Globalstar development
contract; and the Company's ability to manufacture and sell commercial scale
quantities of CDMA infrastructure, subscriber and other equipment at competitive
prices on a timely and profitable basis, and to meet any applicable performance
guarantees. In particular, any delays in commencement of commercial operation of
CDMA-based cellular, personal communications systems ("PCS") or wireless local
loop ("WLL") systems, as well as a reduction in prices of CDMA subscriber
equipment due to competitive pressures, could have a material adverse effect on
product margins and quarterly and annual operating results. The Company has
experienced and may continue to experience fluctuations in quarterly and annual
operating results due to variations in the amount and timing of CDMA fees and
royalties. In addition, earnings in future periods could be adversely affected
in the event that the Company does not meet performance obligations relative to
scheduled delivery dates and performance specifications for CDMA equipment.
Ability to Manage Growth. The Company is experiencing a period of rapid
growth which has placed, and is expected to continue to place, significant
demands on the Company's managerial, operational and financial resources. The
management of such growth will require the Company to continue to improve and
expand the Company's management, operational and financial systems and controls,
including quality control and delivery and service capabilities, and to expand,
train and manage its employee base. In particular, the Company must carefully
manage production and inventory levels to meet increasing product demand and new
product introductions. Inaccuracies in the Company's demand forecasts could
quickly result in either insufficient or excessive inventories and
disproportionate overhead expenses. The Company must also continue to hire and
retain qualified technical, engineering and other personnel in the face of
strong demand from the Company's competitors and others for such individuals.
Any ineffective management of growth or unsuccessful recruitment and retention
of personnel could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company is experiencing significant growth in connection with the
commercial implementation of its CDMA technology, including significant
expansion of manufacturing, test and installation capabilities, customer support
capabilities, and marketing and sales personnel, which requires significant
expenditures to build the necessary organizations. The Company is expanding its
business into international markets which will require it to establish, manage
and control operations in countries where the Company has limited or no
operating experience. The Company's success will depend in part upon the
Company's ability to successfully manage such growth. There can be no assurance
that the Company's attempts to expand its manufacturing, customer support and
marketing and sales organizations will be successful or will result in
additional sales or profitability in any future period. In order to accommodate
planned growth, it is expected that the Company's operating expenses will
continue to increase. There can be no assurance that expense growth will not
exceed the rate of revenue growth.
Dependence on Equipment Sales. An important element of the Company's
strategy is to remain a major supplier of CDMA infrastructure and subscriber
equipment worldwide for cellular, PCS and WLL service providers, including
C-Block PCS licensees in North America. The Company's ability to generate
substantial revenues and profits from sales of its CDMA infrastructure and
subscriber equipment will require substantial capital investments by the Company
and is subject to risks and uncertainties. PCS systems have a limited operating
history in the United States, and the extent of demand for PCS is uncertain. WLL
systems in the
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U.S. and foreign countries are just beginning to be implemented, and their
cost-competitiveness with wireline and other wireless systems and market
acceptance is uncertain. The wireless telecommunications industry is
experiencing significant technological changes. As a result, the future
prospects of the industry and the success of PCS, WLL and other competing
services are uncertain. In order to commence operation, current PCS and WLL
operators have needed, and future operators will need, among other things, to
complete their system designs, acquire sites, purchase and install equipment,
hire personnel in each market and raise sufficient capital to finance the
construction costs and start-up operating losses of their commercial systems.
To complete system build-outs and implement their business plans, PCS and
WLL service providers will require substantial amounts of capital. The failure
of the Company's customers to design, construct and launch their systems would
have a material adverse effect on the Company's financial results. The Company
expects that a number of its potential infrastructure and subscriber equipment
customers will be C, D, E and F-Block licensees. These licensees are subject to
a number of risks in addition to those facing other wireless service providers.
Many of these licensees have limited financial resources, are highly leveraged
and will require large amounts of capital to complete the build-out of their
systems. There can be no assurance that these licensees will be able to raise
such capital. Many PCS and cellular service providers will have substantially
greater resources than these licensees, in particular the C and F-Block
licensees who were required to qualify as "small businesses" in order to bid in
the C and F-Block auctions. Further, there can be no assurance that future FCC
auctions of wireless spectrum will not reduce the competitiveness or
attractiveness of these licensees and their systems, or that such licenses will
not be sold at prices substantially less than those recorded in the prior FCC
auctions. In addition, the C, D, E and F-Block auctions were concluded over one
year following the conclusion of the A-Block and B-Block auctions, which have
provided the A-Block and B-Block licensees with a significant time-to-market
competitive advantage over such licensees.
Risks Related to Vendor Financing. Cellular, PCS and WLL systems operators
increasingly have required their suppliers to arrange or provide long-term
financing for them as a condition to obtaining or bidding on infrastructure
projects. These projects may require the Company to arrange or provide financing
of amounts ranging from modest sums to over a billion dollars on any particular
project. Internationally, potential service providers have limited governmental
or other financing sources and may have particular needs for vendor financing
offered or arranged by the Company. Such amounts financed may include "soft
costs" (such as software, cell site leases and permits), and thus the amount
financed may exceed 100% of infrastructure equipment costs. In February 1996,
the Company entered into an agreement to supply Northern Telecom ("Nortel") with
approximately $200 million of PCS infrastructure equipment and radio frequency
("RF") services as part of Nortel's estimated $1 billion equipment supply
agreement with Sprint Spectrum L.P. ("SPRINT PCS") PCS. In October 1996, Hughes
Network Systems ("Hughes") announced a strategic supply agreement with NextWave
Telecom Inc. ("NextWave") under which Hughes will supply up to $245 million of
CDMA infrastructure equipment for NextWave's network. Pursuant to an agreement
between the Company and Hughes, QUALCOMM will supply a percentage of the
infrastructure equipment to be shipped by Hughes to NextWave. In December 1996,
the Company and Chase Telecommunications, Inc. ("Chase") entered into an
agreement pursuant to which QUALCOMM will supply approximately $140 million of
PCS infrastructure equipment and services based on QUALCOMM'S CDMA technology to
Chase. QUALCOMM has agreed to provide up to $108 million of financing for
equipment purchased under the Chase agreement. Pursuant to an Equipment
Requirements Agreement with QUALCOMM, subject to the satisfaction of certain
conditions, NextWave is obligated to purchase approximately 50% of its
infrastructure equipment requirements from QUALCOMM. The agreement also provides
that QUALCOMM will offer 100% financing for equipment purchased under such
agreement on commercial terms. The terms of the equipment purchases, including
financing terms, will be established in a further agreement to be negotiated in
good faith between the parties. There can be no assurance that such an agreement
will be concluded.
The Company's ability to arrange or provide and be competitive with such
financing will depend on a number of factors, including the Company's capital
structure, level of available credit and ability to provide financing in
conjunction with third-party lenders. There can be no assurance that the Company
will be able to arrange or provide such financing on terms and conditions, and
in amounts, that will be satisfactory to such system operators. A number of the
Company's competitors have substantially greater resources than the
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Company, which may enable them to offer more favorable financing terms and
successfully compete against the Company for infrastructure projects. The
inability to arrange or provide such financing or to successfully compete for
infrastructure projects could have a material adverse effect on the Company and
its business and prospects.
In order to arrange or provide financing for cellular, PCS and WLL
projects, the Company may be required to expose itself to significant project,
market, political and credit risks. The Company may be required to provide such
financing directly, and/or guaranty such financing through third party lenders.
The amount of such financing could become significant and, if not repaid by the
network operator, could have a material adverse effect on the Company's
operating results and liquidity. The Company may be required to maintain any
such extensions of credit, or remain obligated under guarantees, until maturity,
which could have a material adverse effect on the Company's credit rating.
Although the Company may seek to have third parties assume some or all of any
such credit arrangements, there can be no assurance that the Company will be
able to do so. Many WLL and PCS network operators, including a number of C-Block
licensees, have limited or no operating histories, are faced with significant
capital requirements and are high credit risks. Pursuant to FCC regulations
applicable to C-Block licensees, the Company will not be permitted to retain a
security interest in any C-Block licenses, which initially will constitute the
primary asset of many C-Block licensees. C-Block licensees are faced with strict
regulatory requirements under applicable FCC regulations. Compliance with those
regulations is outside of the control of the Company. The failure of a C-Block
licensee to comply with any of those regulations could result in the revocation
of that licensee's FCC licenses.The Company has limited experience evaluating
the credit worthiness or commercial viability of potential purchasers of CDMA
equipment, and there can be no assurances that such customers will not default
on any financing arranged or provided by the Company for the purchase of its
CDMA equipment. The Company may be required to provide vendor financing for a
portion of the Globalstar system prior to its full scale implementation. See
"-- Dependence on Key Customers."
Future Capital Needs. The design, development, manufacture and marketing
of digital wireless communication products and services are highly capital
intensive. In addition, cellular, PCS and WLL systems operators increasingly
have required their suppliers to arrange or provide long-term financing for them
as a condition to obtaining or bidding on infrastructure products. To the extent
that such cash resources are insufficient to fund the Company's activities, the
Company may be required to raise additional funds from a combination of sources
including potential debt or equity issuances. There can be no assurance that
additional financing will be available on reasonable terms or at all. If
additional capital is raised through the sale of additional equity or
convertible debt securities, dilution to the Company's stockholders could occur.
Patents and Proprietary Information. The Company relies on a combination
of patents, copyrights, trade secrets, trademarks and proprietary information to
maintain and enhance its competitive position. The Company has been granted
approximately 125 patents and has approximately 274 patent applications pending
in the United States, of which 11 patents and 5 patent applications relate to
the Company's OmniTRACS products and approximately 97 patents and approximately
260 patent applications relate to the Company's CDMA digital wireless
technology. The Company also actively pursues patent protection in other
countries of interest to the Company. There can be no assurance that the pending
patent applications will be granted, that the Company's patents or copyrights
will provide adequate protection, or that the Company's competitors will not
independently develop or initiate technologies that are substantially equivalent
or superior to the Company's technologies. There can also be no assurance that
the confidentiality agreements upon which the Company relies to protect its
trade secrets and proprietary information will be adequate. From time to time,
certain companies may assert exclusive patent, copyright and other intellectual
proprietary rights to technologies which are claimed to be important to the
industry or to the Company. In addition, from time to time third parties provide
the Company with copies of their patents relating to spread spectrum and other
digital wireless technologies and offer licenses to such technologies, and the
Company evaluates such patents and the advisability of such licenses. If any of
the Company's products were found to infringe on protected technology, the
Company could be required to redesign such products, license such technology,
and/or pay damages to the infringed party. If the Company is unable to license
protected technology used in the Company's products or to redesign such
products, the Company could be prohibited from marketing such products.
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Ericsson Inc., Motorola, Inc. ("Motorola") and InterDigital have each
advised the TIA that they hold patent rights in technology embodied in IS-95.
Lucent Technologies ("Lucent") and OKI Electric have claimed patent rights in
IS-96. In accordance with TIA guidelines, each company has confirmed to the TIA
that it is willing to grant licenses under its rights on reasonable and
nondiscriminatory terms. In connection with the settlement and dismissal of the
Company's patent litigation with InterDigital, the Company received, among other
rights, a fully-paid, royalty free license to use and to sublicense the use of
those patents claimed by InterDigital to be essential to IS-95. If the Company
and other equipment manufacturers are required to obtain additional licenses
and/or pay royalties to one or more patent holders, this could have an adverse
effect on the commercial implementation of the Company's CDMA technology and
could add substantially to the costs of manufacturing and selling products using
the Company's technology.
On September 23, 1996, Ericsson Inc. and Telefonaktiebolaget LM Ericsson
("Ericsson") filed suit against QCOM in the U.S. District Court for the Eastern
District of Texas, Civil Action No. 2-96CV183. On December 17, 1996, Ericsson
also filed suit against QPE in the U.S. District Court for the Northern District
of Texas, Civil Action No. 3-96CV3373P. Both complaints allege that various
elements of the Company's CDMA equipment system and components infringe one or
more patents owned by Ericsson. In December, QUALCOMM filed a countersuit in the
U.S. District Court for the Southern District of California. The complaint
alleges unfair competition by Ericsson based on a pattern of conduct intended to
impede the acceptance and commercial deployment of QUALCOMM's CDMA technology.
The complaint also charges that Ericsson's patent infringement claims against
the Company violate a 1989 agreement between the companies. Finally, the lawsuit
seeks a judicial declaration that certain of Ericsson's patents are not
infringed by QUALCOMM and are invalid. On April 9, 1997, the suit against
Ericsson in the U.S. District Court for the Southern District of California was
dismissed so that all claims in that case can be litigated in the action filed
by Ericsson in the U.S. District Court for the Eastern District of Texas.
Although there can be no assurances that an unfavorable outcome would not have a
material adverse effect on the Company's liquidity, financial position or
results of operations, the Company believes the named Ericsson patents are not
required to produce IS-95 compliant systems and that Ericsson's claims are
without merit. The Company will vigorously defend itself against such claims.
On November 8, 1996 the Company was served with a complaint in connection
with a lawsuit filed in the U.S. District Court for the Eastern District of
Pennsylvania by BTG USA Inc. The complaint alleges that the Company's Global
Positioning System, CDMA telecommunications products and the OmniTRACS system
components thereof infringe United States Patent No. Re. 34,004. The patent
expired in November 1996. Although there can be no assurances that an
unfavorable outcome would not have a material adverse effect on the Company's
liquidity, financial position or results of operations, the Company believes the
complaint has no merit and will vigorously defend the action.
On March 5, 1997, the Company filed a complaint against Motorola in the
U.S. District Court for the Southern District of California, Civil Action No.
CV00372. The complaint was filed in response to allegations by Motorola that the
Company's recently announced "Q" Phone infringes a design patent and certain
utility patents held by Motorola as well as trade dress and common law rights
relating to the appearance of certain Motorola wireless telephone products. The
complaint denies such allegations and seeks a judicial declaration that the
Company's products do not infringe any patents held by Motorola. The complaint
also states that, pursuant to certain patent and technology license agreements
entered into in 1990 between the companies, Motorola is precluded from asserting
infringement of the utility patents. On March 10, 1997, Motorola filed a
complaint against the Company in the U.S. District Court for the Eastern
Division of Illinois, Civil Action No. 97 C 1616 (the "Motorola Complaint"),
alleging claims based primarily on the above alleged infringement. The Company's
motion to transfer the Motorola Complaint to the U.S. District Court for the
Southern District of California was granted on April 3, 1997. On April 10, 1997
a temporary restraining order ("TRO") was entered against the Company
prohibiting QUALCOMM, among other things, from manufacturing, selling, offering
for sale or distributing its Q phone. The TRO was effective until April 24,
1997, on which date the court lifted the TRO and denied Motorola's motion for a
preliminary injunction. On April 25, 1997, Motorola appealed the denial of its
motion for a preliminary injunction. Although there can be no assurance that an
unfavorable outcome of the dispute would not have a material adverse effect on
the
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Company's liquidity, financial position or results of operations, the Company
believes Motorola's complaint has no merit and will vigorously defend the
action.
Manufacturing of CDMA Equipment. QUALCOMM has received orders for CDMA
wireless communications infrastructure and subscriber equipment and application
specific integrated circuits ("ASICs") components for delivery in fiscal 1997
and expects to receive additional orders in the future. The Company is investing
substantial amounts in product development activities to maintain or improve its
competitive position. The Company may spend substantially more on such software
and hardware development than currently anticipated. The Company has
significantly expanded and will continue to significantly expand its
infrastructure and subscriber equipment manufacturing capabilities. Many of the
Company's competitors have greater resources and experience with such large
scale manufacturing. There can be no assurance that the Company will be able to
timely or effectively accomplish such increases in production volume.
Any delays or difficulties in connection with the planned increase in
manufacturing capacity could have a material adverse effect on the Company's
business and results of operations. If the Company is unable to manufacture CDMA
subscriber and infrastructure equipment at commercially acceptable costs, or if
the Company expands its manufacturing capacity but is unable to secure
sufficient orders for its CDMA equipment, the Company's competitive position and
the ability of the Company to achieve a profitable return on its CDMA research
and development expenditures could be materially impaired.
The manufacture of wireless communications equipment is a complex and
precise process involving specialized manufacturing and testing equipment and
processes. Defects or impurities in the components or materials used, equipment
failure or other difficulties could adversely affect the Company's ability to
meet planned production yields. There can be no assurance that the Company will
not encounter difficulties in achieving planned yields on its products, which
would adversely affect its margins and operating results.
The Company manufactures its CDMA cellular and PCS subscriber equipment
through QUALCOMM Personal Electronics ("QPE"), a joint venture between the
Company and a subsidiary of SONY Electronics. The risks associated with the
commercial manufacture of the Company's infrastructure and subscriber equipment
products which are described in this document also apply to the manufacture of
subscriber equipment by QPE. To the extent that QPE experiences any of the
complications, delays or interruptions described herein, the Company's results
of operations would be adversely affected.
Dependence on Suppliers. The Company has from time to time experienced
delays in obtaining quantities of specification compliant RF components and
other parts to meet the demands for its equipment. Several of the critical
products and services used in the Company's existing and proposed products,
including ASICs, flash memory chips and certain RF components used in the
Company's CDMA products and certain custom and semi-custom VLSI circuits and
other sophisticated electronic parts and major subassemblies used in the
OmniTRACS system, are currently available only from single or limited sources.
The reliance on sole or limited source vendors by the Company and its licensees
involves risks, including the possibility of shortages of certain key
components, product performance shortfalls, and reduced control over delivery
schedules, manufacturing capability, quality and costs. Business disruptions or
financial difficulties of a sole or limited source supplier of any particular
component could materially and adversely impact the Company by increasing the
cost of goods sold or reducing the availability of such components. While the
Company believes that it could obtain necessary components from other
manufacturers, an unanticipated change in the source of supply of these
components could trigger performance guarantees or cause significant shipment
delays in the Company's products.
Unanticipated supply limitations could adversely affect the Company's
ability to meet its product orders. There can be no assurance that the supplier
commitments will be met. The Company is also working with its vendors to obtain
expanded volumes of specification compliant components. There may be significant
demand on the Company's suppliers from other manufacturers (including the
Company's licensees) for such components. Delays in the availability or reduced
quantities of these components could adversely affect the Company's ability to
manufacture subscriber equipment in the volumes and within the time frames
required by its customers, which could result in lost revenues and profits and
possible performance guarantee payments. See "--Performance Guarantees."
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Certain components require an order lead time of six months or longer.
Other components that currently are readily available may become difficult to
obtain in the future. There can be no assurance that the Company will not
experience delays in the receipt of certain of its key components. Delays or the
failure of the Company to order sufficient quantities of these components in
advance could prevent the Company from meeting production requirements and could
result in the requirement to pay performance guarantees. To meet forecasted
production levels, the Company may be required to commit to certain long lead
time items prior to contract award. If forecasted orders are not awarded, the
Company may be faced with large inventories of slow moving or unusable parts
which could have an adverse affect on the Company's results of operations.
Rapid Technological Change and New Products. The market for the Company's
products is characterized by rapid technological advances, evolving industry
standards, changes in customer requirements and frequent new product
introductions and enhancements. The introduction of products embodying new
technologies and the emergence of new industry standards could render the
Company's existing products and products currently under development obsolete
and unmarketable. Accordingly, the Company's future success will depend upon its
ability to enhance its current products and develop and introduce new products
that keep pace with technological developments, satisfy varying customer
requirements and achieve market acceptance. Any failure by the Company to
anticipate or respond adequately to technological developments or customer
requirements, or any significant delays in product development or introduction,
could damage the Company's competitive position and have an adverse effect on
revenues and results of operations. There can be no assurance that the Company
will be successful in developing and marketing new equipment products on a
timely basis or that the Company will not experience significant delays in the
future, which could have a material adverse effect on the Company's business and
operations. In addition, there can be no assurance that new products developed
by the Company will achieve market acceptance.
Performance Guarantees. QUALCOMM and QPE have entered into contracts that
provide for performance guarantees to protect customers against late delivery or
failure to perform. These performance guarantees, and any future commitments for
performance guarantees, are obligations entered into separately, and in some
cases jointly, with partners to supply CDMA subscriber and infrastructure
equipment. Certain of these obligations provide for substantial performance
guarantees that accrue at a daily rate based on percentages of the contract
value to the extent the equipment is not delivered by scheduled delivery dates
or the systems fail to meet certain performance criteria by such dates. The
Company is dependent in part on the performance of its suppliers and strategic
partners in order to provide equipment which is the subject of the guarantees.
Thus, the ability to timely deliver such equipment may be outside of the
Company's control. If the Company and QPE are unable to meet their performance
obligations, the payment of the performance guarantees could amount to a
significant portion of the contract value and would have a material adverse
effect on product margins and the Company's results of operations.
Dependence on Key Customers. A significant portion of the Company's CDMA
subscriber and infrastructure equipment sales are, and are expected to continue
to be, concentrated with a limited number of customers. As a result, the
Company's performance will depend significantly on relatively large orders from
a limited number of customers, as well as gaining additional customers, both
within existing cellular, PCS and WLL markets and in new markets. The loss of
any existing customer for CDMA equipment or the failure of the Company to gain
additional customers could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company has entered into a four-year development agreement with
Globalstar, L.P. ("Globalstar") to design and develop subscriber equipment and
ground communications stations of the Globalstar system through 1998. Through
September 29, 1996, the Company had recognized revenues of approximately $213
million under the Globalstar agreement and expects to recognize significant
revenues under the contract during fiscal years 1997 and 1998. It is anticipated
that Globalstar will require capital of approximately $2.5 billion prior to full
scale commercial implementation of its system. To date, Globalstar has received
funds and financing commitments totaling approximately $1.4 billion. Such
capital is being used, in part, to fund the development agreement. There can be
no assurance that Globalstar will be successful in raising additional capital or
that delays or technical or regulatory developments will not arise which could
adversely affect Globalstar's ability to continue funding the development
agreement and which would have a material adverse effect on QUALCOMM's business
and results of operations. The Globalstar development agreement is
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terminable at the election of Globalstar in the event that Globalstar abandons
its efforts to develop the satellite-based communications system.
CDMA Commercialization. The Company's CDMA technology has been launched
commercially for PCS and cellular applications in the U.S., Hong Kong, South
Korea and elsewhere. The successful implementation and operation of such systems
is a complex process requiring coordination of a number of factors, including
the successful interface between infrastructure and subscriber equipment from
multiple vendors and the public wireline network, as well as avoiding
interference from microwave and cellular systems. There can be no assurance that
unforeseen complications will not arise as more subscribers are added to these
systems or in the scale-up and operation of other commercial CDMA systems that
could materially delay or limit the commercial use of the Company's CDMA
technology. Further, if the Company's licensees are unable to deliver CDMA
equipment to the market on a timely basis, or if carriers which have adopted
CDMA fail to deploy their systems on a timely basis, the Company's business and
the reputation of the Company's CDMA technology could be adversely affected.
A number of companies with international operations are developing and
implementing competing cellular, PCS and WLL technologies. While the Company
strongly believes that CDMA is superior to competing digital technologies and is
actively promoting the benefits of its CDMA technology outside of the U.S.,
there can be no assurance that the Company will receive significant
international acceptance of its CDMA technology for cellular, PCS or WLL
applications due to the installed base of Global System for Mobile ("GSM")
telephone systems and competition from the U.S. and Japanese TDMA systems. In
some countries, the Company's CDMA products may be required to undergo extensive
testing and certification by government entities before CDMA can be approved for
commercial use in those countries.
Dependence on OmniTRACS. OmniTRACS systems, complementary software
products, related messaging service and maintenance services historically have
accounted for a significant portion of the Company's total revenues and margins.
The Company expects that margins from its OmniTRACS operations will continue to
represent a substantial portion of the Company's total margins. A significant
portion of the Company's OmniTRACS revenues is derived from the North American
trucking industry, particularly providers of long haul transportation of goods
and equipment. Any adverse events affecting the domestic trucking industry could
have a material adverse effect on the Company's OmniTRACS revenues. Although an
increasing portion of the Company's OmniTRACS revenues is derived from ongoing
messaging and maintenance revenues, new customer sales of the Company's
OmniTRACS systems are important to the Company to maintain continued growth. In
addition, the Company has been experiencing pricing pressure from competitors on
sales of its OmniTRACS products and messaging services, which could result in
further reduction of the margins for such products and services. The Company
expects that an increasing portion of its future OmniTRACS sales will be derived
from international sales. There can be no assurance that the Company's domestic
or international OmniTRACS business will continue to grow at the levels
experienced in the past, which could have a material adverse effect on the
Company's results of operations.
Competition. Competition in the wireless communications industry is
intense. The industry consists primarily of major domestic and international
companies which have financial, technical, marketing, sales, manufacturing,
distribution and other resources substantially greater than those of the
Company. Many of these companies are licensees of the Company's technology, and
have established market positions, trade names, trademarks, patents, copyrights
and intellectual property rights and substantial technological capabilities.
The primary competition with respect to CDMA technology is from current
analog and digital TDMA-based systems, including GSM and DCS 1900, the GSM
implementation for PCS in the U.S. GSM has been adopted as the digital cellular
standard throughout Europe and has received substantial international acceptance
in other countries. Industry publications have reported that over 100 countries
have adopted or are deploying GSM. In Japan, the Ministry of Posts and
Telecommunications has adopted TDMA as its primary digital cellular standard,
which has been widely deployed throughout the country. Japan's proprietary TDMA
system is not compatible with either GSM or the U.S. IS-54 TDMA standard.
However, in 1996, two of the three largest cellular service providers in Japan
announced plans to offer commercial CDMA service in 1998. In addition, a number
of alternative radio systems are also being marketed for WLL applications. Many
of the
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major equipment suppliers have made substantial investments in TDMA and GSM
technology including Hughes, Lucent, Motorola, NOKIA, Nortel and Siemens (all of
whom are licensees of the Company), as well as Ericsson. The Company also
competes against its licensees in the sale of CDMA subscriber and infrastructure
equipment. There can be no assurance that the Company's competitors will not
devote their significantly greater financial, technical, marketing and other
resources to aggressively market competitive communications systems or develop
and adopt competitive digital cellular technologies, and that such efforts will
not have a materially adverse effect on the Company's results of operations in
the future. Moreover, certain equipment manufacturers may offer extremely
attractive financing terms as a means of gaining access to the U.S. PCS market.
The Company's primary competition to its OmniTRACS system includes American
Mobile Satellite Corporation ("AMSC") and HighwayMaster Communications, Inc.
AMSC and its resellers are offering services through the AMSC satellite which
was launched in 1995. Recently Rockwell International, the primary reseller to
date of AMSC services, ceased acting as an AMSC reseller and transferred its
customers to AMSC, thereby increasing AMSC's market presence. These competitors
are aggressively pricing their products and could continue to do so in the
future. In addition, these competitors are offering new value-added products and
services similar to those developed or being developed by QUALCOMM. Emergence of
new competitors, particularly those offering low cost products and future low
earth orbiting ("LEO") satellite communications systems, may impact margins and
intensify competition in new markets. The Company also faces competition abroad
from numerous suppliers of equipment and services. These include Inmarsat and
its authorized resellers through its Inmarsat C geostationary satellite service.
In addition, the Company is facing competition abroad from various terrestrial
based systems and specifically in Europe from GSM-based terrestrial systems. All
of these competitors are aggressively pricing their products and services and
the Company can continue to expect pricing pressures. As with the U.S.
operations, the international business may also experience competition in the
future from LEO Satellite communications systems.
Equipment Sales by CDMA Licensees. Full commercial implementation of the
Company's CDMA technology requires that subscriber and infrastructure equipment
be made available in commercial quantities in a timely and cost effective
manner. Although the Company is a supplier of certain CDMA subscriber and
infrastructure equipment, the Company expects that a major portion of the
subscriber and infrastructure equipment that will be made commercially available
will be supplied by the Company's licensees. If CDMA subscriber and
infrastructure equipment is not delivered to the market on a timely basis,
customers could select other digital wireless technologies. Availability of
equipment and other factors are critical for CDMA technology to be chosen for
wireless applications. The amount and timing of resources devoted by licensees
to the development of CDMA subscriber and infrastructure equipment are
controlled by such licensees, and thus the timing of the availability of third
party equipment is not under the Company's control.
Reliance on Satellite and Other Facilities for OmniTRACS Service. The
Company's OmniTRACS system currently operates in the U.S. market on leased
Ku-band satellite transponders. The Company's data satellite transponder lease
runs through 2001. The Company's position reporting satellite transponder runs
through May 1997, with the rights to extend through May 1999. The Company
believes that its current domestic transponder capacity is adequate to support
over 180,000 OmniTRACS terminals, assuming current per unit message and position
reporting volumes. Future system enhancements may allow for increased
utilization of transponder capacity. The Company believes that U.S. OmniTRACS
operations may require additional transponder capacity in fiscal year 1998 which
it believes will be available on acceptable terms. However, no assurance can be
given that the Company will be able to acquire additional transponder capacity
on acceptable terms on a timely basis. Any failure of the Company to maintain
adequate satellite capacity would have a material adverse effect on the
Company's financial results. The Company's network management facility ("NMF")
operations are subject to the risk that a failure or natural disaster could
interrupt the OmniTRACS service and have a material adverse effect on OmniTRACS
revenues. The Company maintains a fully operational NMF in Las Vegas, Nevada as
a backup to its primary NMF in San Diego, California.
Factors Affecting International Business. Revenues from international
customers accounted for approximately 36% of total revenues in fiscal 1996, 20%
of total revenues in fiscal 1995 and 23% of total revenues in fiscal 1994. Since
the Company is a relatively new entrant into some of these markets and its
competitors may have long-standing, entrenched positions, it may be difficult
for the Company to succeed in certain markets,
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<PAGE> 15
thereby limiting international sales. Other risks faced by the Company in its
international business include unexpected changes in regulatory requirements,
export controls, national standards, currency exchange rates, expropriation,
tariffs or other barriers, political risks, difficulties in staffing and
managing foreign operations, and potentially negative tax consequences. These
factors could have an adverse impact on the Company's operating results. In
addition, because certain joint ventures between the Company and foreign firms
provide for a minority ownership position by the Company in the joint venture,
the Company may be limited in taking actions it might otherwise wish to pursue.
The Company is subject to U.S. export control laws and regulations with respect
to all of the Company's products and technology that are exported from the
United States. The Company is subject to the risk that more stringent export
control requirements could be imposed in the future on product classes that
include products exported by the Company, which would result in additional
compliance burdens on the Company or could impair the enforceability of its
contract rights. In addition, the laws of certain foreign countries, including
developing nations in Asia, South America, Africa and Eastern Europe, may not
protect the Company's intellectual property rights or ensure the enforceability
of its contract rights to the same extent as do the laws of the United States.
Uncertainty of Government Regulation. The Company's products are subject
to various FCC regulations in the U.S. These regulations require that the
Company's products meet certain radio frequency emission standards and not cause
unallowable interference to other services. The Company is also subject to
government regulations and requirements by local and international standards
bodies outside the U.S., where the Company is less prominent than local
competitors and has less opportunity to participate in the establishment of
regulatory and standards policies. Changes in the regulation of the Company's
activities, including changes in the allocation of available spectrum by the
U.S. Government and other governments, or exclusion of its technology by a
standards body, could have a material adverse effect on the Company's results of
operations and its ability to market its products and services. The Company is
also subject to state and federal health, safety and environmental regulations
as well as regulations related to the handling of and access to classified
information.
Reliance on Key Personnel. The Company's success depends in a large part
upon its ability to retain highly qualified technical and management personnel,
the loss of one or more of whom could have a material adverse effect on the
business of the Company. None of these individuals has an employment contract
with the Company. The Company's success also depends upon its ability to
continue to attract and retain highly qualified personnel in all disciplines.
There can be no assurance that the Company will be successful in hiring or
retaining requisite personnel.
Product Liability. Testing, manufacturing, marketing and use of the
Company's products entail the risk of product liability. While the Company
currently has product liability insurance that it believes is adequate to
protect against product liability claims, no assurance can be given that the
Company will be able to continue to maintain such insurance at a reasonable cost
or in sufficient amounts to protect the Company against losses due to product
liability. An inability to maintain insurance at an acceptable cost or to
otherwise protect against potential product liability could prevent or inhibit
the commercialization of the Company's products. In addition, a product
liability claim or recall could have a material adverse effect on the business
or financial condition of the Company.
News reports have asserted that power levels associated with hand-held
cellular telephones may pose certain health risks. The Company is not aware of
any study that has concluded that there are any significant health risks from
using hand-held cellular telephones. If it were determined that electromagnetic
waves carried through the antennas of cellular telephones create a significant
health risk, there could be a material adverse effect on the Company's ability
to market and sell its wireless telephone products.
Anti-Takeover Measures; Rights Plan. The Company's Certificate of
Incorporation provides for cumulative voting in the election of directors. In
addition, the Company's Certificate of Incorporation provides for a classified
Board of Directors and includes a provision (the "Fair Price Provision") that
requires the approval of the holders of at least 66 2/3% of the Company's voting
stock as a condition to a merger or certain other business transactions with, or
proposed by, a holder of more than 15% or more of the Company's voting stock,
except in cases where certain directors approve the transaction or certain
minimum price criteria and other procedural requirements are met. The Company's
Certificate of Incorporation also requires the
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<PAGE> 16
approvals of holders of at least 66 2/3% of the Company's voting stock to amend
or change the provisions relating to the classified board, cumulative voting or
the Fair Price Provision. The Company's Certificate of Incorporation also
requires that any action required or permitted to be taken by stockholders of
the Company must be effected at a duly called annual or special meeting of
stockholders of the Company and may not be effected by any consent in writing.
The classified board, Fair Price Provision and other charter provisions may
discourage certain types of transactions involving an actual or potential change
in control of the Company, including transactions in which the stockholders
might otherwise receive a premium for their shares over then current market
prices, and may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests. Further, pursuant to the terms of
its preferred share purchase rights plan, the Company has distributed a dividend
of one right for each outstanding share of Common Stock. In the event the
Convertible Preferred Securities are converted into Common Stock, each share of
such Common Stock will also be granted a right. These rights will cause
substantial dilution to the ownership of a person or group that attempts to
acquire the Company on terms not approved by the Board of Directors and may have
the effect of deterring hostile takeover attempts. In addition, the Board of
Directors has the authority to fix the rights and preferences of and issue
shares of Preferred Stock, which may have the effect of delaying or preventing a
change in control of the Company without action by the stockholders.
Volatility of Stock Price. Historically, the Company's stock price has
been volatile. The sales prices for the Company's Common Stock have ranged from
$31.25 to $63.75 during the 52-week period ended April 17, 1997. Future
announcements concerning the Company or its competitors, including the selection
of wireless technology by cellular, PCS and WLL service providers, the timing of
roll-out of those systems, the receipt of substantial orders for infrastructure
or subscriber equipment, quality deficiencies in services or products, results
of technological innovations, new commercial products, restrictions on the
Company's ability to manufacture or sell products, price reductions for products
of the Company or its competitors, changes in recommendations of securities
analysts, government regulations, proprietary rights or product or patent
litigation, may have a significant impact on the market price of the Company's
Common Stock. The Company's future earnings and stock price may be subject to
significant volatility, particularly on a quarterly basis. Any shortfalls in
revenues, product margins or earnings from the levels expected by securities
analysts could have an immediate and significant adverse effect on the trading
price of the Company's Common Stock in any given period.
RISKS RELATING TO THE SECURITIES
Ranking of Obligations under the Guarantee and Convertible Subordinated
Debt Securities. QCOM's obligations under the Guarantee are unsecured and
subordinate and junior in right of payment to all other liabilities of QCOM and
pari passu with the most senior preferred stock issued by QCOM from time to
time, if any, and with any guarantee that may be entered into by QCOM in respect
of any preferred stock of any subsidiary or affiliate of QCOM. The obligations
of QCOM under the Convertible Subordinated Debt Securities are subordinate and
junior in right of payment to all present and future Senior Indebtedness of
QCOM. No payment of principal (including redemption payments), premium, if any,
or interest on the Convertible Subordinated Debt Securities may be made if (a)
any Senior Indebtedness of QCOM is not paid when due and any applicable grace
period with respect to such default has ended with such default not being cured
or waived or ceasing to exist or (b) the maturity of any Senior Indebtedness has
been accelerated because of a default, or the holders thereof have the ability
to accelerate because of a default. At December 29, 1996, QCOM had Senior
Indebtedness of approximately $48 million (excluding accrued interest), and QCOM
and consolidated subsidiaries had indebtedness and other liabilities of
approximately $489 million. The ability of the Trust to pay amounts due on the
Convertible Preferred Securities is solely dependent upon QCOM making payments
on the Convertible Subordinated Debt Securities as and when required. In
addition, because QCOM's subsidiaries have not guaranteed payment of the
Convertible Subordinated Debt Securities, claims of holders of Convertible
Preferred Securities are effectively subordinate to the claims of creditors of
such subsidiaries, including trade creditors. There are no terms in the
Convertible Preferred Securities, the Convertible Subordinated Debt Securities
or the Guarantee that prohibit or limit the ability of QCOM or its subsidiaries
to incur additional indebtedness, including indebtedness that ranks senior
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<PAGE> 17
to the Convertible Subordinated Debt Securities or the Guarantee. See
"Description of the Guarantee" and "Description of the Convertible Subordinated
Debt Securities -- Subordination."
Rights under the Guarantee. The Guarantee guarantees to the holders of the
Convertible Preferred Securities the following payments, to the extent not paid
by the Trust: (i) any accrued and unpaid distributions which are required to be
paid on the Convertible Preferred Securities, to the extent the Trust shall have
funds available therefor, (ii) the Redemption Price, which includes all accrued
and unpaid distributions to the date of the redemption, to the extent the Trust
has funds available therefor, with respect to any Convertible Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (unless the
Convertible Subordinated Debt Securities are distributed to the holders of
Convertible Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Convertible
Preferred Securities to the date of payment thereof, to the extent the Trust has
funds available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of Convertible Preferred Securities in
liquidation of the Trust.
The holders of not less than a majority in aggregate liquidation amount of
the Convertible Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Guarantee
Trustee (as defined herein) in respect of the Guarantee or to direct the
exercise of any trust power conferred upon the Guarantee Trustee under the
Guarantee. Holders of the Convertible Preferred Securities have the right to
proceed directly against QCOM to enforce QCOM's obligations to make payments
under the Guarantee, without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. If QCOM were to
default in its obligation to pay amounts payable on the Convertible Subordinated
Debt Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Convertible Preferred
Securities or otherwise, and, in such event, holders of the Convertible
Preferred Securities would not be able to rely upon the Guarantee for payment of
such amounts. Instead, holders of the Convertible Preferred Securities would
rely on the enforcement by the Property Trustee (as defined herein) of its
rights as registered holder of the Convertible Subordinated Debt Securities
against QCOM, pursuant to the terms of the Convertible Subordinated Debt
Securities. See "Description of the Guarantee -- Status of the Guarantee;
Subordination" and "Description of the Convertible Subordinated Debt
Securities -- Subordination." The Declaration provides that each holder of
Convertible Preferred Securities by acceptance thereof agrees to the provisions
of the Guarantee and the Indenture.
Enforcement of Certain Rights by Holders of Convertible Preferred
Securities. If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Convertible Preferred Securities would rely on
the enforcement by the Property Trustee of its rights as the holder of the
Convertible Subordinated Debt Securities against QCOM. In addition, the holders
of a majority in aggregate liquidation amount of the Convertible 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 to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee to exercise the
remedies available to it as a holder of the Convertible Subordinated Debt
Securities. If a Declaration Event of Default occurs that results from the
failure of QCOM to pay principal of or interest on the Convertible Subordinated
Debt Securities when due, during the continuance of such an event of default a
holder of Convertible Preferred Securities may institute a legal proceeding
directly against QCOM to obtain payment to such holder of such principal or
interest on Convertible Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Convertible Preferred
Securities owned of record by such holder. In addition, if the Property Trustee
fails to enforce its rights as holder of the Convertible Subordinated Debt
Securities for 30 days after a request therefor by a holder of Convertible
Preferred Securities to the fullest extent permitted by law, such holder may
proceed to enforce such rights directly against QCOM. The holders of Convertible
Preferred Securities will not be able to exercise directly against QCOM any
other remedy available to the Property Trustee unless the Property Trustee first
fails to do so. See "Description of the Convertible Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
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<PAGE> 18
Option to Extend Interest Payment Period; Tax Consequences. QCOM has the
right under the Indenture to defer the payment of interest on the Convertible
Subordinated Debt Securities at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Convertible Subordinated Debt Securities. Upon the termination of any Extension
Period and the payment of all amounts then due, QCOM may select a new Extension
Period and terminate the payments of all amounts then due, subject to the
requirements described herein. As a consequence of any such deferral, quarterly
Distributions on the Convertible Preferred Securities by the Trust will be
deferred (and the amount of Distributions to which holders of the Convertible
Preferred Securities are entitled will accumulate additional Distributions)
during any such Extension Period.
Should an Extension Period occur, a holder of Convertible Preferred
Securities will continue to accrue interest allocable to the Convertible
Subordinated Preferred Securities held by the Trust for United States federal
income tax purposes. As a result, a holder of Convertible Preferred Securities
will include such income in gross income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive the cash
related to such income from the Trust if the holder disposes of the Convertible
Preferred Securities prior to the record date for the payment of Distributions.
Moreover, if a holder of Convertible Preferred Securities converts its
Convertible Preferred Securities into QCOM Common Stock during an Extension
Period, the holder will not receive any cash related to the deferred
distribution. Additionally, during the pendancy of any Extension Period, QCOM
will not be permitted, subject to certain exceptions set forth herein, to
declare or pay any cash distribution with respect to QCOM capital stock or debt
securities (including guarantees of indebtedness for money borrowed) that rank
pari passu with or junior to the Convertible Subordinated Debt Securities. See
"Description of the Convertible Preferred Securities -- Distributions."
QCOM has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Convertible
Subordinated Debt Securities. However, should QCOM elect to exercise such right
in the future, the market price of the Convertible Preferred Securities is
likely to be affected. A holder that disposes of its Convertible Preferred
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Convertible
Preferred Securities. In addition, as a result of the existence of QCOM's right
to defer interest payments, the market price of the Convertible Preferred
Securities (which represent preferred undivided beneficial interest in the
Convertible Subordinated Debt Securities) may be more volatile than the market
prices of other securities on which original issue discount accrues that are not
subject to such deferrals.
Special Event Redemption or Distribution. Upon the occurrence of a Special
Event, the Trust may be terminated (with the consent of QCOM), except in the
limited circumstances described below, with the result that the Convertible
Subordinated Debt Securities would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. If QCOM declines to
consent to such termination and distribution, QCOM may incur an obligation to
pay Additional Interest. In the case of a Special Event that is a Tax Event, in
certain circumstances QCOM shall have the right to redeem the Convertible
Subordinated Debt Securities, in whole or in part, in which event the Trust will
redeem the Trust Securities on a pro rata basis to the same extent as the
Convertible Subordinated Debt Securities are redeemed. See "Description of the
Convertible Preferred Securities -- Special Event Redemption or Distribution"
and "Certain United States Federal Income Tax Consequences."
Under current United States federal income tax law, a distribution of the
Convertible Subordinated Debt Securities upon the termination of the Trust would
not be a taxable event to holders of the Convertible Preferred Securities.
Interest payments on Convertible Subordinated Debt Securities held by a United
States Alien Holder (as defined herein) would be subject to withholding for U.S.
income taxes at a rate of 30%. Upon occurrence of a Tax Event, however, a
termination of the Trust in which holders of the Convertible Preferred
Securities receive cash would be a taxable event to such holders. See "Certain
United States Federal Income Tax Consequences -- Receipt of Convertible
Subordinated Debt Securities or Cash upon Liquidation of the Trust."
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<PAGE> 19
There can be no assurance as to the market prices for the Convertible
Preferred Securities or Convertible Subordinated Debt Securities that may be
distributed in exchange for Convertible Preferred Securities if a termination of
the Trust were to occur. Accordingly, the Convertible Preferred Securities that
an investor may purchase, or the Convertible Subordinated Debt Securities that
the investor may receive on dissolution and liquidation of the Trust, may trade
at a discount to the price that the investor paid to purchase the Convertible
Preferred Securities offered hereby. Because holders of Convertible Preferred
Securities may receive Convertible Subordinated Debt Securities upon the
occurrence of a Special Event, prospective purchasers of Convertible Preferred
Securities also are making an investment decision with regard to the Convertible
Subordinated Debt Securities and should carefully review all the information
regarding the Convertible Subordinated Debt Securities and the Company contained
herein. See "Description of the Convertible Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Convertible
Subordinated Debt Securities."
Proposed Tax Legislation. On February 6, 1997, President Clinton announced
his Fiscal 1998 Budget Proposal (the "Budget Proposal") which, among other
things, would treat as equity and would eliminate interest deductions under
United States federal income tax laws for debt instruments with a maximum term
of more than 15 years that are not treated as indebtedness on the financial
statements of the issuer. This provision of the Budget Proposal is proposed to
be effective for debt instruments issued on or after the date of first
Congressional committee action. While the Company believes that the Convertible
Subordinated Debt Securities would not be affected by the Budget Proposal, there
can be no assurances that this proposed legislation or other proposals would not
be enacted in the future, and that such legislation would not have a retroactive
effective date that would prevent QCOM from deducting interest on the
Convertible Subordinated Debt Securities. See "Description of the Convertible
Preferred Securities -- Special Event Redemption or Distribution."
Limited Voting Rights. Holders of Convertible Preferred Securities
generally have limited voting rights primarily in connection with directing the
activities of the Property Trustee as the holder of the Convertible Subordinated
Debt Securities. Such holders are not entitled to vote to appoint, remove or
replace, or to increase or decrease the number of Company Trustees, which voting
rights are vested exclusively in QCOM as the holder of the Common Securities.
See "Description of the Convertible Preferred Securities -- Voting Rights."
Absence of Public Market for the Convertible Preferred Securities and
Restrictions on Resale. Although the Convertible Preferred Securities have been
approved for trading in the PORTAL market, there can be no assurance that any
market for the Convertible Preferred Securities will develop or, if one does
develop, that it will be maintained. If an active market for the Convertible
Preferred Securities fails to develop or be sustained, the trading price of the
Convertible Preferred Securities could be adversely affected. The Convertible
Preferred Securities could trade at prices that may be higher or lower than the
offering price hereunder depending on many factors, including prevailing
interest rates, the price of the Common Stock, QCOM's operating results, any
election by QCOM to extend interest payment periods and the market for similar
securities. However, there can be no assurance as to the liquidity of any
trading market for the Convertible Preferred Securities or that an active public
market for the Convertible Preferred Securities will develop.
Trading Price of Convertible Preferred Securities. The Convertible
Preferred Securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest with respect to the underlying Convertible
Subordinated Debt Securities. A holder disposing of Convertible Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Convertible Subordinated
Debt Securities through the date of disposition in income as ordinary income
(i.e., OID (as defined herein)), and to add such amount to the adjusted tax
basis in the holder's Convertible Preferred Securities. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), 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.
See "Certain United States Federal Income Tax Consequences -- Original Issue
Discount, Premium and Market Discount" and "-- Sale of Convertible Preferred
Securities."
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<PAGE> 20
THE COMPANY
QUALCOMM is a leading provider of digital wireless communications products,
technologies and services. The Company designs, develops, markets and
manufactures wireless communications, infrastructure and subscriber equipment
and ASICs based on its CDMA technology and has licensed its CDMA technology to
major telecommunications equipment suppliers for incorporation into their
wireless communications products. QUALCOMM designed and is manufacturing,
distributing and operating the OmniTRACS system, a satellite-based, two-way
mobile communications and tracking system that provides messaging, position
reporting and other services for transportation companies and other mobile and
fixed-site customers. The Company also provides contract development services,
including the design and development of subscriber and ground communications
equipment for the Globalstar satellite-based communications system. In addition,
the Company develops, markets and manufactures a variety of other communications
products, including Eudora, a leading Internet-based electronic mail software
application, for personal, commercial and government applications.
The Company's CDMA technology has been developed for implementation in
cellular, PCS and WLL systems as well as other wireless applications. Wireless
networks based on the Company's CDMA technology have been commercially deployed
and are under development in a number of markets around the world. CDMA has
emerged as the leading digital technology for cellular and PCS applications in
the U.S., having been adopted by a number of the largest cellular and PCS
carriers covering over 95% of the U.S. population. Internationally, CDMA has
been introduced in Hong Kong and South Korea and is being implemented in
numerous other markets worldwide. To support the deployment of CDMA equipment,
the Company has entered into a number of royalty-bearing license agreements with
major telecommunications companies throughout the world. These companies include
Alps Electric, DENSO, DSP Communications, Fujitsu, Hitachi Ltd. ("Hitachi"),
Hughes, Hyundai Electronics, Kenwood, Kyocera, LGIC, Lucent, Matsushita, Maxon,
Mitsubishi, Motorola, NEC, NOKIA, Nortel, OKI Electric, Samsung Electronics,
Sanyo, Siemens, Sony, Toshiba and VLSI Technology. The Company and its licensees
are developing, marketing and manufacturing CDMA wireless infrastructure and
subscriber equipment and ASICs for wireless networks worldwide. The Company has
entered into agreements with Hughes and Nortel to support the design and
manufacture of CDMA infrastructure equipment and a joint venture with Sony, QPE,
to develop, manufacture and market subscriber equipment.
The Company's OmniTRACS system provides two-way data messaging and position
reporting services to mobile users, primarily transportation operators in the
long haul trucking industry. The Company has sold over 185,000 OmniTRACS
terminals worldwide in 33 countries, both directly and through joint ventures
and strategic alliances. The Company operates a network management facility
("NMF") in the U.S. which currently processes over 4 million messages and
position reports per weekday to over 700 customers. The Company also develops
and licenses complementary software products and services which enhance the
functionality of the OmniTRACS system and increase messaging unit volume.
RECENT DEVELOPMENTS
A number of important milestones toward large-scale commercialization of
the Company's CDMA technology have been achieved. In the U.S., CDMA has emerged
as the leading digital technology for cellular and PCS applications. A number of
the largest domestic cellular carriers have selected CDMA as their digital
platform, including AirTouch Communications, ALLTEL Mobile, Ameritech, Comcast
Cellular Communications, GTE Mobilnet, Bell Atlantic Nynex Mobile, 360 degrees
Communications and US WEST. A significant number of the largest PCS carriers
have announced their selection of CDMA for use in their systems, including
PrimeCo Personal Communications, L.P. ("PrimeCo"), a partnership of AirTouch
Communications, Bell Atlantic Nynex Mobile and US WEST; Sprint PCS, a
partnership of Sprint Corporation, Tele-Communications Inc., Cox Communications
Inc. and Comcast Corp.; NextWave; Chase; and Centennial Cellular Corporation.
After extensive field testing, industry review and standardization, the
Company's CDMA technology is now being used in a number of markets around the
world. CDMA-based wireless systems were successfully
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<PAGE> 21
launched in South Korea, Hong Kong, and elsewhere. The Company believes the
South Korean system was serving over 1,000,000 subscribers as of January 1997.
In the fall of 1996, PrimeCo launched PCS service in 15 major U.S. cities,
including Chicago, Dallas, Fort Lauderdale, Ft. Worth, Honolulu, Houston,
Jacksonville, Miami, Milwaukee, New Orleans, Norfolk, Orlando, Richmond, San
Antonio and Tampa. The launch represented the largest domestic multimarket
wireless system deployment to date, as well as the first commercial multimarket
launch of CDMA at 1900 MHz. In December 1996, Sprint PCS launched service in 8
major U.S. cities, including Albany, Fresno, Milwaukee, Pittsburgh, Portland,
San Diego, Spokane and Syracuse. Subscriber equipment for both the PrimeCo and
the Sprint PCS roll-outs was provided by QPE. Other CDMA networks are expected
to be commercially deployed in the U.S. and internationally in the coming year,
including a number of U.S. cellular and PCS networks.
The Company has an agreement with Nortel providing for the production and
delivery of infrastructure equipment for CDMA wireless systems. Pursuant to the
agreement, Nortel has nonexclusive access to QUALCOMM's product designs for
digital cellular, PCS and WLL infrastructure products and in return purchases
from QUALCOMM a minimum percentage of CDMA infrastructure equipment for resale
to its customers. In February 1996, the Company announced its agreement to
supply Nortel with approximately $200 million of PCS infrastructure equipment
and RF services as part of Nortel's estimated $1 billion equipment supply
agreement with Sprint PCS. Other major customers under the agreement between
Nortel and QUALCOMM include BCTel Mobility Cellular and Bell Mobility. As of
December 31, 1996, the Company has shipped approximately 600 base stations and
related infrastructure equipment to PCS and cellular operators in North America.
In September 1996, the Company and Hughes entered into an agreement
providing for design and production of infrastructure equipment for CDMA
wireless systems. Pursuant to the agreement, Hughes will have nonexclusive
access to QUALCOMM's product designs for digital cellular, PCS and WLL
infrastructure products and in return will purchase a minimum percentage of CDMA
infrastructure equipment for resale to its customers. In October 1996, Hughes
announced a strategic supply agreement with NextWave under which Hughes will
supply up to $245 million of CDMA infrastructure equipment for NextWave's PCS
network, with an option to expand such amount to $1 billion over the next six
years under certain conditions. Pursuant to the agreement with Hughes, QUALCOMM
will supply a percentage of the infrastructure equipment to be shipped by Hughes
to NextWave.
In December 1996, the Company and Chase entered into an agreement pursuant
to which QUALCOMM will supply approximately $140 million of PCS infrastructure
equipment and services based on QUALCOMM's CDMA technology to Chase. QUALCOMM
has also agreed to provide up to $108 million of financing for equipment
purchased under the Chase agreement. Chase was awarded PCS licenses in 11 cities
covering approximately 6.3 million people throughout Tennessee and the
surrounding area in the FCC's C-Block auction.
During 1996 and early 1997, the Company significantly expanded its
manufacturing capacity for CDMA subscriber and infrastructure equipment. During
the period, QPE dedicated a new manufacturing facility and completed the
installation of eight production lines in order to support existing and future
orders for CDMA subscriber equipment. In June 1996, Sprint PCS and PrimeCo
announced awards approximating $500 million and $350 million, respectively, to
QPE for CDMA subscriber equipment. Shipments under the contracts began in 1996
and are scheduled to continue through 1998. As of January 1997, the Company had
produced over 1,000,000 handsets and achieved a production rate of over 200,000
units per month. In January 1997, the Company commenced operation of a 177,000
square foot facility in San Diego, California to expand its capacity to
manufacture its CDMA infrastructure equipment.
During the past year, the Company continued its international CDMA
commercialization efforts. The Company's CDMA technology is in use or has been
approved for use in 20 countries and 54 markets worldwide. In advance of
commercial rollout, the Company currently has systems undergoing certification
in India and Russia. The Company plans to pursue additional international
opportunities for the sale of CDMA infrastructure equipment, either as a primary
contractor, through its agreements with Nortel and/or Hughes or through
international joint venture partners.
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In September 1996, Globalstar completed an important milestone when forward
and reverse link calls using the Company's CDMA technology were successfully
completed in a laboratory environment. In December 1996, the Company entered
into a license with Telital S.r.l. ("Telital") to design and manufacture dual
mode Globalstar CDMA/GSM telephones. The dual mode Globalstar satellite
telephones will be designed to operate on either satellite or the local CDMA or
GSM cellular networks throughout the world. Globalstar has entered into a
four-year agreement for QUALCOMM to design and develop subscriber equipment and
ground communications equipment for the Globalstar system. Total revenues under
the contract to QUALCOMM are estimated to exceed $500 million at completion,
$213 million of which had been recognized by QUALCOMM as of September 29, 1996.
The Company shares in the management fee, and its ownership interest in
Globalstar is approximately 7%.
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THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
February 7, 1997 and the entering into of a Declaration of Trust on February 7,
1997. The Trust's purpose is defined in an Amended and Restated Declaration of
Trust, dated February 25, 1997 (the "Declaration"), between QCOM, as sponsor,
and the Company Trustees (as defined herein) as of that date. QCOM directly has
acquired all of the Common Securities in an aggregate liquidation amount equal
to 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 Convertible Subordinated Debt Securities and (iii)
engaging in only those other activities necessary or incidental thereto. The
Trust has a term of approximately 55 years, but may terminate earlier as
provided in the Declaration.
The Trust's affairs are conducted by the trustees (the "Company Trustees")
appointed by QCOM, holder of the Common Securities. The duties and obligations
of the Company Trustees are governed by the Declaration. Pursuant to the
Declaration, the number of Company Trustees is initially five. Three of the
Company Trustees (the "Regular Trustees") are persons who are employees or
officers of, or affiliated with, QUALCOMM. A fourth trustee is a financial
institution unaffiliated with the Company that serves as property trustee (the
"Property Trustee") under the Declaration. Wilmington Trust Company is acting as
the Property Trustee until removed or replaced by the holder of the Common
Securities. Wilmington Trust Company also is acting as indenture trustee under
the Guarantee (the "Guarantee Trustee"). See "Description of the Guarantee." The
fifth trustee is a financial institution or an affiliate thereof which maintains
a principal place of business or residence in the State of Delaware (the
"Delaware Trustee"). Wilmington Trust Company is acting as the Delaware Trustee
until removed or replaced by the holder of the Common Securities.
The Property Trustee holds title to the Convertible Subordinated Debt
Securities for the benefit of the Trust and holders of the Trust Securities and
has the power to exercise all rights, powers and privileges under the Indenture
as the holder of the Convertible Subordinated Debt Securities. In addition, the
Property Trustee maintains exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Convertible Subordinated Debt Securities for the benefit of the
Trust and holders of the Trust Securities. The Property Trustee makes payments
of distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee holds the Guarantee for the benefit of the holders of the
Convertible Preferred Securities. QCOM, as the holder of all the Common
Securities, has the right to appoint, remove or replace any Company Trustee and
to increase or decrease the number of Company Trustees, provided that the number
of Company Trustees shall be at least three, a majority of which shall be
Regular Trustees. QCOM will pay all fees, expenses, debts and obligations (other
than the Trust Securities) related to the Trust and the offering of the Trust
Securities. QCOM has agreed that the Property Trustee and any person to whom
such fees, expenses, debts and obligations are owed will have the right to
enforce QCOM's obligations in respect of such fees, expenses, debts and
obligations directly against QCOM without first proceeding against the Trust.
See "Description of the Convertible Preferred Securities -- Expenses and Taxes."
The rights of the holders of the Convertible Preferred Securities,
including economic rights, rights to information and voting rights, are as set
forth in the Declaration and the Delaware Business Trust Act, as amended (the
"Trust Act"). See "Description of the Convertible Preferred Securities."
The principal place of business of the Trust is c/o QUALCOMM Incorporated,
6455 Lusk Boulevard, San Diego, California 92121; Telephone: (619) 587-1121.
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USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from any sale of the
Offered Securities. Neither QCOM nor the Trust will receive any proceeds from
the sale of the Offered Securities.
ACCOUNTING TREATMENT
The financial statements of the Trust are consolidated with the Company's
financial statements with the Convertible Preferred Securities shown on the
Company's consolidated financial statements as Company-obligated mandatorily
redeemable convertible preferred securities of a subsidiary trust holding solely
subordinated debt securities of QCOM. The sole asset of the Trust will be the
5 3/4% Convertible Subordinated Debentures due February 24, 2012 in the
aggregate principal amount of approximately $680,000,000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for each of the five fiscal years in the period
ended September 30, 1996 and for the three months ended December 31, 1995 and
1996:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEARS ENDED SEPTEMBER 30(1) DECEMBER 31(1)
------------------------------------- --------------
1992 1993 1994 1995 1996 1995 1996
----- ----- ----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)......... -- 5.3x 5.4x 7.7x 3.1x 10.6x 6.2x
</TABLE>
- ---------------
(1) The Company's fiscal periods and on the last Sunday of each period. As a
result of this practice, fiscal 1996 includes 53 weeks.
(2) The ratio of earnings to fixed charges is computed by dividing income (loss)
before taxes, interest expense and other fixed charges by total fixed
charges, including interest expense and capitalized interest. In fiscal
1992, earnings were insufficient to cover fixed charges by $3,544,000.
DESCRIPTION OF THE CONVERTIBLE PREFERRED SECURITIES
The Convertible Preferred Securities have been issued pursuant to the terms
of the Declaration. The terms of the Convertible Preferred Securities include
those stated in the Declaration. The following summary of the principal terms
and provisions of the Convertible Preferred Securities does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Declaration (a copy of which is available for inspection at the corporate trust
office of the Property Trustee in Wilmington, Delaware) and the Trust Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Convertible Preferred Securities, which represent preferred undivided
beneficial interests in the assets of the Trust, and the Common Securities,
which represent common undivided beneficial interests in the assets of the
Trust. All of the Common Securities are owned directly by QCOM. The Common
Securities rank pari passu with the Convertible Preferred Securities, and
payments will be made on the Common Securities on a pro rata basis with the
Convertible Preferred Securities, except that upon the occurrence and during the
continuation of a Declaration Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights to
payment of the holders of the Convertible Preferred Securities. 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 owns and holds the Convertible Subordinated
Debt Securities for the benefit of the Trust and the holders of the Trust
Securities. The payment of distributions out of money held by the Trust, and
payments upon redemption of the Convertible Preferred Securities or liquidation
of the Trust, are guaranteed by QCOM to the extent described under "Description
of the Guarantee."
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<PAGE> 25
The Guarantee Trustee holds the Guarantee for the benefit of the holders of
the Convertible Preferred Securities. The Guarantee does not cover payment of
distributions on the Convertible Preferred Securities when the Trust does not
have sufficient available funds in the Property Account to make such
distributions.
FORM, DENOMINATION AND REGISTRATION
The Convertible Preferred Securities have been issued in fully registered
form, without coupons.
Global Certificate; Book-Entry Form. Except as provided below, Convertible
Preferred Securities sold in the Original Offering to "qualified institutional
buyers," as defined in Rule 144A under the Securities Act ("QIBs"), otherwise
than in reliance on Regulation S, were evidenced by one or more global
certificates representing Convertible Preferred Securities (collectively, the
"Restricted Global Certificate"), which were deposited with the Property Trustee
as custodian for DTC and registered in the name of Cede & Co. ("Cede") as DTC's
nominee. Convertible Preferred Securities sold to persons who acquired such
Convertible Preferred Securities in compliance with Regulation S under the
Securities Act ("Non-U.S. Persons") were evidenced by one or more global
certificates (collectively, the "Regulation S Global Certificate" and together
with the Restricted Global Certificate, the "Global Certificates" or each
individually, a "Global Certificate"), which were registered in the name of a
nominee of DTC and deposited with the Property Trustee, for the accounts of the
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel"). The
Global Certificates (and any Convertible Preferred Securities issued in exchange
therefor) are subject to certain restrictions on transfer set forth therein and
in the Declaration and bear the legend regarding such restrictions set forth
under "Transfer Restrictions." Until the end of the applicable restricted period
(such period, the "Restricted Period"), beneficial interests in the Regulation S
Global Certificate may be held only through Euroclear or Cedel, unless delivery
is made through the Restricted Global Certificate in accordance with the
certification requirements described herein. Restricted Period means, with
respect to the Convertible Preferred Securities, the one-year period and, with
respect to the Convertible Subordinated Debt Securities and Common Stock
issuable upon conversion thereof or of the Convertible Preferred Securities, the
40-day period, in either case following the latest of the commencement of the
Original Offering of the Convertible Preferred Securities and the last original
issue date of the Convertible Preferred Securities.
A QIB may hold its interests in the Restricted Global Certificate directly
through DTC if such QIB is a participant in DTC, or indirectly through
organizations which are participants in DTC (the "Participants"). Transfers
between Participants will be effected in the ordinary way in accordance with DTC
rules and will be settled in same-day funds. The laws of some states require
that certain persons take physical delivery of securities in definitive form.
Consequently, the ability to transfer beneficial interest in the Restricted
Global Certificate to such persons may be limited.
Prior to the expiration of the Restricted Period, a beneficial interest in
the Regulation S Global Certificate may be transferred to a person who takes
delivery in the form of an interest in the Restricted Global Certificate only
upon receipt by the Property Trustee of a written certification from the
transferor to the effect that such transfer is being made (i)(a) to a person
whom the transferor reasonably believes is purchasing for its own account or
accounts as to which it exercises sole investment discretion and that such
person and each such account is a QIB in a transaction meeting the requirements
of Rule 144A or (b) pursuant to another exemption from the registration
requirements under the Securities Act (in which case such certificate must be
accompanied by an opinion of counsel regarding the availability of such
exemption) and (ii) in accordance with all applicable securities laws of any
state of the United States or any other jurisdiction. After the expiration of
the Restricted Period, such certification requirements will no longer apply to
such transfers.
Beneficial interests in the Restricted Global Certificate may be
transferred to a person who takes delivery in the form of an interest in the
Regulation S Global Certificate, whether during or after the Restricted Period,
only upon receipt by the Property Trustee of a written certification from the
transferor to the effect that such transfer is being made in accordance with
Regulation S or Rule 144A under the Securities Act and that, if such transfer
occurs prior to the expiration of the Restricted Period, the interest
transferred will be held immediately thereafter through Euroclear or Cedel. Any
beneficial interest in one of the Global Certificates
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<PAGE> 26
will, upon transfer, cease to be an interest in such Global Certificate and
become an interest in such other Global Certificate and, accordingly, thereafter
will be subject to all transfer restrictions and other procedures applicable to
beneficial interest in such other Global Certificate for as long as it remains
such an interest.
Investors may hold their interests in the Regulation S Global Certificate
through Euroclear or Cedel, if they are participants in such systems, or
indirectly through organizations that are participants in such systems. After
the expiration of the Restricted Period (but no earlier), investors also may
hold such interests through organizations other than Euroclear or Cedel that are
Participants in DTC. Euroclear and Cedel will hold interests in the Regulation S
Global Certificate on behalf of their participants through customers' securities
accounts in their respective names on the books of DTC. All interests in a
Global Certificate, including those held through Euroclear or Cedel, may be
subject to the procedures and requirements of DTC. Those interests held through
Euroclear and Cedel also may be subject to the procedures and requirements of
such systems.
QIBs and Non-U.S. Persons who are not Participants may beneficially own
interests in a Global Certificate held by DTC only through Participants,
including Euroclear and Cedel, or certain banks, brokers, dealers, trust
companies and other parties that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants"). So long as Cede, as the nominee of DTC, is the registered owner
of a Global Certificate, except as provided below, owners of beneficial
interests in a Global Certificate will not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form, and will not be considered holders
thereof.
Subject to compliance with the transfer restrictions applicable to the
Global Certificates described herein and in the Declaration, cross-market
transfers between holders of interests in the Restricted Global Certificate, on
the one hand, and direct or indirect account holders at a Euroclear or Cedel
participant (each, a "Member Organization") holding interests in the Regulation
S Global Certificate, on the other hand, will be effected through DTC in
accordance with DTC's rules and the rules of Euroclear or Cedel, as applicable.
Such cross-market transactions will require, among other things, delivery of
instructions by such Member Organization to Euroclear or Cedel, as the case may
be, in accordance with the rules and procedures and within deadlines (Brussels
time) established by Euroclear or Cedel, as the case may be. If the transaction
complies with all relevant requirements, Euroclear or Cedel, as the case may be,
will then deliver instructions to its depositary to take action to effect final
settlement on its behalf.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to owners of beneficial interests in the Global Certificate held by
DTC 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. If less than all of the Convertible Preferred
Securities are being redeemed, DTC will reduce the amount of the interest of
each Participant in such Convertible Preferred Securities in accordance with its
procedures.
Although voting with respect to the Convertible Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede will
itself consent or vote with respect to Convertible 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's consenting or
voting rights to those Participants to whose accounts the Convertible Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). QCOM and the Trust believe that the arrangements among DTC,
Participants and Indirect Participants, and owners of beneficial interests in
the Global Certificate held by DTC will enable such 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.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
Distribution payments on the Global Certificates will be made to Cede, the
nominee for DTC, as the registered owner of the Global Certificates by wire
transfer of immediately available funds. Neither QCOM, the Property Trustee nor
any paying agent will have any responsibility or liability for any aspect of the
records
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<PAGE> 27
relating to or payments made on account of beneficial ownership interests in the
Global Certificates or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
QCOM has been informed by DTC that, with respect to any distribution
payments on the Global Certificates, DTC's practice is to credit Participants'
accounts on the payment date therefor with payments in amounts proportionate to
their respective beneficial interests in the Convertible Preferred Securities
represented by a Global Certificate, as shown on the records of DTC, unless DTC
has reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in Convertible
Preferred Securities represented by a Global Certificate held through such
Participants will be the responsibility of such Participants, as is now the case
with securities held for the accounts of customers registered in "street name."
Holders who desire to convert their Convertible Preferred Securities into
Common Stock pursuant to the terms of the Convertible Preferred Securities
should contact their brokers or other Participants or Indirect Participants to
obtain information on procedures, including proper forms and cut-off times, for
submitting such requests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Convertible Preferred Securities represented by
a Global Certificate to pledge such interest to persons or entities that do no
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of physical certificate evidencing such
interest.
Neither QCOM nor the Property Trustee (or any registrar, paying agent or
conversion agent under the Declaration) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised QCOM that it will take any action permitted to be
taken by a holder of Convertible Preferred Securities (including, without
limitation, the presentation of Convertible Preferred Securities for exchange as
described below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Certificate are credited and only with
respect to the number of Convertible Preferred Securities represented by the
Global Certificate as to which such Participant or Participants has or have
given such direction.
DTC has advised QCOM as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the United States Securities Exchange Act of 1934
(the "Exchange Act"). DTC was created to hold securities for its Participants
and to facilitate the clearance and settlement of securities transactions
between Participants through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations
such as the Initial Purchasers. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with, a
Participant, either directly or indirectly.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
in order to facilitate transfers of interests in the Global Certificates among
Participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. If DTC is at any time unwilling or unable to continue
as depositary and a successor depositary is not appointed by QCOM within 90
days, QCOM will cause the Convertible Preferred Securities to be issued in
definitive form in exchange for the Global Certificates. None of QCOM, the
Property Trustee nor any of their respective agents will have any responsibility
for the performance by DTC, Euroclear and Cedel, their Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership
interests in the Global Certificate.
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<PAGE> 28
Certificated Convertible Preferred Securities. Convertible Preferred
Securities sold in the Original Offering to investors that are neither QIBs nor
Non-U.S. Persons were issued in definitive registered form in minimum
denominations of 1,000 Convertible Preferred Securities and integral amounts in
excess thereof, and were not and may not be represented by the Global
Certificate. In addition, QIBs and Non-U.S. Persons may request that their
Convertible Preferred Securities be issued in certificated form, and may request
at any time that their interest in a Global Certificate be exchanged for
Convertible Preferred Securities in certificated form, upon compliance with
certain procedures set forth in the Declaration. Finally, certificated
Convertible Preferred Securities may be issued in exchange for Convertible
Preferred Securities represented by the Global Certificate if no successor
depositary is appointed by QCOM as set forth above under "-- Global Certificate;
Book-Entry Form" or in certain other circumstances set forth in the Declaration,
including the occurrence of a Declaration Event of Default.
DISTRIBUTIONS
Distributions on the Convertible Preferred Securities are fixed at a rate
per annum of 5 3/4% of the stated liquidation amount of $50 per Convertible
Preferred Security (equivalent to $2.875 per Convertible Preferred Security).
Distributions in arrears for more than one quarter will bear interest at the
rate of 5 3/4% per annum compounded quarterly (to the extent permitted by
applicable law). The term "distributions" as used herein includes any such
interest payable unless otherwise stated.
Distributions on the Convertible Preferred Securities are cumulative,
accrue from February 25, 1997, and are payable quarterly in arrears on March 1,
June 1, September 1 and December 1 of each year to the holders of record on the
applicable record date, commencing June 1, 1997, when, as and if available for
payment by the Property Trustee, except as otherwise described below. The amount
of distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. The initial distribution, payable on June
1, 1997, will be based on a period longer than a full quarter (February 25, 1997
to June 1, 1997), and will be in the amount of $0.7667 per Convertible Preferred
Security.
So long as no Indenture Event of Default (as defined herein) shall have
occurred and be continuing, QCOM has the right under the Indenture to defer
payments of interest (including any Additional Interest and Liquidated Damages
(as defined herein)) on the Convertible Subordinated Debt Securities by
extending the interest payment period from time to time on the Convertible
Subordinated Debt Securities which, if exercised, would defer quarterly
distributions on the Convertible Preferred Securities (though such distributions
would continue to accrue interest at the distribution rate, compounded
quarterly, since interest would continue to accrue on the Convertible
Subordinated Debt Securities) during any such extended interest payment period.
In the event that QCOM exercises this right, then (a) QCOM shall not declare or
pay any dividend on, make any distributions with respect to, or redeem, purchase
or make a liquidation payment with respect to, any of its capital stock (other
than (i) purchases or acquisitions of shares of Common Stock in connection with
the satisfaction by QCOM of its obligations under any employee benefit plans,
(ii) as a result of a reclassification of QCOM's capital stock or the exchange
or conversion of one class or series of QCOM's capital stock for another class
or series of QCOM's capital stock or the exchange or conversion of one class or
series of QCOM's capital stock for another class or series of QCOM's capital
stock or (iii) the purchase of fractional interests in shares of QCOM's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security of being converted or exchanged), (b) QCOM shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by QCOM which rank pari passu with or junior
to the Convertible Subordinated Debt Securities, and (c) QCOM shall not make any
guarantee payments (other than pursuant to the Guarantee) with respect to the
foregoing; provided, however, that the foregoing restrictions do not apply to
any dividend, redemption, liquidation, interest, principal or guarantee payments
by QCOM where the payment is made by way of securities (including capital stock)
that rank pari passu with or junior to the securities on which such dividend,
redemption, interest, principal or guarantee payment is being made. Prior to the
termination of any such Extension Period, QCOM 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
or extend beyond the stated maturity of the Convertible Subordinated Debt
Securities. Upon termination of
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<PAGE> 29
any Extension Period and the payment of all amounts then due (including any
Additional Interest and Liquidated Damages), QCOM may commence a new Extension
Period as if no Extension Period had previously been declared, subject to the
above requirements. See "Voting Rights" below and "Description of the
Convertible Subordinated Debt Securities -- 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 Convertible Preferred Securities, if funds are available therefor, as they
appear on the books and records of the Trust on the record date next following
the termination of such Extension Period.
QCOM has no current intention to exercise its right to defer payments of
interest by extending the interest payment period on the Convertible
Subordinated Debt Securities.
Distributions on the Convertible Preferred Securities must be paid on the
dates payable to the extent that the Trust has funds available for the payment
of such distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Convertible Preferred Securities are limited
to payments received under the Convertible Subordinated Debt Securities. See
"Description of the Convertible Subordinated Debt Securities." The payment of
distributions out of moneys held by the Trust is guaranteed by the Company to
the extent set forth under "Description of the Guarantee."
Distributions on the Convertible Preferred Securities are payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be 15 days prior to the relevant payment
dates, which payment dates correspond to the interest payment dates on the
Convertible Subordinated Debt Securities. In the event that any Convertible
Preferred Security is redeemed after a record date and prior to (but not on) the
corresponding payment date, the accrued and unpaid distributions on such
Convertible Preferred Security as of the redemption date will be paid to the
holder thereof on the redemption date, not to the holder thereof on the record
date. In the event that a redemption date is also a payment date, then the
accrued and unpaid distributions will be paid to the holder of such Convertible
Preferred Security as of the record date. Such distributions will be paid
through the Property Trustee, who will hold amounts received in respect of the
Convertible Subordinated Debt Securities in the Property Account for the benefit
of the Trust and 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 "-- Form, Denomination and Registration" above.
In the event that any date on which distributions are to be made on the
Convertible 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 date. A "Business
Day" shall mean any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law to close.
CONVERSION RIGHTS
General. The Convertible Preferred Securities are convertible at any time
beginning April 28, 1997 through the close of business on February 24, 2012 (or,
in the case of Convertible Preferred Securities called for redemption, prior to
the close of business on the Business Day prior to the redemption date) (the
"Conversion Expiration Date"), at the option of the holders thereof and in the
manner described below, into shares of Common Stock at an initial conversion
rate of 0.6882 shares of Common Stock for each Convertible Preferred Security
(equivalent to a conversion price of $72.6563 per share of Common Stock),
subject to adjustment as described under "-- Conversion Price
Adjustments -- General" and "-- Conversion Price Adjustments -- Merger,
Consolidation of Sale of Assets of QCOM" below. Whenever QCOM issues shares of
Common Stock upon conversion of Preferred Securities, under QCOM's Preferred
Share Purchase Rights Plan (the "Rights Plan"), or any other share purchase
rights agreement under which holders of Common Stock are issued rights (the
"Rights") entitling the holders under certain circumstances to purchase an
additional share or shares of Common Stock, QCOM will issue, together with each
such share of Common Stock, an appropriate number of rights. For a description
of the Rights Plan, see "Description of QCOM Capital Stock -- Rights; Junior
Preferred Stock."
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<PAGE> 30
The terms of the Convertible Preferred Securities provide that a holder of
a Convertible Preferred Security wishing to exercise its conversion right shall
surrender such Convertible Preferred Security, if it is in certificated form,
together with an irrevocable conversion notice, to the Property Trustee, as
conversion agent (the "Conversion Agent"), which shall, on behalf of such
holder, exchange such Convertible Preferred Security for a portion of the
Convertible Subordinated Debt Securities and immediately convert an equivalent
amount of Convertible Subordinated Debt Securities into Common Stock. Holders
may obtain copies of the required form of the conversion notice from the
Conversion Agent. So long as a book-entry system for the Convertible Preferred
Securities is in effect, however, the procedures for converting the Convertible
Preferred Securities that are in the form of Global Certificates into shares of
Common Stock will be as described under "-- Form, Denomination and
Registration."
Accrued distributions will not be paid on the Convertible Preferred
Securities that are converted, provided, however, that if any Convertible
Preferred Security is converted on or after a record date for payment of
distributions thereon, the distributions payable on the related payment date
with respect to such Convertible Preferred Security shall be distributed to the
holder, despite such conversion. Except as provided in the immediately preceding
sentence, neither the Trust nor QCOM shall make any payment, allowance or
adjustment for accumulated and unpaid distributions, whether or not in arrears,
on converted Convertible Preferred Securities. QCOM will make no payment or
allowance for distributions on the shares of Common Stock issued upon such
conversion, except to the extent that such shares of Common Stock are held of
record on the record date for any such distributions. Each conversion will be
deemed to have been made immediately prior to the close of business on the day
on which the related conversion notice is received by the Conversion Agent.
No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid by QCOM in
cash based on the current market price of Common Stock on the date such
Convertible Preferred Securities are surrendered for conversion.
Conversion Price Adjustments -- General. The conversion price of the
Convertible Subordinated Debt Securities, and, accordingly, the conversion rate
on the Convertible Preferred Securities, are subject to adjustment in certain
events, including (a) the issuance of shares of Common Stock as a dividend or a
distribution with respect to Common Stock, (b) subdivisions, combinations and
reclassification of Common Stock, (c) the issuance to all holders of Common
Stock of rights or warrants entitling them to subscribe for shares of Common
Stock at less than the current market price, (d) the distribution to all holders
of Common Stock of evidences of indebtedness of QCOM, of capital stock (other
than Common Stock) or of assets (other than cash distributions covered by clause
(e) below), or rights or warrants to subscribe for or purchase any of its
securities (excluding rights or warrants to purchase Common Stock referred to in
clause (c) above), (e) distributions consisting of cash, excluding any quarterly
cash dividend on Common Stock to the extent that the aggregate cash dividend per
share of Common Stock in any quarter does not exceed the greater of (i) the
amount per share of Common Stock of the immediately preceding quarterly dividend
on Common Stock to the extent that such preceding quarterly dividend did not
require an adjustment of the conversion rate pursuant to this clause (e) (as
adjusted to reflect subdivisions or combinations of Common Stock), and (ii)
3.125% of the average of the last reported sales price of Common Stock during
the ten trading days immediately prior to the date of declaration of such
dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding-up of QCOM, (f) payment to holders of Common
Stock in respect of a tender or exchange offer by QCOM or any subsidiary for
Common Stock (other than an odd lot tender offer) at a price in excess of the
current market price of Common Stock as of the trading day next succeeding the
last date tenders or exchanges may be made pursuant to such tender or exchange
offer, and (g) payment to holders of Common Stock in respect of a tender or
exchange offer by a person other than QCOM or a subsidiary thereof for Common
Stock at a price in excess of the current market price of Common Stock as of the
trading day next succeeding the last date tenders or exchanges may be made
pursuant to such tender or exchange offer in which, as of the closing date of
the offer, QCOM's Board of Directors is not recommending rejection of the offer.
If an adjustment is required to be made as set forth in clause (e) above as a
result of a distribution that is a quarterly dividend, such adjustment would be
based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant
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to clause (e). If an adjustment is required to be made as set forth in clause
(e) above as a result of a distribution that is not a quarterly dividend, such
adjustment would be based upon the full amount of the distribution. No
adjustment is required to be made for a transaction referred to in clauses (a)
through (e) above if holders of the Convertible Preferred Securities are to
participate in the transaction on a basis and with notice that the Board of
Directors of QCOM determine to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction. The
adjustment referred to in clause (g) above will only be made if the tender offer
or exchange offer is made for an amount which increases that person's ownership
of Common Stock to more than 25% of the total shares of Common Stock
outstanding. The adjustment referred to in clause (g) above will not be made,
however, if as of the close of the offer, the offering documents with respect to
such offer disclose a plan or an intention to cause QCOM to engage in a
consolidation or merger of QCOM or a sale of all of QCOM's assets.
If the distribution date for the Rights of QCOM provided in the Rights
Plan, as presently constituted or under any similar plan (see "Description of
QCOM Capital Stock -- Rights; Junior Preferred Stock"), occurs prior to the date
a Convertible Preferred Security is converted, holders of the Convertible
Preferred Securities who convert such Convertible Preferred Securities after the
distribution date are not entitled to receive the Rights that would otherwise be
attached (but for the date of conversion) to the shares of Common Stock received
upon such conversion. However, adjustment of the conversion price shall be made
under clause (ii) of the preceding paragraph as if the Rights were being
distributed to the common stockholders of QCOM immediately prior to such
conversion. If such an adjustment is made and the Rights are later redeemed,
invalidated or terminated, then a corresponding reversing adjustment shall be
made to the conversion price, on an equitable basis, to take account of such
event.
QCOM from time to time may elect to reduce the conversion price of the
Convertible Subordinated Debt Securities (and thus the conversion rate of the
Convertible Preferred Securities) by any amount selected by QCOM for any period
of at least 30 days, in which case QCOM shall give at least 15 days' notice of
such reduction. QCOM may exercise the option to make such reductions in the
conversion price if QCOM's Board of Directors deems such reductions advisable to
avoid or diminish any income tax to holders of Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain United States Federal
Income Tax Consequences -- Adjustment of Conversion Price."
No adjustment of the conversion price will be made upon the issuance of any
shares of Common Stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on securities of QCOM and the
investment of additional optional amount in shares of Common Stock under any
such plan. No adjustment in the conversion price will be required unless such
adjustment would require a change of at least one percent (1%) in the price then
in effect; provided, however, that any adjustment that would not be required to
be made shall be carried forward and taken into account in any subsequent
adjustment. If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to the holders of the Convertible Subordinated Debt
Securities and, accordingly, to the holders of the Convertible Preferred
Securities.
Conversion Price Adjustments -- Merger, Consolidation or Sale of Assets of
QCOM. In the event that QCOM is a party to any transaction (including, without
limitation, a merger other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of Common Stock),
consolidation, sale of all or substantially all of the assets of QCOM,
recapitalization or reclassification of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination of Common Stock) or any compulsory
share exchange (each of the foregoing being referred to as a "Transaction"), in
each case, as a result of which shares of Common Stock shall be converted into
the right to receive, or shall be exchanged for, (i) in the case of any
Transaction other than a Transaction involving a Common Stock Fundamental Change
(as defined below) (and subject to funds being legally available for such
purpose under applicable law at the time of such conversion), securities, cash
or other property, each Convertible Preferred Security shall thereafter be
convertible into the kind and, in the case of a Transaction which does not
involve a Fundamental Change (as defined below), amount of securities,
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<PAGE> 32
cash and other property receivable upon the consummation of such Transaction by
a holder of that number of shares of Common Stock into which a Convertible
Preferred Security was convertible immediately prior to such Transaction, or
(ii) in the case of a Transaction involving a Common Stock Fundamental Change,
common stock, each Convertible Preferred Security shall thereafter be
convertible (in the manner described herein) into common stock of the kind
received by holders of Common Stock (but in each case after giving effect to any
adjustment discussed below relating to a Fundamental Change if such Transaction
constitutes a Fundamental Change). The holders of Convertible Preferred
Securities will have no voting rights with respect to any Transaction described
in this section.
If any Fundamental Change occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each Convertible
Preferred Security shall be convertible solely into common stock of the kind
received by holders of Common Stock as a result of such Common Stock Fundamental
Change.
The conversion price in the case of any Transaction involving a Fundamental
Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined below),
the conversion price of the Convertible Preferred Securities will thereupon
become the lower of (A) the conversion price in effect immediately prior to
such Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to the preceding paragraphs, and (B)
the result obtained by multiplying the greater of the Applicable Price (as
defined below) or the then applicable Reference Market Price (as defined
below) by a fraction, the numerator of which is $50 and the denominator of
which is (x) the amount of the redemption price for Convertible Preferred
Security if the redemption date were the date of such Non-Stock Fundamental
Change (or, for the period commencing February 25, 1997 and through March
3, 1998, and the twelve-month periods commencing March 4, 1998 and March 4,
1999, the product of 102% multiplied by $50) plus (y) any then-accrued and
unpaid distributions on one Convertible Preferred Security; and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of the Convertible Preferred Securities in effect immediately prior
to such Common Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs, will
thereupon be adjusted by multiplying such conversion price by a fraction of
which the numerator will be the Purchaser Stock Price (as defined below)
and the denominator will be the Applicable Price; provided, however, that
in the event of a Common Stock Fundamental Change in which (A) 100% of the
value of the consideration received by a holder of Common Stock is common
stock of the successor, acquiror, or other third party (and cash, if any,
is paid only with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all Common
Stock will have been exchanged for, converted into, or acquired for common
stock (and cash with respect to fractional interests) of the successor,
acquiror, or other third party, the conversion price of the Convertible
Preferred Securities in effect immediately prior to such Common Stock
Fundamental Change will thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator will be one and the
denominator will be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of Common
Stock as a result of such Common Stock Fundamental Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Convertible Preferred Security would become convertible into
the securities, cash, or property receivable by a holder of the number of shares
of Common Stock into which such Convertible Preferred Security was convertible
immediately prior to such Transaction. A failure to apply the Fundamental Change
conversion price adjustments described above could substantially lessen or
eliminate the value of the conversion privilege associated with the Convertible
Preferred Securities. For example, if QCOM were acquired in a cash merger, each
Convertible Preferred Security would become convertible solely into cash and
would no longer be convertible into securities whose value would vary depending
on the future prospects of QCOM and other factors.
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The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in
"Fundamental Change" Transactions where all or substantially all the Common
Stock is converted into securities, cash, or property and not more than 50% of
the value received by the holders of Common Stock consists of stock listed or
admitted for listing subject to notice of issuance on the NYSE or a national
securities exchange or quoted on the Nasdaq National Market (a Non-Stock
Fundamental Change, as defined below). Such reduction would result in an
increase in the amount of the securities, cash, or property into which each
Convertible Preferred Security is convertible over that which would have been
obtained in the absence of such conversion price adjustments.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price below) is lower than the then applicable conversion price of a
Convertible Preferred Security but greater than or equal to the "Reference
Market Price," the conversion price will be adjusted as described above with the
effect that each Convertible Preferred Security will be convertible into
securities, cash or property of the same type received by the holders of Common
Stock in the Transaction but in an amount per Convertible Preferred Security
that would at the time of the Transaction have had a value equal to the then
applicable redemption price per Convertible Preferred Security set forth below
under "-- Optional Redemption" (or, for periods prior to the date on and after
which QCOM may cause the conversion rights of holders of Convertible Preferred
Securities to expire).
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price) is lower than both the conversion price of a Convertible
Preferred Security in effect prior to any adjustment described above and the
Reference Market Price, the conversion price will be adjusted as described above
but calculated as though such initial value had been the Reference Market Price.
In a Fundamental Change Transaction where all or substantially all the
Common Stock is converted into securities, cash, or property and more than 50%
of the value received by the holders of Common Stock consists of listed or
Nasdaq National Market traded common stock (a Common Stock Fundamental Change,
as defined below), the foregoing adjustments are designed to provide in effect
that (a) where Common Stock is converted partly into such common stock and
partly into other securities, cash, or property, each Convertible Preferred
Security will be convertible solely into a number of shares of such common stock
determined so that the initial value of such shares (measured as described in
the definition of "Purchaser Stock Price" below) equals the value of the shares
of Common Stock into which such Convertible Preferred Security was convertible
immediately before the Transaction (measured as aforesaid) and (b) where
Convertible Common Stock is converted solely into such common stock, each
Convertible Preferred Security will be convertible into the same number of
shares of such common stock receivable by a holder of the number of shares of
Common Stock into which such Convertible Preferred Security was convertible
immediately before such Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by the holder of one share of Common Stock and (ii)
in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the Closing Prices (as defined below) for the
Common Stock during the ten trading days prior to the record date for the
determination of the holders of Common Stock entitled to receive such
securities, cash, or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, the date upon which the holders of the Common Stock shall have the
right to receive such securities, cash, or other property (such record date or
distribution date being hereinafter referred to as the "Entitlement Date"), in
each case as adjusted in good faith by QCOM to appropriately reflect any of the
events referred to in clauses (a) through (g) of the first paragraph under
"-- Conversion Price Adjustments -- General."
The term "Closing Price" means on any day the reported last sale price on
such day or in case no sale takes place on such day, the average of the reported
closing bid and asked prices in each case on the Nasdaq National Market or, if
the stock is not listed or admitted to trading on the Nasdaq National Market, on
the principal national securities exchange on which such stock is listed or
admitted to trading or, if not listed or
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<PAGE> 34
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by any New York Stock Exchange member
firm, selected by the Debt Trustee for that purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of QCOM) of the consideration received by holders of Common Stock
consists of common stock that for each of the ten consecutive trading days prior
to the Entitlement Date has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or quoted on the
Nasdaq National Market; provided, however, that a Fundamental Change shall not
be a Common Stock Fundamental Change unless either (i) QCOM continues to exist
after the occurrence of such Fundamental Change and the outstanding Convertible
Preferred Securities continue to exist as outstanding Convertible Preferred
Securities or (ii) not later than the occurrence of such Fundamental Change, the
outstanding Convertible Preferred Securities are converted into or exchanged for
shares of convertible preferred stock of an entity succeeding to the business of
QCOM or a subsidiary thereof, which convertible preferred stock has powers,
preferences, and relative, participating, optional, or other rights, and
qualifications, limitations, and restrictions, substantially similar to those of
the Convertible Preferred Securities.
The term "Fundamental Change" means the occurrence of any Transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for, or
constitute solely the right to receive securities, cash, or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that, in the case of a plan involving more than one such
Transaction or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Common Stock shall be exchanged for, converted into, or acquired for or
constitute solely the right to receive securities, cash, or other property, but
the adjustment shall be based upon the consideration that a holder of Common
Stock received in such Transaction or event as a result of which more than 50%
of the Common Stock shall have been exchanged for, converted into, or acquired
for or constitute solely the right to receive securities, cash, or other
property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the Entitlement Date, as adjusted in good faith by
QCOM to appropriately reflect any of the events referred to in clauses (a)
through (g) of the first paragraph under "-- Conversion Price
Adjustments -- General."
The term "Reference Market Price" shall initially mean $38.79 (which is an
amount equal to 66 2/3% of the reported last sales price for Common Stock on the
Nasdaq National Market on February 19, 1997) and in the event of any adjustment
of the conversion price other than as a result of a Non-Stock Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the conversion price after giving effect to any
such adjustment shall always be the same as the ratio of the initial Reference
Market Price to the initial conversion price of the Convertible Preferred
Securities.
The company formed by such consolidation or resulting from such merger or
that acquires such assets or that acquires QCOM's shares, as the case may be,
shall make provisions in its certificates or articles of incorporation or other
constituent document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments that,
for events subsequent to the effective date of such certificate or articles of
incorporation or other constituent documents shall be as nearly equivalent as
may be practicable to the relevant adjustments provided for in the preceding
paragraphs and in this paragraph.
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REDEMPTION
The Convertible Preferred Securities have no stated maturity but are
subject to mandatory redemption upon the repayment of the Convertible
Subordinated Debt Securities, whether at their stated maturity or upon
acceleration or redemption. The Convertible Subordinated Debt Securities mature
on February 24, 2012 and may be redeemed at the option of QCOM, in whole or in
part, at any time on or after March 4, 2000, or any time in certain
circumstances upon the occurrence of a Tax Event. See "Special Event Redemption
or Distribution." Upon the repayment of the Convertible Subordinated Debt
Securities, whether at maturity or upon acceleration, redemption or otherwise,
the proceeds from such repayment shall simultaneously be applied to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Convertible Subordinated Debt Securities so repaid or
redeemed at a redemption price equal to the liquidation amount of the Trust
Securities or, in the case of a redemption of the Convertible Subordinated Debt
Securities, at the redemption price paid with respect to the Convertible
Subordinated Debt Securities, as described below, together with accrued and
unpaid distributions on the Trust Securities to the date of redemption;
provided, however, that holders of the Convertible Subordinated Debt Securities
shall be given not less than 20 nor more than 60 days notice of such redemption.
In the event QCOM elects to redeem the Convertible Subordinated Debt
Securities (other than in certain circumstances upon the occurrence of a Special
Event) the appropriate amount of the Convertible Preferred Securities shall be
redeemed at the following prices (expressed as percentages of the liquidation
amount of the Convertible Preferred Securities) together with accrued and unpaid
distributions to, but excluding, the redemption date, if redeemed during the
12-month period beginning March 4:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
------------------------------------------------------------- ----------------
<S> <C>
2000......................................................... 102%
2001......................................................... 101
</TABLE>
and 100% if redeemed on or after March 4, 2002.
In the event QCOM redeems the Convertible Subordinated Debt Securities in
certain circumstances upon the occurrence of a Tax Event as described under
"-- Special Event Redemption or Distribution," the appropriate amount of the
Convertible Preferred Securities will be redeemed at 100% of the liquidation
amount thereof together with accrued and unpaid distributions to the redemption
date.
Notwithstanding the foregoing, if Convertible Preferred Securities are
redeemed on any March 1, June 1, September 1, or December 1, accrued and unpaid
distributions with respect to the redeemed Convertible Preferred Securities
shall be payable to holders of record on the relevant record date, instead of
the holders on the redemption date.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
A "Tax Event" means that the Regular Trustees shall have received an
opinion from nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that, on or after the date
of this Prospectus, 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, (b) any judicial decision, official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action"), or (c) any amendment to, clarification of, or change
in the official position or the interpretation of such Administrative Action or
judicial decision that differs from the theretofore generally accepted position,
in each case, by any legislative body, court, governmental authority or
regulatory body, irrespective of the manner in which such amendment,
clarification or change is made known, which amendment, clarification, or change
is effective or such pronouncement or decision is announced, in each case on or
after the date of this Prospectus (collectively, a "Change in Tax Law"), there
is the creation by such Change in Tax Law of more than an insubstantial risk
that (i) the Trust is or will be subject to United States federal income tax
with respect to income accrued or received on the Convertible Subordinated Debt
Securities, (ii) the Trust is or will be subject to more than a de
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<PAGE> 36
minimis amount of taxes, duties or other governmental charges, or (iii) interest
paid in cash by QCOM to the Trust on the Convertible Subordinated Debt
Securities is not, or will not be, deductible, in whole or in part, by QCOM for
United States federal income tax purposes. Notwithstanding the foregoing, a Tax
Event shall not include any Change in Tax Law that requires QCOM for United
States federal income tax purposes to defer taking a deduction for any original
issue discount ("OID") that accrues with respect to the Convertible Subordinated
Debt Securities until the interest payment related to such OID is paid by QCOM
in cash; provided that such Change in Tax Law does not create more than an
insubstantial risk that QCOM will be prevented from taking a deduction for OID
accruing with respect to the Convertible Subordinated Debt Securities at a date
that is no later than the date the interest payment related to such OID is
actually paid by QCOM in cash.
An "Investment Company Event" means that the Regular Trustees shall have
received an opinion from nationally recognized independent counsel experienced
in practice under the 1940 Act (as hereinafter defined) to the effect that, as a
result of the occurrence of a change in law or regulation or a written 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 an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law
becomes effective on or after the date of this Prospectus.
If, at any time, a Tax Event or an Investment Company Event (each, as
described above, a "Special Event") shall occur and be continuing, the Trust
may, with the consent of QCOM, except in the circumstances described below, be
terminated and dissolved with the result that Convertible Subordinated Debt
Securities, with an aggregate principle 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 Trust Securities, would be distributed to the holders of the Trust
Securities, in liquidation of such holders' interests in the Trust on a pro rata
basis, within 90 days following the occurrence of such Special Event; provided,
however, that, as a condition of such termination, dissolution and distribution,
(i) in the case of the occurrence of a Tax Event, the Regular Trustees shall
have received an opinion from nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published revenue rulings of the Internal Revenue Service, to the effect that
neither the Trust nor the holders of the Trust Securities will recognize any
gain or loss for United States federal income tax purposes as a result of such
termination and dissolution of the Trust and the distribution of the Convertible
Subordinated Debt Securities and (ii) QCOM shall have given it prior written
consent to the dissolution and distribution; and provided, further, that if
there is available to the Trust the opportunity to eliminate, within such 90-day
period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust, QCOM or the holders of the Trust
Securities, the Trust will pursue such measure in lieu of termination and
dissolution.
If in the case of the occurrence of a Tax Event (i) QCOM has received an
opinion (a "Redemption Tax Opinion") from nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that QCOM would be precluded from deducting the
interest on the Convertible Subordinated Debt Securities for United States
federal income tax purposes even if the Convertible Subordinated Debt Securities
were distributed to the holders of Trust Securities in liquidation of such
holders' interests in the Trust as described above, or (ii) the Regular Trustees
shall have been informed by nationally recognized independent tax counsel
experienced in such matters that a No Recognition Opinion cannot be delivered,
QCOM shall have the right, upon not less than 20 nor more than 60 days notice,
to redeem the Convertible Subordinated Debt Securities in whole or in part at
100% of the principal amount thereof plus accrued and unpaid interest thereon
for cash within 90 days following the occurrence of such Tax Event, and,
following such redemption, Trust Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Convertible Subordinated Debt
Securities so redeemed shall be redeemed by the Trust at the liquidation amount
thereof plus accrued and unpaid distributions thereon to the redemption date on
a pro rata basis; provided, however, that, if there is available to QCOM or
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the Trust the opportunity to eliminate, within such 90-day period, the Tax Event
by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no adverse effect on
the Trust, QCOM or the holders of the Trust Securities, QCOM or the Trust will
pursue such measure in lieu of redemption. If QCOM declines to consent to the
dissolution and distribution, QCOM may incur an obligation to pay Additional
Interest. See "Description of the Convertible Subordinated Debt
Securities -- Additional Interest."
DISTRIBUTION OF CONVERTIBLE SUBORDINATED DEBT SECURITIES
At any time, QCOM has the right to terminate the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Convertible Subordinated Debt Securities to be
distributed to the holders of the Convertible Preferred Securities and Common
Securities in dissolution 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 Convertible Subordinated Debt
Securities should not be a taxable event to the Trust and holders of the
Convertible Preferred Securities. Should there be a change in law, a change in
legal interpretation, a Special Event or other circumstances, however, the
distribution could be a taxable event to holders of the Convertible Preferred
Securities. See "Certain United States Federal Income Tax
Consequences -- Receipt of Convertible Subordinated Debt Securities or Cash Upon
Liquidation of the Trust."
After the date for any distribution of Convertible Subordinated Debt
Securities upon termination of the Trust, (i) the Convertible Subordinated Debt
Securities and the Guarantee will no longer be deemed to be outstanding, (ii)
the depository or its nominee, as a record holder of the Convertible Preferred
Securities, will receive one or more registered global certificates representing
the Convertible Subordinated Debt Securities to be delivered to the depository
or its nominee in connection with and upon such distribution and (iii) any
certificates representing Convertible Preferred Securities and the Guarantee not
held by the depository or its nominee will be deemed to represent Convertible
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate stated liquidated 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 Convertible Subordinated Debt Securities, until
such certificates are presented to QCOM or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Convertible
Preferred Securities or the Convertible Subordinated Debt Securities that may be
distributed in exchange for the Convertible Preferred Securities if a
termination and liquidation of the Trust were to occur. Accordingly, the
Convertible Preferred Securities that an investor may purchase, or the
Convertible Subordinated Debt Securities that the investor may receive on
termination and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Convertible Preferred Securities.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all the outstanding Convertible
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Trust Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Convertible
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, provided that QCOM has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or other repayment of the Convertible Subordinated Debt Securities,
the Trust will irrevocably deposit with the depositary funds sufficient to pay
the applicable Redemption Price and will give the depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Convertible Preferred Securities. See "-- Form, Denomination and Registration."
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 Convertible
Preferred Securities so called for redemption will cease, except the right of
the holders of such Convertible Preferred Securities to receive the Redemption
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Price, but without interest on such Redemption Price. In the event any date
fixed for redemption of Convertible Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payments 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 payment of the Redemption Price in
respect of Convertible Preferred Securities is improperly withheld or refused
and not paid either by the Trust or by QCOM pursuant to the Guarantee,
distributions on such Convertible Preferred Securities will continue to accrue,
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 Convertible Preferred
Securities are to be redeemed, the Convertible Preferred Securities will be
redeemed pro rata, provided that the distribution of redemption proceeds payable
to DTC, any other depositary, or their respective nominees shall be made in
accordance with the procedures of DTC or such other depositary. See "-- Form,
Denomination and Registration."
Subject to the foregoing, and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding
Convertible Preferred Securities by tender, in the open market or by private
agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, termination,
dissolution or winding-up of the Trust (each, a "Liquidation"), the holders of
the Convertible Preferred Securities at that time will be entitled to receive
out of the assets of the Trust, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $50 per Convertible Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Convertible Subordinated Debt
Securities in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, an accrued and unpaid interest equal to accrued and unpaid distributions on,
the Convertible Preferred Securities, have been distributed on a pro rata basis
to the holders of Convertible Preferred Securities in exchange for such
Convertible 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 Convertible 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 Convertible Preferred
Securities, except that if a Declaration Event of Default has occurred and is
continuing the Convertible Preferred Securities shall have a preference over the
Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on January 31,
2052, the expiration of the term of the Trust, (ii) upon the bankruptcy of QCOM
or the holder of the Common Securities, (iii) upon the filling of a certificate
of dissolution or its equivalent with respect to QCOM or the holder of the
Common Securities, the filing of a certificate of cancellation with respect to
the Trust, or the revocation of the charter of QCOM or the holder of the Common
Securities and the expiration of 90 days after the date of the Common Securities
and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) upon the distribution of the Convertible
Subordinated Debt Securities following the occurrence of a Special Event or if
QCOM, as sponsor, has given written notice to the Property Trustee to terminate
the Trust (which direction is optional and wholly within the discretion of QCOM,
as sponsor), (v) upon the entry of a decree of a judicial dissolution of QCOM or
the holder of the Common Securities or the Trust, (vi) upon the redemption of
all of the Trust Securities or (vii) upon the distribution of Common Stock to
all holders of Convertible Preferred Securities upon conversion of all
outstanding Convertible Preferred Securities.
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DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
(see "Description of the Convertible Subordinated Debt Securities -- Indenture
Events 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 or its consequences until all Declaration Events of Default
with respect to the Convertible Preferred Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with respect to
the Convertible Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Convertible Preferred Securities and only the holders of the
Convertible 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 Property
Trustee, as the sole holder of the Convertible Subordinated Debt Securities,
will have the right under the Indenture to declare the principal of, and
interest on, the Convertible Subordinated Debt Securities to be immediately due
and payable. The Property Trustee shall notify all holders of the Convertible
Preferred Securities of any notice of default received from the Debt Trustee
with respect to the Convertible Subordinated Debt Securities. Such notice shall
state that such Indenture Event of Default also constitutes a Declaration Event
of Default. If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of QCOM to pay interest or principal
on the Convertible Subordinated Debt Securities on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Convertible Preferred Securities may directly institute
a proceeding of reinforcement of payment to such holder of the principal of or
interest on the Convertible Subordinated Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Convertible Preferred
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Convertible Subordinated Preferred Securities. In
connection with such Direct Action, the rights of the holders of the Common
Securities will be subrogated to the rights of such holder of Convertible
Preferred Securities to the extent of any payment made by QCOM to such holder of
Convertible Preferred Securities in such Direct Action. In addition, if the
Property Trustee fails to enforce its rights under the Convertible Subordinated
Debt Securities (other than rights arising from an Indenture Event of Default
described in the immediately preceding sentence) for a period of 30 days after
any holder of Convertible Preferred Securities shall have made a written request
to the Property Trustee to enforce such right rights to the fullest extent
permitted by law, such holder of Convertible Preferred Securities may, to the
extent permitted by law, institute a Direct Action to enforce the Property
Trustee's rights as holder of the Convertible Subordinated Debt Securities,
without first instituting any legal proceeding against the Property Trustee or
any other Person. Except as provided in the preceding sentences, the holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Convertible Subordinated Debt Securities.
See "-- Voting Rights."
VOTING RIGHTS
Except as provided below and except as provided under the Trust Act and
under "Description of the Guarantee -- Amendments and Assignment" below, and
except as otherwise required by law and the Declaration, the holders of the
Convertible Preferred Securities will have no voting rights. In the event that
QCOM elects to defer payments of interest on the Convertible Subordinated Debt
Securities as described above under "-- Distributions," the holders of the
Convertible Preferred Securities do not have the right to appoint a special
representative or trustee or otherwise act to protect their interests.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in aggregate liquidation amount of the Convertible Subordinated 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 to 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 the holder
of the Convertible Subordinated Debt Securities, to (i) exercise the remedies
available under the Indenture with
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respect to the Convertible Subordinated Debt Securities, (ii) waive any past
Indenture Event of Default which is waivable under the Indenture, (iii) exercise
any right to rescind or annul a declaration that the principal of all the
Convertible Subordinated Debt Securities shall be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Convertible Subordinated Debt Securities, where such consent shall be required,
provided 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
Convertible Subordinated Debt Securities affected thereby (a "Super-Majority"),
only the holders of at least the proportion in liquidation amount of the
Convertible Preferred Securities which the relevant Super-Majority represents of
the aggregate principal amount of the Convertible Subordinated Debt Securities
may direct the Property Trustee to give such consent or take such action. The
Property Trustee shall not take any action described in clauses (i), (ii), (iii)
and (iv) above unless the Property Trustee has obtained an opinion of nationally
recognized independent 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 and each holder of Trust Securities
will be treated as owing an undivided beneficial interest in the Convertible
Subordinated Debt Securities.
In the event the consent of the Property Trustee, as the holder of the
Convertible Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Property Trustee shall request the direction of the holders of the Trust
Securities with respect to such amendment, modification or termination. The
Property Trustee shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Convertible
Preferred Securities and, if no Declaration Event of Default has occurred and is
continuing, a majority in liquidation amount of the Common Securities, voting
together as a single class, provided that where a consent under the 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 Convertible Preferred Securities and Common
Securities, respectively, which the relevant Super-Majority represents of the
aggregate principal amount of the Convertible Subordinated Debt Securities
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 nationally recognized independent 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.
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 Convertible Preferred
Securities may be given at a separate meeting of holders of Convertible
Preferred Securities convened for such purpose, at a meeting of all holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which holders of Convertible 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 Convertible
Preferred Securities. Each such notice will include a statement setting forth
(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 the Convertible Preferred
Securities will be required for the Trust to redeem and cancel Convertible
Preferred Securities or distribute Convertible Subordinated Debt Securities in
accordance with the Declaration.
Notwithstanding that holders of Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Convertible Preferred Securities that are owned at such time by QCOM or
any entity directly or indirectly controlling or controlled by, or under direct
or indirect common control with, QCOM, shall not be entitled to vote or consent
and shall, for purposes of such vote or consent, be treated as if such
Convertible Preferred Securities were not outstanding.
The procedures by which holders of Convertible Preferred Securities may
exercise their voting rights are described above. See "Form, Denomination and
Registration."
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Holders of the Convertible Preferred Securities have no rights to appoint
or remove the Company Trustees, who may be appointed, removed or replaced solely
by QCOM, as the direct or indirect holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, 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 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 in liquidation amount of the Trust Securities
affected thereby, provided that a reduction of the principal amount or the
distribution rate, or a change in the payment dates or maturity of the
Convertible Preferred Securities, shall not be permitted without the consent of
each holder of Convertible Preferred Securities. In the event any amendment or
proposal referred to in clause (i) above would adversely affect only the
Convertible 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 in liquidation amount 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 for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
EXPENSES AND TAXES
In the Declaration, QCOM has agreed to pay for all obligations (other than
with respect to the Trust Securities) and all costs and expenses of the Trust
(including costs and expenses relating to the organization of the Trust, the
fees and expenses of the Company Trustees and the costs and expenses relating to
the operation of the Trust) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Trust might become subject. The foregoing obligations of the Trust
under the Declaration are for the benefit of, and shall be enforceable by, the
Property Trustee and any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor"), whether or not such Creditor has
received notice thereof. The Property Trustee and any such Creditor may enforce
such obligations of the Trust directly against QCOM, and QCOM has irrevocably
waived any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Trust or any other person before proceeding
against QCOM. QCOM also has agreed in the Declaration to execute such additional
agreements as may be necessary or desirable to give full effect to the foregoing
agreement of QCOM.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton announced his Fiscal 1998 Budget
Proposal (the "Budget Proposal") which, among other things, would treat as
equity and would eliminate interest deductions under United States federal
income tax laws for debt instruments with a maximum term of more than 15 years
that are not treated as indebtedness on the financial statements of the issuer.
This provision of the Budget Proposal is proposed to be effective for debt
instruments issued on or after the date of first Congressional committee action.
While the Company believes that the Convertible Subordinated Debt Securities
would not be affected by the Budget Proposal, there can be no assurances that
this proposed legislation or other proposals would not be enacted in the future,
and that such legislation would not have a retroactive effective date that would
prevent QCOM from deducting interest on the Convertible Subordinated Debt
Securities. See "Description of the Convertible Preferred Securities -- Special
Event Redemption or Distribution."
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If the Budget Proposal or any similar legislation changed the tax treatment
of the Convertible Subordinated Debt Securities and the Convertible Preferred
Securities, the United States federal income tax consequences of the purchase,
ownership and disposition of Convertible Preferred Securities would differ from
those described herein. If legislation were enacted that would constitute a Tax
Event, there could be a distribution of Convertible Subordinated Debt Securities
to holders of the Convertible Preferred Securities or, in certain circumstances,
at QCOM's option, redemption of the Convertible Subordinated Debt Securities by
QCOM. There can be no assurances as to whether or in which form the Budget
Proposal may be enacted into law or whether other legislation will be enacted
that otherwise adversely affects the tax treatment of the Convertible
Subordinated Debt Securities. The discussion herein assumes that the Budget
Proposal, if enacted, will not apply to the Convertible Subordinated Debt
Securities and the Convertible Preferred Securities.
MERGERS, CONSOLIDATIONS OR AMALGAMATION
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 entity, except as described below and as
described in "Description of the Convertible Preferred Securities -- Special
Event Redemption or Distribution." The Trust may, with the consent of a majority
of the Regular Trustees and without the consent of the holders of the Trust
Securities or the other Company Trustees, 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 (x) expressly assumes all of the
obligations of the Trust with respect to the Trust Securities or (y) 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 in priority with respect
to distributions and payments upon termination, liquidation, redemption,
maturity and otherwise, (ii) QCOM expressly acknowledges a trustee of such
successor entity which possesses the same powers and duties as the Property
Trustee as the holder of the Convertible Subordinated Debt Securities, (iii) the
Convertible Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Convertible
Preferred Securities are then listed, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Convertible Preferred Securities
(including any Successor 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 substantially identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation or replacement, QCOM has received an opinion
from nationally recognized 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)
following such merger, consolidation, amalgamation or replacement, the Trust (or
such successor entity) will be treated as a grantor trust for United States
federal income tax purposes, and (viii) QCOM guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of the holders of 100% in liquidation amount 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 for
United States federal income tax purposes as other than a grantor trust and any
holder of Trust Securities not to be treated as owning an undivided beneficial
interest in the Convertible Subordinated Debt Securities.
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REGISTRATION RIGHTS
In connection with the Original Offering, the Company and the Trust entered
into a Registration Rights Agreement with the Initial Purchasers dated February
25, 1997 (the "Registration Rights Agreement") pursuant to which the Company and
the Trust agreed, at the Company's expense, for the benefit of the holders of
the Convertible Preferred Securities, the Guarantee, the Convertible
Subordinated Debt Securities and the Common Stock issuable upon conversion of
the Convertible Preferred Securities and the Convertible Subordinated Debt
Securities (together, the "Registrable Securities"), to (i) file with the
Commission on or prior to the date 90 days after the Original Closing Date a
shelf registration statement (the "Shelf Registration Statement") on such form
as QCOM deems appropriate covering resales of the Registrable Securities, (ii)
use all reasonable efforts to cause the Shelf Registration Statement to be
declared effective as promptly as practicable and in no event later than 180
days after the Original Closing Date and (iii) use all reasonable efforts to
keep effective the Shelf Registration Statement until three years after the
latest date of original issuance of the Convertible Preferred Securities (or
such earlier date as the holders of Registrable Securities are able to sell all
Registrable Securities immediately without restriction pursuant to Rule 144(k)
under the Securities Act or any successor rule thereto or otherwise) (such
period, the "Effectiveness Period"). The Trust and QCOM will be permitted to
suspend the use of the prospectus (which is a part of the Shelf Registration
Statement) in connection with sales of Registrable Securities by holders during
certain periods of time under certain circumstances relating to pending
corporate developments relating to the Company and public filings with the
Commission and similar events. The Trust and QCOM will provide to each
registered holder copies of such prospectus, notify each registered holder when
the Shelf Registration Statement has become effective, and take certain other
actions as are required to permit unrestricted sales of the Registrable
Securities. A holder that sells Registrable Securities pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to the
purchaser and will be bound by the provisions of the Registration Rights
Agreement referred to below that are applicable to such holder (including
certain indemnification provisions).
In the Registration Rights Agreement, the Trust and QCOM agreed to
indemnify the holders of Registrable Securities against certain liabilities,
including liabilities under the Securities Act, subject to certain customary
limitations, and each holder of Registrable Securities included in the Shelf
Registration Statement will be obligated to indemnify the Trust and QCOM, any
other holder and any underwriters participating in the offering of Registrable
Securities against any liability with respect to information furnished by such
holder in writing to the Trust and QCOM (including the information in a Selling
Securityholder's Questionnaire) expressly for use in the Shelf Registration
Statement.
If (i) on or prior to the date 90 days after the Original Closing Date, a
Shelf Registration Statement has not been filed with the Commission or (ii) on
or prior to the date 180 days after the Original Closing Date such Shelf
Registration Statement has not been declared effective (each such event, a
"Registration Default"), additional interest ("Liquidated Damages") will accrue
on the Convertible Subordinated Debt Securities and, accordingly, additional
distributions will accrue on the Convertible Preferred Securities, in each case
from and including the date following the Registration Default until such date
as such Registration Default is cured (i.e., the date the Shelf Registration
Statement is filed or declared effective, as the case may be). Liquidated
Damages will be paid quarterly in arrears, with the first quarterly payment due
on the first interest or distribution date, as applicable, following the date on
which such Liquidated Damages begin to accrue, and will accrue at a rate per
annum equal to an additional one-quarter of one percent (0.25%) of the principal
amount or liquidation amount, as applicable, to and including the 90th day
following such Registration Default and one-half of one percent (0.50%) thereof
from and after the 91st day following such Registration Default.
This summary of certain provisions of the Registration Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Registration Rights Agreement, a copy of
which is available to holders of Convertible Preferred Securities (i) for
inspection at the offices of QCOM specified above or at the office of the
Property Trustee in Wilmington, Delaware or (ii) upon request to QCOM.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration 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 the Declaration at the request of any
holder of Convertible Preferred Securities, unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby; but the foregoing shall not relieve the Property Trustee, upon
the occurrence of a Declaration Event of Default, from its obligation to
exercise the rights and powers vested in it by the Declaration. The Property
Trustee also serves as the Debt Trustee under the Indenture and as the Guarantee
Trustee under the Guarantee.
CONVERSION AGENT; REGISTRAR AND TRANSFER AGENT
Wilmington Trust Company shall act as Conversion Agent, Registrar and
Transfer Agent for the Convertible Preferred Securities. In the event that the
Convertible Preferred Securities do not remain in book-entry only form, the
Property Trustee will act as paying agent and may designate an additional or
substitute paying agent at any time. Registration of transfers of Convertible
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 Regular
Trustees may require) in respect of any tax or other governmental charges which
may be imposed in relation to it. The Trust will not be required to register or
cause to be registered the transfer of Convertible Preferred Securities after
such Convertible Preferred Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Convertible Preferred Securities are governed by,
and construed in accordance with, the internal law 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 deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. QCOM is authorized
and directed to conduct its affairs so that the Convertible Subordinated Debt
Securities will be treated as indebtedness of QCOM for United States federal
income tax purposes. In this connection, the Regular Trustees and QCOM are
authorized to take any action, not inconsistent with applicable law, the
Declaration or the Certificate of Incorporation of QCOM, that each of the
Regular Trustees and QCOM determines in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Convertible Preferred
Securities.
Holders of the Convertible Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of the information concerning the Guarantee
for the benefit of the holders from time to time of the Convertible Preferred
Securities. Wilmington Trust Company is acting as the Guarantee Trustee. The
terms of the Guarantee are those set forth therein. The following summary does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Guarantee (a copy of which
is available at the corporate trust office of the Guarantee Trustee in
Wilmington, Delaware.) The Guarantee is held by the Guarantee Trustee for the
benefit of the holders of the Convertible Preferred Securities.
GENERAL
Pursuant to the Guarantee, QCOM irrevocably and unconditionally has agreed,
to the extent set forth therein, to pay in full to the holders of the
Convertible Preferred Securities the Guarantee Payments (as defined herein)
without duplication of amounts theretofore paid by the Trust, to the extent not
paid by the Trust, regardless of any defense, right of set-off or counterclaim
that the Trust may have or assert. The following payments or distributions with
respect to the Convertible Preferred Securities, to the extent not paid or made
by the Trust (the "Guarantee Payments"), are subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions that are required to be
paid on the Convertible Preferred Securities, to the extent the Trust has funds
available therefore, (ii) the Redemption Price, which includes all accrued and
unpaid distributions to the date of the redemption, to the extent the Trust has
funds available therefor, with respect to any Convertible Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
termination, dissolution or winding-up of the Trust (other than in connection
with the distribution of Convertible Subordinated Debt Securities to the holders
of the Convertible Preferred Securities in exchange for Convertible Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Convertible Preferred Securities to the
date of payment, to the extent the Trust has funds available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
holders of Convertible Preferred Securities in liquidation of the Trust. QCOM's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by QCOM to the holders of Convertible Preferred Securities or
by causing the Trust to pay such amounts to such holders.
The Guarantee is a full and unconditional guarantee of the Guarantee
Payments with respect to the Convertible Preferred Securities from time of
issuance of the Convertible Preferred Securities, but will not apply to the
payment of distributions and other payments on the Convertible Preferred
Securities when the Property Trustee does not have sufficient funds in the
Property Account to make such distributions or other payments. If QCOM does not
make interest payments on the Convertible Subordinated Debt Securities held by
the Property Trustee, the Trust will not make distributions on the Convertible
Preferred Securities issued by the Trust and will not have funds available
therefor. See "Risk Factors -- Rights under the Guarantee" and "Description of
the Convertible Subordinated Debt Securities -- Certain Covenants."
QCOM also agreed separately to guarantee the obligations of the Trust with
respect to the Common Securities (the "Common Securities Guarantee") to the same
extent as the Guarantee, except that upon the occurrence and during the
continuation of an Indenture Event of Default, holders of Convertible Preferred
Securities shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, QCOM has covenanted that, so long as the Convertible
Preferred Securities remain outstanding, if there shall have occurred and is
continuing any event that would constitute an event of default under the
Guarantee or the Declaration, then (a) QCOM shall not declare or pay any
dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock,
(b) QCOM shall not make any payment or interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by QCOM which rank
pari passu with or junior to the Convertible Subordinated Debt Securities and
(c) QCOM shall not make any guarantee payments (other
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than pursuant to the Guarantee) with respect to the foregoing. However, the
foregoing restriction will not apply to any dividend, redemption, liquidation,
interest, principal or guarantee payments of QCOM where the payment is made by
way of securities (including capital stock) that rank pari passu with or junior
to the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of Convertible Preferred Securities (in which case no vote
will be required), the Guarantee may be amended only with the prior approval of
the holders of not less than 66 2/3% in liquidation amount of the outstanding
Convertible Preferred Securities. The manner of obtaining any such approval of
holders of the Convertible Preferred Securities is set forth under "Description
of the Convertible Preferred Securities -- Voting Rights." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of QCOM and shall inure to the benefit
of the holders of the Convertible Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect as to
the Convertible Preferred Securities upon full payment of the Redemption Price
of all Convertible Preferred Securities or upon distribution of the Convertible
Subordinated Debt Securities to the holder of the Convertible Preferred
Securities, and will terminate completely upon full payment of the amounts
payable upon liquidation of the Trust. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Convertible Preferred Securities must repay to the Trust or QCOM, or their
successors, any sums paid to them under such Convertible Preferred Securities or
the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of QCOM
to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Convertible
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee with
respect to the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee. If the Guarantee
Trustee fails to enforce the Guarantee any holder of Convertible Preferred
Securities may institute a legal proceeding directly against QCOM to enforce the
Guarantee Trustee's rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Convertible Preferred Securities shall
have the absolute and unconditional right to proceed directly against QCOM to
obtain Guarantee Payments, without first determining if the Guarantee Trustee
has enforced the Guarantee or instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity. QCOM 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 QCOM.
STATUS OF THE GUARANTEE; SUBORDINATION
The Company's obligations under the Guarantee to make the Guarantee
Payments constitute an unsecured obligation of QCOM and rank (i) subordinate and
junior in right of payment to all other liabilities of QCOM, including the
Convertible Subordinated Debt Securities, except those liabilities of QCOM made
pari passu or subordinate by their terms, (ii) pari passu with the most senior
preferred stock issued from time to time by QCOM, if any, and with any guarantee
now or hereafter entered into by QCOM with respect to any preferred stock of any
subsidiary or affiliate of QCOM, and (iii) senior to the Common Stock. The terms
of the Convertible Preferred Securities provide that each holder of Convertible
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
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The Guarantee constitutes a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity). The Guarantee has been
deposited with the Guarantee Trustee to be held for the benefit of the holders
of the Convertible Preferred Securities. Subject to the rights of holders of
Convertible Preferred Securities to institute proceedings directly against QCOM
to enforce their rights under the Guarantee, the Guarantee Trustee has the right
to enforce the Guarantee on behalf of the holders of the convertible Preferred
Securities.
QCOM's obligations under the Guarantee, taken together with its obligations
under the Declaration, the Convertible Subordinated Debt Securities and the
Indenture, in the aggregate provide a full and unconditional guarantee by QCOM
of payments due on the Convertible Preferred Securities.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee and after the curing of all such defaults that may have occurred,
undertakes to perform only such duties as are specifically set forth in the
Guarantee 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 provisos, the Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Guarantee at the request of any
holder of Convertible Preferred Securities, unless offered reasonable indemnity
against the costs, expenses and liabilities which might be incurred thereby; but
the foregoing shall not relieve the Guarantee Trustee, upon the occurrence of
any event of default under the Guarantee, from its obligation to exercise the
rights and powers vested in it by the Guarantee.
GOVERNING LAW
The Guarantee is governed by, and construed in accordance with, the
internal law of the State of New York.
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DESCRIPTION OF THE CONVERTIBLE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the terms of the Convertible
Subordinated Debt 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 February 25, 1997 (the "Indenture"), between QCOM and
Wilmington Trust Company, as Trustee (the "Debt Trustee"), copies of which are
available for inspection at the corporate trust office of the Debt Trustee in
Wilmington, Delaware. The terms of the Convertible Subordinated Debt Securities
include those stated in the Indenture. Certain capitalized terms used herein are
defined in the Indenture.
Under certain circumstances involving the termination of the Trust
following the occurrence of a Special Event, Convertible Subordinated Debt
Securities may be distributed to the holders of Trust Securities in liquidation
of the Trust. See "Description of the Convertible Preferred
Securities -- Special Event Redemption or Distribution."
GENERAL
The Convertible Subordinated Debt Securities have been issued as unsecured
subordinated debt securities under the Indenture. The Convertible Subordinated
Debt Securities are limited in aggregate principal amount to approximately $680
million, such amount being the sum of the aggregate stated liquidation amount of
the Convertible Preferred Securities and the capital contributed by QCOM in
exchange for the Common Securities.
The Convertible Subordinated Debt Securities are not subject to any sinking
fund provision. The entire principal amount of the Convertible Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon, including additional interest, if any, on February 24,
2012.
If Convertible Subordinated Debt Securities are distributed to holders of
the Convertible Preferred Securities in liquidation of such holders' interests
in the Trust, such Convertible Subordinated Debt Securities will initially be
issued in the same form as the Convertible Preferred Securities that such
Convertible Subordinated Debt Securities replace. Any Global Certificate will be
replaced by one or more Global Securities (as defined under "Book-Entry and
Settlement"). As described herein, under certain circumstances, Convertible
Subordinated Debt Securities may be issued in certificated form in exchange for
a Global Security. See "Book-Entry and Settlement" below. In the event
Convertible Subordinated Debt Securities are issued in certificated form, such
Convertible subordinated Debt Securities issued as a Global Security will be
made to the depositary for the convertible Subordinated Debt Securities. In the
event Convertible Subordinated Debt Securities are issued in certificated form,
such Convertible Subordinated Debt Securities will be in denominations of $50
and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Convertible Subordinated Debt Securities
issued as a Global Security will be made to the Depositary for the Convertible
Subordinated Debt Securities. In the event Convertible Subordinated Debt
Securities are issued in certificated form, principal and interest will be
payable, the transfer of the Convertible Subordinated Debt Securities will be
registrable and Convertible Subordinated Debt Securities will be exchangeable
for convertible Subordinated Debt Securities of other denominations of a like
aggregate principal amount at the corporate trust office of the Debt Trustee in
Wilmington, Delaware; provided, that payment of interest may be made at the
option of QCOM by check mailed to the address of the persons entitled thereto.
The Indenture does not contain provisions that afford holders of the
Convertible Subordinated Debt Securities protection in the event of a highly
leveraged transaction involving the Company or a decline in the credit quality
of the Company resulting from a change of control transaction.
SUBORDINATION
The Indenture provides that the Convertible Subordinated Debt Securities
are subordinated and junior in right of payment to all Senior Indebtedness of
QCOM, whether now existing or hereafter incurred. No
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payment of principal of (including redemption payments, if any), premium, if
any, or interest on, the Convertible Subordinated Debt Securities may be made if
(a) any Senior Indebtedness of QCOM is not paid when due and any applicable
grace period with respect to such default has ended with such default not being
cured or waived or ceasing to exist or (b) the maturity of any Senior
Indebtedness has been accelerated because of a default. Upon any distribution of
assets of QCOM to creditors upon any dissolution, winding-up, liquidation or
reorganization, whether voluntary or involuntary, or in a bankruptcy,
insolvency, receivership or other proceedings, all principal of, premium, if
any, and interest due or to become due on, all Senior Indebtedness must be paid
in full before the holders of the Convertible Subordinated Debt Securities 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
Convertible Subordinated Debted Securities will be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions
applicable to such Senior Indebtedness until all amounts owing on the
Convertible Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means the principal of, premium, if any,
interest on, and any other payment due pursuant to, any of the following,
whether outstanding on the Original Offering Date or thereafter incurred or
created: (a) all indebtedness of QCOM for money borrowed or evidenced by notes,
debentures, bonds or other securities (including, but not limited to, those
which are convertible or exchangeable for securities of QCOM and indebtedness
owed to subsidiaries and affiliates of QCOM); (b) all indebtedness of QCOM due
and owing with respect to letters of credit (including, but not limited to,
reimbursement obligations with respect thereto); (c) all obligations of QCOM due
and owing with respect to reimbursement agreements under any surety bond,
insurance policy, bankers' acceptance, security purchase facility, or similar
agreement or arrangement; (d) all indebtedness or other obligations of QCOM due
and owing with respect to interest rate and currency swap agreements, cap, floor
and collar agreements, currency spot and forward contracts and other similar
agreements and arrangements; (e) all indebtedness consisting of commitment or
standby fees due and payable to lending institutions with respect to credit
facilities or letters of credit available to QCOM; (f) all obligations of QCOM
under leases required or permitted to be capitalized under generally accepted
accounting principles; (g) all obligations of QCOM issued or assumed as the
deferred purchase price of property or services, all conditional sale
obligations of QCOM, and all obligations of QCOM under any title retention
agreement; (h) all obligations of QCOM under agreements or arrangements with
respect to deferred compensation due its employees or employees of its
subsidiaries and its obligations under employee benefit plans; (i) all
indebtedness or obligations of others of the kinds described in any of the
preceding clauses (a)-(h) that are (x) assumed by or guaranteed in any manner by
QCOM, or in effect guaranteed (directly or indirectly) by QCOM through an
agreement to purchase, contingent or otherwise, or in its capacity as a general
partner of any entity, and all obligations of QCOM, under any such guarantee or
other arrangements or (y) secured by a lien on any property or asset of QCOM
(whether or not such obligation is assumed by QCOM); and (j) all renewals,
extensions, refundings, deferrals, amendments, or modifications or indebtedness
or obligations of the kinds described in any of the preceding clauses (a)-(i);
unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Convertible Subordinated Debt
Securities; provided that Senior Indebtedness shall not included indebtedness
for trade payables or constituting the deferred purchase price of assets or
services incurred in the ordinary course of business.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by QCOM. As of December 29, 1996, Senior Indebtedness of
QCOM aggregated approximately $48 million (excluding accrued interest), and QCOM
and its consolidated subsidiaries had indebtedness and other liabilities of
approximately $489 million to which the Convertible Subordinated Debt Securities
are effectively subordinated.
CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that would
constitute an Indenture Event of Default, (ii) QCOM shall be in default with
respect to its payment of any obligations under the Guarantee or the Common
Securities Guarantee, and such default shall be continuing or (iii) QCOM shall
have given
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notice of its election to defer payments of interest on the Convertible
Subordinated Debt Securities as provided in the Indenture and any Extension
Period shall be continuing, then, in each case, (a) QCOM shall not declare or
pay any dividend on, make any distributions with respect to, or redeem, purchase
or make a liquidation payment with respect to, any of its capital stock (other
than (A) purchases or acquisitions of shares of Common Stock in connection with
the satisfaction of QCOM of its obligations under any employee benefit plans,
(B) as a result of a reclassification of capital stock of QCOM or the exchange
or conversion of one class or series of QCOM's capital stock for another class
or series of capital stock of QCOM or (C) the purchase of fractional interests
in shares of QCOM's capital stock pursuant to the conversion or exchange
provisions of such capital stock of QCOM or the security being converted or
exchanged), (b) QCOM shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by QCOM which rank pari passu with or junior to
the Convertible Subordinated Debt Securities and (c) QCOM shall not make any
guarantee payments (other than pursuant to the Guarantee) with respect to the
foregoing.
Notwithstanding the foregoing restrictions, QCOM is permitted, in any
event, to make dividend, redemption, liquidation and guarantee payments on
capital stock of QCOM, and interest, principal, redemption and guarantee
payments on debt securities issued by QCOM ranking pari passu with or junior to
Convertible Subordinated Debt Securities, where the payment is made by way of
securities (including capital stock) that rank pari passu with or junior to the
securities on which such payment is being made.
For as long as the Trust Securities remain outstanding, QCOM has covenanted
(i) to maintain 100% direct or indirect ownership of the Common Securities of
the Trust; provided, however, that any permitted successor of QCOM under the
Indenture may succeed to QCOM's ownership of such Common Securities, (ii) not to
cause, as sponsor of the Trust, or to permit, as holder of the Common
Securities, the termination, dissolution or winding-up of the Trust, except in
connection with a distribution of the Convertible Subordinated Debt Securities
as provided in the Declaration and in connection with certain mergers,
consolidations or amalgamations, (iii) to use its reasonable efforts, consistent
with the terms of the Declaration, to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of Convertible
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes and (iv) to use reasonable efforts
to cause each holder of Trust Securities to be treated as owning an undivided
beneficial interest in the Convertible Subordinated Debt Securities.
OPTIONAL REDEMPTION
QCOM has the right to redeem the Convertible Subordinated Debt Securities,
in whole or in part, from time to time, on or after March 4, 2000, upon not less
than 20 nor more than 60 days notice to the holders thereof, at the following
prices (expressed as percentages of the principal amount of the Subordinated
Debt Securities) together with accrued and unpaid interest, including Additional
Interest (as defined herein) to, but excluding, the redemption date, if redeemed
during the 12-month period beginning March 4:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---------------------------------------------------------- ----------------
<S> <C>
2000...................................................... 102%
2001...................................................... 101
</TABLE>
and 100% if redeemed on or after March 4, 2002.
QCOM also has the right to redeem the Convertible Subordinated Debt
Securities at any time in certain circumstances upon the occurrence of a Tax
Event as described under "Description of Convertible Preferred
Securities -- Special Event Redemption or Distribution" at 100% of the principal
amount thereof together accrued and unpaid interest (including Additional
Interest) to the redemption date.
Notwithstanding the foregoing, if Convertible Subordinated Debt Securities
are redeemed on any March 1, June 1, September 1 or December 1, accrued and
unpaid interest with respect to the Convertible
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Subordinated Debt Securities shall be payable to holders of record on the
relevant record date, instead of the holders on the redemption date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Subordinated Debt Securities will be used to redeem Convertible Preferred
Securities.
INTEREST
Each Convertible Subordinated Debt Security shall bear interest at the rate
of 5 3/4% per annum from February 25, 1997, payable quarterly in arrears on
March 1, June 1, September 1 or December 1 of each year (each, an "Interest
Payment Date,") commencing on June 1, 1997, to the person in whose name such
Convertible Subordinated Debt Security 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 Convertible Subordinated Debt Securities
are distributed to holders of Convertible Preferred Securities in liquidation of
such holders' interests in the Trust and such Convertible Subordinated Debt
Securities shall not thereafter continue to remain in book-entry only form, QCOM
shall have the right to select record dates which shall be not less than fifteen
days prior to each Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Convertible Subordinated Debt Securities is not a
Business Day, then payment of the interest 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 to any such delay), except that, if such Business Day
is 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 date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default shall have occurred and be
continuing, QCOM has the right at any time, and from time to time, during the
term of the Convertible Subordinated Debt Securities 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 QCOM shall pay all
interest then accrued and unpaid (including any Additional Interest and
Liquidated Damages), together with interest thereon at the rate specified for
the Convertible Subordinated Debt Securities to the extent permitted by
applicable law; provided that, during any such Extension Period, (a) QCOM shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock (other than (A) purchases or acquisitions of shares of Common
Stock in connection with the satisfaction by QCOM of its obligations under any
employee benefit plans, (B) as a result of a reclassification of capital stock
of QCOM or the exchange or conversion of one class or series of QCOM's capital
stock for another class or series of capital stock of QCOM or (C) the purchase
of fractional interests in shares of QCOM's capital stock pursuant to the
conversion or exchange provisions of such capital stock of QCOM or the security
being converted or exchanged), (b) QCOM shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by QCOM which rank pari passu with or junior to the
Convertible Subordinated Debt Securities and (c) QCOM shall not make any
guarantee payments (other than pursuant to the Guarantee)with respect to the
foregoing; provided, however, the foregoing restriction will not apply to any
dividend, redemption, liquidation, interest or principal or guarantee payments
by QCOM where the payment is made by way of securities (including capital stock)
that rank junior to the securities on which such dividend, redemption, interest,
principal or guarantee payment is being made. Prior to the termination of any
such Extension Period, QCOM may further defer payment of interest by extending
the interest payment period, provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity of the Convertible Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, QCOM may select a new Extension Period, as if no Extension
Period had previously been declared, subject to the above requirements. No
interest during an Extension Period, except at the end thereof, shall be due and
payable. QCOM has no present intention of exercising its rights to defer
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payments of interest by extending the interest payment period on the Convertible
Subordinated Debt Securities. If the Property Trustee shall be the sole holder
of the Convertible Subordinated Debt Securities, QCOM shall give the Regular
Trustees and the Property Trustees notice of its selection of an Extension
Period one Business Day prior to the earlier of (i) the next succeeding date on
which distributions on the Convertible Preferred Securities are payable or (ii)
the date the Trust is required to give notice of the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the Convertible
Preferred Securities of the record date or the date such distribution is
payable, but in any event not less than ten Business Days prior to such record
date. The Regular Trustees shall give notice of QCOM's selection of such
Extension Period to the holders of the Convertible Preferred Securities. If the
Property Trustee shall not be the sole holder of the Convertible Subordinated
Debt Securities, QCOM shall give the holders of the Convertible Subordinated
Debt Securities notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the relevant Interest Payment Date or (ii) the
date QCOM is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Convertible
Subordinated Debt Securities or the record of the record or payment date of such
related interest payment, but in any event at least two Business Days before
such record date.
CONVERSION OF THE SUBORDINATED DEBT SECURITIES
The Convertible Subordinated Debt Securities are convertible into Common
Stock at the option of the holders of the Convertible Subordinated Debt
Securities at any time beginning 60 days following the first date that any
Convertible Preferred Securities are issued and prior to the close of business
on February 24, 2012 (or, in the case of Convertible Subordinated Debt
Securities called for redemption, the close of business on the Business Day
prior to the redemption date) at the initial conversion rate of 0.6882 shares of
Common Stock for each Convertible Preferred Security (equivalent to a conversion
price of $72.6563 per share of Common Stock) subject to the conversion price
adjustments described under "Description of Convertible Preferred
Securities -- Conversion Rights." The Trust has agreed not to convert
Convertible Subordinated Debt Securities held by it except pursuant to a notice
of conversion delivered to the Conversion Agent by a holder of Convertible
Preferred Securities. Upon surrender of a Convertible Preferred Security to the
Conversion Agent for conversion, the Trust will distribute Convertible
Subordinated Debt Securities to the Conversion Agent on behalf of the holder of
the Convertible Preferred Securities so converted, whereupon the Conversion
Agent will convert such Convertible Subordinated Debt Securities to Common Stock
on behalf of such holder. The Company's delivery to the holders of the
Convertible Subordinated Debt Securities (through the Conversion Agent) of the
fixed number of shares of Common Stock into which the Convertible Subordinated
Debt Securities are convertible (together with the cash payment, if any, in lieu
of fractional shares) will be deemed to satisfy QCOM's obligation to pay the
principal amount of the Convertible Subordinated Debt Securities so converted,
and the accrued and unpaid interest thereon attributable, to the period from the
last date to which interest has been paid or duly provided for; provided,
however, that if any Convertible Subordinated Debt Securities are converted
after a record date for payment of interest, the interest payable on the related
interest payment date with respect to such Convertible Subordinated Debt
Securities shall be paid to the Trust (which will distribute such interest to
the converting holder) or other holder of Convertible Subordinated Debt
Securities, as the case may be, despite such conversion.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by United States, or any other taxing authority, then, in any
such case, QCOM will pay as additional interest ("Additional Interest") such
additional amounts as shall be required so that the net amounts received and
retained by the Trust after paying any such taxes, duties, assessments, or other
governmental charges will be equal to the amounts the Trust would have received
had no such taxes, duties, assessments or other governmental charges been
imposed.
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INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Convertible Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Convertible
Subordinated Debt Securities, including any Additional Interest and
Liquidated Damages in respect thereof, when due; provided, however, that a
valid extension of the interest payment period by QCOM shall not constitute
a default in the payment of interest for this purpose; or
(b) failure to pay principal or premium, if any, on the Convertible
Subordinated Debt Securities when due whether at maturity, upon earlier
redemption or otherwise; or
(c) failure to issue and deliver shares of Common Stock upon an
election by a holder of Convertible Subordinated Debt Securities to convert
such Convertible Subordinated Debt Securities; or
(d) failure to observe or perform any other covenant contained in the
Indenture for 90 days after written notice to QCOM from the Debt Trustee or
the holders of at least 25% in principal amount of the outstanding
Convertible Subordinated Debt Securities; or
(e) certain events of bankruptcy, insolvency or reorganization of
QCOM; or
(f) the voluntary or involuntary termination, dissolution or
winding-up of the Trust, except in connection with the distribution of
Convertible Subordinated Debt Securities to the holders of Convertible
Preferred Securities in liquidation of the Trust, the redemption of all
outstanding Trust Securities of the Trust and certain mergers,
consolidations or amalgamations permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Convertible Subordinated Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debt Trustee. The Debt Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Convertible Subordinated Debt Securities may
declare the principal due and payable immediately on default, but the holders of
a majority in aggregate outstanding principal amount may rescind and annul such
declaration and its consequences if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and any applicable premium has been deposited
with the Debt Trustee. So long as the Property Trustee is the holder of the
Convertible Subordinated Debt Securities, it will have the right to accelerate
the maturity of the indebtedness thereunder and to exercise the other rights of
the holder of the convertible Subordinated Debt Securities described above.
The holders of a majority in aggregate outstanding principal amount of the
Convertible Subordinated Debt Securities affected thereby may, on behalf of the
holders of all the Convertible Subordinated Debt Securities, waive any past
default, except (i) a default in the payment of principal, premium, if any, or
interest, including Additional Interest and Liquidated Damages (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration and any applicable
premium has been deposited with the Debt Trustee), or (ii) a default in the
covenant of QCOM described under "Certain Covenants" above, or (iii) in respect
of a covenant or provision of the Indenture that cannot be modified or amended
without the consent of the holder of each outstanding Convertible Subordinated
Debt Security affected thereby (see "Modification of the Indenture").
An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Convertible Preferred Securities in certain
circumstances have the right to direct the Property Trustee to exercise its
rights as the holder of the Convertible Subordinated Debt Securities. See
"Description of the Convertible Preferred Securities -- Declaration Events of
Default" and "Voting Rights."
In addition, if an Indenture Event of Default results from the failure of
QCOM to pay principal of or interest on the Convertible Subordinated Debt
Securities when due, during the continuance of such an event of default a holder
of Convertible Preferred Securities may immediately institute a legal proceeding
directly against QCOM to obtain payment of such principal or interest on
Convertible Subordinated Debt Securities
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having a principal amount equal to the aggregate liquidation amount of the
Convertible Preferred Securities owned of record by such holder. Also, if the
Property Trustee fails to enforce its rights as holder of the Convertible
Subordinated Debt Securities for 30 days after a request therefor by a holder of
Convertible Preferred Securities, such holder may proceed to enforce such rights
directly against QCOM to the fullest extent permitted by law.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Convertible Preferred Securities in connection
with the voluntary or involuntary termination, dissolution or winding-up of the
Trust as a result of the occurrence of a Special Event, the Convertible
Subordinated Debt Securities will be issued in the same form as the Convertible
Preferred Securities that such Convertible Subordinated Debt Securities replace.
Any Convertible Preferred Securities evidenced by a Global Certificate will be
replaced by Convertible Subordinated Debt Securities in the form of one or more
global certificates (each, a "Global Security") registered in the name of the
depositary or its nominee. Convertible Subordinated Debt Securities represented
by the Global Security will be exchangeable for Convertible Subordinated Debt
Securities in certificated form and will be transferable, on terms and
conditions generally the same as those applicable to the Convertible Preferred
Securities prior to such distribution. See "Description of the Convertible
Preferred Securities -- Form, Denomination and Registration." The Global
Securities described above may not be transferred except by the depositary to a
nominee of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or to a successor depositary or its nominee.
THE DEPOSITARY
If Convertible Subordinated Debt Securities are distributed to holders of
Convertible Preferred Securities in liquidation of such holders' interest in the
Trust, DTC will act as securities depositary for the Convertible Subordinated
Debt Securities. For a description of DTC and the specific terms of the
depository arrangements in effect as of the date of this Prospectus, see
"Description of the Convertible Preferred Securities -- Form, Denomination and
Registration." 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 Convertible Preferred Securities apply in all material respects
to any debt obligations represented by one or more Global Securities held by
DTC. QCOM may appoint a successor to DTC or any successor depositary in the
event DTC or such successor depositary is unable or unwilling to continue as
depositary.
None of QCOM, the Trust, the Debt Trustee, any payment agent and any other
agent of QCOM or the Debt 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 Convertible Subordinated Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICE
A Global Security shall be exchangeable for Convertible Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee if (i) the depositary notifies QCOM that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, or if at any time the depositary ceases to be a
clearing agency registered or in good standing under the Exchange Act (or other
applicable statute or regulation) at a time when the depositary is required to
be so registered to act as such depositary and no successor depositary shall
have been appointed by QCOM within 90 days after QCOM receives such notice or
becomes aware of such condition, (ii) QCOM in its sole discretion determines
that such Global Security shall be so exchangeable or (iii) there shall have
occurred an Indenture Event of Default with respect to such Convertible
Subordinated Debt Securities. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Convertible Subordinated
Debt Securities registered in such names as the depositary shall direct. It is
expected that such instructions will be based upon directions received by the
depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
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In the event the Convertible Subordinated Debt Securities are not
represented by one or more Global Securities, certificates evidencing
Convertible Subordinated Debt Securities may be presented for registration of
transfer (with the form of transfer endorsed thereon duly executed) or exchange,
at the office of the Debt Registrar (as defined in the Indenture) or at the
office of any transfer agent designated by QCOM for such purpose with respect to
the Convertible Subordinated Debt Securities, without service charge and upon
payment of any taxes and other governmental charges as described in the
Indenture. Such transfer or exchange will be effected upon the Debt Registrar or
such transfer agent, as the case may be, being satisfied with the documents of
title and identity of the person making the request. QCOM has appointed the Debt
Trustee as Debt Registrar with respect to the Convertible Subordinated Debt
Securities. QCOM may at any time rescind the designation of any such transfer
agent or approve a change in the location through which any such transfer agent
acts, except QCOM will be required to maintain a transfer agent at the place of
payment. QCOM may at any time designate additional transfer agents with respect
to the Convertible Subordinated Debt Securities.
In the event of any redemption in part, QCOM shall not be required to (i)
issue, exchange or register the transfer of Convertible Subordinated Debt
Securities during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of less than all of the
Convertible Subordinated Debt Securities and ending at the close of business on
the date of such mailing or (ii) register the transfer of or exchange any
Convertible Subordinated Debt Securities so selected for redemption, in whole or
in part, except the unredeemed portion of any Convertible Subordinated Debt
Securities being redeemed in part.
CONVERSION AND PAYING AGENTS
Wilmington Trust Company is acting as Conversion Agent for the Convertible
Subordinated Debt Securities. Payment of principal of and premium, if any, on
the Convertible Subordinated Debt Securities will be made only against surrender
to the Paying Agent (as defined in the Indenture) of the Convertible
Subordinated Debt Securities. Principal of and premium, if any, and interest on
Convertible Subordinated Debt Securities will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as QCOM may designate from time to time, except that at the option of
QCOM payment of any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Debt Register with
respect to the Convertible Subordinated Debt Securities. Payment of interest on
the Convertible Subordinated Debt Securities on any Interest Payment Date will
be made to the person in whose name the Convertible Subordinated Debt Security
(or predecessor security) is registered at the close of business on the Regular
Record Date (as defined in the Indenture) for such interest payment.
QCOM initially is acting as Paying Agent with respect to the Convertible
Subordinated Debt Securities except that, if the Convertible Subordinated Debt
Securities are distributed to the holders of the Convertible Preferred
Securities in liquidation of such holders' interests in the Trust, the Debt
Trustee will act as the Paying Agent. QCOM at any time may designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts, except that QCOM will be
required to maintain a Paying Agent at the place of payment.
All monies paid by QCOM to a Paying Agent for the payment of the principal
of, premium, if any, or interest, if any, on the Convertible Subordinated Debt
Securities which remain unclaimed at the end of two years after such principal,
premium or interest shall have become due and payable will be repaid to QCOM,
and the holder of such Convertible Subordinated Debt Securities will thereafter
look only to QCOM for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting QCOM and the Debt Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Convertible Subordinated Debt Securities, to modify the Indenture or any
supplemental indenture affecting that series or the rights of the holders of the
Convertible Subordinated Debt Securities; provided that no such modification
may, without the consent of the holder of each outstanding Convertible
Subordinated Debt Security affected thereby, (i) change the stated maturity of
the Convertible Subordinated Debt Securities, reduce the principal amount
thereof, reduce the
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rate or extend the time of payment of interest (including any Additional
Interest or Liquidated Damages) thereon, or reduce any premium payable upon the
redemption thereof, adversely affect the right to convert any Convertible
Subordinated Debt Security, decrease the conversion rate or increase the
conversion price of any Convertible Subordinated Debt Security, or change the
subordination provisions of the Indenture in a manner that adversely affects the
rights of any holders of Convertible Subordinated Debt Securities or (ii) reduce
the percentage of Convertible Subordinated Debt Securities the holders of which
are required to consent to any such supplemental indenture or to waive defaults,
without the consent of the holders of each Convertible Subordinated Debt
Security then outstanding and affected thereby.
In addition, QCOM and the Debt Trustee may execute, without the consent of
holders of the Convertible Subordinated Debt Securities, any supplemental
indenture for certain other usual purposes.
SUCCESSOR CORPORATION
QCOM may not consolidate with or merge into, or transfer its properties and
assets substantially or as an entirety to, another corporation, and another
corporation may not consolidate with or merge into, or transfer its properties
and assets substantially or as an entity to QCOM, unless (i) in the case QCOM
consolidates with or merges into another corporation or transfers its properties
and assets substantially or as an entirety to another corporation, the successor
corporation, which shall be a corporation organized under the laws of the United
States or a State thereof, assumes by supplemental indenture all the obligations
of QCOM under the Convertible Subordinated Debt Securities and the Indenture,
(ii) immediately after giving effect to such transaction, no Indenture Event of
Default shall have occurred and be continuing, and (iii) such transition is
permitted under the Declaration and Guarantee and does not give rise to any
breach or violation of the Declaration or Guarantee. Except for the conversion
price adjustments described under "Description of Convertible Preferred
Securities -- Conversion Rights," the Indenture does not otherwise contain any
covenant which restricts the ability of QCOM to merge or consolidate with or
into any other corporation, sell or convey all or substantially all of its
assets to any person, firm or corporation or otherwise engage in restructuring
transactions.
GOVERNING LAW
The Indenture and the Convertible Subordinated Debt Securities are governed
by, and construed in accordance with, the internal law of the State of New York.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture 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 provision, the Debt Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Convertible Subordinated Debt
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby; but the
foregoing shall not relieve the Debt Trustee, upon the occurrence of an
Indenture Event of Default, from its obligation to exercise the rights and
powers vested in it by the Indenture. The Debt Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debt Trustee reasonably believes that repayment
or adequate indemnity is not reasonably assured to it. The Debt Trustee also
serves as Property Trustee under the Declaration and as the Guarantee Trustee
under the Guarantee.
MISCELLANEOUS
QCOM has the right at all times to assign any of its rights or obligations
under the Indenture to a direct or indirect wholly-owned subsidiary of QCOM;
provided, that in the event of any such assignment, QCOM will remain liable for
all of the obligations of such subsidiary. Subject to the foregoing, the
Indenture is binding upon and inure to the benefit of the parties thereto and
their respective successors and assigns. The Indenture provides that it may not
otherwise be assigned by the parties thereto.
The Indenture provides that QCOM will pay all costs, expenses, debts and
obligations of the Trust other than with respect to the Trust Securities.
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EFFECT OF OBLIGATIONS UNDER THE CONVERTIBLE SUBORDINATED
DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the exclusive purposes of the Trust are to
(i) issue the Trust Securities, (ii) invest the proceeds thereof in the
Convertible Subordinated Debt Securities 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
Convertible Subordinated Debt Securities, such payments will be sufficient to
cover distributions and payments due on the Trust Securities primarily because
(i) the aggregate principal amount of the Convertible Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and interest and other payment
dates on the Convertible Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Convertible
Preferred Securities; (iii) QCOM shall pay for all costs, expenses, debts and
obligations of the Trust (other than with respect to the Trust Securities); and
(iv) the Declaration provides that Regular 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 Convertible Preferred Securities (to the extent funds
therefor are available) are guaranteed by QCOM as and to the extent set forth
under "Description of the Guarantee." If QCOM does not make interest payments on
the Convertible Subordinated Debt Securities purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Convertible Preferred Securities. The Guarantee does not apply to any
payment of distributions unless and until the Trust has sufficient funds for the
payment of such distributions. The Guarantee covers the payment of distributions
and other payments on the Convertible Preferred Securities only if and to the
extent that QCOM has made a payment of interest or principal on the Convertible
Subordinated Debt Securities held by the Trust as its sole asset. The Guarantee,
when taken together with QCOM's obligations under the Convertible Subordinated
Debt Securities, the Indenture and the Declaration, including its obligations to
pay costs, expenses, debts and liabilities of the Trust (other than with respect
to the Trust Securities), provides a full and unconditional guarantee of amounts
on the Convertible Preferred Securities.
If QCOM fails to make interest or other payments on the Convertible
Subordinated Debt Securities when due (taking into account any Extension
Period), the Declaration provides a mechanism whereby the holders of the
Convertible Preferred Securities, using the procedures described in "Description
of the Convertible Preferred Securities -- Voting Rights," may direct the
Property Trustee to enforce its rights under the Convertible Subordinated Debt
Securities, including proceeding directly against QCOM to enforce the
Convertible Subordinated Debt Securities. If the Property Trustee fails to
enforce its rights under the Indenture or the Convertible Subordinated Debt
Securities, a holder of Convertible Preferred Securities may, to the extent
permitted by law, institute a legal proceeding directly against QCOM to enforce
the Property Trustee's rights under the Indenture and the Convertible
Subordinated Debt Securities without first instituting any legal proceeding
against the Property Trustee or any other person or entity, including the Trust.
In addition, during the continuance of a Declaration Event of Default that
results from the failure of QCOM to pay principal of or interest on the
Convertible Subordinated Debt Securities when due, a holder may proceed directly
against QCOM, without first waiting to determine if the Property Trustee has
enforced its rights under the Declaration, to obtain payment of such principal
or interest on Convertible Subordinated Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Convertible Preferred
Securities owned of record by such holder.
If QCOM fails to make payments under the Guarantee, the Guarantee provides
a mechanism whereby the holders of the Convertible Preferred Securities may
direct the Guarantee Trustee to enforce its rights thereunder. If the Guarantee
Trustee fails to enforce the Guarantee, any holder of convertible Preferred
Securities may institute a legal proceeding directly against QCOM to enforce the
Guarantee Trustee's rights under the Guarantee, without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Convertible Preferred Securities shall
have the right, which is absolute and unconditional, to proceed directly against
QCOM to obtain Guarantee Payments,
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without first waiting to determine if the Guarantee Trustee has enforced the
Guarantee or instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
DESCRIPTION OF CAPITAL STOCK
As of April 25, 1997, the authorized capital stock of QCOM consisted of
150,000,000 shares of Common Stock, $0.0001 par value ("Common Stock"), and
8,000,000 shares of Preferred Stock, $0.0001 par value ("Preferred Stock"), of
which 1,500,000 shares have been designated Series A Junior Participating
Preferred Stock ("Series A").
COMMON STOCK
As of April 25, 1997, there were 67,536,528 shares of Common Stock
outstanding held of record by 2,233 stockholders. The holders of Common Stock
are entitled to one vote for each share held of record on all matters submitted
to a vote of the stockholders. Subject to preferences that may be applicable to
any then outstanding Preferred Stock, holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. In the event of a liquidation, dissolution
or winding up of QCOM, holders of Common Stock are entitled to share ratably in
all assets remaining after payment of liabilities and the liquidation preference
of any then outstanding Preferred Stock. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are, and all shares of
Common Stock issuable upon conversion of the Convertible Preferred Securities,
when and if issued, will be, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 8,000,000 shares of Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares constituting any
series or the designation of such series, without any further vote or action by
the stockholders. The issuance of Preferred Stock could adversely affect the
voting power of holders of Common Stock and could have the effect of delaying,
deferring or preventing a change in control of the Company.
RIGHTS; JUNIOR PREFERRED STOCK
QCOM has adopted a stockholder rights plan as set forth in a Rights
Agreement dated as of September 26, 1995, between QCOM and First Interstate Bank
of California, as rights agent (the "Rights Agreement"). The following is a
summary of the Rights Agreement.
Rights. Each right (a "Right" and, collectively, the "Rights") entitles
the registered holder to purchase from QCOM one one-hundredth of a share of
Series A at a price of $250.00 per one one-hundredth of a share of Series A (the
"Purchase Price"), subject to adjustment. Each one one-hundredth of a share of
Series A has designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions which makes its value approximately
equal to the value of one share of Common Stock. The description and terms of
the Rights are set forth in the Rights Agreement.
The Rights are evidenced by the stock certificates representing the Common
Stock then outstanding, and no separate Right Certificates (as defined herein)
have been distributed. Until the earlier to occur of (i) 10 days following a
public announcement that a person, entity or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership of 15% or more
of the outstanding Common Stock or (ii) 10 business days (or such later date as
may be determined by action of the Board of Directors of QCOM prior to such time
as any person, entity or group becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person, entity or group of 15% or more of such outstanding
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Common Stock (the earlier of such dated being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding, by such Common Stock certificate.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Stock
certificates issued upon transfer or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender or
transfer of any certificates for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 25, 2005 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case as described below.
The Purchase Price payable, and the number of shares of Series A or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series A,
(ii) upon the grant to holders of the Series A of certain rights or warrants to
subscribe for or purchase shares of Series A at a price, or securities
convertible into shares of Series A with a conversion price, less than the then
current market price of the Series A shares or (iii) upon the distribution to
holders of the shares of Series A of evidences of indebtedness or assets
(excluding regular periodic cash dividends paid out of earnings or retained
earnings or dividends payable in shares of Series A) or of subscription rights
or warrants (other than those referred to above). The exercise of Rights for
shares of Series A is at all times subject to the availability of a sufficient
number of authorized but unissued shares of Series A.
The number of outstanding Rights and the number of one one-hundredths of a
share of Series A issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidation or
combinations of the Common Stock occurring, in any case, prior to the
Distribution Date.
Series A shares purchasable upon exercise of the Rights will not be
redeemable. Each share of Series A will be entitled to a minimum preferential
quarterly dividend payment of $1.00 but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Stock. In the event of
liquidation, the holders of Series A will be entitled to a minimum preferential
liquidation payment of $100 but will be entitled to an aggregate payment of 100
times the payment made per Common Stock. Each share of Series A will have 100
votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Series A will be entitled to receive 100 times the amount of
consideration received per share of Common Stock. These rights are protected by
customary anti-dilution provisions. Because of the nature of the dividend and
liquidation rights of the Series A, the value of one one-hundredth of a share of
Series A should approximate the value of one share of Common Stock.
In the event that any person, entity or group becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
for a 60-day period have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the exercise price of
the Right (or, if such number of shares is not and cannot be authorized, the
Company may issue Preferred Stock, cash, debt, stock or a combination thereof in
exchange for the Rights). This right will terminate 60 days after the date on
which the Rights become nonredeemable (as described below), unless there is an
injunction or similar obstacle to exercise of the Rights, in which event this
right will terminate 60 days after the date on which the Rights again become
exercisable.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder
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of a Right will thereafter have the right to receive, upon the exercise thereof
at the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after the acquisition by a person, entity or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
Company's outstanding Common Stock and prior to the acquisition by such person,
entity or group of 50% or more of QCOM's outstanding Common Stock, the Board of
Directors of QCOM may exchange the Rights (other than Rights owned by such
person, entity or group which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a share of
Series A, per Right (or, if the number of shares is not and cannot be
authorized, the Company may issue cash, debt, stock or a combination thereof in
exchange for the Rights), subject to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Series A will be issued (other than
fractions which are integral multiples of the number of one one-hundredths of a
share of Series A issuable upon the exercise of one Right, which may, at the
option of QCOM, be evidenced by depository receipts), and in lieu thereof, an
adjustment in cash will be made based on the market price of the Series A on the
last trading day prior to the date of exercise
At any time prior to the earliest of (i) the close of business on the day
of the first public announcement that a person, entity or group has become an
Acquiring Person or (ii) the Final Expiration Date, the Board of Directors of
QCOM may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). Following the expiration of the above periods,
the Rights will be nonredeemable. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of QCOM
without the consent of the holders of the Rights, including an amendment to
lower the threshold for exercisability of the Rights from 15% to any percentage
which is (i) greater than the largest percentage of the outstanding Common Stock
then known to QCOM to be beneficially owned by any person, entity or group
(other than QCOM, any subsidiary of QCOM, any employee benefit plan of QCOM or
any subsidiary, or any person, entity or group holding Common Shares pursuant to
the terms of any such plan) and (ii) not less than 10%, except that from and
after such time as any person, entity or group becomes an Acquiring Person no
such amendment may adversely affect the interest of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person, entity or group that attempts to acquire the
Company on terms not approved by QCOM's Board of Directors. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be redeemed by QCOM at $.01 per Right
prior to the earliest of (i) the date that a person, entity or group has
acquired beneficial ownership of 15% or more of the Common Stock (unless
extended for one or more 10 day periods by the Board of Directors), (ii) a
Change in Control or (iii) the final expiration date of the rights.
Series A Junior Participating Preferred Stock. In connection with the
Rights Agreement, 1,500,000 shares of Series A are authorized and reserved for
issuance by the Board. No shares of Series A are currently outstanding. The
material terms of the Series A are summarized herein; however, such summary is
subject to the terms of QCOM's Certificate of Incorporation and the Certificate
of Designation relating to the Series A.
Subject to the prior payment of cumulative dividends on any class of
preferred stock ranking senior to the Series A, a holder of Series A will be
entitled to cumulative dividends out of funds legally available therefor, when,
as and if declared by the Board at a quarterly rate per share of Series A equal
to the greater of (a) $1.00 or (b) 100 times (subject to adjustment upon certain
dilutive events) the aggregate per share amount of all cash dividends and 100
times (subject to adjustment upon certain dilutive events) the aggregate per
share
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amount (payable in kind) of all noncash dividends or other distributions (other
than dividends payable in Common Stock or a sub-division the outstanding share
of Common Stock) declared on Common Stock, since the immediately preceding
quarterly dividend payment date for the Series A (or since the date of issuance
of the Series A if not such dividend payment date has occurred).
A holder of Series A is entitled to 100 votes (subject to adjustment upon
certain dilutive events) per share of Series A on all matters submitted to a
vote of QCOM stockholders. Such holders will vote together with the holders of
the Common Stock as a single class on all matters submitted to a vote of QCOM
stockholders.
In the event of a merger or consolidation of QCOM which results in Common
Stock being exchanged or changed for other stock, securities, cash and or other
property, the shares of Series A shall similarly be exchanged or changed in an
amount per share equal to 100 times (subject to adjustment upon certain dilutive
events) the aggregate amount of stock, securities, cash and/or other property,
as the case may be, into which each share of Common Stock has been exchanged or
changed.
In the event of liquidation, dissolution or winding up of the Company, a
holder of Series A will be entitled to receive $100 per share, plus accrued and
unpaid dividends and distributions thereon, before any distribution may be made
to holders of shares of stock of QCOM ranking junior to the Series A, and the
holders of Series A are entitled to receive an aggregate amount per share equal
to 100 times (subject to adjustment upon certain dilutive events) the aggregate
amount to be distributed per share to holders of Common Stock.
The Series A is not subject to redemption. The terms of the Series A
provide that the Company is subject to certain restrictions with respect to
dividends and distributions on and redemptions and purchases of shares of stock
of QCOM ranking junior to or on a parity with the Series A in the event that
payments of dividends or other distributions payable on the Series A are in
arrears.
WARRANTS
In November 1991, the Company issued to PacTel Corporation warrants to
purchase an aggregate of 782,000 shares of Common Stock at a price of $5.50 per
share exercisable for a period of 7 years. As of April 17, 1997, none of these
warrants had been exercised.
TRANSFER AGENT AND REGISTRAR
Harris Trust Company of California has been appointed as the transfer agent
and registrar for the Common Stock.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Delaware Law"), an anti-takeover law. In general,
the statute prohibits a publicly held Delaware corporation form engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock.
QCOM's Certificate of Incorporation contains a provision (the "Fair Price
Provision") that requires the approval of the holders of at least 66 2/3% of
QCOM voting stock as a condition to a merger or certain other business
transactions with, or proposed by, a holder of 15% or more of QCOM's voting
stock (an "Interested Stockholder"), except in cases where the Continuing
Directors (as hereinafter defined) approve the transaction or certain minimum
price criteria and other procedural requirements are met. A "Continuing
Director" is a director originally elected upon incorporation of QCOM or a
director who is not an Interested Stockholder or affiliated with an Interested
Stockholder or whose nomination or election to the Board of Directors is
recommended or approved by a majority of the Continuing Directors. The minimum
price criteria
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generally require that, in a transaction in which stockholders are to receive
payments, holders of Common Stock must receive a value equal to the highest
price paid by the Interested Stockholder for Common Stock during the prior two
years, and that such payment be made in cash or in the type of consideration
paid by the Interested Stockholder for the greatest portion of its shares.
QCOM's Board of Directors believes that the Fair Price Provision will help
assure that all of QCOM's stockholders will be treated similarly if certain
kinds of business combinations are effected. However, the Fair Price Provision
may make it more difficult to accomplish certain transactions that are opposed
by the incumbent Board of Directors and that could be beneficial to
stockholders.
QCOM's Certificate of Incorporation also requires that any action required
or permitted to be taken by stockholders of QCOM must be effected at a duly
called annual or special meeting of stockholders and may not be effected by any
consent in writing. In addition, special meetings of stockholders of QCOM may be
called only by the Board of Directors, the Chairman of the Board or the
President of QCOM or by any person or persons holding shares representing at
least 10% of the outstanding Common Stock. The Certificate of Incorporation also
provides for a classified Board of Directors consisting of three classes of
directors. In addition, the Certificate of Incorporation provides that the
authorized number of directors may be changed only by resolution of the Board of
Directors. These provisions may have the effect of deterring hostile takeovers
or delaying changes in control or management of the Company.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States
federal income tax consequences to a holder of Convertible Preferred Securities
(a "Holder") of the purchase, ownership and disposition of the Convertible
Preferred Securities. Unless otherwise stated, this summary deals only with the
tax considerations applicable to purchasers of the Convertible Preferred
Securities that hold the Convertible Preferred Securities as capital assets.
This summary is based on the United States federal income tax laws, regulations,
United States Treasury Regulations ("Treasury Regulations") and rulings and
decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. This summary does not address the tax consequences applicable
to investors that may be subject to special tax rules such as banks, thrifts,
real estate investment trusts, regulated investment companies, insurance
companies, dealers in securities or currencies, tax-exempt investors or persons
that will hold the Convertible Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than capital
asset. This summary also does not address the tax consequences to persons that
have a functional currency other than the U.S. dollar or the tax consequences to
shareholders, partners or beneficiaries of a Holder. Further, it does not
include any description of any alternative minimum tax consequences or the tax
laws of any state or local government or of any foreign government that may be
applicable to a Holder.
CLASSIFICATION OF THE CONVERTIBLE SUBORDINATED DEBT SECURITIES
The Company intends to take the position that the Convertible Subordinated
Debt Securities will be classified for United States federal income tax purposes
as indebtedness of the Company under current law, and, by acceptance of a
Convertible Preferred Security, each Holder covenants to treat the Convertible
Subordinated Debt Securities as indebtedness and the Convertible Preferred
Securities as evidence of an indirect beneficial ownership interest in the
convertible Subordinated Debt Securities. No assurance can be given, however,
that such position of the Company will not be challenged by the Internal Revenue
Service. The remainder of this discussion assumes that the Convertible
Subordinated Debt Securities will be classified for United States income tax
purposes as indebtedness of the Company.
CLASSIFICATION OF QUALCOMM FINANCIAL TRUST I
In connection with the issuance of the Convertible Preferred Securities,
Cooley Godward LLP, special counsel to the Trust, has rendered its opinion that,
under current law and assuming full compliance with the terms of the Indenture
and the Declaration (and certain other documents), based upon certain facts and
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assumptions contained in such opinion, the Trust will be classified as a
"grantor trust" for United States federal income tax purposes and not as a
partnership or an association taxable as a corporation. Each Holder will be
treated for United States federal income tax purposes as owning an undivided
beneficial interest in the Convertible Subordinated Debt Securities.
Accordingly, each Holder will be required to include in its gross income the OID
accrued with respect to its allocable share of Convertible Subordinated Debt
Securities. Investors should be aware that the opinion of Cooley Godward LLP
does not address any other tax issue and is not binding on the Internal Revenue
Service or the courts.
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Because QCOM has the option, under the terms of the Convertible
Subordinated Debt Securities, to defer payments of interest by extending
interest payment periods for up to 20 consecutive quarters, the Convertible
Subordinated Debt Securities will be treated as issued with OID equal to the
total amount of the stated interest payments on the Convertible Subordinated
Debt Securities. Holders must include the OID attributable to the Convertible
Subordinated Debt Securities in income on an economic accrual basis, regardless
of their method of tax accounting. The amount of OID that accrues in any month
will approximately equal the amount of interest that accrues in that month at
the stated interest rate. In the event that the interest payment period is
extended, Holders will continue to accrue OID approximately equal to the amount
of the interest payment due at the end of the extended interest payment period
on an economic accrual basis over the length of the extended interest period.
Corporate Holders will not be entitled to a dividends-received deduction with
respect to any income earned with respect to the Convertible Preferred
Securities.
To the extent a subsequent Holder acquires its Convertible Preferred
Securities at a price that is greater or less than the adjusted issue price of
such Holder's share of the Convertible Subordinated Debt Securities (which
generally should approximate par plus accrued but unpaid interest), the Holder
will be deemed to have acquired its interest in the Convertible Preferred
Securities with acquisition premium or with market discount, as the case may be.
Such Holders are advised to consult their tax advisors as to the income tax
consequences of the acquisition, ownership and disposition of the Convertible
Preferred Securities. A Holder acquiring Convertible Preferred Securities with
acquisition premium will be permitted to reduce the amount of OID required to be
included in income to reflect such premium. A Holder acquiring Convertible
Preferred Securities at a market discount will include the amount of such
discount in income in accordance with the market discount rules described below.
A Holder acquiring Convertible Preferred Securities at a market discount
generally will be required to recognize ordinary income to the extent of accrued
market discount upon the retirement of the underlying Convertible Subordinated
Debt Securities or, to the extent of any gain, upon the disposition of the
Convertible Preferred Securities. Such market discount would accrue ratably, or,
at the election of the Holder, under a constant yield method, over the remaining
term of the Convertible Subordinated Debt Securities. A Holder also will be
required, in the absence of the election described in the next sentence, to
defer the deduction of a portion of the interest paid or accrued on indebtedness
incurred to purchase or carry Convertible Preferred Securities acquired with
market discount. In lieu of the foregoing, a Holder may elect to include market
discount in income currently as it accrues on all market discount instruments
acquired by such Holder in the taxable year of the election or thereafter, in
which case the interest deduction deferral rule will not apply.
A Holder may elect in lieu of applying the market discount or premium rules
described above, to account for all income under the Convertible Preferred
Securities as if it were OID.
LIQUIDATED DAMAGES
QCOM intends to take the position that the Liquidated Damages described
above under "Description of the Preferred Securities -- Registration Rights"
will be taxable to a holder as ordinary income in accordance with the holder's
usual method of income tax accounting. The IRS may take a different position,
however, which could affect both the timing of the holder's income and the time
and amount of QCOM's deduction with respect to the Liquidated Damages.
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RECEIPT OF CONVERTIBLE SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF
THE TRUST
Under certain circumstances, as described under the caption "Description of
the Convertible Preferred Securities -- Special Event Redemption or
Distribution" and "Redemption of Convertible Preferred Stock -- Distribution of
Convertible Subordinated Debt Securities," Convertible Subordinated Debt
Securities may be distributed to Holders in exchange for the Convertible
Preferred Securities and in liquidation of the Trust. Such a distribution would
be treated as a non-taxable event to each Holder, and each Holder would receive
an aggregate tax basis in the Convertible Subordinated Debt Securities equal to
such Holder's aggregate tax basis in the Convertible Preferred Securities. A
Holder's holding period in the Convertible Subordinated Debt Securities so
received in liquidation of the Trust would include the period during which the
Convertible Preferred Securities were held by such Holder. If, however, the
exchange is caused by a Tax Event which results in the Trust being treated as an
association taxable as a corporation, the distribution would likely be a taxable
event to Holders; the distribution may also be taxable to the Trust which could
reduce the amount of the distributions to the Holders.
Under certain circumstances, as described under the caption "Description of
the Convertible Preferred Securities -- Special Event Redemption or
Distribution," upon the occurrence of a Tax Event, Holders may receive cash in
redemption of their Convertible Preferred Securities. Such a redemption would be
taxable disposition of the redeemed Convertible Preferred Securities, and a
Holder would recognize gain or loss as if it sold such redeemed Convertible
Preferred Securities for cash. See "-- Sale of Convertible Preferred
Securities."
SALE OF CONVERTIBLE PREFERRED SECURITIES
A Holder that sells Convertible Preferred Securities will recognize gain or
loss equal to the difference between its adjusted tax basis in the Convertible
Preferred Securities and the amount realized on the sale. A Holder's adjusted
tax basis in the Convertible Preferred Securities generally will be its initial
purchase price increased by OID (and accrued market discount, if any) previously
includable in such Holder's gross income to the date of disposition and
decreased by payments received on the Convertible Preferred Securities. Subject
to the market discount rules described above, any such gain or loss generally
will be capital gain or loss and generally will be long-term capital gain or
loss if the Convertible Preferred Securities have been held for more than one
year.
The Convertible Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Convertible Subordinated Debt Securities. A Holder disposing of its
Convertible Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest
through the date of disposition in income as ordinary income (i.e., OID), and to
add such amount to its adjusted tax basis in its Convertible Preferred
Securities. To the extent the selling price is less than the Holder's adjusted
tax basis (which will include, in the form of OID, all accrued but unpaid
interest), 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.
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES TO COMMON STOCK
Except possibly to the extent attributable to accrued and unpaid interest
on the Convertible Subordinated Debt Securities, a Holder will not recognize
income, gain or loss upon the conversion, through the Conversion Agent, of
Convertible Subordinated Debt Securities into Common Stock. A Holder will,
however, recognize gain upon the receipt of cash in lieu of a fractional share
of Common Stock equal to the amount of cash received less such Holder's tax
basis in such fractional share. Such a Holder's tax basis in the Common Stock
received upon conversion generally should be equal to such Holder's tax basis in
the Convertible Preferred Securities delivered to the Conversion Agent for
exchange less the basis allocated to any fractional share for which cash is
received, and such Holder's holding period in the Common Stock received upon
conversion generally should begin on the date such Holder acquired the
Convertible Preferred Securities delivered to the Conversion Agent for exchange.
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ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the United States
Internal Revenue Code of 1986, as amended (the "Code"), would treat Holders as
having received a constructive distribution from QCOM in the event the
conversion ratio of the Convertible Subordinated Debt Securities were adjusted,
or were not adjusted, if (i) as a result of such adjustment, or lack thereof,
the proportionate interest (measured by the quantum of Common Stock into or for
which the Convertible Subordinated Debt Securities are Convertible or
exchangeable) of the Holders in the assets or earnings and profits of the
company were increased and (ii) the adjustment, or failure to adjust, was not
pursuant to a bona fide, reasonable anti-dilution formula. An adjustment in the
conversion ratio would not be considered made pursuant to such a formula if the
adjustment was made to compensate for certain taxable distributions with respect
to the Common Stock. Thus, under certain circumstances, a reduction in the
conversion price for the Holders may result in deemed dividend income to Holders
to the extent of the current or accumulated earnings and profits of the Company.
Holders would be required to include their allocable share of such deemed
dividend in gross income but will not receive any cash related thereto.
Corporate Holders may, however, be eligible for a dividend-received deduction
with respect to such amounts.
PROPOSED TAX LEGISLATION
Please refer to discussion above under the heading "Description of the
Convertible Preferred Securities -- Proposed Tax Legislation."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
Holder that is either (a) not treated as a resident of the United States for
purposes of Section 7701(b) of the Code or the terms of any applicable tax
treaty, or (b) not a "U.S. person." A U.S. person means a citizen or resident of
the United States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States, an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source, and any other person included within the definition of United
States person under the Code and the regulations thereunder.
As discussed above, QCOM intends to take the position that the Convertible
Preferred Securities will be classified for United States federal income tax
purposes as indebtedness of QCOM under current law; no assurance can be given,
however, that such position of QCOM will not be challenged by the Internal
Revenue Service. See "-- Classification of the Convertible Subordinated Debt
Securities."
As discussed above, the Convertible Preferred Securities will be treated as
evidence of an indirect beneficial ownership interest in the Convertible
Subordinated Debt Securities. See "-- Classification of the Convertible
Subordinated Debt Securities." Thus, assuming the Convertible Subordinated Debt
Securities are classified for United States federal income tax purposes as
indebtedness of the Company, distributions of interest on the Convertible
Subordinated Debt Securities by the Trust or any of its paying agents to the
Holders will be treated as payments of interest, and such payments to a United
States Alien Holder will not be subject to United States withholding tax,
provided that (1) the beneficial owner of the Convertible Preferred Securities
("Beneficial Owner") does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (2) the Beneficial Owner is not a controlled foreign corporation with
respect to which the Company is a "related person" within the meaning of the
Code, and (3) either (i) the Beneficial Owner certifies, under penalties of
perjury, to the Trust or its agent that it is not a U.S. person and provides its
name and address or (ii) any securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution"), holding the Convertible
Preferred Securities in such capacity on behalf of the Beneficial Owner,
certifies, under penalties of perjury, to the Trust or its agent that such
statement has been received from the Beneficial Owner by it (or another
financial institution), and furnishes the Trust or its agent with a copy
thereof. The certification may be made on IRS Form W-8, and a United States
Alien Holder must inform the Trust or its agent or any change in information on
the form within 30 days of the change. Note that,
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in April 1996, the United States Internal Revenue Service issued proposed
Treasury Regulations that, if finalized in their current form, would change the
withholding and portfolio interest rules set forth in this section, possibly on
a retroactive basis.
A United States Alien Holder generally will not be subject to United States
withholding tax or United States federal income tax on any gain recognized upon
the sale or other disposition of Convertible Preferred Securities or upon
receipt of cash in lieu of a fractional share of Common Stock upon the
conversion of Convertible Subordinated Debt Securities into Common Stock,
unless: (i) the gain is effectively connected with a United States trade or
business or, depending on the terms of any applicable tax treaty, is
attributable to a permanent establishment maintained by the United States Alien
Holder within the United States; (ii) the United States Alien Holder is an
individual who is present in the United States for 183 days or more in the
taxable year of sale or other disposition; (iii) the gain is attributable to an
office or other fixed place of business maintained in the United States by a
United States Alien Holder that is an individual, or the gain is otherwise
considered U.S. source income for United States federal income tax purposes;
(iv) the United States Alien Holder is subject to tax pursuant to the provisions
of the United States federal tax law applicable to certain United States
expatriates; or (v) the Company is or becomes a United States real property
holding corporation ("USRPHC") within the meaning of Section 897(c) of the Code
and certain other requirements are met, as described below. The Company believes
that it is not a USRPHC and does not expect to become such a corporation.
United States federal withholding tax at a rate of 30% (or such lower rate
as may be provided by an applicable tax treaty, if any) may apply to the
following payments received by a United States Alien Holder (i) a deemed
dividend as a result of an adjustment of, or failure to adjust, the conversion
ratio of the Convertible Subordinated Debt Securities, as described under
"-- Adjustment of Conversion Price," and (ii) certain payments made by the Trust
or any of its paying agents, if the Convertible Subordinated Debt Securities
were not classified for United States federal income tax purposes as
indebtedness of the Company. Under recently proposed Treasury Regulations
(generally effective, if adopted, for payments made after December 31, 1997), a
claim for a reduced rate of withholding based upon an income tax treaty would
require certification on IRS Form W-8 (or an acceptable substitute) of certain
information regarding the beneficial owner of the dividends, including its
non-U.S. status and residence in the relevant treaty country.
INFORMATION REPORTING TO HOLDERS
The Trust will report the OID that accrued during the year with respect to
the Convertible Subordinated Debt Securities and any gross proceeds received by
the Trust from the retirement or redemption of the Convertible Subordinated Debt
Securities, annually to the Holders of record of the Convertible Preferred
Securities and to the Internal Revenue Service. The Trust currently intends to
deliver such reports to Holders of record prior to January 31 following each
calendar year. It is anticipated that persons who hold Convertible Preferred
Securities as nominees for beneficial holders will report the required tax
information to beneficial holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds for the sale of, the Convertible Preferred
Securities may be subject to a "backup" withholding tax of 31% if the Holder
fails to comply with certain identification requirements. Any withheld amounts
will be allowed as a credit against the Holder's United States federal income
tax, provided that required information is furnished to the Internal Revenue
Service.
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
CONVERTIBLE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
OR OTHER TAX LAWS.
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SELLING HOLDERS
The Preferred Convertible Securities were originally issued and sold by the
Trust to Lehman Brothers, Bear, Stearns & Co. Inc., Alex. Brown & Sons
Incorporated, Goldman, Sachs & Co. and Merrill Lynch & Co. (the "Initial
Purchasers"), and simultaneously sold by the Initial Purchasers in transactions
exempt from the registration requirements of the Securities Act, in the United
States to persons reasonably believed by such Initial Purchasers to be
"qualified institutional buyers" as defined in Rule 144A under the Securities
Act, in the United States to a limited number of other institutional "accredited
investors" (as defined in Rule 501(A)(1), (2), (3) or (7) under the Securities
Act) and outside the United States to non-U.S. persons in offshore transactions
in reliance on Regulation S under the Securities Act. The Selling Holders may
from time to time offer and sell pursuant to this Prospectus any or all of the
Convertible Preferred Securities and shares of Common Stock issued upon
conversion thereof. The term "Selling Holder" includes the holders listed below
and the beneficial owners of the Convertible Preferred Securities and their
transferees, pledgees, donees or other successors.
The following table sets forth information with respect to the Selling
Holders of the Convertible Preferred Securities and the respective number of
Convertible Preferred Securities beneficially owned by each Selling Holder that
may be offered pursuant to this Prospectus. Such information has been obtained
from the Selling Holders and the Property Trustee.
<TABLE>
<CAPTION>
NUMBER OF CONVERTIBLE
SELLING HOLDER PREFERRED SECURITIES
---------------------------------------------------------- ---------------------
<S> <C>
[Information to be provided by Amendment]
</TABLE>
[Except as set forth above,] none of the Selling Holders has, or within the
past three years has had, any position, office or other material relationship
with the Trust or the Company or any of their predecessors or affiliates.
Because the Selling Holders may, pursuant to this Prospectus, offer all or some
portion of the Convertible Preferred Securities, the Convertible Subordinated
Debt Securities or the Common Stock issuable upon conversion of the Convertible
Preferred Securities, no estimate can be given as to the amount of the
Convertible Preferred Securities, the Convertible Subordinated Debt Securities
or the Common Stock issuable upon conversion of the Convertible Preferred
Securities that will be held by the Selling Holders upon termination of any such
sales. In addition, the Selling Holders identified above may have sold,
transferred or otherwise disposed of all or a portion of their Convertible
Preferred Securities since the date on which they provided the information
regarding their Convertible Preferred Securities included herein in transactions
exempt from the registration requirements of the Securities Act. See "Plan of
Distribution."
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers directly
by the Selling Holders. Alternatively, the Selling Holders may from time to time
offer the Offered Securities to or through underwriters, broker/dealers or
agents, which may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders, and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities, may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing of options. At the time a particular offering of the Offered
Securities is made, a Prospectus Supplement, if required, will be distributed
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which will set forth the aggregate amount and type of Offered Securities being
offered and the terms of the offering, including the name or names of any
underwriters, broker/dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Offered Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or any exemption
from registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
Pursuant to the Registration Rights Agreement, the Company shall bear all
reasonable fees and expenses customarily borne by issuers in a non-underwritten
secondary offering by selling security holders or in an underwritten offering,
as the case may be, incurred in connection with the performance of its
obligations under the Registration Rights Agreement; provided, however, that the
Selling Holders will pay all underwriting discounts and selling commissions, if
any. The Selling Holders will be indemnified by the Company and the Trust,
jointly and severally, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended September 30,
1996 have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the Convertible Preferred Securities will be passed upon on
behalf of the Trust by Richards, Layton & Finger, Wilmington, Delaware, special
Delaware counsel to the Trust. The validity of the Convertible Subordinated Debt
Securities and the Guarantee will be passed upon on behalf of the Company by
Reed Smith Shaw & McClay, New York, New York. The validity of the Common Stock
issuable upon conversion of the Convertible Preferred Securities, and certain
matters relating thereto, will be passed upon on behalf of the Company by Cooley
Godward, LLP, San Diego, California.
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GLOSSARY OF TERMS
CDMA DIGITAL TECHNOLOGY
"ASICs" -- Application Specific Integrated Circuits.
"Analog" -- The representation of information as a continuously varying
signal.
"Base Station" -- A fixed site with network equipment that is used for
communicating with mobile stations; may also refer to a cell, a sector within a
cell, an MTSO, or other part of a cellular system.
"CDMA" -- Code Division Multiple Access is QUALCOMM's proprietary
application of a digital wireless transmission technology for use in cellular
telephone communications, personal communications services, and other wireless
communications systems. CDMA is a spread spectrum technology in which calls are
assigned a code to encode analog voices signals that have been converted by a
vocoder into digital bit streams. The coded signals are then transmitted over
the air on a spread spectrum of 1.25 MHz to a cell site, where they are
processed by a channel unit or a modem.
"Cellular System" -- A wireless phone system based on a grid of "cells."
Each cell contains transmitters, receivers, antennas, switching gear and control
equipment located at a base station.
"Channel" -- A single path for transmitting electric signals.
"CTIA" -- The Cellular Telecommunications Industry Association is an
industry group in North America comprised primarily of cellular telephone
service companies.
"Digital" -- The representation of information as discrete values, for
example, a stream of digits in the form of 1's and 0's. Modern electronic
equipment uses digital rather than analog techniques so that computer technology
may be employed.
"Error Correction" -- a technique used to encode data before transmission
in order to permit recovery of the original data in the event transmission
errors.
"Frequency" -- The number of identical cycles per second, measured in
hertz, of a periodic oscillation or wave in radio propagation.
"GSM" -- Global System for Mobile Communications is the European version of
TDMA technology.
"Hand-off" -- the act of transferring communication with a mobile station
from one base station to another. A hard hand-off temporarily disconnects a call
from the current cell before connecting it to the new cell before terminating
communications with the old cell.
"Infrastructure Equipment" -- The fixed infrastructure equipment in a base
system that receives, transmits, and processes signals from and to subscriber
equipment and/or between the wireless system and the public switched telephone
network.
"MTSO" -- A Mobile Telephone Switching Office is the switch for a cellular
system and handles call processing and database query, supports maintenance
activity, monitors mobile telephone signal strength, and automatically switches,
or "hands-off," calls in progress as a mobile telephone moves from cell to cell
within the designated service area.
"PBX"--A Private Branch Exchange is a telephone system designed for use in
buildings. QUALCOMM's CDMA technology is being tested as a wireless PBX for
in-building applications.
"PCS"-- Personal Communications Services is a digital wireless
communications system using cellular wireless technologies operating at
frequencies ranging from 1800 MHz to 2000 MHz.
"Service Provider" -- A company that provides cellular phone services to
end users.
"Spectrum" -- The range of electromagnetic radio frequencies.
"Subscriber Equipment" -- Mobile or portable wireless telephone handsets.
68
<PAGE> 70
"TDMA" -- Time Division Multiple Access is a digital wireless transmission
technology which converts analog voice signals into digital data and in U.S.
IS-54 assigns the data to two of six time slots on each frame on a 30 KHz
frequency channel.
"TIA" -- The Telephone Industry Association is an industry group in North
America comprised primarily of telephone equipment manufacturers.
"Vocoder" -- A speech compression device which encodes voice signals to
reduce the transmission capacity of a voice transmission.
"Wireless Local Loop or WLL" -- A system that eliminates need for a wire
(loop) connecting the public switched network, which is used in the conventional
wired telephone systems, by transmitting voice messages over radio waves for the
"last mile" connection between the location of the fixed telephone and a radio
connected by a cable to the public switched network.
OMNITRACS
"NMF" -- The Network Management Facility is the operations center of the
OmniTRACS system which controls the transmission and formatting of messages to
and from customers, fleet vehicles, and dispatch centers.
"QASPR" -- The QUALCOMM Automatic Satellite Position Reporting System is a
proprietary method used to determine and report the position of OmniTRACS units
in the U.S. and Europe.
OTHER COMMUNICATIONS SYSTEMS
"LEO" -- Low Earth Orbit satellite systems have been proposed for worldwide
telecommunications services. QUALCOMM and Loral Corporation have formed a joint
venture called GLOBALSTAR to design, develop, deploy and operate a low earth
orbit, global satellite communications system based on CDMA digital wireless
technology.
"VLSI" -- Very Large Scale Integrated circuits are used by communications
system developers throughout the world in many different applications. The
Company's VLSI products include Viterbi and trellis decoders, speech coders,
direct digital synthesizers, phase locked loop and voltage-controlled
oscillators.
69
<PAGE> 71
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE TRUST OR THE
INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION. UNDER NO CIRCUMSTANCES
SHALL THE DELIVERY OF THIS PROSPECTUS, OR ANY SALE MADE PURSUANT TO THIS
OFFERING, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Special Note Regarding Forward-Looking
Statements........................... 4
Available Information.................. 4
Documents Incorporated by Reference.... 5
Risk Factors........................... 6
The Company............................ 19
The Trust.............................. 22
Use of Proceeds........................ 23
Accounting Treatment................... 23
Ratio of Earnings to Fixed Changes..... 23
Description of the Convertible
Preferred Securities................. 23
Description of the Guarantee........... 44
Description of the Convertible
Subordinated Debt Securities......... 47
Debt Securities and the Guarantee...... 56
Description of Capital Stock........... 57
Certain United States Federal Income
Tax Consequences..................... 61
Selling Holders........................ 66
Plan of Distribution................... 66
Experts................................ 67
Legal Opinions......................... 67
Glossary of Terms...................... 68
</TABLE>
======================================================
======================================================
13,200,000 CONVERTIBLE
PREFERRED SECURITIES
QUALCOMM
FINANCIAL TRUST I
5 3/4% TRUST CONVERTIBLE
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
AND CONVERTIBLE INTO
THE COMMON STOCK OF
[QUALCOMM LOGO]
$50 PER
TRUST CONVERTIBLE
PREFERRED SECURITY
------------------------------
PROSPECTUS
------------------------------
APRIL , 1997
======================================================
<PAGE> 72
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of expenses in connection with the
issuance and distribution of the securities registered hereby. All the amounts
shown are estimates except for the registration fee.
<TABLE>
<S> <C>
SEC registration fee.............................................. $188,000
NASDAQ NMS fee.................................................... *
Blue sky fees and expenses........................................ *
Printing and engraving expenses................................... *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Miscellaneous..................................................... *
-------
Total................................................... $ *
=======
</TABLE>
- ---------------
* To be filed by Amendment.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
INDEMNIFICATION BY THE COMPANY OF ITS DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law. The Company believes
that indemnification under its Bylaws covers at least negligence and gross
negligence by indemnified parties, and may require the Company to advance
litigation expenses in the case of stockholder derivative actions or other
actions, against and undertaking by the indemnified party to repay such advances
if it is ultimately determined that the indemnified party is not entitled to
indemnification.
In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty of care to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
The Company has entered into separate indemnification agreements with its
directors. These agreements may require the Company, among other things, to
indemnify the directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature), to advance their expenses incurred as
a result of any proceeding against them as to which they could be indemnified
and to obtain directors' insurance if available on reasonable terms.
The Company maintains insurance policies covering officers and directors
under which the insurers agree to pay, subject to certain exclusions, including
certain violations of securities laws, for any claim made against the directors
and officers of the Company for a wrongful act that they may become legally
obligated to pay or for which the Company is required to indemnify the officers
or directors. The policies have limits of up to $25,000,000 in the aggregate,
subject to retentions of up to $350,000 in the aggregate. The Company believes
II-1
<PAGE> 73
that its Certificate of Incorporation and Bylaw provisions, indemnification
agreements and insurance policies are necessary to attract and retain qualified
persons as directors and officers.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company as to which
indemnification is being sought nor is the Company aware of any threatened
litigation that may result in claims for indemnification by any director,
officer, employee or other agent.
INDEMNIFICATION OF TRUSTEES AND OFFICERS OF THE TRUST
The Amended and Restated Declaration of the Trust ("Declaration of the
Trust") provides that no Regular Trustee, affiliate of any Regular Trustee, or
any officers, directors, stockholders, members, partners, employees,
representatives or agents of any Regular Trustee, or any officer, employees,
representatives or agents of the Trust or its Affiliates, or any officer,
employee or agent of the Trust or its affiliates (each an "Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to the Trust
or any officer, director, stockholder, partner, member, representative, employee
of agent of the Trust or its affiliates or any holder of Convertible Preferred
Securities 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 the
Declaration or by law, except that an Indemnified Person by the Declaration or
by law, 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. The Declaration of the Trust also provides that, to the
fullest extent permitted by law, QCOM shall indemnify and hold harmless the (i)
Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property
Trustee and the Delaware Trustee, and (iv) any officers, directors,
stockholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee and the Delaware Trustee from and
against any loss, liability or expense (including reasonable legal fees and
expenses) incurred without gross negligence (in the case, of the Property
Trustee, negligence) or bad faith on its part, arising out of or in connection
with the acceptance or administration or the Trust under the Declaration.
The Declaration of the Trust further provides that, to the full extent
permitted by applicable law, QCOM, shall indemnify any Indemnified Person
against expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) reasonably incurred by him in connection with any party 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 proceedings, had no reasonable cause to believe his conduct was
unlawful.
The Declaration of the Trust further provides that QCOM shall indemnify, to
the full extent permitted by law, any Indemnified Person who was or is or is
threatened to be made a party to any action or suit by or in the rights of the
Trust to procure a judgment in its favor by reason of the fact that he is or was
an Indemnified Person against expenses (including attorneys' fees) 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
Indemnified Person shall have been adjudged to be liable to the Trust (with
certain exceptions).
The directors and officers of QCOM and the Regular Trustees are covered by
insurance policies indemnifying them against certain liabilities, including
certain liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"), which might be incurred by them in such capacities and
against which they may not be indemnified by QCOM or the Trust.
The Selling Holders have been indemnified by QCOM and the Trust, jointly
severally, against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith. QCOM and the Trust have been indemnified by the Selling Holders
severally against certain civil liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection therewith.
II-2
<PAGE> 74
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
4.1 Certificate of Trust of QUALCOMM Financial Trust I, filed with the Delaware
Secretary of State on February 7, 1997.
4.2 Declaration of Trust of QUALCOMM Financial Trust I, dated as of February 7,
1997, among QUALCOMM Incorporated, as Sponsor, Wilmington Trust Company, as
Delaware Trustee and Property Trustee, and Irwin Mark Jacobs, Harvey P.
White, and Anthony Thornley, as Regular Trustees.
4.3 Amended and Restated Declaration of Trust of QUALCOMM Financial Trust I,
dated as of February 25, 1997, among QUALCOMM Incorporated, as Sponsor,
Wilmington Trust Company, as Delaware Trustee and Property Trustee, and
Irwin Mark Jacobs, Harvey P. White, and Anthony Thornley, as Regular
Trustees.
4.4 Indenture for the 5 3/4% Convertible Subordinated Debt Securities, dated as
of February 25, 1997, among QUALCOMM Incorporated and Wilmington Trust
Company, as Indenture Trustee.
4.5 Form of 5 3/4% Convertible Preferred Securities (Included in Annex 1 to
Exhibit 4.3 above).
4.6 Form of 5 3/4% Convertible Subordinated Debt Securities (Included in Annex 1
to Exhibit 4.3 above).
4.7 Preferred Securities Guarantee Agreement, dated as of February 25, 1997,
between QUALCOMM Incorporated, as Guarantor, and Wilmington Trust Company,
as Guarantee Trustee.
5.1 Opinion of Cooley Godward LLP, as to the validity of the Common Stock of
QUALCOMM Incorporated issuable upon conversion of the Convertible Preferred
Securities being registered hereby.
5.2 Opinion of Reed Smith Shaw & McClay, as to the validity of the Convertible
Subordinated Debt Securities and Convertible Preferred Securities Guarantee
of the Company being registered hereby.
5.3 Opinion of Richards, Layton & Finger, as to the validity of the Convertible
Preferred Securities of QUALCOMM Financial Trust I being registered hereby.
8.1 Opinion of Cooley Godward LLP, special United States tax counsel to QUALCOMM
Incorporated and QUALCOMM Financial Trust I, as to certain tax matters.
10.1 Registration Rights Agreement, dated February 25, 1997, between QUALCOMM
Financial Trust I and Lehman Brothers, Bear Stearns & Co., Inc., Alex. Brown
& Sons Incorporated, Goldman, Sachs & Co. and Merrill Lynch & Co., as
Initial Purchasers
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges of QUALCOMM
Incorporated.
23.1 Consent of Cooley Godward LLP (Included in Exhibit 5.1).
23.2 Consent of Reed Smith Shaw & McClay (Included in Exhibit 5.2).
23.3 Consent of Richards, Layton & Finger (Included in Exhibit 5.3).
23.4 Consent of Price Waterhouse LLP.
24.1 Power of Attorney for QUALCOMM Incorporated. Reference is made to page II-6.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company, as Indenture Trustee under the 5 3/4%
Convertible Subordinated Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company, as Property Trustee under the
Declaration of Trust.
</TABLE>
II-3
<PAGE> 75
<TABLE>
<C> <S>
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company, as Convertible Preferred Securities
Guarantee Trustee under the Convertible Preferred Securities Guarantee.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registration
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which remain unsold at the termination of the
offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants 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 Registrants 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 of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(d) The Company 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
II-4
<PAGE> 76
Rule 430A and contained in a form of Prospectus filed by the Registrants
pursuant to Rule 424(b)(1) or (4) 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; and
(2) For purposes 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.
(e) To the extent either Registrant intends to rely on Section 305(b)(2) of
the Trust Indenture Act of 1939 (the "Trust Act") for determining the
eligibility of the Trustee under indentures for securities to be used, offered
or sold on a delayed basis by or on behalf of such registrants, each of the
undersigned Registrants hereby undertake to file an application for the purpose
of determining the eligibility of the trustee to act under subsection (a) of
Section 310 of such Trust Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of such Trust Act.
II-5
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
below named Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on April 28,
1997.
QUALCOMM Financial Trust I
By: /s/ IRWIN MARK JACOBS
------------------------------------
Irwin Mark Jacobs
Regular Trustee
By: /s/ HARVEY P. WHITE
------------------------------------
Harvey P. White
Regular Trustee
By: /s/ ANTHONY THORNLEY
------------------------------------
Anthony Thornley
Regular Trustee
Pursuant to the requirements of the Securities Act of 1933, the below named
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California on April 28, 1997.
QUALCOMM INCORPORATED
By: /s/ IRWIN MARK JACOBS
------------------------------------
Irwin Mark Jacobs
Title: Chairman of the Board of
Directors, President and Chief
Executive Officer POWER OF
ATTORNEY FOR
QUALCOMM INCORPORATED
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints IRWIN MARK JACOBS, HARVEY P. WHITE and
ANTHONY THORNLEY, and each of them, as his or her true and lawful
attorneys-infact and agents, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any subsequent registration statement filed
by the Registrant pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, which relates to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitutes or substitute, may lawfully do or cause
to be done by virtue hereof.
II-6
<PAGE> 78
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------------- ----------------
<S> <C> <C>
/s/ IRWIN MARK JACOBS Chief Executive Officer and April 28, 1997
- --------------------------------------------- Chairman of the Board (Principal
Irwin Mark Jacobs Executive Officer)
/s/ ANDREW S. VITERBI Vice Chairman of the Board April 28, 1997
- ---------------------------------------------
Andrew S. Viterbi
/s/ HARVEY P. WHITE President and Director April 28, 1997
- ---------------------------------------------
Harvey P. White
/s/ ANTHONY THORNLEY Senior Vice President and Chief April 28, 1997
- --------------------------------------------- Financial Officer (Principal
Anthony Thornley Financial and Accounting
Officer)
/s/ RICHARD C. ATKINSON Director April 28, 1997
- ---------------------------------------------
Richard C. Atkinson
/s/ ADELIA A. COFFMAN Director April 28, 1997
- ---------------------------------------------
Adelia A. Coffman
/s/ NEIL KADISHA Director April 28, 1997
- ---------------------------------------------
Neil Kadisha
/s/ ROBERT E. KAHN Director April 28, 1997
- ---------------------------------------------
Robert E. Kahn
/s/ JEROME S. KATZIN Director April 28, 1997
- ---------------------------------------------
Jerome S. Katzin
/s/ DUANE A. NELLES Director April 28, 1997
- ---------------------------------------------
Duane A. Nelles
/s/ PETER M. SACERDOTE Director April 28, 1997
- ---------------------------------------------
Peter M. Sacerdote
/s/ FRANK SAVAGE Director April 28, 1997
- ---------------------------------------------
Frank Savage
/s/ BRENT SCOWCROFT Director April 28, 1997
- ---------------------------------------------
Brent Scowcroft
/s/ MARC I. STERN Director April 28, 1997
- ---------------------------------------------
Marc I. Stern
</TABLE>
II-7
<PAGE> 79
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
4.1 Certificate of Trust of QUALCOMM Financial Trust I, filed with the
Delaware Secretary of State on February 7, 1997........................
4.2 Declaration of Trust of QUALCOMM Financial Trust I, dated as of
February 7, 1997, among QUALCOMM Incorporated, as Sponsor, Wilmington
Trust Company, as Delaware Trustee and Property Trustee, and Irwin Mark
Jacobs, Harvey P. White, and Anthony Thornley, as Trustees.............
4.3 Amended and Restated Declaration of Trust of QUALCOMM Financial Trust
I, dated as of February 25, 1997, among QUALCOMM Incorporated, as
Sponsor, Wilmington Trust Company, as Delaware Trustee and Property
Trustee, and Irwin Mark Jacobs, Harvey P. White, and Anthony Thornley,
as Trustees............................................................
4.4 Indenture for the 5 3/4% Convertible Subordinated Debt Securities,
dated as of February 25, 1997, among QUALCOMM Incorporated and
Wilmington Trust Company, as Indenture Trustee.........................
4.5 Form of 5 3/4% Convertible Preferred Securities (Included in Annex 1 to
Exhibit 4.3 above).....................................................
4.6 Form of 5 3/4% Convertible Subordinated Debt Securities (Included in
Annex 1 to Exhibit 4.3 above)..........................................
4.7 Preferred Securities Guarantee Agreement, dated as of February 25,
1997, between QUALCOMM Incorporated, as Guarantor, and Wilmington Trust
Company, as Guarantee Trustee..........................................
5.1 Opinion of Cooley Godward LLP, as to the validity of the Common Stock
of QUALCOMM Incorporated issuable upon conversion of the Convertible
Preferred Securities being registered hereby...........................
5.2 Opinion of Reed Smith Shaw & McClay, as to the validity of the
Convertible Subordinated Debt Securities and the Convertible Preferred
Securities Guarantee of the Company being registered hereby.
5.3 Opinion of Richards, Layton & Finger, as to the validity of the
Convertible Preferred Securities of QUALCOMM Financial Trust I being
registered hereby......................................................
8.1 Opinion of Cooley Godward LLP, special United States tax counsel to
QUALCOMM Incorporated and QUALCOMM Financial Trust I, as to certain tax
matters................................................................
10.1 Registration Rights Agreement, dated February 25, 1997, between
QUALCOMM Financial Trust I and Lehman Brothers, Bear Stearns & Co.,
Inc., Alex. Brown & Sons Incorporated, Goldman, Sachs & Co. and Merrill
Lynch & Co., as Initial Purchasers.....................................
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges of
QUALCOMM Incorporated..................................................
23.1 Consent of Cooley Godward LLP (Included in Exhibit 5.1)................
23.2 Consent of Reed Smith Shaw & McClay (Included in Exhibit 5.2).
23.3 Consent of Richards, Layton & Finger (Included in Exhibit 5.3).........
23.4 Consent of Price Waterhouse LLP........................................
24.1 Power of Attorney for QUALCOMM Incorporated: Reference is made to Page
II-6...................................................................
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company, as Indenture Trustee
under the 5 3/4% Convertible Subordinated Indenture....................
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended of Wilmington Trust Company, as Property Trustee under
the Declaration of Trust...............................................
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended of Wilmington Trust Company, as Convertible Preferred
Securities Guarantee Trustee under the Convertible Preferred Securities
Guarantee..............................................................
</TABLE>
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF TRUST OF
QUALCOMM FINANCIAL TRUST I
THIS Certificate of Trust of QUALCOMM Financial Trust I (the "Trust"),
dated February 7, 1997, is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, as trustee, to form a business trust
under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is QUALCOMM
Financial Trust I.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective on
February 7, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as trustee
By: /s/ Debra Eberly
----------------------
Name: Debra Eberly
Title: Administrative Account Manager
<PAGE> 1
EXHIBIT 4.2
DECLARATION OF TRUST
OF
QUALCOMM FINANCIAL TRUST I
THIS DECLARATION OF TRUST is made as of February 7 1997 (this
"Declaration"), by and between, QUALCOMM Incorporated, as sponsor (the
"Sponsor"), and Wilmington Trust Company, a Delaware banking corporation, as
trustee (the "Trustee"). The Sponsor and the Trustee hereby agree as follows:
1. The trust created hereby shall be known as "QUALCOMM Financial Trust I"
(the "Trust"), in which name the Trustee or the Sponsor, to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. Such amount shall constitute the initial trust estate. It
is the intention of the parties hereto that the Trust created hereby constitute
a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Section 3801, et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustee is hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in such form as the Trustee may approve.
3. The Sponsor and the Trustee will enter into an amended and restated
Trust Agreement or Declaration satisfactory to each such party to provide for
the contemplated operation of the Trust created hereby and the issuance of the
Convertible Preferred Securities and Common Securities referred to therein.
Prior to the execution and delivery of such amended and restated Trust Agreement
or Declaration, the Trustee shall not have any duty or obligation hereunder or
with respect of the trust estate, except as otherwise required by applicable law
or as may be necessary to obtain prior to such execution and delivery any
licenses, consents or approvals required by applicable law or otherwise.
Notwithstanding the foregoing, the Trustee may take all actions deemed proper as
are necessary to effect the transactions contemplated herein.
4. The Sponsor, as sponsor of the Trust, is hereby authorized, in its
discretion, (i) to prepare one or more offering memoranda in preliminary and
final form relating to the offering and sale of Convertible Preferred Securities
of the Trust in a transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and such other forms or
filings as may be required by the 1933 Act, the Securities Exchange Act of 1934,
as amended, or Trust Indenture Act of 1939, as amended, in each case relating to
the Convertible Preferred Securities of the Trust; (ii) to file and execute on
behalf of the Trust, such applications, reports, surety bonds, irrevocable
consents,
1.
<PAGE> 2
appointments of attorney for service of process and other papers and documents
that shall be necessary or desirable to register or establish the exemption from
registration of the Convertible Preferred Securities of the Trust under the
securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of
the Trust, may deem necessary or desirable; (iii) to execute and file an
application, and all other applications, statements, certificates, agreements
and other instruments that shall be necessary or desirable, to the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market and,
if and at such time as determined by the Sponsor, to the New York Stock Exchange
or any other national stock exchange or the Nasdaq National Market for listing
or quotation of the Convertible Preferred Securities of the Trust; (iv) to
execute and deliver letters or documents to, or instruments for filing with, a
depository relating to the Convertible Preferred Securities of the Trust; and
(v) to execute, deliver and perform on behalf of the Trust one or more purchase
agreements, registration rights agreements, dealer manager agreements, escrow
agreements and other related agreements providing for or relating to the sale of
the Convertible Preferred Securities of the Trust.
In the event that any filing referred to in this Section 4 is required
by the rules and regulations of the Commission, PORTAL or state securities or
Blue Sky laws to be executed on behalf of the Trust by the Trustee, the Trustee,
in its capacity as trustee of the Trust, is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that the Trustee, in its capacity as trustee of
the Trust, shall not be required to join in any such filing or execute on behalf
of the Trust any such document unless required by the rules and regulations of
the Commission, PORTAL or state securities or Blue Sky laws.
5. This Declaration may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall by one and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor which may
increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware or,
if not a natural person, an entity which has its principal place of business in
the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any trustee of the Trust at any time. Any
trustee of the Trust may resign upon thirty days' prior notice to the Sponsor.
7. This Declaration shall be governed by, and construed in accordance
with, the laws of the State of Delaware (with regard to conflict of laws
principles).
8. To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless the Trustee from and against any loss, damage or
claim incurred by the
2.
<PAGE> 3
Trustee by reason of any act or omission performed or omitted by the Trustee in
good faith on behalf of the Trust and in a matter the Trustee reasonably
believed to be within the scope of authority conferred on the Trustee by this
Declaration, except that the Trustee shall not be entitled to be indemnified in
respect of any loss, damage or claim incurred by the Trustee by reason of gross
negligence or willful misconduct with respect to such acts or omissions.
IN WITNESS WHEREOF, the parties hereto have caused this Declaration to
be duly executed as of the day and year first above written.
QUALCOMM INCORPORATED
as Sponsor
By: /s/ Anthony Thornley
------------------------------------------
Name: Anthony Thornley
Title: Vice President and Chief Financial
Officer
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
trustee of the Trust
By: /s/ Debra Eberly
------------------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
3.
<PAGE> 1
EXHIBIT 4.3
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
QUALCOMM FINANCIAL TRUST I
DATED AS OF FEBRUARY 25, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I INTERPRETATION AND DEFINITIONS............................................................. 2
SECTION 1.1 Definitions........................................................................ 2
ARTICLE II TRUST INDENTURE ACT....................................................................... 9
SECTION 2.1 Trust Indenture Act; Application................................................... 9
SECTION 2.2 Lists of Holders of Securities..................................................... 9
SECTION 2.3 Reports by the Property Trustee.................................................... 9
SECTION 2.4 Periodic Reports to Property Trustee............................................... 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent................................... 10
SECTION 2.6 Events of Default; Waiver.......................................................... 10
SECTION 2.7 Event of Default; Notice........................................................... 11
ARTICLE III ORGANIZATION............................................................................. 12
SECTION 3.1 Name............................................................................... 12
SECTION 3.2 Office............................................................................. 12
SECTION 3.3 Purpose............................................................................ 12
SECTION 3.4 Authority.......................................................................... 12
SECTION 3.5 Title to Property of the Trust..................................................... 13
SECTION 3.6 Powers and Duties of the Regular Trustees.......................................... 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............................... 16
SECTION 3.8 Powers and Duties of the Property Trustee.......................................... 16
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee........................ 18
SECTION 3.10 Certain Rights of Property Trustee................................................ 20
SECTION 3.11 Delaware Trustee.................................................................. 22
SECTION 3.12 Execution of Documents............................................................ 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities............................ 22
SECTION 3.14 Duration of Trust................................................................. 22
SECTION 3.15 Mergers........................................................................... 22
ARTICLE IV SPONSOR................................................................................... 23
SECTION 4.1 Sponsor's Purchase of Common Securities............................................ 23
SECTION 4.2 Responsibilities of the Sponsor.................................................... 23
SECTION 4.3 Expenses........................................................................... 24
ARTICLE V TRUSTEES................................................................................... 25
SECTION 5.1 Number of Trustees................................................................. 25
SECTION 5.2 Delaware Trustee................................................................... 25
SECTION 5.3 Property Trustee; Eligibility...................................................... 26
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee
Generally.................................................................................. 26
SECTION 5.5 Regular Trustees................................................................... 27
</TABLE>
i
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<TABLE>
<S> <C>
SECTION 5.6 Appointment, Removal and Resignation of Trustees................................... 27
SECTION 5.7 Vacancies among Trustees........................................................... 28
SECTION 5.8 Effect of Vacancies................................................................ 28
SECTION 5.9 Meetings........................................................................... 29
SECTION 5.10 Delegation of Power............................................................... 29
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business....................... 29
ARTICLE VI DISTRIBUTIONS............................................................................. 30
SECTION 6.1 Distributions...................................................................... 30
ARTICLE VII ISSUANCE OF SECURITIES................................................................... 30
SECTION 7.1 General Provisions Regarding Securities............................................ 30
SECTION 7.2 Execution and Authentication....................................................... 30
SECTION 7.3 Form and Dating.................................................................... 31
SECTION 7.4 Registrar; Paying Agent; Conversion Agent.......................................... 33
SECTION 7.5 Paying Agent to Hold Money in Trust............................................... 34
SECTION 7.6 Replacement Securities............................................................ 34
SECTION 7.7 Outstanding Convertible Preferred Securities...................................... 34
SECTION 7.8 Convertible Preferred Securities in Treasury...................................... 34
SECTION 7.9 Temporary Securities.............................................................. 35
SECTION 7.10 Cancellation..................................................................... 35
ARTICLE VIII TERMINATION OF TRUST.................................................................... 35
SECTION 8.1 Termination of Trust............................................................... 35
ARTICLE IX TRANSFER OF INTERESTS..................................................................... 36
SECTION 9.1 General............................................................................ 36
SECTION 9.2 Transfer Procedures and Restrictions.............................................. 37
SECTION 9.3 Deemed Security Holders............................................................ 45
SECTION 9.4 Appointment of Successor Depositary................................................ 45
SECTION 9.5 Registration Rights................................................................ 45
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS....................... 46
SECTION 10.1 Liability......................................................................... 46
SECTION 10.2 Exculpation....................................................................... 47
SECTION 10.3 Fiduciary Duty.................................................................... 47
SECTION 10.4 Indemnification................................................................... 48
SECTION 10.5 Outside Businesses................................................................ 50
ARTICLE XI ACCOUNTING................................................................................ 51
SECTION 11.1 Fiscal Year....................................................................... 51
SECTION 11.2 Certain Accounting Matters........................................................ 51
SECTION 11.3 Banking........................................................................... 51
SECTION 11.4 Withholding....................................................................... 52
ARTICLE XII AMENDMENTS AND MEETINGS.................................................................. 52
</TABLE>
ii
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<TABLE>
<S> <C>
SECTION 12.1 Amendments........................................................................ 52
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.................. 54
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE................................ 55
SECTION 13.1 Representations and Warranties of Property Trustee................................ 55
SECTION 13.2 Representations and Warranties of Delaware Trustee................................ 55
ARTICLE XIV MISCELLANEOUS............................................................................ 56
SECTION 14.1 Notices........................................................................... 56
SECTION 14.2 Governing Law..................................................................... 57
SECTION 14.3 Intention of the Parties.......................................................... 57
SECTION 14.4 Headings.......................................................................... 57
SECTION 14.5 Successors and Assigns............................................................ 57
SECTION 14.6 Partial Enforceability............................................................ 57
SECTION 14.7 Counterparts...................................................................... 58
SECTION 14.8 Compliance Certificates and Opinions.............................................. 58
</TABLE>
ANNEX I Terms of Securities...........................................I-1
EXHIBIT A-1 Form of Convertible Preferred Security Certificate...........A1-1
EXHIBIT A-2 Form of Common Security Certificate..........................A2-1
EXHIBIT B Specimen of Debenture.........................................B-1
EXHIBIT C Purchase Agreement............................................C-1
EXHIBIT D Form of Certificate for Exchange or Registration
of Transfer from Restricted Global Preferred
Security to Regulation S Global Preferred Security............D-1
EXHIBIT E Form of Certificate for Exchange or Registration
of Transfer from Regulation S Global Preferred
Security to Restricted Global Preferred Security .............E-1
iii
<PAGE> 5
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
QUALCOMM FINANCIAL TRUST I
February 25, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of February 25, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein), and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established QUALCOMM Financial
Trust I (the "Trust"), a trust under the Delaware Business Trust Act pursuant to
a Declaration of Trust dated as of February 7, 1997 (the "Original Declaration")
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on February 7, 1997, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as 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.
1
<PAGE> 6
ARTICLE I
INTERPRETATION AND 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 as modified, supplemented or amended from time
to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Actual Knowledge" means, with respect to the Property Trustee's
knowledge of an occurrence, receipt by a Responsible Officer of the Property
Trustee of written notice of such occurrence from the Sponsor or Holders of at
least ten percent (10%) of the outstanding liquidation amount of the Securities.
"Additional Preferred Securities" has the meaning set forth in
paragraph 1(a) of Annex I.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent or Conversion Agent.
"Applicable Procedures" means the rules and procedures of the
Depositary, Euroclear, and CEDEL applicable to transfer or exchange of
beneficial interests in book-entry securities.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in New York, New York or San Diego, California
are permitted or required by any applicable law to close.
2
<PAGE> 7
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Convertible Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Convertible
Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means February 25, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning set forth in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be dated
as of February 25, 1997 of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officer, director, shareholder,
member, partner, employee, representative or agent of any Regular Trustee; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Conversion Agent" has the meaning set forth in Section 7.4.
"Convertible Preferred Securities Guarantee" means the guarantee
agreement to be dated as of February 25, 1997, of the Sponsor in respect of the
Convertible Preferred Securities.
"Convertible Preferred Security" has the meaning set forth in Section
7.1.
"Convertible Preferred Security Beneficial Owner" means, with respect
to a Book Entry Interest, a Person who is the beneficial owner of such Book
Entry Interest, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly as
a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office
3
<PAGE> 8
at the date of execution of this Agreement is located at 1100 North Market
Street, 9th Floor, Wilmington, Delaware 19890.
"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 QUALCOMM Incorporated in its capacity as
issuer of the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being attached hereto as
Exhibit B.
"Definitive Preferred Certificates" has the meaning set forth in
Section 7.3(d).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Depositary" means DTC or any Clearing Agency appointed as a successor
to DTC pursuant to Section 9.4.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Effectiveness Period" has the meaning set forth in Section 9.5.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Exchanged Global Preferred Security" has the meaning set forth in
Section 9.2(b).
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Certificate" has the meaning set forth in Section 7.3(c).
"Global Preferred Security" means a Restricted Global Preferred
Security or a Regulation S Global Preferred Security.
4
<PAGE> 9
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of February 25, 1997, between
the Debenture Issuer and the Debenture Trustee, pursuant to which the Debentures
are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidated Damages" has the meaning set forth in Section 9.5.
"List of Holders" has the meaning set forth in Section 2.2(a).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Convertible Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
5
<PAGE> 10
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Sponsor, and may be
an employee of any thereof, and who shall be acceptable to the Property
Trustee. Any Opinion of Counsel delivered with respect to compliance
with a condition or covenant provided for in this Trust Agreement shall
include:
(a) a statement that each individual signing the Opinion of
Counsel has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each individual in rendering
the Opinion of Counsel;
(c) a statement that each individual has made such examination
or investigation as is necessary to enable such individual to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Original Declaration" has the meaning set forth in the Recitals
hereto.
"Participant" has the meaning set forth in Section 7.3(c).
"Paying Agent" has the meaning set forth in Section 7.4.
"Payment Amount" has the meaning set forth in Section 6.1.
"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.
"PORTAL" has the meaning specified in Section 3.6(b)(iii).
"Preferred Certificate" means a certificate representing a Convertible
Preferred Security substantially in the form of Exhibit A-1.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement for the offering and
sale of Convertible Preferred Securities in the form of Exhibit C.
"QIB" means a "qualified institutional buyer," as defined in Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
6
<PAGE> 11
"Registrable Securities" has the meaning set forth in Section 9.5.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Default" has the meaning set forth in Section 9.5.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of February 25, 1997.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Regulation S" has the meaning set forth in Section 7.3(b).
"Regulation S Global Preferred Securities" has the meaning set forth in
Section 7.3(b).
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including any
vice president, any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer or other officer of the Corporate Trust
Office of the Property Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Definitive Preferred Security" has the meaning set forth in
Section 7.3(d).
"Restricted Global Preferred Security" has the meaning set forth in
Section 7.3(a).
"Restricted Period" has the meaning set forth in Section 7.3(b).
"Restricted Preferred Security" means a Restricted Definitive Preferred
Security or a Restricted Global Preferred Security.
"Restricted Securities Legend" has the meaning set forth in Section
9.2(j).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Convertible Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
7
<PAGE> 12
"Securities Guarantees" means the Common Securities Guarantee and the
Convertible Preferred Securities Guarantee.
"Shelf Registration Statement" has the meaning set forth in Section
9.5.
"Sponsor" means QUALCOMM Incorporated, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15.
"Successor Property Trustee" has the meaning set forth in Section 5.6.
"Successor Securities" has the meaning set forth in Section 3.15(i)(b).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as provided
in the terms of the Convertible Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Convertible Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" means QUALCOMM Financial Trust I, a trust created under the
Delaware Business Trust Act.
"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.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Unrestricted Definitive Preferred Security" means a Convertible
Preferred Security in definitive, fully registered form without distribution
coupons, that does not bear the Restricted Securities Legend and is free from
any restriction on transfer (other than any such restriction attributable solely
to any Holder's status).
8
<PAGE> 13
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee (i) semiannually, not later than March 31 and
September 30 of each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders") as of a date not more than 15 days prior to the delivery
thereof, and (ii) at any other time within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 15 days before
such List of Holders is given to the Preferred Guarantee Trustee; provided,
however, that neither the Sponsor nor the Regular Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by or on behalf of the Sponsor and the Regular Trustees on
behalf of the Trust, and in the absence of the provision of any such List of
Holders to the Property Trustee, then notice shall be deemed to have been given
to the Property Trustee that the List of Holders has not changed since the most
recent List of Holders. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Registrar or Paying Agent
(if acting in such capacity), provided, however, that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Convertible Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
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SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any), for transmission to
Holders of the Convertible Preferred Securities as may be required by such
Section 314, and the compliance certificate required by Section 314 in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
Delivery of such reports, information and documents to the Property
Trustee is for informational purposes only and the Property Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Sponsor's compliance with any of its covenants hereunder (as to which the
Property Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Convertible
Preferred Securities may, by vote, on behalf of the Holders of all of the
Convertible Preferred Securities, waive any past Event of Default in respect of
the Convertible Preferred Securities and its consequences, provided, however,
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
the Declaration may only be waived by the vote of the Holders of at
least the proportion in liquidation amount of the Convertible Preferred
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) is hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Upon such waiver, any such default shall cease to exist,
and any Event of Default with respect to the Convertible Preferred Securities
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or an Event of Default with respect to the Convertible Preferred Securities or
impair any right consequent thereon. Any waiver by the Holders of the
Convertible Preferred Securities of an Event of Default with respect to the
Convertible Preferred Securities shall also be deemed to constitute a waiver by
the Holders of the Common Securities of any such Event of Default with respect
to the Common Securities for all purposes of this Declaration without any
further act, vote, or consent of the Holders of the Common Securities.
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(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided, however, further, each Holder of Common Securities will be deemed to
have waived any such Event of Default and all Events of Default with respect to
the Common Securities and its consequences until all Events of Default with
respect to the Convertible Preferred Securities have been cured, waived or
otherwise eliminated, and until such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be acting
solely on behalf of the Holders of the Convertible Preferred Securities and only
the Holders of the Convertible Preferred Securities will have the right to
direct the Property Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Convertible Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) is
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any
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of the Debentures or in the payment of any sinking fund installment established
for the Debentures, the Property Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Property Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 7.1(a) and (b) of the Indenture;
or
(ii) any default as to which the Property Trustee shall have
Actual Knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "QUALCOMM Financial Trust I" as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is c/o QUALCOMM
Incorporated, 6455 Lusk Boulevard, San Diego, California 92121-2779. On ten
Business Days' written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue and
sell 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, 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 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, 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 and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
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SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Sections 3.6 and 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities (except to the extent
that the Sponsor has also been granted authority with respect to certain of such
activities pursuant to Section 4.2):
(a) to issue and sell the Convertible Preferred Securities and the
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Convertible 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 Securities shall be limited to a simultaneous issuance of both
Convertible Preferred Securities and Common Securities on the Closing Date and
one more simultaneous issuance of both Convertible Preferred Securities and
Common Securities solely to cover overallotments in connection with the sale of
the Convertible Preferred Securities;
(b) in connection with the issue and sale of the Convertible Preferred
Securities, at the direction of the Sponsor, to:
(i) execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, relating to the offering and sale of Convertible Preferred
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act, to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act),
and outside the United States to non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities Act and
to execute and file with the Commission, at such time as determined by
the Sponsor, a registration statement filed on Form S-3 prepared by the
Sponsor, including any amendments thereto, relating to the resale of
Convertible 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 Convertible Preferred
Securities in any State or foreign jurisdiction in which the Sponsor
has determined to qualify or register such Convertible Preferred
Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the Private Offerings, Resale and Trading through Automated
Linkages ("PORTAL") Market and, at such time as the Sponsor may
determine, to the New York Stock Exchange or any other national stock
exchange or the Nasdaq Stock Market's National Market for listing or
quotation of the Convertible Preferred Securities;
(iv) execute and deliver letters, documents, or instruments
with DTC relating to the Convertible Preferred Securities;
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(v) execute and file with the Commission, at such time as may
be determined by the Sponsor, a registration statement on Form 8-A,
including any amendments thereto, prepared by the Sponsor relating to
the registration of the Convertible Preferred Securities under Section
12(b) of the Exchange Act;
(vi) execute and enter into the Purchase Agreement,
Registration Rights Agreement and other related agreements providing
for the sale and resale of the Convertible Preferred Securities; and
(vii) 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 Convertible Preferred
Securities in any State in which the Sponsor has determined to qualify
or register such Convertible Preferred Securities for resale;
(c) to acquire the Debentures with the proceeds of the sale of the
Convertible Preferred Securities and the Common Securities; provided, however,
that the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Property Trustee for the benefit of the Holders of
the Convertible Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided, however, that the Regular
Trustees shall consult with the Sponsor and provide notice to the Property
Trustee before taking or refraining from taking any Ministerial Action in
relation to a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Convertible Preferred Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
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(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election to defer payments
of interest on the Debentures by extending the interest payment period under the
Indenture;
(n) 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 or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Convertible
Preferred Securities or to enable the Trust to effect the purposes for which the
Trust was created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes, provided that such action
does not adversely affect the interests of Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Sponsor.
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SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Regular Trustees
and the Property Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I,
(A) direct the time, method and place of exercising any trust power
conferred upon the Debenture Trustee with respect to the Debentures,
(B) waive any past default that is waivable under the Indenture, (C)
exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required, unless, in the
case of each action described in Clause (A), (B), (C), or (D), the
Trust shall have received an opinion of counsel to the effect that, as
a result of such action, the Trust will not be classified other than as
a grantor trust for United States federal income tax purposes and each
holder of Securities will be treated as owning an individual beneficial
interest in the Debentures.
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
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(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
of the Securities and, upon the receipt of payments of funds made in
respect of the Debentures held by the Property Trustee, deposit such
funds into the Property Trustee Account and make payments to the
Holders of the Convertible Preferred Securities and Holders of the
Common Securities from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account that is maintained with a
banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the
Convertible Preferred Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) deposit the proceeds received by the Trust from the
original issuance, from time to time, of Convertible Preferred
Securities (including Additional Preferred Securities) and Common
Securities into the Property Trustee Account and, upon and in
accordance with the order of a Regular Trustee, use such funds to
purchase Debentures;
(iii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Convertible
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iv) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the
occurrence of certain Special Events arising from a change in law or a
change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default of which the Property Trustee has
Actual Knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act; provided, however, that if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Convertible Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Convertible Preferred
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Convertible Preferred Securities to the extent of any payment
made by the Debenture Issuer to such Holder of Convertible Preferred Securities
in such Direct Action. In addition, if the Property Trustee fails to enforce its
rights under the Debentures (other than rights arising from an Event of Default
described in the immediately preceding sentence) for a period of 30 days after
any Holder of Convertible Preferred Securities shall have made a written request
to the Property Trustee to enforce such rights, such Holder of Convertible
Preferred Securities may, to the fullest extent permitted by law, institute a
Direct Action to enforce the Property Trustee's rights as holder of the
Debentures,
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without first instituting any legal proceeding against the Property Trustee or
any other Person. Except as provided in the preceding sentences, the Holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if the Property Trustee has Actual Knowledge that an Event of Default has
occurred and is continuing, the Property Trustee shall, for the benefit of
Holders of the Securities, enforce its rights as holder of the Debentures
subject to the rights of the Holders pursuant to the terms of such Securities.
In no event, however, shall the Property Trustee, in its capacity as holder of
the Debentures, have the power to convert the Debentures.
(h) The Property Trustee may authorize one or more Paying Agents to pay
Distributions, redemption payments or liquidation payments on behalf of the
Trust with respect to all Securities and any such Paying Agent shall comply with
Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by
the Property Trustee at any time and a successor Paying Agent or additional
Paying Agents may be appointed at any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6 and shall not be responsible for any actions taken by the
Regular Trustees or for monitoring compliance by the Regular Trustees of their
duties hereunder.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take any action that
is inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
TRUSTEE.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer of
the Property Trustee has Actual Knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
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(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not, on their face, they conform to
the requirements of this Declaration, but shall otherwise have
no duty to determine the accuracy or completeness thereof or
whether the same comply with applicable laws;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the
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Property Trustee need not be segregated from other funds held by it
except in relation to the Property Trustee Account maintained by the
Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular Trustees
or the Sponsor.
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
selection or other experts and the advice or opinion of such counsel
and experts with respect to legal matters or advice within the scope of
such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Property Trustee, provided that nothing
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contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, from its
obligations expressly created hereunder to exercise the rights and
powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Property Trustee (i) may request
written instructions from the Holders of the Securities which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in or
accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
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SECTION 3.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12 EXECUTION OF DOCUMENTS.
Except as otherwise required by the Business Trust Act, any Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities 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 or the Securities.
SECTION 3.14 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall terminate on January 31, 2052.
SECTION 3.15 MERGERS.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except pursuant to this Section
3.15. At the request of the Sponsor, with the consent of the Regular Trustees
and without the consent of the Property Trustee, the Delaware Trustee or the
Holders of the Convertible Preferred Securities, the Trust may merge with or
into, consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State ("Successor Entity"); provided, that (i) such
Successor Entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Convertible Preferred Securities or (b) substitutes
for the Convertible Preferred Securities other securities having substantially
the same terms as the Convertible Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Convertible Preferred Securities rank in priority with respect to Distributions
and payments upon liquidation, redemption and otherwise, (ii) the Sponsor
expressly appoints a trustee of such Successor Entity possessing the same powers
and duties as the Property Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Convertible Preferred Securities are then listed, if
any, (iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Convertible Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical-rating
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organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Convertible Preferred Securities (including
any Successor Securities) in any material respect, (vi) such Successor Entity
has a purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease the
Sponsor has received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders of the
Convertible Preferred Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the Holder's
interest in the new entity), (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease neither the Trust nor
such Successor Entity will be required to register as an Investment Company, and
(c) following such merger, consolidation, amalgamation or replacement, the Trust
or such Successor Entity will be treated as a grantor trust for United States
Federal income tax purposes and (viii) the Sponsor or any permitted successor or
assignee owns all of the Common Securities of such Successor Entity and
guarantees the obligations of such Successor Entity under the Successor
Securities at least to the extent provided by the Convertible Preferred
Securities Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Convertible
Preferred Securities, consolidate, amalgamate, merge with or into, be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity to be classified as other than a grantor trust for
United States Federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date, the Sponsor will purchase 341,000 Common
Securities, being all of the Common Securities issued by the Trust on the
Closing Date and representing approximately 3% of the total capital of the Trust
after issuance of the Convertible Preferred Securities on the Closing Date. In
the event that any Additional Preferred Securities are issued by the Trust after
the Closing Date, the Sponsor will, concurrently with such issuance, purchase
additional Common Securities, at a purchase price for each Common Security equal
to the purchase price payable for each Additional Preferred Security as set
forth in the Purchase Agreement, in a number (not to exceed 68,050) equal to (x)
the number of Additional Preferred Securities issued, divided by (y) 0.97, and
multiplied by (z) 0.03, rounded up to the nearest whole number.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Convertible Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities (except to the extent that the Regular
Trustees have also been granted authority with respect to certain of such
activities pursuant to Section 3.6):
(i) to prepare the Offering Memorandum in preliminary and
final form, and to prepare for filing with the Commission and execute
on behalf of the Trust a shelf registration
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statement on Form S-3, including any amendments thereto, relating to
the resale of Convertible Preferred Securities;
(ii) to determine the States and foreign jurisdictions in
which to take appropriate action to qualify or register all or part of
the Convertible Preferred Securities in any jurisdiction in which the
Sponsor has determined to qualify or register for sale such Convertible
Preferred Securities and to do any and all such acts, other than
actions that must be taken by the Trust, and to advise the Trust of
actions it must take, and to prepare for execution and filing and
execute on behalf of the Trust 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 and foreign
jurisdictions;
(iii) to prepare or cause to be prepared for filing and to
execute on behalf of the Trust, an application to PORTAL or any other
national stock exchange or the Nasdaq Stock Market's National Market
for listing or quotation of the Convertible Preferred Securities;
(iv) to prepare and execute on behalf of the Trust letters,
documents, or instruments for filing with DTC relating to the
Convertible Preferred Securities;
(v) to prepare for filing with the Commission, and to execute
on behalf of the Trust, at such time as may be determined by the
Sponsor, a registration statement on Form 8-A, including any amendments
thereto relating to the registration of the Convertible Preferred
Securities under Section 12(b) of the Exchange Act; and
(vi) to negotiate the terms of the Purchase Agreement,
Registration Rights Agreement and other related agreements providing
for the sale and resale of the Convertible Preferred Securities and to
execute such documents on behalf of the Trust.
SECTION 4.3 EXPENSES.
(a) The Sponsor shall be responsible for and shall pay for all debts
and obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance and sale of the
Convertible Preferred Securities, the fees and expenses (including reasonable
counsel fees and expenses) of the Trustees, the costs and expenses for printing
and engraving and computing or accounting equipment, Paying Agent(s),
registrar(s), transfer agent(s), duplication, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the disposition of Trust assets).
(b) The Sponsor shall pay any and all taxes (other than withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for the
benefit of, and shall be enforceable by, the Property Trustee and any Person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor"), whether or not such Creditor has received notice hereof. The
Property Trustee and any such Creditor may enforce the Sponsor's obligations
under this Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Sponsor. The Sponsor agrees to
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execute such additional agreements as may be necessary or desirable in order to
give full effect to the provisions of this Section 4.3.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities; provided, however, that the number of Trustees shall in
no event be less than two (2); provided, further that (1) one Trustee shall
satisfy the requirements for being a Delaware Trustee as provided in Section 5.2
(the "Delaware Trustee"); (2) there shall be at least one Trustee who is an
employee or officer of, or is affiliated with the Sponsor (each, a "Regular
Trustee"); and (3) one Trustee shall be the Property Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture
Act, and such Trustee may also serve as Delaware Trustee if it meets the
applicable requirements.
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee, which shall be the
Delaware Trustee, shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, provided that, if the Property Trustee has its principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
The initial Delaware Trustee shall be:
Wilmington Trust Company.
In the event that a national banking association, with the name "First
Union Trust Company, National Association" or any other name, succeeds, as
contemplated, to all or substantially all the corporate trust business of First
Union Bank of Delaware, such successor entity shall automatically be deemed to
be the Delaware Trustee, effective as of the consummation of such succession,
with the same effect as if it had executed this Declaration on the Closing Date,
upon delivery to the Sponsor and the Regular Trustees of an instrument, in form
and substance reasonably satisfactory to the Sponsor and the Regular Trustees,
accepting the responsibilities hereunder as Delaware Trustee and agreeing to be
bound by all of the provisions hereof applicable to the Delaware Trustee, and
thereupon First Union
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Bank of Delaware will automatically be deemed to have resigned as the Delaware
Trustee, effective as of the consummation of such succession.
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as Property
Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a Person permitted by the Commission
to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such Person
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of such Section 310(b).
(d) The Convertible Preferred Securities Guarantee shall be deemed to
be specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be: Wilmington Trust Company.
SECTION 5.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
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SECTION 5.5 REGULAR TRUSTEES.
The initial Regular Trustees shall be:
Irwin Mark Jacobs
Harvey P. White
Anthony S. Thornley
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, 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 or applicable law, 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 3.6, provided that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all 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 3.6.
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Property Trustee (the
"Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees and
the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need
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for prior or subsequent accounting) by an instrument in writing signed by the
Trustee and delivered to the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) subject to the provisions of the last paragraph of
Section 5.2, no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee
as the case may be if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees, shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their
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number, shall have all the powers granted to the Regular Trustees and shall
discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9 MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided, however, that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. In the event there is only
one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
SECTION 5.10 DELEGATION OF POWER.
(a) Any 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 purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any Person into which the Property Trustee or the Delaware Trustee, as
the case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, provided, however, such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Convertible Preferred Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest, Additional Interest, and Liquidated Damages (as each such
term is defined in the Indenture)), premium and/or principal on the Debentures
held by the Property Trustee (the amount of any such payment being a "Payment
Amount"), the Property Trustee shall be, and hereby is directed, to the extent
funds are available for that purpose, to make a distribution (a "Distribution")
of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of convertible preferred securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Annex I (the
"Convertible Preferred Securities") and one class of convertible common
securities, representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common Securities.")
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Convertible Preferred Securities and the Common Securities.
The Trust shall issue no Securities in bearer form.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Convertible Preferred Securities as provided
in this Declaration, the Convertible Preferred Securities so issued shall be
deemed to be validly issued, fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder or a Convertible
Preferred Security Beneficial Owner 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 and to have expressly assented and
agreed to the terms of the Indenture and the Convertible Preferred Securities
Guarantee.
(e) Convertible Preferred Securities sold other than in reliance on
Regulation S or to QIBs will be issued initially in minimum denominations of
5,000 Convertible Preferred Securities.
SECTION 7.2 EXECUTION AND AUTHENTICATION.
(a) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. In case any Regular Trustee of the Trust who shall have signed
any of the Securities shall cease to be such
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Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration any
such person was not such a Regular Trustee.
(b) One Regular Trustee shall sign the Convertible Preferred Securities
for the Trust by manual or facsimile signature. Unless otherwise determined by
the Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Convertible Preferred Security Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the Convertible
Preferred Security Certificate has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Convertible Preferred Securities
Certificates for original issue.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Convertible Preferred Securities Certificates. An
authenticating agent may authenticate Convertible Preferred Securities
Certificates whenever the Property Trustee may do so. Each reference in this
Declaration to authentication by the Property Trustee includes authentication by
such agent. An authenticating agent has the same rights as the Property Trustee
to deal with the Company or an Affiliate of the Company.
SECTION 7.3 FORM AND DATING.
The Convertible Preferred Securities Certificates and the Property
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A-1 and the Common Securities Certificates shall be substantially in the
form of Exhibit A-2, each of which is hereby incorporated in and expressly made
a part of this Declaration. Certificates may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof. The Securities
may have letters, numbers, notations or other marks of identification or
designation and such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject, if any, or usage (provided,
however, that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Preferred Certificate shall be dated the date of its authentication. The terms
and provisions of the Securities set forth in Annex I and the forms of
Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Property Trustee and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby.
(a) RESTRICTED GLOBAL PREFERRED SECURITIES. The Convertible Preferred
Securities are being offered and sold by the Trust pursuant to the Purchase
Agreement. Convertible Preferred Securities offered and sold in their initial
distribution to QIBs in reliance on Rule 144A, as provided in the Purchase
Agreement, shall be issued in the form of one or more permanent global
Securities in definitive, fully registered form without distribution coupons and
with the appropriate global legend and
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Restricted Securities Legend set forth in Exhibit A-1 hereto (collectively, the
"Restricted Global Preferred Security"), which shall be deposited on behalf of
the purchasers of the Convertible Preferred Securities represented thereby with
the Property Trustee, at its Columbia, South Carolina office, as custodian for
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Trust and authenticated by the Property Trustee
as hereinafter provided. The number of Convertible Preferred Securities
represented by the Restricted Global Preferred Security may from time to time be
increased or decreased by adjustments made on the records of the Property
Trustee and the Depositary or its nominee as hereinafter provided.
(b) REGULATION S GLOBAL PREFERRED SECURITIES. Convertible Preferred
Securities offered and sold in their initial distribution in reliance on
Regulation S under the Securities Act ("Regulation S"), as provided in the
Purchase Agreement, shall be issued in the form of one or more permanent global
Securities in definitive, fully registered form without distribution coupons and
with the appropriate global legend and Restricted Securities Legend set forth in
Exhibit A-1 hereto (collectively, the "Regulation S Global Preferred Security"),
which shall be deposited on behalf of the purchasers of the Convertible
Preferred Securities represented thereby with the Property Trustee, at its
Columbia, South Carolina office, as custodian for the Depositary, and registered
in the name of the Depositary or a nominee of the Depositary, duly executed by
the Trust and authenticated by the Property Trustee as hereinafter provided, for
credit to the respective accounts at the Depositary of the depositories for
Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear, or CEDEL. Until such time as the Restricted Period shall have
terminated, investors may hold beneficial interests in such Regulation S Global
Preferred Security only through Euroclear and CEDEL, unless delivery of such
beneficial interest shall be made through the Restricted Global Preferred
Security in accordance with the certification requirements set forth below in
Section 9.2(d). After the Restricted Period shall have terminated, such
certification requirements shall no longer be required for such transfers. As
used herein, the term "Restricted Period" means the period up to (but not
including) the 40th day following the later of (i) the date of the commencement
of the offering of the Convertible Preferred Securities and (ii) the last
original issuance date of the Convertible Preferred Securities. The number of
Convertible Preferred Securities represented by the Regulation S Global
Preferred Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Depositary or
its nominee as hereinafter provided.
(c) BOOK-ENTRY PROVISIONS. This Section 7.3(c) shall apply only to the
Restricted Global Preferred Security, the Regulation S Global Preferred Security
and such other Convertible Preferred Securities in global form as may be
authorized by the Trust to be deposited with or on behalf of the Depositary.
(i) The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more certificates representing Restricted Global Preferred
Securities and one or more certificates representing Regulation S Global
Preferred Securities, each of which certificates (collectively, "Global
Certificates") (a) shall be registered in the name of Cede & Co. or other
nominee of the Depositary and (b) shall be delivered by the Property Trustee to
the Depositary or pursuant to the Depositary's written instructions or held by
the Property Trustee as custodian for the Depositary. Any other Global Preferred
Security authenticated under this Declaration shall be registered in the name of
the Depositary or a nominee thereof and delivered to such Depositary or a
nominee thereof or the Property Trustee or other custodian for the Depositary or
such nominee.
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(ii) Neither any members of, or participants in, the
Depositary ("Participants") nor any other Persons on whose behalf Participants
may act (including Euroclear and CEDEL and account holders and participants
therein) shall have any rights under this Declaration with respect to any Global
Preferred Security held on their behalf by the Depositary or by the Property
Trustee as the custodian of the Depositary or under such Global Preferred
Security, and the Depositary may be treated by the Trust, the Property Trustee
and any agent of the Trust or the Property Trustee as the absolute owner of such
Global Preferred Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Participants, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Preferred Security.
(d) CERTIFICATED SECURITIES. Convertible Preferred Securities sold
other than in reliance on Regulation S or to QIBs will be issued only in
definitive certificated form ("Definitive Preferred Certificates") and will be
issued initially in minimum denominations of 5,000 Convertible Preferred
Securities. Purchasers of Convertible Preferred Securities who are QIBs acting
on behalf of institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and did not purchase Convertible
Preferred Securities in reliance on Regulation S under the Securities Act will
receive Convertible Preferred Securities in the form of individual certificates
in definitive, fully registered form without distribution coupons and with the
Restricted Securities Legend set forth in Exhibit A-1 hereto ("Restricted
Definitive Preferred Securities"). Restricted Definitive Preferred Securities
will bear the Restricted Securities Legend set forth on Exhibit A-1 unless
removed in accordance with Section 9.2.
SECTION 7.4 REGISTRAR; PAYING AGENT; CONVERSION AGENT.
The Trust shall establish or maintain in San Diego, California an
office or agency where Securities may be presented for registration of transfer
or exchange (the "Registrar"). In the event that the Convertible Preferred
Securities are not in book-entry only form, the Trust shall maintain in San
Diego, California an office or agency where the Convertible Preferred Securities
may be presented for payment ("Paying Agent). The Trust shall maintain an office
or agency where Securities may be presented for conversion ("Conversion Agent").
The Trust may appoint the Paying Agent and the Conversion Agent and may appoint
one or more additional paying agents and one or more additional conversion
agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent and the term "Conversion Agent" includes
any additional conversion agent. The Trust may change any Paying Agent or
Conversion Agent without prior notice to any Holder. The Trust shall notify the
Property Trustee in writing of the name and address of any Agent not a party to
this Declaration. If the Trust fails to appoint or maintain another entity as
Paying Agent or Conversion Agent, the Property Trustee shall act as such. The
Trust or any of its Affiliates may act as Paying Agent or Conversion Agent. The
Trust shall act as Paying Agent and Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Conversion Agent
for the Convertible Preferred Securities.
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SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of principal or distribution on the Securities, and will notify
the Property Trustee if there are insufficient funds. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee. The Trust at any time may require
a Paying Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.6 REPLACEMENT SECURITIES.
If the holder of a Security claims that the Certificate representing
such Security has been lost, destroyed or wrongfully taken or if such
Certificate is mutilated and is surrendered to the Trust or in the case of the
Convertible Preferred Securities to the Property Trustee, the Trust shall issue
and the Property Trustee shall authenticate a replacement Certificate if the
Property Trustee's and the Trust's requirements, as the case may be, are met. If
required by the Property Trustee or the Trust, an indemnity bond must be
sufficient in the judgment of both to protect the Trustees, the Property
Trustee, the Sponsor or any authenticating agent from any loss which any of them
may suffer if a Certificate is replaced. The Company may charge for its expenses
in replacing a Certificate.
Every replacement Security is an additional obligation of the Trust.
SECTION 7.7 OUTSTANDING CONVERTIBLE PREFERRED SECURITIES.
The Convertible Preferred Securities outstanding at any time are all
the Convertible Preferred Securities represented by Preferred Certificates
authenticated by the Property Trustee except for those canceled by it, those
delivered to it for cancellation, and those described in this Section as not
outstanding.
If a Preferred Certificate is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Certificate is held by a bona fide purchaser.
If Convertible Preferred Securities are considered paid in accordance
with the terms of this Declaration, they cease to be outstanding and interest on
them ceases to accrue.
A Convertible Preferred Security does not cease to be outstanding
because one of the Trust, the Sponsor or an Affiliate of the Sponsor holds such
Security.
SECTION 7.8 CONVERTIBLE PREFERRED SECURITIES IN TREASURY.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Convertible Preferred
Securities owned by the Trust, the Sponsor or an
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Affiliate of the Sponsor, as the case may be, shall be disregarded and deemed
not to be outstanding, except that for the purposes of determining whether the
Property Trustee shall be fully protected in relying on any such direction,
waiver or consent, only Securities which the Property Trustee has Actual
Knowledge of being so owned shall be so disregarded.
SECTION 7.9 TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Trust may
prepare and, in the case of the Convertible Preferred Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Trust considers appropriate for temporary Securities. Without unreasonable
delay, the Trust shall prepare and deliver to the Property Trustee Convertible
Preferred Securities in certificated form (other than in the case of Convertible
Preferred Securities in global form) and thereupon any or all temporary
Convertible Preferred Securities (other than any such Convertible Preferred
Securities in global form) may be surrendered in exchange therefor, at the
office of the Registrar, and the Property Trustee shall authenticate and deliver
an equal aggregate liquidation amount of definitive Convertible Preferred
Securities in certificated form in exchange for temporary Convertible Preferred
Securities (other than any such Convertible Preferred Securities in global
form). Such exchange shall be made by the Trust at its own expense and without
any charge therefor. Until so exchanged, temporary Securities shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Declaration as Securities in definitive certificated form
authenticated (in the case of Convertible Preferred Securities) and delivered
hereunder.
SECTION 7.10 CANCELLATION.
The Trust at any time may deliver a Convertible Preferred Security to
the Property Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Property Trustee any Convertible Preferred
Security surrendered to them for registration of transfer, redemption,
conversion, exchange or payment. The Property Trustee shall promptly cancel all
Preferred Certificates surrendered for registration of transfer, redemption,
conversion, exchange, payment, replacement or cancellation and shall dispose of
canceled Preferred Certificates as the Trust directs. The Trust may not issue
new Preferred Certificates to replace certificates representing Convertible
Preferred Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any Holder has converted.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Holder of the Common Securities
or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor; the consent of a majority in liquidation amount of the
Securities voting together as a single class to file a certificate of
cancellation with
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respect to the Trust; or the revocation of the charter of the Holder of
the Common Securities or the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance
with the terms of the Securities and after satisfaction of all
liabilities to creditors (whether by payment or by making reasonable
provision for payment) all of the Debentures held by the Property
Trustee shall have been distributed to the Holders of Securities in
exchange for all of the Securities;
(vi) upon the distribution of the Common Stock (as defined in
Annex I) to Holders of all outstanding Securities upon conversion of
all such Securities;
(vii) the expiration of the term of the Trust on January 31,
2052; or
(viii) before the issuance 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 8.1(a), after satisfaction of all liabilities to creditors
(whether by payment or by making reasonable provision for payment) the Trustees
shall file a certificate of cancellation with the Secretary of State of the
State of Delaware and thereupon the Trust shall terminate.
(c) The provisions of Article X shall survive the termination of the
Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 GENERAL.
(a) When Convertible Preferred Securities are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal number of Convertible Preferred Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trust shall issue and the Property
Trustee shall authenticate Preferred Certificates at the Registrar's request.
(b) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
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(c) Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such transfer would not
cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
(d) The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificates, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled as
provided in Section 7.10. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the transfer
of, or exchange, Convertible Preferred Securities during a period beginning at
the opening of business 15 days before the day of any selection of Convertible
Preferred Securities for redemption set forth in the terms and ending at the
close of business on the day of selection, or (ii) to register the transfer or
exchange of any Convertible Preferred Security so selected for redemption in
whole or in part, except the unredeemed portion of any Preferred Security being
redeemed in part.
SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE PREFERRED CERTIFICATES. When
Definitive Preferred Certificates are presented to the Registrar or co-registrar
(x) to register the transfer of the Convertible Preferred Securities represented
thereby; or (y) to exchange such Convertible Preferred Securities for an equal
number of Convertible Preferred Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Certificates surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Restricted Definitive Preferred
Securities, shall be accompanied by the following additional
information and documents, as applicable:
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(A) if such Restricted Preferred Securities are being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification from such Holder to that
effect (substantially in the form set forth on the
reverse of the Definitive Preferred Certificate); or
(B) if such Restricted Preferred Securities are being
transferred to a QIB in accordance with Rule 144A, a
certification from such Holder to that effect
(substantially in the form set forth on the reverse
of the Definitive Preferred Certificate); or
(C) if such Restricted Preferred Securities are being
transferred (i) pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S, or (ii) pursuant to an effective
registration statement under the Securities Act, or
(iii) to an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3), or
(7) under the Securities Act that is acquiring the
Restricted Preferred Securities for its own account,
or for the account of such an institutional
accredited investor, not with a view to or for offer
or sale in connection with any distribution in
violation of the Securities Act, or (iv) in reliance
on another exemption from the registration
requirements of the Securities Act, (X) a
certification from such Holder to that effect
(substantially in the form set forth on the reverse
of the Definitive Preferred Certificate), (Y) in the
case of clauses (i), (iii), and (iv) above, if the
Trust or the Registrar so requests, an opinion of
counsel reasonably acceptable to the Trust or the
Registrar, as the case may be, to the effect that
such transfer is in compliance with the Securities
Act, and (Z) in the case of clause (ii) above, a
certificate signed by a Regular Trustee to the effect
that a registration statement covering the sale of
such Restricted Preferred Securities is effective.
(b) TRANSFERS AFTER EFFECTIVENESS OF SHELF REGISTRATION STATEMENT.
After the effectiveness of a Shelf Registration Statement covering the resale of
Convertible Preferred Securities, Preferred Certificates representing
Convertible Preferred Securities transferred pursuant to such Shelf Registration
Statement in compliance with Section 9.2(a)(ii)(C)(ii) will no longer be
required to bear the Restricted Securities Legend, and beneficial interests in a
Convertible Preferred Security in global form without legends will be available
to transferees of Convertible Preferred Securities transferred pursuant to such
Shelf Registration Statement, upon exchange of the transferring Holder's
Restricted Definitive Preferred Certificate or directions to transfer such
Holder's beneficial interest in the Restricted Global Preferred Security, as the
case may be. No such transfer or exchange of a Restricted Definitive Preferred
Certificate or of an interest in the Restricted Global Preferred Security shall
be effective unless the transferor delivers to the Trust a certification (in the
applicable form set forth on the reverse of the Definitive Preferred
Certificate) as to compliance by such Person with the provisions of this
Declaration applicable to such transfer or exchange. After the effectiveness of
the Shelf Registration Statement, the Trust shall issue and the Property
Trustee, upon instruction from the Trust, shall authenticate a Preferred
Certificate in global form without the Restricted Securities Legend (the
"Exchanged Global Preferred Security") to deposit with the Depositary to
evidence (i) transfers of beneficial interests in the Restricted Global
Preferred Security that are thereafter exchanged for interests in such Exchanged
Global Preferred Security, and (ii) transfers of Restricted Definitive Preferred
Securities and Unrestricted Definitive Preferred Securities with respect to
which the transferee elects to take delivery in the form of beneficial interests
in such Exchanged Global Preferred Security, in each case subject to compliance
with the applicable provisions of this Declaration.
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(c) RESTRICTED GLOBAL PREFERRED SECURITY TO REGULATION S GLOBAL
PREFERRED SECURITY. If the holder of a beneficial interest in the Restricted
Global Preferred Security wishes at any time to transfer such interest to a
Person who wishes to take delivery thereof in the form of a beneficial interest
in the Regulation S Global Preferred Security, such transfer may be effected,
subject to the Applicable Procedures, only in accordance with this Section
9.2(c). Upon receipt by the Registrar of (i) written instructions given in
accordance with the Applicable Procedures from a Participant directing the
Registrar to credit or cause to be credited to a specified Participant's account
a beneficial interest in the Regulation S Global Preferred Security in a number
of Convertible Preferred Securities equal to that as to which a beneficial
interest in the Restricted Global Preferred Security is to be so transferred,
(ii) a written order given in accordance with the Applicable Procedures
containing information regarding the account of the Participant (and, if
applicable, the Euroclear or CEDEL account, as the case may be) to be credited
with, and the account of the Participant to be debited for, such beneficial
interest, and (iii) a certificate in substantially the form set forth in Exhibit
D given by the holder of such beneficial interest, the Registrar shall instruct
the Depositary to reduce the number of Convertible Preferred Securities
represented by the Restricted Global Preferred Security, and to increase the
number of Convertible Preferred Securities represented by the Regulation S
Global Preferred Security, by the number of Convertible Preferred Securities as
to which a beneficial interest in the Restricted Global Preferred Security is to
be so transferred, and to credit or cause to be credited to the account of the
Person specified in such instructions (which during the Restricted Period shall
be the Participant for Euroclear or CEDEL or both, as the case may be) a
beneficial interest in the Regulation S Global Preferred Security in a number of
Convertible Preferred Securities equal to that by which the Restricted Global
Preferred Security was reduced upon such transfer.
(d) REGULATION S GLOBAL PREFERRED SECURITY TO RESTRICTED GLOBAL
PREFERRED SECURITY. If, during the Restricted Period, the holder of a beneficial
interest in the Regulation S Global Preferred Security wishes to transfer such
interest to a Person who wishes to take delivery thereof in the form of a
beneficial interest in the Restricted Global Preferred Security, such transfer
may be effected, subject to the Applicable Procedures, only in accordance with
this Section 9.2(d). Upon receipt by the Registrar of (i) written instructions
given in accordance with the Applicable Procedures from a Participant directing
the Registrar to credit or cause to be credited to a specified Participant's
account a beneficial interest in the Restricted Global Preferred Security in a
number of Convertible Preferred Securities equal to that as to which a
beneficial interest in the Regulation S Global Preferred Security is to be so
transferred, (ii) a written order given in accordance with the Applicable
Procedures containing information regarding the account of the Participant (and,
if applicable, the Euroclear or CEDEL account, as the case may be) to be
credited with, and the account of the Participant to be debited for, such
beneficial interest, and (iii) a certificate in substantially the form set forth
in Exhibit E given by the holder of such beneficial interest, the Registrar
shall instruct the Depositary to reduce the number of Convertible Preferred
Securities represented by the Regulation S Global Preferred Security, and to
increase the number of Convertible Preferred Securities represented by the
Restricted Global Preferred Security, by the number of Convertible Preferred
Securities as to which a beneficial interest in the Regulation S Global
Preferred Security is to be so transferred, and to credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the Restricted Global Preferred Security in a number of
Convertible Preferred Securities equal to that by which the Regulation S Global
Preferred Security was reduced upon such transfer.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF A DEFINITIVE PREFERRED
CERTIFICATE FOR A BENEFICIAL INTEREST IN A GLOBAL PREFERRED SECURITY. A
Definitive Preferred Certificate may not be exchanged for a beneficial interest
in a Global Preferred Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Property Trustee of a Definitive Preferred
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Certificate, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with:
(i) if such Definitive Preferred Security is a Restricted
Preferred Security, certification, in the form set forth on the reverse
of the Preferred Certificate, that such Definitive Preferred Security
is being transferred to a QIB in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Preferred Certificate is a
Restricted Preferred Security, written instructions directing the
Property Trustee to make, or to direct the Depositary to make, an
adjustment on its books and records with respect to such Global
Preferred Security to reflect an increase in the number of the
Preferred Securities represented by the Global Preferred Security,
then the Property Trustee shall cancel such Definitive Preferred Certificate and
cause, or direct the Depositary to cause, the aggregate number of Convertible
Preferred Securities represented by the Global Preferred Security to be
increased accordingly. If no Global Preferred Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Regular Trustee, an appropriate number of Convertible Preferred
Securities in global form.
(f) TRANSFER AND EXCHANGE OF GLOBAL PREFERRED SECURITIES. The transfer
and exchange of Global Preferred Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Declaration
(including applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act.
(g) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL PREFERRED SECURITY
FOR A DEFINITIVE PREFERRED CERTIFICATE.
(i) Any Person having a beneficial interest in a Global
Preferred Security may upon request, and if accompanied by the
information specified below, exchange such beneficial interest for a
Definitive Preferred Certificate representing the same number of
Convertible Preferred Securities. Upon receipt by the Property Trustee
from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Preferred Security of written
instructions or such other form of instructions as is customary for the
Depositary or the Person designated by the Depositary as having such a
beneficial interest in a Restricted Preferred Security and the
following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the
owner of a beneficial interest in a Global Preferred
Security, a certification from such Person to that
effect (substantially in the form set forth on the
reverse of the Definitive Preferred Certificate); or
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A, a certification
from the transferor to that effect (substantially in
the form set forth on the reverse of the Definitive
Preferred Certificate); or
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(C) if such beneficial interest is being transferred (i)
pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S, or (ii)
pursuant to an effective registration statement under
the Securities Act, or (iii) to an institutional
"accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) under the Securities Act
that is acquiring the Restricted Preferred Securities
for its own account, or for the account of such an
institutional accredited investor, not with a view to
or for offer or sale in connection with any
distribution in violation of the Securities Act, or
(iv) in reliance on another exemption from the
registration requirements of the Securities Act, (X)
a certification from the transferee or transferor to
that effect (substantially in the form set forth on
the reverse of the Definitive Preferred Certificate),
(Y) in the case of clauses (i), (iii), and (iv)
above, if the Trust or the Registrar so requests, an
opinion of counsel reasonably acceptable to the Trust
or the Registrar, as the case may be, to the effect
that such transfer is in compliance with the
Securities Act, and (Z) in the case of clause (ii)
above, a certificate signed by a Regular Trustee to
the effect that a registration statement covering the
sale of such Restricted Preferred Securities is
effective.
then the Property Trustee will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Property Trustee, the aggregate principal amount of the Global
Preferred Security to be reduced on its books and records and,
following such reduction, the Trust will execute and the Property
Trustee will authenticate and deliver to the transferee a Definitive
Preferred Certificate.
(ii) Definitive Preferred Certificates issued in exchange for
a beneficial interest in a Global Preferred Security pursuant to this
Section 9.2(g) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the
Property Trustee. The Property Trustee shall deliver such Definitive
Preferred Certificates to the Persons in whose names such Convertible
Preferred Securities are so registered in accordance with the
instructions of the Depositary.
(h) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL PREFERRED
SECURITIES. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (i) of this Section 9.2), a Global
Preferred Security may not be transferred as a whole except by the Depositary to
a nominee of the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
(i) AUTHENTICATION OF DEFINITIVE PREFERRED CERTIFICATES IN ABSENCE OF
DEPOSITARY.
(i) If at any time:
(A) the Depositary notifies the Trust that the
Depositary is unwilling or unable to continue as Depositary
for the Global Preferred Securities or has ceased to be a
Clearing Agency registered under the Exchange Act, and a
successor Depositary for the Global Preferred Securities is
not appointed by the Trust at the direction of the Sponsor
within 90 days after delivery of such notice; or
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(B) in the case of a Global Preferred Security held
for an account of Euroclear or CEDEL, Euroclear or CEDEL, as
the case may be, (A) is closed for business for a continuous
period of 14 days (other than by reason of statutory or other
holidays) or (B) announces an intention permanently to cease
business or does in fact do so; or
(C) the Trust (with the consent of the Sponsor)
notifies the Property Trustee in writing that it elects to
cause the issuance of Definitive Preferred Certificates under
this Declaration; or
(D) an Event of Default has occurred and is
continuing,
then the Trust will execute, and the Property Trustee, upon receipt of
a written order of the Trust signed by one Regular Trustee requesting
the authentication and delivery of Definitive Preferred Certificates to
the Persons designated by the Trust, will authenticate and deliver
Definitive Preferred Certificates, representing an aggregate number of
Convertible Preferred Securities equal to the aggregate number of
Convertible Preferred Securities represented by such Global Preferred
Securities, in exchange for such Global Certificates. Any Global
Preferred Security exchanged pursuant to clause (A), (B), or (C) above
shall be so exchanged in whole and not in part and any Global Security
exchanged pursuant to clause (D) above may be exchanged in whole or
from time to time in part as directed by the Depositary.
(ii) Definitive Preferred Certificates issued in exchange for
a Global Preferred Security or any portion thereof pursuant to
paragraph (i) above shall be registered in such names and be in such
authorized denominations as the Depositary shall designate and shall
bear any legends required hereunder. Any Global Preferred Security to
be exchanged in whole shall be surrendered by the Depositary to the
Registrar. With regard to any Global Preferred Security to be exchanged
in part, either such Global Preferred Security shall be so surrendered
for exchange or, if the Property Trustee is acting as custodian for the
Depositary or its nominee with respect to such Global Preferred
Security, the number of Convertible Preferred Securities represented
thereby shall be reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate adjustment made on the
records of the Property Trustee. Upon any such surrender or adjustment,
the Property Trustee shall authenticate and make available for delivery
the Definitive Preferred Certificates issuable on such exchange to or
upon the written order of the Depositary or an authorized
representative thereof.
(j) LEGENDS.
(i) Until three (3) years after the later of the original
issuance date of any Restricted Preferred Security or the last date
that any Affiliate of the Trust was the owner of such Restricted
Preferred Security, any Certificate evidencing such Restricted
Preferred Security (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon
conversion thereof which shall bear the legend set forth in the
Indenture) shall bear a legend (the "Restricted Securities Legend") in
substantially the following form (unless such Restricted Preferred
Security has been transferred pursuant to a registration statement that
has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or unless
otherwise agreed by the Trust in writing, with notice thereof to the
Registrar):
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THIS SECURITY (OR ITS PREDECESSOR), ANY CONVERTIBLE SUBORDINATED DEBT
SECURITY ISSUED IN EXCHANGE FOR THIS SECURITY, AND ANY COMMON STOCK ISSUED ON
CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO OR FOR THE
ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY
ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES FOR THE BENEFIT OF
THE ISSUER HEREOF THAT: (I) IT HAS ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH QUALCOMM
Incorporated (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR
OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (D), (E) OR (F) IS SUBJECT TO
THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEES FOR SUCH ISSUER (i) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN FORM AND SUBSTANCE, AND (ii) IN EACH
OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRANSFER AGENT. THIS
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LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(ii) Any Certificate (or Security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to which the conditions for removal of the
foregoing legend as set forth therein have been satisfied may, upon surrender of
such Certificate for exchange to the Registrar in accordance with the provisions
of this Section 9.2, be exchanged for a new Certificate or Certificates, of like
tenor and aggregate number of Convertible Preferred Securities, which shall not
bear the Restricted Securities Legend.
(k) CANCELLATION OR ADJUSTMENT OF GLOBAL PREFERRED SECURITY. At such
time as all beneficial interests in a Global Preferred Security have either been
exchanged for Definitive Preferred Certificates to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Preferred Security shall be returned to the
Depositary for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Preferred Security is exchanged for Definitive Preferred Certificates,
Convertible Preferred Securities represented by such Global Preferred Security
shall be reduced and an adjustment shall be made on the books and records of the
Property Trustee (if it is then the Securities Custodian for such Global
Preferred Security) with respect to such Global Preferred Security, by the
Property Trustee or the Securities Custodian, to reflect such reduction.
(l) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
CONVERTIBLE PREFERRED SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Preferred Certificates and Global Preferred Certificates at
the Registrar's or co-registrar's request.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) Prior to the due presentation for registrations of
transfer of any Convertible Preferred Security, the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar may deem
and treat the Person in whose name a Convertible Preferred Security is
registered as the absolute owner of such Convertible Preferred Security
for the purpose of receiving Distributions on such Convertible
Preferred Security and for all other purposes whatsoever, and none of
the Trust, the Property Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(iv) All Convertible Preferred Securities issued upon any
transfer or exchange pursuant to the terms of this Declaration shall
evidence the same security and shall be entitled to the same benefits
under this Declaration as the Convertible Preferred Securities
surrendered upon such transfer or exchange.
(m) NO OBLIGATION OF THE PROPERTY TRUSTEE.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Preferred Security, any
Participant in the Depositary or other Person with
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respect to the accuracy of the records of the Depositary or its nominee
or of any Participant thereof, with respect to any ownership interest
in the Convertible Preferred Securities or with respect to the delivery
to any Participant, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Convertible
Preferred Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Convertible
Preferred Securities shall be given or made only to or upon the order
of the registered Holders (which shall be the Depositary or its nominee
in the case of a Global Preferred Security). The rights of beneficial
owners in any Global Preferred Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Property Trustee may conclusively rely and shall be
fully protected in relying upon information furnished by the Depositary
or any agent thereof with respect to its Participants and any
beneficial owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Convertible Preferred Security (including any transfers between or
among Depositary Participants or beneficial owners in any Global
Preferred Security) other than to require delivery of such certificates
and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Property Trustee,
Registrar, or a co-registrar shall have Actual Knowledge thereof.
SECTION 9.4 APPOINTMENT OF SUCCESSOR DEPOSITARY.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Convertible Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency to
act as Depositary with respect to such Convertible Preferred Securities.
SECTION 9.5 REGISTRATION RIGHTS.
The holders of the Convertible Preferred Securities, the Debentures,
the Convertible Preferred Securities Guarantee, and the shares of Common Stock
of the Company issuable upon conversion of the Debentures (collectively, the
"Registrable Securities") are entitled to the benefits of the Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Company has
agreed for the benefit of the holders of Registrable Securities that (i) it
will, at its cost, within 90 days after the date of original issuance of the
Debentures, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to the resales of the Registrable
Securities, (ii) it will use all reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the
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Commission as promptly as practicable and in no event later than 180 days after
the date of original issuance of the Debentures, and (iii) the Company will use
all reasonable efforts to maintain such Shelf Registration Statement
continuously effective under the Securities Act until the third anniversary of
the effectiveness of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement (the "Effectiveness Period").
If (i) on or prior to 90 days following the date of original issuance
of the Registrable Debentures, a Shelf Registration Statement has not been filed
with the Commission, or (ii) on or prior to the 180th day following the date of
original issuance of the Debentures, such Shelf Registration Statement is not
declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures from and including the day
following such Registration Default. Liquidated Damages will be paid quarterly
in arrears, with the first quarterly payment due on the first interest or
distribution payment date, as applicable, following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount or
liquidation amount, as applicable, to and including the 90th day following such
Registration Default and one-half of one percent (0.50%) thereof from and after
the 91st day following such Registration Default. Upon (x) the filing of the
Shelf Registration Statement after the 90-day period described in clause (i)
above or (y) the effectiveness of the Shelf Registration Statement after the
180-day period described in clause (ii) above, the interest rate borne by the
Debentures from the date of such filing or effectiveness, as the case may be,
will be reduced to the interest rate then in effect on the Debentures.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; or
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Convertible Preferred Securities shall 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.
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SECTION 10.2 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.
(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 10.3 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 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 (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), 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
any 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.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
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(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 its "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 10.4 INDEMNIFICATION.
(a)(i) The Sponsor shall indemnify, to the full 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 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.
(ii) The Sponsor shall indemnify, to the full 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.
(iii) 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 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
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(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(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 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.
(v) 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 10.4(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 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer 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 believe
his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or
Convertible Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(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 Convertible 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 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) 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 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of
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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 10.4(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.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(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, to the fullest extent permitted by
law, the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of
the Property Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee and the Delaware Trustee (each of the
Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without gross negligence (in the case of
the Property Trustee, negligence) or bad faith on its part, arising out of or in
connection with the acceptance or administration or the trust or trusts
hereunder, including 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 powers or duties
hereunder. The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
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 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, the Delaware Trustee, or the
Property 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, the Delaware Trustee and the Property 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, the Delaware Trustee and the Property 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
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
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ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; provided, however, that the Property Trustee
shall designate the signatories for the Property Trustee Account.
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SECTION 11.4 WITHHOLDING.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee;
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee; and
(iv) if the amendment affects the rights, powers, duties,
obligations or immunities of the Sponsor, the Sponsor.
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment,
the Property Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment
which affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee shall
have first received:
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(A) an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers
of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act.
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities.
(f) The rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any
other provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; and
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse
effect on the right, preferences or privileges of the Holders.
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SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Convertible Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees a writing stating that the
signing Holders of Securities wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Security Certificates
held by the Holders of Securities exercising the right to call a meeting and
only those Securities specified shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days
and not more than 60 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Convertible Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by the Holders
of Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Security
Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Convertible
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Preferred Securities are then listed or trading otherwise provides, the
Regular Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants, as applicable, to the
Trust and the Sponsor at the time of the Successor Property Trustee's acceptance
of its appointment as Property Trustee that:
(a) the Property Trustee is a national banking association with trust
powers, duly organized, validly existing and in good standing, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the Property Trustee of
the Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) the execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any South Carolina or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the Declaration.
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a national banking association or a
Delaware banking corporation with trust powers, duly organized, validly existing
and in good standing, with trust power
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and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration under
Delaware law constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with or
notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the Declaration.
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
QUALCOMM Financial Trust I
c/o QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, California 92121-2779
Attention: General Counsel
(b) if given to the Delaware Trustee or the Property Trustee, at the
mailing address set forth below (or such other address as Delaware Trustee or
the Property Trustee may give notice of to the Holders of the Securities):
Wilmington Trust Company
1100 North Market Street
9th Floor
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(c) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
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QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, California 92121-2779
Attention: General Counsel
(d) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 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 14.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 14.4 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 14.5 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 14.6 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.
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SECTION 14.7 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.
SECTION 14.8 COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this Declaration, upon any
application or request by the Company to the Trustees to take any action under
any provision of this Declaration, the Company shall furnish to the Trustees an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Declaration relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Declaration relating to such
particular application or request, no additional certificate or opinion need be
furnished.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/ Irwin Mark Jacobs
----------------------------------------
Irwin Mark Jacobs, as Regular Trustee
/s/ Harvey P. White
----------------------------------------
Harvey P. White, as Regular Trustee
/s/ Anthony S. Thornley
----------------------------------------
Anthony S. Thornley, as Regular Trustee
Wilmington Trust Company, as Delaware and Property
Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
QUALCOMM Incorporated, as Sponsor
By: /s/ Anthony S. Thornley
-------------------------------------
Name: Anthony S. Thornley
Title: Senior Vice President and Chief Financial
Officer
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ANNEX TO AMENDMENT
RESTATED DECLARATION OF TRUST
(4.3)
ANNEX I
TERMS OF SECURITIES
5 3/4% TRUST CONVERTIBLE PREFERRED SECURITIES
5 3/4% TRUST CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of February 25, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Convertible Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Offering Memorandum referred to below):
1. DESIGNATION AND NUMBER.
(a) Convertible Preferred Securities. 11,000,000 Convertible
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of $550,000,000, plus up to an additional
2,200,000 Convertible Preferred Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of $110,000,000 (the
"Additional Preferred Securities") solely to cover over-allotments (as provided
for in the Purchase Agreement), and a liquidation amount with respect to the
assets of the Trust of $50 per Convertible Preferred Security, are hereby
designated for the purposes of identification only as "5 3/4% Trust Convertible
Preferred Securities" (the "Convertible Preferred Securities"). The Convertible
Preferred Security Certificates evidencing the Convertible Preferred Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Convertible Preferred Securities are listed.
(b) Common Securities. 341,000 Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
$17,050,000, plus up to an additional 68,050 Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
$3,402,500 to meet the capital requirements of the Trust in the event of an
issuance of Additional Preferred Securities, and a liquidation amount with
respect to the assets of the Trust of $50 per common security, are hereby
designated for the purposes of identification only as "5 3/4% Trust Convertible
Common Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. DISTRIBUTIONS.
(a) Distributions payable on each Security will be fixed at a rate
per annum of 5 3/4% (the "Coupon Rate") of the stated liquidation amount of $50
per Security, such rate being the rate of interest payable on the Debentures to
be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by
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applicable law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed on the basis of a 360-day year of twelve 30-day
months.
(b) Distributions on the Securities will be cumulative, will
accrue from the date of original issuance of the Securities, and will be payable
quarterly in arrears, on March 1, June 1, September 1 and December 1 of each
year, commencing on June 1, 1997, except as otherwise described below. So long
as no event of default under the Indenture shall have occurred and be
continuing, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall last beyond
the date of maturity of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the maturity of
the Debentures. Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the 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 will be 15 days prior to the relevant payment dates, which
payment dates correspond to the interest payment dates on the Debentures;
provided that if the payment date is a Redemption Date, then the record date for
the Distribution shall be as of the opening of business on such record date for
the purpose of permitting a Holder of a Convertible Preferred Security to
convert on such record date while continuing to be the record holder for the
Distribution and therefore entitled to receive the Distribution on the payment
date notwithstanding conversion on the record date. In the event that any
Convertible Preferred Security is redeemed after a record date and prior to (but
not on) the corresponding payment date, the accrued and unpaid distributions on
such Convertible Preferred Security as of the redemption date will be paid to
the holder thereof on the redemption date, not to the holder thereof on the
record date. In the event that a redemption date is also a payment date, then
the accrued and unpaid distributions will be paid to the holder of such
Convertible Preferred Security as of the record date. Subject to any applicable
laws and regulations and the provisions of the Declaration, each such payment in
respect of the Convertible Preferred Securities will be made as described under
the heading "Description of the Convertible Preferred Securities--Form,
Denomination and Registration" in the Offering Memorandum, dated February 19,
1997, of the Trust. The relevant record dates for the Common Securities shall be
the same record date as for the Convertible Preferred Securities. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other
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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 date.
(d) In the event of an election by the Holder to convert its
Securities through the Conversion Agent into Common Stock (as hereinafter
defined) pursuant to the terms of the Securities as set forth in this Annex I to
the Declaration, no payment, allowance or adjustment shall be made with respect
to accumulated and unpaid Distributions on such Securities, or be required to be
made; provided that Holders of Securities at the close of business on any record
date for the payment of Distributions will be entitled to receive the
Distributions payable on such Securities on the corresponding payment date
notwithstanding the conversion of such Securities into Common Stock following
such record date.
(e) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities to creditors an amount equal to the
aggregate of the stated liquidation amount of $50 per Security plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"), unless such dissolution, winding-up or termination
occurs in connection with a Special Event in which case, in accordance with
Section 4(c), Debentures in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of such Securities, with an interest rate
equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.
If, upon any such dissolution, 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 Securities shall be paid on a Pro Rata basis.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price per Security equal
to the redemption price of the Debentures, together with accrued and unpaid
Distributions thereon through the date of the redemption, payable in cash (the
"Redemption Price"). Holders will be given not less than 20 nor more than 60
days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata from each Holder of
Securities, it being understood that, in respect of Convertible Preferred
Securities registered in the name of and held of record by DTC (or a successor
depositary) or any nominee, the distribution of the proceeds of such redemption
will be made in accordance with the procedures of such agency or nominee.
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(c) If, at any time, a Tax Event or an Investment Company Event
(each, as defined below, a "Special Event") shall occur and be continuing, the
Regular Trustees may with the consent of the Sponsor, except in certain limited
circumstances in relation to a Tax Event described in this Section 4(c),
dissolve the Trust and, after satisfaction of creditors, cause Debentures held
by the Property Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Securities,
to be distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis, within 90 days following
the occurrence of such Special Event (the "90 Day Period"); provided, however,
that such dissolution and distribution shall be conditioned on (i) in the case
of the occurrence of a Tax Event, the Regular Trustees' receipt of an opinion of
a nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that neither the Trust nor the
Holders of the Securities will recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures, (ii) in the case of a Tax Event, the Debenture
Issuer or the Trust being unable to eliminate, within the 90 Day Period, the Tax
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that has no adverse
effect on the Trust, the Debenture Issuer, the Sponsor or the Holders of the
Securities ("Ministerial Action"), and (iii) the Sponsor's prior written consent
to such dissolution and distribution.
If in the event of a Tax Event (i) after receipt of a Dissolution Tax
Opinion (as defined hereinafter) by the Regular Trustees, the Sponsor has
received an opinion (a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that the Debenture Issuer would
be precluded from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were distributed to the
Holders of Securities in liquidation of such Holders' interests in the Trust as
described in this Section 4(c), or (ii) the Regular Trustees shall have been
informed by nationally recognized independent tax counsel experienced in such
matters that a No Recognition Opinion cannot be delivered to the Trust, the
Debenture Issuer shall have the right at any time, upon not less than 20 nor
more than 60 days notice, to redeem the Debentures in whole or in part, at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon, for cash within 90 days following the occurrence of
such Tax Event. Following such redemption, Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed shall be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is available to the
Debenture Issuer or the Trust the opportunity to eliminate, within such 90-day
period, the Tax Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after February
25, 1997, as a result of (a) any amendment to, clarification of, 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 affecting taxation, (b) any judicial decision,
official administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to,
clarification of, or change in the official position or the interpretation of
such Administrative Action or judicial decision that differs from the
theretofore generally accepted position, in each case, by any legislative body,
court, governmental authority or regulatory body, irrespective of the manner in
which such amendment, clarification or change is made
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known, which amendment, clarification, or change is effective or such
pronouncement or decision is announced, in each case, on or after, February 25,
1997 (collectively, a "Change in Tax Law"), there is more than an insubstantial
risk that (i) the Trust is or will be subject to United States federal income
tax with respect to interest accrued or received on the Debentures, (ii) the
Trust is, or will be subject to more than a de minimis amount of taxes, duties
or other governmental charges, or (iii) interest payable in cash by the
Debenture Issuer to the Trust on the Debentures is not, or will not be,
deductible, in whole or in part, by the Debenture Issuer for United States
federal income tax purposes. Notwithstanding the foregoing, a Tax Event shall
not include any Change in Tax Law that requires the Debenture Issuer for United
States federal income tax purposes to defer taking a deduction for any original
issue discount ("OID") that accrues with respect to the Debentures until the
interest payment related to such OID is paid by the Debenture Issuer in cash;
provided, that such Change in Tax Law does not create more than an insubstantial
risk that the Debenture Issuer will be prevented from taking a deduction for OID
accruing with respect to the Debentures at a date that is no later than the date
the interest payment related to such OID is actually paid by the Debenture
Issuer in cash.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in such matters to the effect that, as a result of the occurrence of a change in
law or regulation or a written change in interpretation or application of law or
regulations by any legislative body, court, governmental agency or regulatory
authority on or after February 25, 1997 (a "Change in 1940 Act Law"), there is
more than an insubstantial risk that the Trust is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
On and from the date fixed by the Regular Trustees for any distribution
of Debentures upon dissolution of the Trust: (i) the Securities will no longer
be deemed to be outstanding, (ii) The Depository Trust Company (the
"Depositary") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Convertible Preferred Securities held in the form of
Global Certificates, will receive a registered certificate or certificates in
global form representing the Debentures to be delivered upon such distribution,
and (iii) any certificates representing Securities, except for Global
Certificates representing Convertible Preferred Securities held by the
Depositary or its nominee (or any successor Clearing Agency or its nominee),
will be deemed to represent Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on, such Convertible Preferred Securities until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution Notice"),
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 20 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(e), a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, or by such other means suitable to assure delivery of such written
notice, to Holders of Securities. Each Redemption/ Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution
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Notice or in the mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange proceedings with respect to
any other Holder.
(f) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Securities, it being understood that, in respect of
Convertible Preferred Securities registered in the name of and held of record by
the Depositary or its nominee (or any successor Clearing Agency or its nominee)
or any nominee, the distribution of the proceeds of such redemption will be made
to each Clearing Agency Participant (or Person on whose behalf such nominee
holds such securities) in accordance with the procedures applied by such agency
or nominee.
(g) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) with respect to the Convertible Preferred Securities held
in Global Certificates, by 12:00 noon, New York City time, on the redemption
date, provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or other
repayment of the Debentures, the Property Trustee will deposit irrevocably with
the Depositary or its nominee (or successor Clearing Agency or its nominee)
funds sufficient to pay the applicable Redemption Price with respect to the
Convertible Preferred Securities and will give the Depositary (or its nominee)
(or successor Clearing Agency or its nominee) irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Convertible
Preferred Securities, and (B) with respect to Convertible Preferred Securities
issued in definitive form and Common Securities, provided that the Debenture
Issuer has paid the Property Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the Property Trustee
will pay the relevant Redemption Price to the Holders of such Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the required date of such deposit,
Distributions will cease to accrue on the Securities so called for redemption
and all rights of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and 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 each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to accrue
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.
(h) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Convertible Preferred
Securities held in the form of Global Certificates, to the Depositary or its
nominee (or any successor Clearing Agency or its nominee) and, in respect of
Definitive Convertible Preferred Security Certificates, to the Holder thereof,
and (B) in respect of the Common Securities, to the Holder thereof.
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(i) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), the Sponsor or any
of its subsidiaries may at any time and from time to time purchase outstanding
Convertible Preferred Securities by tender, in the open market or otherwise.
5. CONVERSION RIGHTS.
The Holders of Securities shall have the right at any time, beginning
April 26, 1997 through the close of business on February 24, 2012 (or, in the
case of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Class A Common Stock of QUALCOMM Incorporated ("QUALCOMM")
("Common Stock") in the manner described herein on and subject to the following
terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Securities for a portion of the Debentures theretofore held by the Trust on the
basis of one Security per $50 principal amount of Debentures, and immediately
convert such amount of Debentures into fully paid and nonassessable shares of
Common Stock at an initial rate of 0.6882 shares of Common Stock per $50
principal amount of Debentures (which is equivalent to a conversion price of
$72.6563 per share of Common Stock, subject to certain adjustments set forth in
Sections 15.3 and 15.4 of the Indenture (as so adjusted, "Conversion Price")).
(b) In order to convert Securities into QUALCOMM's Common Stock
the Holder shall submit to the Conversion Agent at the office referred to above
an irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Trust of the Holder's election to exchange
Securities for a portion of the Debentures held by the Trust and the Trust
shall, upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance with this
Section. The Conversion Agent shall thereupon notify QUALCOMM of the Holder's
election to convert such Debentures into shares of Common Stock. Holders of
Securities at the close of business on a Distribution record date will be
entitled to receive the Distribution payable on such securities on the
corresponding Distribution payment date notwithstanding the conversion of such
Securities following such record date but prior to such distribution payment
date. Except as provided above, neither the Trust nor the Sponsor will make, or
be required to make, any payment, allowance or adjustment upon any conversion on
account of any accumulated and unpaid Distributions accrued on the Securities
(including any Additional Amounts accrued thereon) surrendered for conversion,
or on account of any accumulated and unpaid dividends on the shares of Common
Stock issued upon such conversion. Securities shall be deemed to have been
converted immediately prior to the close of business on the day on which a
Notice of Conversion relating to such Securities is received by the Trust in
accordance with the foregoing provision (the "Conversion Date"). The Person or
Persons entitled to receive Common Stock issuable upon conversion of the
Debentures shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
Conversion Date, QUALCOMM shall issue and deliver at the office of the
Conversion Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any
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fraction of any share to the Person or Persons entitled to receive the same,
unless otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints
Wilmington Trust Company "Conversion Agent" for the purpose of effecting the
conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
Section and (ii) to convert all or a portion of the Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Section and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount, provided that the
Conversion Agent shall not give effect to any conversion of Securities if, after
giving effect to such conversion, the aggregate amount of Common Securities
outstanding would be less than 3% of the aggregate liquidation amount of the
Securities.
(d) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be paid
in cash by QUALCOMM to the Conversion Agent, which in turn will make such
payment to the Holder or Holders of Securities so converted. The cash payable
shall be based on the current market price of Common Stock on the date such
Securities are surrendered for conversion.
(e) QUALCOMM shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding.
Notwithstanding the foregoing, QUALCOMM shall be entitled to deliver
upon conversion of Debentures, shares of Common Stock reacquired and held in the
treasury of QUALCOMM (in lieu of the issuance of authorized and unissued shares
of Common Stock), so long as any such treasury shares are free and clear of all
liens, charges, security interests or encumbrances. Any shares of Common Stock
issued upon conversion of the Debentures shall be duly authorized, validly
issued and fully paid and nonassessable. The Trust shall deliver the shares of
Common Stock received upon conversion of the Debentures to the converting Holder
free and clear of all liens, charges, security interests and encumbrances,
except for United States withholding taxes. Each of QUALCOMM and the Trust shall
prepare and shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required by
law, and shall comply with all applicable requirements as to registration or
qualification of Common Stock (and all requirements to list Common Stock
issuable upon conversion of Debentures that are at the time applicable), in
order to enable QUALCOMM to lawfully issue Common Stock to the Trust upon
conversion of the Debentures and the Trust to lawfully deliver Common Stock to
each Holder upon conversion of the Securities.
(f) QUALCOMM will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue
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has paid to the Trust the amount of any such tax, or has established to the
satisfaction of the Trust that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Securities or set forth in this Annex I to the Declaration or in the Declaration
itself or otherwise require the Property Trustee or the Trust to pay any amounts
on account of such withholdings.
6. VOTING RIGHTS - CONVERTIBLE PREFERRED SECURITIES.
(a) Except as provided under Sections 6(b) and 8 and as otherwise
required by law and the Declaration, the Holders of the Convertible Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Convertible Preferred
Securities, voting separately as a class, may direct the time, method, and place
of conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as holder of
the Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and its consequences that
is waivable under Section 7.13 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable, or (iv) consent to any amendment, modification, or termination
of the Indenture or the Debentures, where such consent shall be required,
provided, however, that, where a consent under the Indenture would require the
consent or act of the Holders of greater than a majority of the Holders in
principal amount of 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 in liquidation amount of the
Convertible Preferred Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. The Property
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Convertible Preferred Securities. Other than with respect
to directing the time, method and place of conducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Convertible Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel to the effect that for
the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action and each
holder of Securities will be treated as owning an undivided beneficial interest
in the Debentures.
If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of Convertible Preferred Securities to the extent of
any payment made by the Issuer to such Holder of Convertible Preferred
Securities in such Direct Action. In addition, if the Property Trustee fails to
enforce its rights under the Debentures (other than rights arising from an Event
of Default described in the immediately preceding sentence) for a period of 30
days after any Holder of Convertible Preferred Securities shall have made a
written request to the Property Trustee to enforce such rights, such Holder of
Convertible Preferred Securities may, to
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the fullest extent permitted by law, thereafter institute a Direct Action to
enforce the Property Trustee's rights as holder of the Debentures, without first
instituting any legal proceeding against the Property Trustee or any other
Person. Except as provided in the preceding sentences, the Holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Convertible Preferred
Securities may be given at a separate meeting of Holders of Convertible
Preferred Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which Holders of Convertible
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 Convertible Preferred Securities. Each such notice will include a
statement setting forth (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 the Convertible Preferred
Securities will be required for the Trust to redeem and cancel Convertible
Preferred Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Convertible Preferred Securities that are owned by the Sponsor or any
Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
7. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under Sections 7(b), (c) and 8 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after any
Event of Default with respect to the Convertible Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under the Declaration, including (i) directing the
time, method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 5.13 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable, provided that, where a consent or
action under the Indenture would require the consent or act of a Super Majority
of the Holders, the Property Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 7(c), the Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Convertible
Preferred Securities.
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Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall not take any action in accordance with
the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action and each
holder of Trust Securities will be treated as owning an undivided beneficial
interest in the Debentures.
If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Convertible Preferred Securities may directly institute a
Direct Action on or after the respective due date specified in the Debentures.
In connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of Convertible
Preferred Securities to the extent of any payment made by the Issuer to such
Holder of Convertible Preferred Securities in such Direct Action. In addition,
if the Property Trustee fails to enforce its rights under the Debentures (other
than rights arising from an Event of Default described in the immediately
preceding sentence) for a period of 30 days after any Holder of Convertible
Preferred Securities shall have made a written request to the Property Trustee
to enforce such rights, such Holder of Convertible Preferred Securities may, to
the fullest extent permitted by law, thereafter institute a Direct Action to
enforce the Property Trustee's rights as holder of the Debentures, without first
instituting any legal proceeding against the Property Trustee or any other
Person. Except as provided in the preceding sentences, the Holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common 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 Common Securities. Each such notice will include a
statement setting forth (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 the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
8. AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration 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 Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities affected thereby;
provided, however, that a reduction of the principal amount or Coupon Rate , or
a change in the
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<PAGE> 75
payment dates or maturity of the Convertible Preferred Securities shall not be
permitted without the consent of each Holder of Convertible Preferred Securities
affected thereby; and provided further that, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Convertible
Preferred Securities or only 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 in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the 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 Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of the holders 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 Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding;
provided, further, that the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Securities under this
Section 8(b) 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 the purposes of United States federal income
tax and that each holder of Securities will be treated as owning an undivided
beneficial interest in the Debentures.
9. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Convertible Preferred Securities pro rata according to the aggregate liquidation
amount of Convertible Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Convertible Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Convertible 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.
10. RANKING.
The Convertible Preferred Securities rank pari passu and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default occurs and is continuing, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Convertible Preferred Securities.
11. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.
Each Holder of Convertible Preferred Securities and Common Securities,
by the acceptance thereof, agrees to the provisions of the Convertible Preferred
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
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<PAGE> 76
12. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive or similar
rights to subscribe for any additional securities.
13. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Convertible
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request to
the Sponsor at its principal place of business.
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<PAGE> 77
EXHIBIT A-1
FORM OF CONVERTIBLE PREFERRED SECURITY CERTIFICATE
{IF THE CONVERTIBLE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE,
INSERT - This Convertible Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Convertible Preferred Security is exchangeable for Convertible
Preferred Securities registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Declaration and no transfer of this Convertible Preferred Security (other than a
transfer of this Convertible Preferred Security as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Convertible Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York) to the Trust or its agent for registration of transfer, exchange
or payment, and any Convertible Preferred Security issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment hereon is made to
Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.}
THIS SECURITY (OR ITS PREDECESSOR), ANY CONVERTIBLE SUBORDINATED DEBT
SECURITY ISSUED IN EXCHANGE FOR THIS SECURITY, AND ANY COMMON STOCK ISSUED ON
CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO OR FOR THE
ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY
ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES FOR THE BENEFIT OF
THE ISSUER HEREOF THAT: (I) IT HAS ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH QUALCOMM
INCORPORATED (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT
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<PAGE> 78
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR
OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (D), (E) OR (F) IS SUBJECT TO
THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEES FOR SUCH ISSUER (i) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN FORM AND SUBSTANCE, AND (ii) IN EACH
OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.
A1-2
<PAGE> 79
Certificate Number: Number of Convertible Preferred Securities:
____________________ _______________________
{ADD FOR GLOBAL CERTIFICATES: (as increased or
decreased as set forth on Schedule A attached hereto}
CUSIP NO.___________
Certificate Evidencing Convertible Preferred Securities
of
QUALCOMM FINANCIAL TRUST I
5 3/4% Trust Convertible Preferred Securities
(liquidation amount $50 per Trust Convertible Preferred Security)
QUALCOMM Financial Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of convertible preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 5 3/4% Trust Convertible Preferred Securities
(liquidation amount $50 per Trust Convertible Preferred Security) (the
"Convertible Preferred Securities"). The Convertible Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Convertible Preferred
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of February 25, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Convertible
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Convertible Preferred
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Convertible Preferred Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Convertible
Preferred Securities as evidence of indirect beneficial ownership in the
Debentures.
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<PAGE> 80
Unless the Property Trustee's Certificate of Authentication hereon has
been properly executed, these Convertible Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Trust has caused this certificate to be
executed.
QUALCOMM FINANCIAL TRUST I
By:________________________________
Name:
Title: Regular Trustee
{FORM OF CERTIFICATE OF AUTHENTICATION}
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Preferred Securities referred to in the
within-mentioned Declaration.
Dated:
Wilmington Trust Company,
as Property Trustee
By:_______________________________
Authorized Signatory
A1-4
<PAGE> 81
{FORM OF REVERSE OF SECURITY}
Distributions payable on each Convertible Preferred Security will be
fixed at a rate per annum of 5 3/4% (the "Coupon Rate") of the stated
liquidation amount of $50 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Preferred
Securities will be cumulative, will accrue from February 25, 1997 and will be
payable quarterly in arrears, on June 1, September 1, December 1 and March 1 of
each year, commencing on June 1, 1997, which payment dates shall correspond to
the interest payment dates on the Debentures, to Holders of record at the close
of business on the regular record date for such distribution which shall be the
close of business 15 days prior to the relevant payment date. The Debenture
Issuer has the right under the Indenture, subject to certain conditions, to
defer payments of interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding 20 consecutive quarters (each
an "Extension Period") provided that no Extension Period shall last beyond the
date of the maturity of the Debentures and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the maturity of
the Debentures. Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Convertible Preferred Securities shall be redeemable as provided in
the Declaration.
The Convertible Preferred Securities shall be convertible into shares
of Common Stock of QUALCOMM Incorporated ("QUALCOMM Common Stock"), through (i)
the exchange of Preferred Securities for a portion of the Debentures and (ii)
the immediate conversion of such Debentures into QUALCOMM Common Stock, in the
manner and according to the terms set forth in the Declaration.
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<PAGE> 82
CONVERSION REQUEST
To: Wilmington Trust Company
as Property Trustee of
QUALCOMM Financial Trust I
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Convertible Preferred Securities, or the
portion below designated, into Common Stock of QUALCOMM Incorporated (the
"QUALCOMM Common Stock") in accordance with the terms of the Amended and
Restated Declaration of Trust, dated as of February 25, 1997 (as amended from
time to time, the "Declaration"), by the Regular Trustees named therein,
Wilmington Trust Company, as Delaware Trustee and as Property Trustee, QUALCOMM
Incorporated, as Sponsor, and by the Holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to the Declaration.
Pursuant to the aforementioned exercise of the option to convert these
Convertible Preferred Securities, the undersigned hereby directs the Conversion
Agent (as that term is defined in the Declaration) to (i) exchange such
Convertible Preferred Securities for a portion of the Debentures (as that term
is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Convertible Preferred Securities set forth as
Annex I to the Declaration) and (ii) immediately convert such Debentures on
behalf of the undersigned, into QUALCOMM Common Stock (at the conversion rate
specified in the terms of the Convertible Preferred Securities set forth as
Annex I to the Declaration).
A1-6
<PAGE> 83
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date: ____________, ____
in whole __ in part __
Number of Preferred Securities to be
converted: ___________________
If a name or names other than
the undersigned, please
indicate in the spaces below
the name or names in which the
shares of QUALCOMM Common
Stock are to be issued, along
with the address or addresses
of such person or persons
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
_____________________________________________
_____________________________________________
_____________________________________________
Signature Guarantee:*___________________
_____________
* (Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
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<PAGE> 84
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Convertible
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Convertible Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: _____________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Convertible
Preferred Security Certificate)
Signature Guarantee** ___________________________________
__________________________________
** Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
A1-8
<PAGE> 85
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF SECURITIES
RE: 5 3/4% Trust Convertible Preferred Securities of QUALCOMM Financial
Trust I
This Certificate relates to the exchange or registration for transfer
of _______ (number) of Convertible Preferred Securities held in (check
applicable box) _____ book-entry or ______ definitive form by
___________________ (the "Transferor"), prior to the Resale Restriction
Termination Date (as defined in the legend on the face of this Certificate).
The Transferor (check applicable box):
- has requested the Registrar by written order to deliver, in exchange
for its beneficial interest in a Global Preferred Security held by the
Depositary, Convertible Preferred Securities in definitive registered form of
authorized denominations and an aggregate number of Convertible Preferred
Securities equal to its beneficial interest in such Global Preferred Security
(or portion thereof as indicated above); or
- has requested the Registrar by written order to exchange or register
the transfer of such Convertible Preferred Securities.
In connection with such request and in respect of all such Convertible
Preferred Securities, the Transferor does hereby certify that Transferor is
familiar with the Declaration relating to the above-captioned Convertible
Preferred Securities and, as provided in Section 9.2 of such Declaration, the
transfer of these Convertible Preferred Securities does not require registration
under the Securities Act because (check applicable box):
- Such Convertible Preferred Securities are being acquired for the
Transferor's own account (in satisfaction of Section 9.2(a)(ii)(A) or Section
9.2(g)(i)(A) of the Declaration).
- Such Convertible Preferred Securities are being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A (in satisfaction of Section 9.2(a)(ii)(B) or
Section 9.2(g)(i)(B) of the Declaration).
- Such Convertible Preferred Securities are being transferred pursuant
to an effective registration statement under the Securities Act (in satisfaction
of Section 9.2(a)(ii)(C) or Section 9.2(g)(i)(C) of the Declaration).
- Such Convertible Preferred Securities are being transferred in
compliance with and in reliance on Rule 144 or Regulation S under the Securities
Act, or to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) under the Securities Act that is acquiring such
Convertible Preferred Securities for its own account, or for the account of such
an institutional accredited investor, not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act, or in
reliance on another exemption from the registration requirements of the
Securities Act (other than Rule 144A) and (check if applicable) _____ an opinion
of counsel to the effect that such
A1-9
<PAGE> 86
transfer is in compliance with the Securities Act accompanies this Certificate
(in satisfaction of Section 9.2(a)(ii)(C) or Section 9.2(g)(i)(C) of the
Declaration).
______________________________
[INSERT NAME OF TRANSFEROR]
By:___________________________
Date:_____________________
A1-10
<PAGE> 87
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The original number of Convertible Preferred Securities represented by
this Global Certificate shall be __________. The following increases or
decreases in the number of Convertible Preferred Securities represented by this
Global Certificate have been made:
<TABLE>
<CAPTION>
Amount of increase Amount of decrease Signature of
Date of in number of in number of Number of Securities authorized officer
increase/ Securities Securities following such of
decrease increase/decrease Trustee
<S> <C> <C> <C> <C>
</TABLE>
A1-11
<PAGE> 88
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.
OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A
RELATED PARTY (AS DEFINED IN THE INDENTURE) OF QUALCOMM INCORPORATED.
Certificate Number: Number of Common Securities:
_______________ __________________
Certificate Evidencing Common Securities
of
QUALCOMM FINANCIAL TRUST I
5 3/4% Trust Convertible Common Securities
(liquidation amount $50 per Common Security)
QUALCOMM Financial Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the 5 3/4% Trust Convertible Common Securities (liquidation amount
$50 per Common Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of February 25,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Sponsor
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
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<PAGE> 89
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of ____________, 199__.
QUALCOMM Financial Trust I
By: ________________________________
Name:
Title: Regular Trustee
A2-2
<PAGE> 90
{FORM OF REVERSE OF SECURITY}
Distributions payable on each Common Security will be fixed at a rate
per annum of 5 3/4% (the "Coupon Rate") of the stated liquidation amount of $50
per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from February 25, 1997 and will be
payable quarterly in arrears, on March 1, June 1, September 1 and December 1 of
each year, commencing on June 1, 1997, which payment dates shall correspond to
the interest payment dates on the Debentures, to Holders of record at the close
of business on the regular record date for such distribution which shall be the
close of business on the Business Day next preceding such distribution payment
date unless otherwise provided in the Declaration. The Debenture Issuer has the
right under the Indenture, subject to certain conditions, to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") provided that no Extension Period shall last beyond the date
of maturity of the Debentures and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the date of
maturity of the Debentures. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of Common Stock
of QUALCOMM Incorporated ("QUALCOMM Common Stock"), through (i) the exchange of
Common Securities for a portion of the Debentures and (ii) the immediate
conversion of such Debentures into QUALCOMM Common Stock, in the manner and
according to the terms set forth in the Declaration.
A2-3
<PAGE> 91
CONVERSION REQUEST
To: Wilmington Trust Company
as Property Trustee of
QUALCOMM Financial Trust I
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of QUALCOMM Incorporated (the "QUALCOMM Common
Stock") in accordance with the terms of the Amended and Restated Declaration of
Trust, dated as of February 25, 1997 (as amended from time to time, the
"Declaration"), by the Regular Trustees named therein, Wilmington Trust Company,
as Delaware Trustee and as Property Trustee, QUALCOMM Incorporated, as Sponsor,
and by the Holders, from time to time, of undivided beneficial interests in the
Trust to be issued pursuant to the Declaration. Pursuant to the aforementioned
exercise of the option to convert these Common Securities, the undersigned
hereby directs the Conversion Agent (as that term is defined in the Declaration)
to (i) exchange such Common Securities for a portion of the Debentures (as that
term is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Common Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into QUALCOMM Common Stock (at the conversion rate specified in the
terms of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date: ____________, ____
in whole __ in part __
Number of Common Securities to be
converted: _____________________
A2-4
<PAGE> 92
If a name or names other than
the undersigned, please
indicate in the spaces below
the name or names in which the
shares of QUALCOMM Common Stock
are to be issued, along with
the address or addresses of
such person or persons
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
or Other Identifying Number
---------------------------------------------
---------------------------------------------
Signature Guarantee:*
- ------------------
* (Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
A2-5
<PAGE> 93
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ______________________________________________________
________________________________________________________________________________
____________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate) Signature Guarantee**:_____________________________________________
_________________
** (Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.)
A2-6
<PAGE> 94
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 95
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND
AGREES FOR THE BENEFIT OF QUALCOMM INCORPORATED (THE "COMPANY") THAT: (I) IT
HAS ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE OF RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR" FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND
(III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.
ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (D), (E)
OR (F) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEES
FOR SUCH ISSUER (i) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN FORM AND
SUBSTANCE, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
CUSIP No. 747525AA1
Certificate No. D-1. $567,050,000
--------------
QUALCOMM INCORPORATED
5 3/4% CONVERTIBLE SUBORDINATED DEBENTURE
QUALCOMM Incorporated, a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to WILMINGTON TRUST
COMPANY, AS PROPERTY TRUSTEE, or registered assigns, the principal sum of Five
Hundred Sixty Seven Million Fifty Thousand and No/100 Dollars ($567,050,000.00)
(as increased or decreased as indicated on Schedule A attached hereto) on
February 24, 2012, and to pay interest on said principal sum from February 25,
1997, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 1, June
1, September 1, and December 1 of each year commencing June 1, 1997, at the
rate of 5 3/4% per annum until the principal hereof shall have become due
<PAGE> 96
This Convertible Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Debentures"),
specified in the Indenture, all issued or to be issued in one series under and
pursuant to an Indenture (the "Indenture") dated as of February 25, 1997, duly
executed and delivered between the Company and Wilmington Trust Company, as
Trustee (the "Trustee"), to which Indenture (which term shall include,
collectively, any 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 Company and the Holders of
Convertible Debentures. This series of Debentures is limited in aggregate
principal amount as specified in the Indenture and is herein sometimes referred
to as the "Convertible Debentures."
Upon the occurrence and during the continuation of a Tax Event, in
certain circumstances, this Convertible Debenture may become due and payable,
in whole or in part, at the principal amount together with any interest accrued
thereon, including Additional Payments (the "Special Redemption Price"). The
Special Redemption Price shall be paid prior to 12:00 noon, New York time, on
the date of such redemption or at such earlier time as the Company determines.
In addition, the Company shall have the right to redeem this
Convertible Debenture at the option of the Company, upon not less than 20 nor
more than 60 days' notice, in whole or in part at any time on or after March 4,
2000 (an "Optional Redemption") at the following prices (expressed as
percentages of the principal amount of the Convertible Debentures) (the
"Optional Redemption Price") together with accrued and unpaid interest,
including Additional Payments, if any, to, but excluding, the redemption date,
if redeemed during the 12-month period beginning March 4:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 102.0%
2001 101.0%
2002 and thereafter 100.0%
</TABLE>
If Convertible Debentures are redeemed on any March 1, June 1,
September 1, or December 1, accrued and unpaid interest shall be payable to
Holders of record on the relevant record date, instead of the Holders on the
Redemption Date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Debentures will be used to redeem Convertible Preferred Securities.
If Convertible Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption, the Convertible Debentures will be redeemed
on a pro rata basis, in portions equal to $50 (or any integral multiple
thereof) of the principal amount of Convertible Debentures.
In the event of redemption of this Convertible Debenture in part only,
a new Convertible Debenture or Convertible Debentures for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible Debentures
and all interest accrued thereof (including any Additional Payments) 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 Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Debentures; provided, however, that
no such supplemental indenture shall (a) change the fixed maturity of any
Debenture, or reduce the principal amount thereof, or reduce the
<PAGE> 97
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at the same rate
per annum compounded quarterly. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this
Convertible Debenture is not a Business Day, then payment of interest payable
on such date will be made on the next succeeding day that 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 date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture (referred to on the
reverse hereof), be paid to the person in whose name this Convertible Debenture
(or one or more Predecessor Debentures, as defined in said Indenture) is
registered on the Regular Record Date for such interest installment which shall
be the close of business on the date 15 days prior to such Interest Payment
Date unless otherwise provided in the Indenture. Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the registered Holders on such Regular Record Date and may be paid to the
Person in whose name this Convertible Debenture (or one or more Predecessor
Debentures) is registered at the close of business on a special record date to
be fixed by the Trustee (referred to on the reverse hereof) for the payment of
such defaulted interest, notice whereof shall be given to the registered
Holders of the Convertible Debentures not less than 10 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 on which the
Convertible Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. The principal of
(and premium, if any) and the interest on this Convertible Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of
payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the registered Holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the Holder of
this Convertible Debenture is the Property Trustee, the payment of the
principal of (and premium, if any) and interest on this Convertible Debenture
will be made at such place and to such account as may be designated by the
Property Trustee.
The indebtedness evidenced by this Convertible Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, hereby waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such Holder upon said
provisions.
This Convertible Debenture shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Convertible Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
<PAGE> 98
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof, or
make any change that adversely affects the right to convert any Debenture or
make any change in the subordination provisions that adversely affects the
rights of any Holders of any Debenture, without the consent of the Holder of
each Debenture so affected, or (b) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Debentures at the time outstanding, on behalf of all of the Holders of the
Debentures, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture,
and its consequences, except a default in the payment of the principal of or
premium, if any, or interest on any Debentures or a default with respect to
certain covenants concerning the Trust more fully set forth in the Indenture or
a default in respect of any provision in the Indenture that cannot be modified
without the consent of the Holders of all Debentures affected thereby. Any such
consent or waiver by the registered Holder of this Convertible Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Convertible
Debenture and of any Convertible Debenture issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective
of whether or not any notation of such consent or waiver is made upon this
Convertible Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of
and premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
As long as an Event of Default shall not have occurred and be
continuing and certain other conditions have been satisfied, the Company shall
have the right at any time during the term of the Convertible Debentures and
from time to time to extend the interest payment period of such Convertible
Debentures for up to 20 consecutive quarters (as "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest
(including Additional Payments) then accrued and unpaid (together with interest
thereon at the rate specified for the Convertible Debentures to the extent that
payment of such interest is enforceable under applicable law) to the Holders as
they appear on the transfer records of the Company as of the first Regular
Record Date after the Extended Interest Payment Period. Before the termination
of any such Extended Interest Payment Period, the Company may further extend
such Extended Interest Payment Period, provided that such Extended Interest
Payment Period together with all such further extensions thereof shall not
exceed 20 consecutive quarters. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid interest
(including all Additional Payments) then due, the Company may commence a new
Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Convertible Debenture is transferable by the registered Holder
hereof on the Debenture Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in Wilmington, Delaware accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or his or her attorney duly authorized
in writing, and thereupon one or more new Convertible Debentures of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Debenture Registrar may deem and treat the registered Holder hereof as the
absolute owner hereof (whether or not this Convertible Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Debenture Registrar) for the purpose of receiving payment
of or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Debenture Registrar shall be affected by any notice to
the contrary.
<PAGE> 99
No recourse shall be had for the payment of the principal of or the
interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right, exercisable at
any time beginning April 26, 1997 and prior to the close of business (New York
time) on February 24, 2012 (or, in the case of a Convertible Debenture called
for redemption, prior to the close of business on the Business Day prior to the
corresponding redemption date), to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $50) into shares of Common
Stock at the initial conversion rate of 0.6882 shares of Common Stock for each
$50 in aggregate principal amount of Convertible Debenture (equivalent to a
Conversion Price of $72.6563 per share of Common Stock), subject to adjustment
under certain circumstances.
To convert a Convertible Debenture, a Holder must (a) complete and sign
a conversion notice substantially in the form attached hereto, (b) surrender
the Convertible Debenture to the Conversion Agent, (c) furnish appropriate
endorsements or transfer documents if required by the Conversion Agent and (d)
pay any transfer or similar tax, if required. Upon conversion, no adjustment or
payment will be made for interest (including Additional Payments) or dividends,
but if any Holder surrenders a Convertible Debenture for conversion on or after
the Regular Record Date for the payment of an installment of interest and prior
to the opening of business on the next Interest Payment Date, then,
notwithstanding such conversion, the interest payable on such Interest Payment
Date will be paid to the registered Holder of such Convertible Debenture on
such Regular Record Date. The number of shares issuable upon conversion of a
Convertible Debenture is determined by dividing the principal amount of the
Convertible Debentures converted by the Conversion Price in effect on the
Conversion Date. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest. The outstanding principal
amount of any Convertible Debenture shall be reduced by the portion of the
principal amount thereof converted into shares of Common Stock.
The Convertible Debentures are issuable only in registered form without
Coupons in denominations of $50 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Convertible Debentures are exchangeable for a like aggregate principal amount
of Convertible Debentures of a different authorized denomination, as requested
by the Holder surrendering the same.
All terms used in this Convertible Debenture that are not defined
herein but are defined in the Indenture shall have the meanings assigned to
them in the Indenture.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
<PAGE> 100
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
QUALCOMM INCORPORATED
By: /s/ Anthony S. Thornley
--------------------------------
Name: Anthony S. Thornley
Title:
Attest:
By: /s/ Irwin Mark Jacobs
-----------------------------
Name: Irwin Mark Jacobs
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
Dated: February 25, 1997
Wilmington Trust Company, as Trustee
By: /s/ James P. Lawler
------------------------------
Authorized Signatory
<PAGE> 101
ELECTION TO CONVERT
To: QUALCOMM Incorporated
The undersigned owner of this Convertible Debenture hereby irrevocably
exercises the option to convert this Convertible Debenture, or the portion
below designated, into Class A Common Stock of QUALCOMM INCORPORATED in
accordance with the terms of the Indenture referred to in this Convertible
Debenture, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date: ________________, ____
in whole _____ in part _____
Portion of Convertible Debenture to be
converted ($50 or integral multiples
thereof):
$______________
________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number
________________________________________
________________________________________
________________________________________
Signature Guarantee: (1)________________
(1) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
<PAGE> 102
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Convertible Debenture to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
and irrevocably appoints________________________________________________________
agent to transfer this Convertible Debenture on the books of the Company. The
agent may substitute another to act for him or her.
Date:_________________________
Signature:____________________
(Sign exactly as your name appears on the other side of this Convertible
Debenture)
Signature Guarantee(2):________________________________________________
(2) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Debenture Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.
<PAGE> 103
SCHEDULE A
The original principal amount of this Debenture shall be
$567,050,000.00. The following increases or decreases in the principal amount
of this Debenture have been made:
<TABLE>
<CAPTION>
Signature of
Date of Principal amount of authorized officer
increase/ Amount of increase Amount of decrease Debenture following of Trustee or
decrease in principal amount in principal amount increase/decrease Custodian
- -------- ------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 104
EXHIBIT C
PURCHASE AGREEMENT
C-1
<PAGE> 105
DEBENTURE PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of February 25, 1997, between QUALCOMM
INCORPORATED, a corporation existing under the laws of the State of Delaware
(the "Issuer"), and QUALCOMM FINANCIAL TRUST I, a statutory business trust
organized under the laws of the State of Delaware (the "Trust"), relating to the
5 3/4% Convertible Subordinated Debentures due February 24, 2012 (the
"Debentures") issuable pursuant to the Indenture (the "Indenture") dated as of
February 25, 1997 between the Company and Wilmington Trust Company, as trustee.
Capitalized terms used herein and not otherwise defined herein have the
respective meanings ascribed thereto in the Purchase Agreement, dated February
19, 1997 among Issuer, the Trust and the Purchasers named therein (the "Purchase
Agreement").
WHEREAS, the Trust, desires to purchase from the Issuer, and the Issuer
desires to sell to the Trust, the Debentures.
NOW THEREFORE, the parties hereto agrees as follows:
1. The Trust hereby offers to purchase and the Issuer hereby
accepts such offer and agrees to issue and sell to the Trust on the Closing Date
(as defined in the Purchase Agreement) $567,050,000 aggregate principal amount
of the Debentures, in consideration of the payment on or before the date hereof
of $567,050,000 in immediately available funds.
2. The Issuer represents and warrants that the Debentures have
been duly authorized and executed by the Issuer, and when duly authenticated and
delivered to the Trust in accordance with the terms hereof, will constitute the
legally valid and binding obligations of the Issuer entitled to the benefits of
the Indenture and enforceable against the Issuer in accordance with their terms
(subject to the receivership, convservatorship and supervisory powers of both
regulatory agencies as well as applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws affecting creditors'
rights generally from time to time in effect, and subject, as as to
enforceability, to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.)
3. This Agreement shall be deemed to be a contract made under the
laws of the State of New York, and for all purposes shall be governed by and
construed in accordance with the laws of said State, without regard to conflicts
of law principles thereof.
1.
<PAGE> 106
IN WITNESS WHEREOF, the parties hereto have caused this Debenture
Purchase Agreement to be duly executed as of the date hereof.
QUALCOMM INCORPORATED
By: /s/ Irwin Mark Jacobs
-------------------------------------
Name: Irwin Mark Jacobs
Title: Chief Executive Officer
QUALCOMM FINANCIAL TRUST I
By: /s/ Anthony S. Thornley
-------------------------------------
Name: Anthony S. Thornley
Title: Regular Trustee
2.
<PAGE> 107
EXHIBIT D
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER FROM RESTRICTED GLOBAL PREFERRED SECURITY TO REGULATION
S GLOBAL PREFERRED SECURITY
(Pursuant to Section 9.2(c) of the Declaration)
Wilmington Trust Company
1100 North Market Street
Ninth Floor
Wilmington, Delaware 19890
Attention: ___________________
RE: 5 3/4% Trust Convertible Preferred Securities of QUALCOMM
Financial Trust I
Dear Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Declaration of
Trust, dated as of February 25, 1997 (the "Declaration"), of QUALCOMM Financial
Trust I, a Delaware business trust (the "Trust") , among QUALCOMM Incorporated,
as Sponsor, and the several trustees named therein. Capitalized terms used but
not defined herein shall have the meanings given to them in the Declaration.
This letter relates to _________ (number) Convertible Preferred
Securities which are evidenced by one or more Restricted Global Preferred
Securities and held with the Depositary in the name of _____________________
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Convertible Preferred Securities to a Person who will take
delivery thereof in the form of an equal number of Convertible Preferred
Securities evidenced by one or more Regulation S Global Preferred Securities,
which amount, immediately after such transfer, is to be held with the Depositary
through Euroclear or CEDEL or both.
In connection with such request and in respect of such Convertible
Preferred Securities, the Transferor hereby certifies that such transfer has
been effected in compliance with the transfer restrictions applicable to the
Convertible Preferred Securities and pursuant to and in accordance with Rule 903
or Rule 904 under the United States Securities Act of 1933, as amended (the
"Securities Act"), and accordingly the Transferor hereby further certifies that:
(1) The offer of the Convertible Preferred Securities was not made
to a person in the United States;
(2) either:
(a) at the time the buy order was originated, the
transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed and believes that the transferee
was outside the United States; or
D-1
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(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market
and neither the Transferor nor any person acting on
its behalf knows that the transaction was prearranged
with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest
being transferred as described above is to be held with the
Depositary through Euroclear or CEDEL or both.
(6) With respect to transfers made in reliance on Rule 144, the
Convertible Preferred Securities are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
and with respect to transfer made in reliance on Rule 144A,
that such Convertible Preferred Securities are being
transferred in accordance with Rule 144A under the Securities
Act to a transferee that the Transferor reasonably believes is
purchasing the Convertible Preferred Securities for its own
account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and
any such account is a "qualified institutional buyer" within
the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable
securities laws of any state of the United States or any other
jurisdiction.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903 (c) (2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903 (c) (2) or (3) or Rule 904(c)(1), as the
case may be.
Upon giving effect to this request to exchange a beneficial interest in
a Restricted Global Preferred Security for a beneficial interest in a Regulation
S Global Preferred Security, the resulting beneficial interest shall be subject
to the restrictions on transfer applicable to Regulation S Global Preferred
Securities pursuant to the Declaration and the Securities Act.
D-2
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This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Initial Purchasers under the
Purchase Agreement, and you and each of them are entitled to rely on the
contents of this certificate. Terms used in this certificate and not otherwise
defined in the Declaration have the meanings set forth in Regulation S under the
Securities Act.
________________________________________
[Insert Name of Transferor]
By: ____________________________________
Name:
Title:
Dated:___________________
D-3
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EXHIBIT E
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL PREFERRED SECURITY
TO RESTRICTED GLOBAL PREFERRED SECURITY
(Pursuant to Section 9.2(d) of the Declaration)
Wilmington Trust Company
1100 North Market Street
Ninth Floor
Wilmington, Delaware 19890
Attention: _______________________
RE: 5 3/4% Trust Convertible Preferred Securities of QUALCOMM
Financial Trust I
Dear Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Declaration of
Trust, dated as of February 25, 1997 (the "Declaration"), of QUALCOMM Financial
Trust I, a Delaware business trust (the "Trust") , among QUALCOMM Incorporated,
as sponsor, and the several trustees named therein. Capitalized terms used but
not defined herein shall have the meanings given to them in the Declaration.
This letter relates to _________ (number) Convertible Preferred
Securities which are evidenced by one or more Regulation S Global Preferred
Securities and held with the Depositary through Euroclear or CEDEL or both in
the name of _____________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Convertible Preferred
Securities to a Person who will take delivery thereof in the form of an equal
number of Convertible Preferred Securities evidenced by one or more Restricted
Global Preferred Securities, which amount, immediately after such transfer, is
to be held with the Depositary.
In connection with such request and in respect of such Convertible
Preferred Securities, the Transferor hereby certifies that:
[CHECK ONE]
/ / such transfer is being effected pursuant to and in accordance
with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Convertible
Preferred Securities are being transferred to a Person that
the Transferor reasonably believes is purchasing the
Convertible Preferred Securities for its own account, or for
one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A;
or
E-1
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/ / such transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
/ / such transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from
the registration requirements of the Securities Act other than
Rule 144A or Rule 144, and the Transferor hereby further
certifies that the Convertible Preferred Securities are being
transferred in compliance with the transfer restrictions
applicable to the Convertible Preferred Securities and in
accordance with the requirements of the exemption claimed,
which certification is supported by such legal opinions or
other information provided by the Transferor or the transferee
(a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Trust, to
the effect that such transfer is in compliance with the
Securities Act;
and such Convertible Preferred Securities are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Preferred Securities for a beneficial interest in Restricted
Global Preferred Securities, the resulting beneficial interest shall be subject
to the restrictions on transfer applicable to Restricted Global Preferred
Securities pursuant to the Declaration and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Initial Purchasers under the
Purchase Agreement, and you and each of them are entitled to rely on the
contents of this certificate. Terms used in this certificate and not otherwise
defined in the Declaration have the meanings set forth in Regulation S under the
Securities Act.
________________________________________
[Insert Name of Transferor]
By:________________________________
Name:
Title:
Date:________________,________
E-2
<PAGE> 1
Exhibit 4.4
===============================================
QUALCOMM INCORPORATED
as Issuer
TO
WILMINGTON TRUST COMPANY
as Trustee
INDENTURE
dated as of February 25, 1997
5-3/4% Convertible Subordinated Debentures
Due 2012
===============================================
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS........................................................................................... 1
SECTION 1.1 Definitions....................................................................................... 1
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES.................................... 10
SECTION 2.1 Designation and Principal Amount.................................................................. 10
SECTION 2.2 Form of Debentures; Initial Issuance to Property Trustee.......................................... 10
SECTION 2.3 Denomination of Debentures; Payment of Interest; Extension of Interest Payment Period............. 12
SECTION 2.4 Execution, Authentication, Delivery and Dating.................................................... 15
SECTION 2.5 Registration, Registration of Transfer and Exchange............................................... 15
SECTION 2.6 Mutilated, Destroyed, Lost and Stolen Debentures.................................................. 17
SECTION 2.7 Temporary Debentures.............................................................................. 17
SECTION 2.8 Persons Deemed Owners............................................................................. 18
SECTION 2.9 Cancellation...................................................................................... 18
ARTICLE III REDEMPTION OF DEBENTURES............................................................................ 18
SECTION 3.1 Optional Redemption by Company.................................................................... 18
SECTION 3.2 Tax Event Redemption.............................................................................. 19
SECTION 3.3 Applicability of Article.......................................................................... 20
SECTION 3.4 No Sinking Fund................................................................................... 20
SECTION 3.5 Election to Redeem; Notice to Trustee............................................................. 20
SECTION 3.6 Selection by Trustee of Debentures to Be Redeemed................................................. 20
SECTION 3.7 Notice of Redemption.............................................................................. 20
SECTION 3.8 Deposit of Redemption Price....................................................................... 21
SECTION 3.9 Debentures Payable on Redemption Date............................................................. 22
SECTION 3.10 Debentures Redeemed in Part...................................................................... 22
ARTICLE IV SUBORDINATION OF DEBENTURES.......................................................................... 22
SECTION 4.1 Debentures Subordinate to Senior Indebtedness..................................................... 22
SECTION 4.2 Payment Over of Proceeds Upon Dissolution, Etc.................................................... 22
SECTION 4.3 Prior Payment to Senior Indebtedness Upon Acceleration of Debentures.............................. 23
SECTION 4.4 No Payment When Senior Indebtedness in Default.................................................... 24
SECTION 4.5 Payment Permitted in Certain Situations........................................................... 24
SECTION 4.6 Subrogation to Rights of Holders of Senior Indebtedness........................................... 24
SECTION 4.7 Provisions Solely to Define Relative Rights....................................................... 25
SECTION 4.8 Trustee to Effectuate Subordination............................................................... 25
SECTION 4.9 No Waiver of Subordination Provisions............................................................. 25
SECTION 4.10 Notice to Trustee................................................................................ 26
SECTION 4.11 Reliance on Judicial Order or Certificate of Liquidating Agent................................... 26
SECTION 4.12 Trustee Not Fiduciary for Holders of Senior Indebtedness......................................... 27
SECTION 4.13 Rights of Trustee as Holder of Senior Indebtedness, Preservation of Trustee's Rights............. 27
SECTION 4.14 Article Applicable to Paying Agents.............................................................. 27
SECTION 4.15 Certain Conversions Deemed Payment............................................................... 27
ARTICLE V CERTAIN COVENANTS..................................................................................... 28
SECTION 5.1 Payment of Principal, Premium and Interest........................................................ 28
SECTION 5.2 Maintenance of Office or Agency................................................................... 28
SECTION 5.3 Money for Debentures Payments to Be Held in Trust................................................. 28
SECTION 5.4 Existence......................................................................................... 29
SECTION 5.5 Statement by Officers as to Default............................................................... 30
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SECTION 5.6 Limitation on Dividends and Other Payments........................................................ 30
SECTION 5.7 Covenants as to the Trust......................................................................... 31
SECTION 5.8 Payment of Expenses of the Trust.................................................................. 31
SECTION 5.9 Registration Rights............................................................................... 31
SECTION 5.10 Payment of Taxes and Other Claims................................................................ 32
ARTICLE VI HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.................................................... 32
SECTION 6.1 Company to Furnish Trustee Names and Addresses of Holders......................................... 32
SECTION 6.2 Preservation of Information; Communications to Holders............................................ 33
SECTION 6.3 Reports by Trustee................................................................................ 34
SECTION 6.4 Reports by Company................................................................................ 34
ARTICLE VII DEFAULTS AND REMEDIES............................................................................... 35
SECTION 7.1 Events of Default................................................................................. 35
SECTION 7.2 Acceleration of Maturity; Rescission and Annulment................................................ 36
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement by Trustee................................... 37
SECTION 7.4 Trustee May File Proofs of Claim.................................................................. 38
SECTION 7.5 Trustee May Enforce Claims Without Possession of Debentures....................................... 38
SECTION 7.6 Application of Money Collected.................................................................... 39
SECTION 7.7 Limitation on Suits............................................................................... 39
SECTION 7.8 Unconditional Right of Holders to Receive Principal and Interest and to Convert................... 40
SECTION 7.9 Restoration of Rights and Remedies................................................................ 40
SECTION 7.10 Rights and Remedies Cumulative................................................................... 40
SECTION 7.11 Delay or Omission Not Waiver..................................................................... 40
SECTION 7.12 Control by Holders of Debentures................................................................. 40
SECTION 7.13 Waiver of Past Defaults.......................................................................... 41
SECTION 7.14 Undertaking for Costs............................................................................ 41
SECTION 7.15 Waiver of Stay or Extension Laws................................................................. 42
SECTION 7.16 Enforcement by Holders of Convertible Preferred Securities....................................... 42
ARTICLE VIII CONCERNING THE TRUSTEE............................................................................. 43
SECTION 8.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default...................... 43
SECTION 8.2 Certain Rights of Trustee......................................................................... 44
SECTION 8.3 Not Responsible for Recitals or Issuance of Debentures............................................ 45
SECTION 8.4 May Hold Debentures............................................................................... 45
SECTION 8.5 Money Held in Trust............................................................................... 45
SECTION 8.6 Compensation and Reimbursement.................................................................... 45
SECTION 8.7 Resignation and Removal; Appointment of Successor................................................. 46
SECTION 8.8 Acceptance of Appointment by Successor............................................................ 47
SECTION 8.9 Disqualification; Conflicting Interests........................................................... 47
SECTION 8.10 Corporate Trustee Required; Eligibility.......................................................... 48
SECTION 8.11 Preferential Collection of Claims Against Company................................................ 48
SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business...................................... 48
SECTION 8.13 Appointment of Authenticating Agent.............................................................. 48
SECTION 8.14. Notice of Defaults.............................................................................. 50
ARTICLE IX ACTS OF HOLDERS...................................................................................... 50
SECTION 9.1 Acts of Holders................................................................................... 50
ARTICLE X MEETINGS OF HOLDERS OF DEBENTURES..................................................................... 51
SECTION 10.1 Purposes for Which Meetings May be Called........................................................ 51
SECTION 10.2 Call, Notice and Place of Meetings............................................................... 51
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SECTION 10.3 Persons Entitled to Vote at Meetings............................................................. 52
SECTION 10.4 Quorum; Action................................................................................... 52
SECTION 10.5 Determination of Voting Rights; Conduct and Adjournment of Meetings.............................. 53
SECTION 10.6 Counting Votes and Recording Action of Meetings.................................................. 53
ARTICLE XI SUPPLEMENTAL INDENTURES.............................................................................. 54
SECTION 11.1 Supplemental Indentures Without Consent of Holders............................................... 54
SECTION 11.2 Supplemental Indentures With Consent of Holders.................................................. 55
SECTION 11.3 Execution of Supplemental Indentures............................................................. 55
SECTION 11.4 Effect of Supplemental Indentures................................................................ 56
SECTION 11.5 Conformity with Trust Indenture Act.............................................................. 56
SECTION 11.6 Reference in Debentures to Supplemental Indentures............................................... 56
ARTICLE XII CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................................................... 56
SECTION 12.1 Company May Consolidate, Etc. on Certain Terms................................................... 56
SECTION 12.2 Successor Corporation Substituted................................................................ 57
SECTION 12.3 Opinion of Counsel to Trustee.................................................................... 57
ARTICLE XIII SATISFACTION AND DISCHARGE......................................................................... 57
SECTION 13.1 Satisfaction and Discharge of Indenture.......................................................... 57
SECTION 13.2 Application of Trust Money....................................................................... 58
ARTICLE XIV IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES......................... 59
ARTICLE XV CONVERSION OF DEBENTURES............................................................................. 59
SECTION 15.1 Conversion Rights................................................................................ 59
SECTION 15.2 Conversion Procedures............................................................................ 60
SECTION 15.3 Conversion Price Adjustments..................................................................... 61
SECTION 15.4 Conversion Price Adjustment - Rights under Shareholders Rights Plan.............................. 65
SECTION 15.5 Conversion Price Adjustment - Merger, Consolidation or Sale of Assets of the Company............. 66
SECTION 15.6 Merger, Consolidation, or Sale of Assets......................................................... 67
SECTION 15.7 Notice of Adjustments of Conversion Price........................................................ 68
SECTION 15.8 Prior Notice of Certain Events................................................................... 68
SECTION 15.9 Dividend or Interest Reinvestment Plans.......................................................... 69
SECTION 15.10 Certain Additional Rights....................................................................... 69
SECTION 15.11 Reservation of Shares of Common Stock........................................................... 70
SECTION 15.12 Payment of Certain Taxes upon Conversion........................................................ 70
SECTION 15.13 Nonassessability................................................................................ 70
SECTION 15.14 Duties of Trustee Regarding Conversion.......................................................... 70
SECTION 15.15 Repayment of Certain Funds upon Conversion...................................................... 71
SECTION 15.16 Restrictions on Common Stock Issuable Upon Conversion........................................... 71
ARTICLE XVI MISCELLANEOUS PROVISIONS............................................................................ 71
SECTION 16.1 Compliance Certificates and Opinions............................................................. 71
SECTION 16.2 Form of Documents Delivered to Trustee........................................................... 72
SECTION 16.3 Notices, Etc., to Trustee and Company............................................................ 72
SECTION 16.4 Notice to Holders of Debentures; Waiver.......................................................... 73
SECTION 16.5 Language of Notices, Etc......................................................................... 73
SECTION 16.6 Conflict with Required Provisions of the Trust Indenture Act..................................... 73
SECTION 16.7 Effect of Headings and Table of Contents......................................................... 73
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SECTION 16.8 Successors and Assigns........................................................................... 73
SECTION 16.9 Separability Clause.............................................................................. 74
SECTION 16.10 Benefits of Indenture........................................................................... 74
SECTION 16.11 Governing Law................................................................................... 74
SECTION 16.12 Legal Holidays.................................................................................. 74
SECTION 16.13 Execution in Counterparts....................................................................... 74
</TABLE>
Exhibit A: Form of Debenture
iv
<PAGE> 6
INDENTURE, dated as of February 25, 1997, between QUALCOMM
Incorporated, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company," as more fully defined in Section
1.1), having its principal office at 6455 Lusk Boulevard, San Diego, California
92121-2779, and Wilmington Trust Company, a national banking association having
its principal corporate trust office at 1100 North Market Street, Ninth Floor,
Wilmington, Delaware 19890, as Trustee (herein called the "Trustee," as more
fully defined in Section 1.1).
RECITALS OF THE COMPANY:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5-3/4% Convertible Subordinated Debentures due 2012
(hereinafter sometimes called the "Debentures"), in an aggregate principal
amount not to exceed $567,050,000 (or up to $680,452,500 if the overallotment
option granted under the Purchase Agreement is exercised in full) and, to
provide the terms and conditions upon which the Debentures are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Debentures, the certificate of authentication to be borne
by the Debentures, and the form of assignment, and the form of conversion notice
to be borne by the Debentures are to be substantially in the forms hereinafter
provided for; and
WHEREAS, all acts and things necessary to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Debentures have in
all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Debentures are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Debentures by the Holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective Holders from
time to time of the Debentures (except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
<PAGE> 7
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States of America, and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are
generally accepted in the United States of America at the date of such
computation;
(d) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(e) headings are for convenience of reference only and do not
affect interpretation; and
(f) the following terms have the meanings given to them in the
Declaration: (i) Clearing Agency; (ii) Common Stock; (iii) Conversion
Agent; (iv) Convertible Preferred Security Certificate; (v) Delaware
Trustee; (vi) Dissolution Tax Opinion; (vii) DTC; (viii) Investment
Company Event; (ix) No-Recognition Opinion; (x) Property Trustee; (xi)
Purchase Agreement; (xii) Redemption Tax Opinion; (xiii) Regular
Trustees; (xiv) Special Event; and (xv) Tax Event.
"Act," when used with respect to any Holder of a Debenture, has the
meaning specified in Section 9.1.
"Actual Knowledge" means, with respect to the Trustee's knowledge of an
occurrence, receipt by a Responsible Officer of the Trustee of written notice of
such occurrence from the Company or a Holder or Holders of at least ten percent
(10%) of the Outstanding principal amount of the Debentures.
"Additional Interest" has the meaning specified in Section 2.3(b).
"Additional Payment" means any Additional Interest, Compounded
Interest, or Liquidated Damages.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Applicable Price" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of the Common Stock receive only cash, the amount of
cash received by the holder of one share of Common Stock and (ii) in the event
of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the Closing Prices during the ten trading days prior to
and including the record date for the determination of the holders of Common
Stock entitled to receive such securities, cash, or other property in connection
with such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if
there is no such record date, the date upon which the holders of the Common
Stock shall have the right to receive such securities, cash, or other property,
in each case as adjusted in good faith by the Company to appropriately reflect
any of the events referred to in clauses (i) through (vi) of Section 15.3(a).
2
<PAGE> 8
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 8.13 to act on behalf of the Trustee to authenticate
Debentures.
"Authorized Newspaper" means a newspaper, in the English language or in
an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in the place in connection with which the term is
used, or in the financial community of such place. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Debenture" means a Debenture evidencing all or part of the
Debentures, issued to the Depositary or its nominee, and registered in the name
of such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
or the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such common stock, in each case listen on the NASDAQ National Market
System or, if the common stock is not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such common
stock is listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices as furnished by any NASDAQ National Market System member firm selected
from time to time by the Board of Directors of the Company for that purpose or,
if not so available in such manner, as otherwise determined in good faith by the
Board of Directors.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with the Convertible Preferred Securities
issued by the Trust; provided, however, that, upon the occurrence of an event of
default under the Declaration, the rights of holders of Common Securities to
payment in respect to distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of the Convertible
Preferred Securities.
"Common Securities Guarantee" means any Guarantee that the Company
enters into with the Property Trustee or other Persons that operates directly or
indirectly for the benefit of holders of the Common Securities.
"Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the
anti-dilution provisions of any Debenture, however, shares of Common Stock
issuable on
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conversion of a Debenture shall include only shares of the class designated as
Class A Common Stock of the Company at the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of the payment of dividends or the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company, provided, however, that, if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of such classes resulting from all such reclassifications.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common Stock consists of
common stock that for each of the ten consecutive trading days prior to the
record date for the determination of the holders of Common Stock entitled to
receive such common stock or if there is no such record date, the date on which
the holders of the Common Stock shall have the right to receive such Common
Stock, has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Convertible Preferred
Securities continue to exist as outstanding Convertible Preferred Securities or
(ii) not later than the occurrence of such Fundamental Change, the outstanding
Convertible Preferred Securities are converted into or exchanged for shares of
convertible preferred stock of an entity succeeding to the business of the
Company, which convertible preferred stock has powers, preferences, and
relative, participating, optional, or other rights, and qualifications,
limitations, and restrictions, substantially similar to those of the Convertible
Preferred Securities.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by the Chairman of the Board of Directors or
the President or any Vice Chairman or any Vice President and by the Treasurer or
the Secretary or any Assistant Treasurer or any Assistant Secretary of the
Company and delivered to the Trustee.
"Compounded Interest" has the meaning specified in Section 2.3(c).
"Conversion Price" has the meaning specified in Section 15.1.
"Convertible Preferred Securities" means undivided beneficial interests
in the assets of the Trust which rank pari passu with the Common Securities
issued by the Trust; provided, however, that, upon the occurrence of an event of
default under the Declaration, the rights of holders of Common Securities to
payment in respect to distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of Convertible Preferred
Securities.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which as of the date hereof is located at the address set forth in the first
paragraph of this Indenture.
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"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Debenture Register" and "Debenture Registrar" have the respective
meanings specified in Section 2.5.
"Debenture" has the meaning stated in the first recital of this
Indenture and more particularly means any Debenture authenticated and delivered
under this Indenture.
"Declaration" means the Amended and Restated Declaration of Trust of
the Trust, as it may be amended from time to time in accordance with its terms.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Deferred Interest" has the meaning specified in Section 2.3(c).
"Depositary" means The Depositary Trust Company until a successor
Depositary shall have been appointed pursuant to procedures adopted under
Section 2.5, and thereafter the term "Depositary" shall mean or include each
Person who is then a Depositary hereunder.
"Direct Action" means a proceeding instituted by a holder of
Convertible Preferred Securities directly against the Company to enforce rights
under the Debentures in certain circumstances, as specified in Section 7.16.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration, and the Debentures held by the Property Trustee are to be
distributed to the holders of the Trust Securities pro rata in accordance with
the Declaration.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 7.1.
"Extended Interest Payment Period" has the meaning specified in Section
2.3(c).
"Fundamental Change" means the occurrence of any Transaction or event
in connection with a plan pursuant to which all or substantially all of the
Common Stock shall be exchanged for, converted into, acquired for, or constitute
solely the right to receive securities, cash, or other property (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization, or otherwise), provided, that,
in the case of a plan involving more than one such Transaction or event, for
purposes of adjustment of the conversion price, such Fundamental Change shall be
deemed to have occurred when substantially all of the Common Stock shall be
exchanged for, converted into, or acquired for or constitute solely the right to
receive securities, cash, or other property, but the adjustment shall be based
upon the consideration that a holder of Common Stock received in such
Transaction or event as a result of which more than 50% of the Common Stock
shall have been exchanged for, converted into, or acquired for or constitute
solely the right to receive securities, cash, or other property.
"Global Debenture" has the meaning specified in Section 2.3(a).
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"Guarantor" means the Company, in its capacity as guarantor under any
Trust Securities Guarantee.
"Holder," when used with respect to any Debenture, means the Person in
whose name the Debenture is registered in the Debenture Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of the Debentures.
"Interest Payment Date" has the meaning set forth in the form of
Debenture.
"Liquidated Damages" has the meaning set forth in Section 5.9.
"Maturity," when used with respect to any Debenture, means the date on
which the principal of such Debenture becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Non Book-Entry Convertible Preferred Securities" has the meaning
specified in Section 2.3(a)(ii).
"Non-Stock Fundamental Change" means any Fundamental Change other than
a Common Stock Fundamental Change.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board of Directors or the President or any Vice Chairman or any Vice
President and by the Treasurer or the Secretary or any Assistant Treasurer or
any Assistant Secretary of the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be acceptable to the
Trustee.
"Optional Redemption Price" has the meaning specified in Section
3.1(a).
"Outstanding," when used with respect to the Debentures, means, as of
the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures for whose payment or redemption of which money
or United States Government Obligations in the necessary amount has
been theretofore deposited in accordance with Article XIII with the
Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of Debentures; provided,
however, that, if Debentures or portions of Debentures are to be
redeemed prior to the Maturity thereof, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
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(iii) Debentures in lieu of which other Debentures have been
authenticated and delivered pursuant to this Indenture, other than any
Debentures in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debentures are held by a
bona fide purchaser in whose hands such Debentures are valid
obligations of the Company; and
(iv) Debentures converted into Common Stock pursuant to
Article XV, except as otherwise provided in Section 3.6;
provided, however, that in determining whether the Holders of the requisite
aggregate principal amount of the Outstanding Debentures have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or whether
a quorum is present at a meeting of Holders of Debentures, Debentures owned by
the Company or any other obligor upon such Debentures, or any Affiliate of the
Company or of such other obligor, shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, or upon any such determination as to the presence of a
quorum, only Debentures as to which the Trustee has Actual Knowledge to be so
owned shall be so disregarded. Debentures so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Debentures and that the pledgee is not the Company or any other obligor upon
such Debentures or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of and any premium and interest on any Debentures on behalf of the
Company.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, trust, association, joint stock company,
limited liability company, unincorporated association or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Place of Payment," when used with respect to the Debentures, means the
place or places where, subject to the provisions of Section 5.2, the principal
of and any premium and interest on the Debentures are payable as specified in or
contemplated by the Debentures.
"Predecessor Debenture" of a Debenture means every previous Debenture
evidencing all or a portion of the same debt as that evidenced by such
Debenture; and, for the purposes of this definition, a Debenture authenticated
and delivered under Section 2.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Debenture shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Debenture.
"Preferred Securities Guarantee" means any Guarantee that the Guarantor
may enter into with the Property Trustee or other Persons that operates directly
or indirectly for the benefit of holders of the Convertible Preferred
Securities.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Market Price" initially means $38.79 (which is an amount
equal to 66 2/3% of the reported last sale price for the Common Stock on the
Nasdaq National Market on February 19, 1997), and in the event of any adjustment
of the Conversion Price other than as a result of a Non-Stock
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Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial Conversion Price of the
Debentures.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the date 15 days prior to such Interest Payment Date, whether or not
such day is a Business Day.
"Responsible Officer" means, when used with respect to the Trustee, the
chairman of the board of directors, the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer, the controller or any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Restricted Securities Legend" means the legend restricting transfer of
the Debentures in the form set forth in Section 2.2.
"Rights" means any right of a holder of Common Stock entitling such
holder under certain circumstances to purchase an additional share or shares of
stock.
"Rights Plan" means the Rights Agreement dated as of September 16, 1995
by and between the Company and First Interstate Bank of California, as amended
from time to time.
"Senior Indebtedness" means, with respect to the Company, the principal
of, premium, if any, interest on, and any other payment due pursuant to, any of
the following, whether outstanding on the date of this Indenture or thereafter
incurred or created: (a) all indebtedness of the Company for money borrowed or
evidenced by notes, debentures, bonds or other securities (including, but not
limited to, those which are convertible or exchangeable for securities of the
Company and indebtedness owed to subsidiaries and affiliates of the Company);
(b) all indebtedness of the Company due and owing with respect to letters of
credit (including, but not limited to, reimbursement obligations with respect
thereto); (c) all obligations of the Company due and owing with respect to
reimbursement agreements under any surety bond, insurance policy, bankers'
acceptance, security purchase facility, or similar agreement or arrangement; (d)
all indebtedness or other obligations of the Company due and owing with respect
to interest rate and currency swap agreements, cap, floor and collar agreements,
currency spot and forward contracts and other similar agreements and
arrangements; (e) all indebtedness consisting of commitment or standby fees due
and payable to lending institutions with respect to credit facilities or letters
of credit available to the Company; (f) all obligations of the Company under
leases required or permitted to be capitalized under generally accepted
accounting principles; (g) all obligations of the Company issued or assumed as
the deferred purchase price of property or services, all conditional sale
obligations of the Company, and all obligations of the Company under any title
retention agreement; (h) all obligations of the Company under agreements or
arrangements with respect to deferred compensation due its employees or
employees of its Subsidiaries and its obligations under employee benefit plans;
(i) all indebtedness or obligations of others of the kinds described in any of
the preceding clauses (a), (b), (c), (d), (e), (f), (g), or (h) that are (x)
assumed by or guaranteed in any manner by the Company or in effect guaranteed
(directly or indirectly) by the Company through an agreement to purchase,
contingent or otherwise, or in its capacity as a general partner of any entity,
and all obligations of the Company under any such guarantee or other
arrangements, or (y) secured by
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a lien on any property or asset of the Company (whether or not such obligation
is assumed by the Company); and (j) all renewals, extensions, refundings,
deferrals, amendments or modifications of indebtedness or obligations of the
kinds described in any of the preceding clauses (a), (b), (c), (d), (e), (f),
(g), (h), or (i); unless in the case of any particular indebtedness, obligation,
renewal, extension, refunding, amendment, modification or supplement, the
instrument or other document creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Debentures; provided that
Senior Indebtedness shall not include indebtedness for trade payables or
constituting the deferred purchase price of assets or services incurred in the
ordinary course of business.
"Special Redemption Price" has the meaning set forth in Section 3.2.
"Stated Maturity," when used with respect to any Debenture or any
installment of interest thereon, means the date specified in such Debenture as
the fixed date on which the principal of such Debenture or such installment of
interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture, business trust or similar entity, at least a
majority of whose outstanding partnership or similar interests shall at the time
be owned by such Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner.
"Trading Day" shall mean a day on which any securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
"Trust" means the Qualcomm Financial Trust I, a Delaware statutory
business trust.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" shall mean all such
Persons.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed, provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent of any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trust Securities" means Common Securities and Convertible Preferred
Securities.
"Trust Securities Guarantees" means the Common Securities Guarantee and
the Preferred Securities Guarantee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is unconditionally
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guaranteed as a full faith and credit obligation by the United States which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with
respect to any such U.S. Government Obligations or a specific payment of
principal of or interest on any such U.S. Government Obligations held by such
custodian for the account of the holder of such depositary receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depositary receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of principal of or interest on the U.S.
Government Obligations evidenced by such depositary receipt.
"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
The Debentures shall be designated as "5-3/4% Convertible Subordinated
Debentures due 2012". The aggregate principal amount of Debentures that may be
authenticated and delivered pursuant to this Indenture is limited to the sum of
(i) $567,050,000 plus (ii) up to an additional $113,402,500 in the event that
the over-allotment option granted in the Purchase Agreement is exercised in full
(except for Debentures authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debentures pursuant to Sections
2.5, 2.6, 2.7, 3.10, and 15.2). Upon the execution of this Indenture, or from
time to time thereafter, such Debentures may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver such Debentures upon the written order of the Company,
signed by (a) its President, any Executive or Senior Vice President or any Vice
President and (b) its Treasurer or any Assistant Treasurer or its Secretary or
any Assistant Secretary, without any further action by the Company hereunder.
SECTION 2.2 FORM OF DEBENTURES; INITIAL ISSUANCE TO PROPERTY TRUSTEE.
The Debentures and the Trustee's Certificate of Authentication to be
borne by the Debentures shall be in substantially the form set forth in Exhibit
A, which is incorporated in and made a part of this Indenture.
Any of the Debentures may have such letters, numbers or other marks of
identification (including different CUSIP numbers) and such notations, legends
and endorsements as the officer of the Company executing the same may approve
(execution thereof by such officer to be conclusive evidence of such approval)
and as are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any securities exchange or automated
quotation system on which the Debentures may be listed or designated for
issuance or with the procedures of the Depositary, or to conform to usage. The
Company shall furnish any such legend not contained in Exhibit A to the Trustee
in writing.
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The terms and provisions contained in the form of Debentures attached
as Exhibit A hereto shall constitute, and are hereby expressly made a part of,
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Debentures shall be typewritten or printed, lithographed
or engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Debentures may be listed, all as determined by
the officers executing such Debentures, as evidenced by their execution of such
Debentures.
The Debentures initially issued to the Property Trustee shall be in the
form of one or more individual certificates in definitive, fully registered form
without coupons and shall bear the following legend (the "Restricted Securities
Legend") unless the Company determines otherwise in accordance with applicable
law:
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF
THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES
FOR THE BENEFIT OF QUALCOMM INCORPORATED (THE "COMPANY") THAT: (I) IT HAS
ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
(THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS
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SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE
FOREGOING CLAUSE (D), (E) OR (F) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
SECURITY AND THE TRUSTEES FOR SUCH ISSUER (i) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM IN FORM AND SUBSTANCE, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
SECTION 2.3 DENOMINATION OF DEBENTURES; PAYMENT OF INTEREST;
EXTENSION OF INTEREST PAYMENT PERIOD.
(a) Except as provided below, the Debentures shall be issued in
fully registered certificated form without coupons, in denominations of $50 in
principal amount and integral multiples thereof. Principal and interest on the
Debentures issued in certificated form will be payable, the transfer of such
Debentures will be registrable, and such Debentures will be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of the
Trustee; provided, however, that payment of interest may be made at the option
of the Company by check mailed to the Holder at such address as shall appear in
the Debenture Register. Notwithstanding the foregoing, so long as the Holder of
any Debentures is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest and Additional Interest, if any) on such
Debentures held by the Property Trustee will be made at such place and to such
account as may be designated by the Property Trustee.
In connection with a Dissolution Event, (i) the Debentures in
certificated form may be presented to the Trustee by the Property Trustee in
exchange for a global Debenture in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Debentures (a "Global Debenture"),
to be registered in the name of the Depositary, or its nominee, and delivered by
the Trustee to the Depositary for crediting to the accounts of its participants
pursuant to the instructions of the Regular Trustees. The Company upon any such
presentation shall execute a Global Debenture in such aggregate principal amount
and deliver the same to the Trustee for authentication and delivery in
accordance with this Indenture. Payments on the Debentures issued as a Global
Debenture will be made to the Depositary; and
(ii) if any Convertible Preferred Securities are held in non
book-entry certificated form, any Convertible Preferred Security Certificate
which represents Convertible Preferred Securities other than Convertible
Preferred Securities held by the Clearing Agency or its nominee ("Non Book-Entry
Convertible Preferred Securities") will be deemed to represent beneficial
interests in Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Convertible Preferred
Securities until such Convertible Preferred Security Certificates are presented
to the Debenture Registrar for transfer or reissuance at which time such
Convertible Preferred Security Certificates will be canceled and a Debenture,
registered in the name of the holder of the Convertible Preferred Security
Certificate or the transferee of the holder of such Convertible Preferred
Security Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Convertible Preferred Security
Certificate canceled, will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with this Indenture. On
issue of such Debentures, Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the Trustee will be deemed
to have been canceled.
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A Global Debenture may be transferred, in whole but not in part, only
to another nominee of the Depositary, or to a successor depositary selected or
approved by the Company or to a nominee of such successor Depositary.
(b) Each Debenture will bear interest at the rate specified in
Exhibit A (the "Coupon Rate") from February 25, 1997 until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, compounded quarterly, payable
(subject to the provisions of this Section 2.3) quarterly in arrears on March 1,
June 1, September 1 and December 1 of each year (each, an "Interest Payment
Date"), commencing on June 1, 1997, to the Person in whose name such Debenture
or any predecessor Debenture is registered, at the close of business on the
Regular Record Date for such interest installment.
Any interest on any Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Debentures are registered at the
close of business on a Special Record Date (as defined herein) for the payment
of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Debenture and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
provided in this clause. Thereupon, the Trustee shall fix a Special Record Date
(the "Special Record Date") for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Debenture Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefore having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Debentures are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Debentures may be listed, and, if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.3(b),
each Debenture delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue (including in each case Compounded
Interest), which were carried by such other Debenture.
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The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Debentures is not a Business Day, then payment
of interest 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 date.
If, at any time while the Property Trustee is the Holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, the Company will pay as additional interest ("Additional
Interest") on the 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 government charges been imposed.
(c) As long as an Event of Default shall not have occurred and be
continuing, the Company shall have the right, at any time and from time to time
during the term of the Debentures, to defer payments of interest by extending
the interest payment period of such Debentures for a period not exceeding 20
consecutive quarters (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest (including any Additional Interest,
Compounded Interest, and Liquidated Damages) shall be due and payable; provided
that no Extended Interest Payment Period may extend beyond the Maturity Date or
any earlier Redemption Date. To the extent permitted by applicable law, interest
at the Coupon Rate, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 2.3, will bear
interest thereon at the Coupon Rate compounded quarterly for each quarter of the
Extended Interest Payment Period ("Compounded Interest"). At the end of the
Extended Interest Payment Period, the Company shall pay all interest accrued and
unpaid on the Debentures, including any Additional Interest, Compounded Interest
and Liquidated Damages (together, "Deferred Interest") that shall be payable, to
the Holders of Debentures in whose names the Debentures are registered in the
Debenture Register on the first Regular Record Date after the end of the
Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further extend such period, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters, or extend beyond the Stated Maturity of the
Debentures. Upon the termination of any Extended Interest Payment Period and
upon the payment of all Deferred Interest then due, the Company may commence a
new Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
If the Property Trustee is the only registered Holder of the Debentures
at the time the Company selects an Extended Interest Payment Period, the Company
shall give written notice to the Regular Trustees, the Property Trustee and the
Trustee of its election of such Extended Interest Payment Period one Business
Day before the earlier of (i) the next succeeding date on which Distributions on
the Trust Securities issued by the Trust are payable, or (ii) the date the Trust
is required to give notice of the record date, or the date such Distributions
are payable, to the NASDAQ National Market System or other applicable
self-regulatory organization or to holders of Convertible Preferred Securities
issued by the Trust, but in any event at least 10 Business Days before such
record date.
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If the Property Trustee is not the only Holder of the Debentures at the
time the Company elects an Extended Interest Payment Period, the Company shall
give the Holders of Debentures and the Trustee written notice of its selection
of such Extended Interest Payment Period at least 10 Business Days before the
earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the
Company is required to give notice of the record date or payment date with
respect to such interest payment to the NASDAQ National Market System or other
applicable self-regulatory organization or to Holders of Debentures, but in any
event at least two Business Days before such record date.
The quarter in which any notice is given pursuant to paragraph (c) of
this Section 2.3 shall be counted as one of the 20 quarters permitted in the
maximum Extended Interest Payment Period permitted under this Section 2.3.
SECTION 2.4 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Debentures shall be signed on behalf of the Company by both (a) its
Chairman of the Board of Directors or any Vice Chairman of the Board of
Directors or its President or one of its Vice Presidents and (b) its Treasurer
or one of its Assistant Treasurers or its Secretary or one of its Assistant
Secretaries, under its corporate seal which may, but need not, be attested. The
signature of any of these officers on Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Debentures executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of Debentures, and the
Trustee in accordance with the Company Order shall authenticate and make
Debentures available for delivery.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on the Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Debenture shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debenture to the Trustee for cancellation as
provided in Section 2.9 together with a written statement stating that such
Debenture has never been issued and sold by the Company, for all purposes of
this Indenture such Debenture shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 2.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at an office or agency to be
maintained by the Company in accordance with Section 5.2 a register (the
"Debenture Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of transfers of
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<PAGE> 21
Debentures. The Trustee is hereby appointed "Debenture Registrar" for the
purpose of registering transfers of Debentures as herein provided.
Upon due surrender for registration of transfer of any Debenture at the
office or agency of the Company maintained pursuant to Section 5.2 for such
purpose in a Place of Payment, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the designated
transferee or transferees, one or more new Debentures of any authorized
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations and of a like aggregate principal
amount and tenor, upon surrender of the Debentures to be exchanged at any such
office or agency. Whenever any Debentures are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, the Debentures which the Holder making the exchange is entitled to
receive.
Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Debentures which the Holder making the exchange is entitled to
receive.
All Debentures issued upon any registration of transfer or exchange of
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee or any
transfer agent) be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in Exhibit A or in other form satisfactory to the
Company and the Debenture Registrar or any transfer agent duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Debentures, other than
exchanges pursuant to Section 2.7, 3.7 or 15.2 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Debentures during a period beginning at the opening of business
15 days before any selection of Debentures to be redeemed and ending at the
close of business on the day of the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Debenture so
selected for redemption, in whole or in part, except the unredeemed portion of
any Debenture being redeemed in part.
The Debentures shall not be transferred, except in compliance with the
Restricted Securities Legend, unless any such transfer is otherwise determined
by the Company to be in compliance with applicable law. Upon any distribution of
the Debentures to the holders of the Trust Securities in accordance with the
Declaration, the Company and the Trustee shall enter into a supplemental
indenture pursuant to Section 11.1(g) to provide for transfer restrictions
(including legends, if any, to be included on the Debentures) and procedures
with respect to the Debentures substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at the time
of such distribution and the appointment of a Depositary.
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SECTION 2.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Debenture of like principal amount and tenor and
bearing a number not contemporaneously outstanding, and such mutilated Debenture
shall be canceled by the Trustee in accordance with the Indenture.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Debenture and
(ii) such security or indemnity as may be required by them, then, in the absence
of notice to the Company or the Trustee that such Debenture has been acquired by
a bona fide purchaser, the Company shall, subject to the following paragraph,
execute, and the Trustee shall authenticate and make available for delivery, in
lieu of any such destroyed, lost or stolen Debenture, a new Debenture of like
principal amount and tenor and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and any such new
Debenture shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 2.7 TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Debentures in lieu of which they
are issued, in registered form and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debentures may
determine, as evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, all temporary Debentures may be surrendered in exchange
therefor, at the office of the Debenture Registrar, and the Company shall
execute and the Trustee shall authenticate and deliver an equal aggregate
principal amount of definitive Debentures in certificated form in exchange for
temporary Debentures. Such exchange shall be made by the Company at its own
expense and without any charge therefor. Until so
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exchanged, temporary Debentures shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as Debentures
in definitive certificated form authenticated and delivered hereunder.
SECTION 2.8 PERSONS DEEMED OWNERS.
Prior to due presentment of a Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Sections 2.3 and 2.5) any interest or Additional Payments
on such Debenture and for all other purposes whatsoever, whether or not such
Debenture shall be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 2.9 CANCELLATION.
All Debentures surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and promptly shall be canceled by the Trustee. The Company may at any time
deliver to the Trustee for cancellation any Debentures previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Debentures previously authenticated
hereunder which the Company has not issued and sold, and all Debentures so
delivered promptly shall be canceled by the Trustee. No Debentures shall be
authenticated in lieu of or in exchange for any Debentures canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Debentures held by the Trustee shall be disposed of as directed by a Company
Order; provided that the Trustee shall not be required to destroy the
certificates representing the canceled Debentures.
ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.1 OPTIONAL REDEMPTION BY COMPANY.
(a) Subject to the provisions of Sections 3.1(b), (c), and (d)
and to the other provisions of this Article III, the Company shall have the
right to redeem the Debentures, in whole or in part, from time to time, on or
after March 4, 2000, upon not less than 20 days nor more than 60 days notice to
the Holders of the Debentures, at the following prices (expressed as percentages
of the principal amount of the Debentures) (the "Optional Redemption Price"), if
redeemed during the 12-month period beginning March 4:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 ...................... 102%
2001 ...................... 101%
2002 and thereafter........ 100%
</TABLE>
plus, in each case, accrued and unpaid interest (including Additional Payments,
if any) to, but excluding, the Redemption Date.
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The Optional Redemption Price shall be paid prior to 12:00
noon, New York time, on the Redemption Date or at such earlier time as the
Company determines, provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Optional Redemption Price by 10:00 a.m., New York
time, on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would
result in the delisting of the Convertible Preferred Securities issued by the
Trust from any national securities exchange or other organization on which the
Convertible Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
(c) The Company may not redeem fewer than all of the
outstanding Debentures unless all accrued and unpaid interest has been paid on
all of the outstanding Debentures.
(d) Notwithstanding the foregoing, if Debentures are
redeemed on any March 1, June 1, September 1, or December 1, accrued and unpaid
interest (and Additional Payments, if any) shall be payable to Holders of record
on the relevant record date, instead of the Holders on the Redemption Date.
(e) Notwithstanding the foregoing, the Trustee shall not
redeem any Debentures pursuant to this Section 3.1 or mail any notice of
optional redemption during the continuance of a default in payment of interest
or premium on the Debentures or of any Event of Default of which, in the case of
any Event of Default other than under Section 7.1(a) or (b), a Responsible
Officer of the Trustee has Actual Knowledge.
SECTION 3.2 TAX EVENT REDEMPTION.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax
Opinion; or
(b) after receiving a Dissolution Tax Opinion, the
Regular Trustees shall have been informed by tax counsel
rendering the Dissolution Tax Opinion that a No-Recognition
Opinion cannot be delivered to the Trust,
then, notwithstanding Section 3.1(a) but subject to Sections 3.1(b), (c), and
(d), the Company shall have the right upon not less than 20 days nor more than
60 days notice to the Holders of the Debentures to redeem the Debentures, in
whole or in part, for cash within 90 days following the occurrence of such Tax
Event (the "90-Day Period") at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest (including Additional
Payments, if any) thereon to the date of such redemption (the "Special
Redemption Price"); provided, however, that, if at the time there is available
to the Company or the Trust the opportunity to eliminate, within the 90-Day
Period, the Tax Event by taking some ministerial action ("Ministerial Action"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Company, the Trust or the
Holders of the Trust Securities issued by the Trust, the Company shall pursue
such Ministerial Action in lieu of redemption; and, provided, further, that the
Company shall have no right to redeem the Debentures while the Trust is pursuing
any Ministerial Action pursuant to its obligations under the Declaration.
The Special Redemption Price shall be paid prior to 12:00 noon, New
York time, on the Redemption Date or at such earlier time as the Company
determines, provided that the Company shall
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deposit with the Trustee an amount sufficient to pay the Special Redemption
Price by 10:00 a.m., New York time, on the date such Special Redemption Price is
to be paid.
SECTION 3.3 APPLICABILITY OF ARTICLE.
Redemption of Debentures at the election of the Company, as permitted
by Section 3.1 and 3.2, shall be made in accordance with such Sections and this
Article.
SECTION 3.4 NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking fund.
SECTION 3.5 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Debentures shall be evidenced by
an Officers' Certificate. In the case of any redemption at the election of the
Company, the Company shall, at least 45 days prior to the Redemption Date fixed
by the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of
Debentures to be redeemed.
SECTION 3.6 SELECTION BY TRUSTEE OF DEBENTURES TO BE REDEEMED.
If less than all the Debentures are to be redeemed, the particular
Debentures to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Debentures not previously
called for redemption, on a pro rata basis, in portions equal to $50 (or any
integral multiple thereof) of the principal amount of Debentures.
If Debentures selected for partial redemption are converted into Common
Stock in part before termination of the conversion right with respect to the
portion of the Debentures so selected, the converted portion of the Debentures
shall be deemed (so far as may be) to be the portion selected for redemption.
Debentures (or portions thereof) which have been converted into Common Stock
during a selection of Debentures to be redeemed shall be treated by the Trustee
as Outstanding for the purpose of such selection. In any case where more than
one Debenture is registered in the same name, the Trustee in its discretion may
treat the aggregate principal amount so registered as if it were represented by
one Debenture.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption and, in the case of any Debentures selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of the Debentures which has been or is to be
redeemed.
SECTION 3.7 NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section
16.4 to the Holders of Debentures to be redeemed not less than 20 nor more than
60 days prior to the Redemption Date. All
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notices of redemption shall identify the Debentures (including the CUSIP number)
to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest
and Additional Payments, if any, to be paid upon such redemption;
(c) if less than all the Outstanding Debentures are to be
redeemed, the aggregate principal amount of Debentures to be redeemed,
the aggregate principal amount of Debentures to be outstanding after
such partial redemption, the identification (and, in the case of
partial redemption, the principal amounts) of the particular Debentures
to be redeemed, and a statement to the effect that on or after the
Redemption Date upon surrender of such Debenture a new Debenture in the
principal amount equal to the unredeemed portion will be issued;
(d) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debenture to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date;
(e) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price; and
(f) the Conversion Price then in effect, the date on which the
right to convert the Debentures to be redeemed will terminate, and the
place or places where such Debentures may be surrendered for
conversion.
A notice of redemption published as contemplated by Section 16.4 need
not identify particular Debentures to be redeemed.
Notice of redemption of Debentures to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 3.8 DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 5.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest (including Additional
Payments, if any) on, all the Debentures which are to be redeemed on that date.
If any Debenture called for redemption is converted into Common Stock,
any money deposited with the Trustee or with any Paying Agent or so segregated
and held in trust for the redemption of such Debenture shall (subject to any
right of the Holder of such Debenture or any Predecessor Debenture to receive
interest as provided in this Indenture) be paid to the Company upon Company
Request or, if then held by the Company, shall be discharged from such trust.
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SECTION 3.9 DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Debentures so
to be redeemed shall on the Redemption Date become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debentures shall cease to bear interest. Upon surrender of any
such Debenture for redemption in accordance with said notice, such Debenture
shall be paid by the Company at the Redemption Price together with accrued
interest (including Additional Payments, if any) to the Redemption Date; subject
to the provisions of Section 3.1(d).
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest (including Additional Payments, if any) from the Redemption
Date at the rate prescribed therefor in the Debenture.
SECTION 3.10 DEBENTURES REDEEMED IN PART.
Any Debenture which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Debenture without service charge, a new Debenture or Debentures of like tenor of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered.
ARTICLE IV
SUBORDINATION OF DEBENTURES
SECTION 4.1 DEBENTURES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Debenture, by
the Holder's acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article, the indebtedness
represented by the Debenture and the payment of the principal of (and premium,
if any) and interest (including Additional Payments) on each and all of the
Debentures are hereby expressly made subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred. No provision
of this Article shall prevent the occurrence of any Default or Event of Default
hereunder.
SECTION 4.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest (including Additional
Payments) on the Debentures; and upon any such dissolution or
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winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, which the Holders of the Debentures or the Trustee would
be entitled to receive from the Company, except for the provisions of this
Article, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Debentures or by the Trustee under the Indenture if
received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders of the Debentures or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article XII shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or
transfer such properties and assets substantially as an entirety, as the case
may be, shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Article XII.
SECTION 4.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION
OF DEBENTURES.
In the event that any Debentures are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Indebtedness
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of all Senior Indebtedness or provision shall be made for such
payment in cash, before the Holders of the Debentures are entitled to receive
any payment (including any payment which may be payable by reason of the payment
of any other indebtedness of
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the Company being subordinated to the payment of the Debentures) by the Company
on account of the principal of (or premium, if any) or interest (including
Additional Payments) on the Debentures or on account of the purchase or other
acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Debenture prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
SECTION 4.4 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, beyond any applicable
grace period with respect thereto, or in the event that the maturity of any
Senior Indebtedness of the Company, as the case may be, has been accelerated
because of a default, then no payment shall be made by the Company with respect
to the principal (including redemption payments) of, or premium, if any, or
interest (including Additional Payments) on the Debentures, unless and until
such default is cured or waived or ceases to exist or any such acceleration or
demand for payment has been rescinded.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 4.4, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
SECTION 4.5 PAYMENT PERMITTED IN CERTAIN SITUATIONS.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Debentures shall prevent (a) the Company, at any time except during
the pendency of any dissolution, winding-up, liquidation or reorganization of
the Company, whether voluntary or involuntary, or any bankruptcy, insolvency,
receivership or other proceedings of the Company referred to in Section 4.2 or
under the conditions described in Section 4.3 or 4.4, from making payments at
any time of principal of, or premium, if any, or interest (including Additional
Payments) on the Debentures, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal of,
or premium, if any, or interest (including Additional Payments) on the
Debentures or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have Actual Knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 4.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness or the
provision for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness,
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the rights of the Holders of Debentures shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Debentures
are subordinated to the Senior Indebtedness and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Debentures shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of Debentures or the Trustee would
be entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to or for the benefit of the holders
of Senior Indebtedness by Holders of Debentures or the Trustee, shall, as among
the Company, its creditors other than holders of Senior Indebtedness, and the
Holders of Debentures, be deemed to be a payment or distribution by the Company
to or on account of the Senior Indebtedness.
SECTION 4.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of Debentures on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing contained
in this Article or elsewhere in this Indenture or in the Debentures is intended
to or shall (a) impair, as among the Company, its creditors other than holders
of Senior Indebtedness and the Holders of Debentures, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of Debentures the principal of (and premium, if any) and interest on the
Debentures as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of Debentures and creditors of the Company, as the case may be, other
than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
SECTION 4.8 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Debenture by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
SECTION 4.9 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or
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the Holders of Debentures, without incurring responsibility to the Holders of
Debentures and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of Debentures to the holders
of Senior Indebtedness do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 4.10 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company which would prohibit the making
of any payment to or by the Trustee in respect of any Debentures pursuant to the
provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of any Debentures pursuant to the
provisions of this Article, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company or a holder
or holders of Senior Indebtedness or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 8.2, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall have not received the notice
provided for in this Section at least two Business Days prior to the date upon
which, by the terms hereof, any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Debentures), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 8.2, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 4.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 8.2, and the
Holders of Debentures shall be entitled conclusively to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating
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trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Debentures, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 4.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness.
SECTION 4.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS,
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6.
SECTION 4.14 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 4.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 4.15 CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only, (a) the issuance and delivery of
junior securities (or cash paid in lieu of fractional shares) upon conversion of
Debentures in accordance with Article XV, shall not be deemed to constitute a
payment or distribution on account of the principal of or premium or interest on
Debentures or on account of the purchase or other acquisition of Debentures, and
(b) the payment, issuance or delivery of cash, property or securities (other
than junior securities and cash paid in lieu of fractional shares) upon
conversion of a Debenture shall be deemed to constitute payment on account of
the principal of such Debenture. For the purposes of this Section, the term
"junior securities" means (i) shares of any stock of any class of the Company
and (ii) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Debentures are so subordinated as provided in this Article.
Nothing contained in this Article or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of Debentures, the
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right, which is absolute and unconditional, of the Holder of any Debenture to
convert such Debenture in accordance with Article XV.
ARTICLE V
CERTAIN COVENANTS
SECTION 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees that it will duly and punctually pay
the principal of and any premium and interest (including any Additional
Payments) on the Debentures in accordance with the terms of the Debentures and
this Indenture.
SECTION 5.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the United States an office or agency
where Debentures may be presented or surrendered for payment, where Debentures
may be surrendered for registration of transfer, exchange, or conversion and
where notices and demands to or upon the Company in respect of Debentures and
this Indenture may be served. The Company will give prompt notice to the Trustee
and to the Holders as provided in Sections 16.3 and 16.4, respectively, of the
location and any change in the location, of any such office or agency. If at any
time the Company shall fail to maintain any such required office or agency in
respect of Debentures or shall fail to furnish the Trustee with the address
thereof, such presentations and surrenders of Debentures may be made and notices
and demands may be made or served at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the same as its agent to receive such respective
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in
accordance with the requirements set forth above for such purposes. The Company
will give prompt written notice to the Trustee and the Holders of Debentures of
any such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 5.3 MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to Debentures, it will, on or before each due date of the principal of
and any premium or interest on any of the Debentures, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal and any premium or interest so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure to act.
Whenever the Company shall have one or more Paying Agents for
Debentures it will, prior to each due date of the principal of and any premium
or interest on any Debentures, deposit with a Paying Agent a sum sufficient to
pay the principal and any premium or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless
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such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure to act.
The Company will cause each Paying Agent for Debentures other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of and any premium or interest on Debentures in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or
any other obligor upon the Debentures) in the making of any payment of
principal of and any premium or interest on the Debentures;
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent, and
(d) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and any premium or
interest on any Debenture and remaining unclaimed for two years after such
principal and any premium or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of the Debenture shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money and all liability of the Company as trustee thereof shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in an Authorized Newspaper in each Place of Payment, notice that
such money remains unclaimed and that after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 5.4 EXISTENCE.
Subject to Article XII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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SECTION 5.5 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate signed by its principal executive officer, principal financial
officer or principal accounting officer stating whether or not to the best
knowledge of the signer thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder), and if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge.
The Company shall file with the Trustee, within five Business Days
after becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
SECTION 5.6 LIMITATION ON DIVIDENDS AND OTHER PAYMENTS.
In the event that (i) an Event of Default shall have occurred and be
continuing, (ii) the Guarantor shall be in default with respect to its payment
of any obligations under the Preferred Securities Guarantee, or (iii) the
Company shall have given notice of its election to defer payments of interest on
Debentures pursuant to Section 2.3(c) and any Extended Interest Payment Period
shall be continuing, then, in each case, the Company shall not
(x) declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or make a liquidation payment with
respect to, any of its capital stock (other than (A) purchases or
acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee
benefit plans, (B) as a result of a reclassification of capital stock
of the Company or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of capital
stock of the Company, or (C) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock of the Company or the
security being converted or exchanged), or
(y) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by the Company which rank
pari passu with or junior to the Debentures; or
(z) make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Securities Guarantee).
Notwithstanding the foregoing, the Company will be permitted,
in any event, to make dividend, redemption, liquidation and guarantee payments
on capital stock of the Company, and interest, principal, redemption and
guarantee payments on debt securities issued by the Company ranking pari passu
with or junior to the Debentures, where the payment is made by way of securities
(including capital stock) that rank junior to the securities on which such
payment is being made.
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SECTION 5.7 COVENANTS AS TO THE TRUST.
For so long as the Trust Securities remain outstanding, the Company
will (a) maintain 100% direct or indirect ownership of the Common Securities of
the Trust; provided, however, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of the Common Securities; (b)
not to cause, as sponsor of the Trust, or to permit, as holder of the Common
Securities, termination, dissolution or winding up of the Trust, except in
connection with a distribution of the Debentures as provided in the Declaration
and in connection with certain mergers, consolidations or amalgamations as
provided for in the Declaration, (c) use its reasonable efforts, consistent with
the terms of the Declaration, to cause the Trust (i) to remain a statutory
business trust, except in connection with a distribution of Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (ii) to continue to be
classified as a grantor trust for United States federal income tax purposes; and
(d) to use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an undivided beneficial interest in the Debentures.
SECTION 5.8 PAYMENT OF EXPENSES OF THE TRUST.
In connection with the offering, sale and issuance of the Debentures to
the Property Trustee and the sale of the Trust Securities by the Trust, the
Company shall:
(a) pay for all costs, fees and expenses relating to the offering, sale
and issuance of the Debentures;
(b) be responsible for and pay for all obligations (other than with
respect to the Trust Securities) of the Trust, pay for all costs and expenses of
the Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the Initial Purchasers in connection
therewith), the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets), and all liabilities, costs and
expenses with respect to such taxes, of the Trust.
SECTION 5.9 REGISTRATION RIGHTS.
The holders of the Convertible Preferred Securities, the Debentures,
the Preferred Securities Guarantee, and the shares of Common Stock of the
Company issuable upon conversion of the Debentures into Common Stock
(collectively, the "Registrable Securities") are entitled to the benefits of a
Registration Rights Agreement, dated as of February 25, 1997, among the Company
and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company has agreed for the benefit of the
holders of Registrable Securities that (i) it will, at its cost, within 90 days
after the date of original issuance of the Debentures, file a shelf registration
statement (the "Shelf Registration Statement") with the Commission with respect
to the resales of the Registrable Securities, (ii) it will use all reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission as promptly as practicable and in no event later than 180 days
after the
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date of original issuance of the Debentures, and (iii) the Company will use all
reasonable efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act until three years after the latest date of
original issuance of the Debentures or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period").
If (i) on or prior to 90 days following the date of original issuance
of the Registrable Debentures, a Shelf Registration Statement has not been filed
with the Commission, or (ii) on or prior to the 180th day following the date of
original issuance of the Debentures, such Shelf Registration Statement is not
declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures from and including the day
following such Registration Default. Liquidated Damages will be paid quarterly
in arrears, with the first quarterly payment due on the first interest or
distribution payment date, as applicable, following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount, to and
including the 90th day following such Registration Default and one-half of one
percent (0.50%) thereof from and after the 91st day following such Registration
Default. Upon (x) the filing of the Shelf Registration Statement after the
90-day period described in clause (i) above or (y) the effectiveness of the
Shelf Registration Statement after the 180-day period described in clause (ii)
above, the interest rate borne by the Debentures from the date of such filing or
effectiveness, as the case may be, will be reduced to the interest rate then in
effect on the Debentures (excluding Liquidated Damages).
SECTION 5.10 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (b)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
ARTICLE VI
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
As required by Section 312(a) of the Trust Indenture Act, the Company
will furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than March 31 and September 30 of
each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders of the Debentures ("List of
Holders") as of a date not more than 15 days prior to the delivery
thereof, provided, however, that the Company shall not be obligated to
provide such List of Holders at any time the List of Holders does not
differ from the most recent List of Holders given to the Trustee by or
on behalf of the Company, and in the absence of the provision of
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any such List of Holders to the Trustee, then notice shall be deemed to
have been given to the Trustee that the List of Holders has not changed
since the most recent List of Holders; and
(b) at any other time, within 30 days of receipt by the
Company of a written request for a List of Holders as of a date no more
than 15 days before such List of Holders is given to the Trustee.
The Trustee shall preserve, in as current a form as is reasonably practicable,
all information contained in Lists of Holders given to it or which it receives
in the capacity as Debenture Registrar or Paying Agent (if acting in such
capacity), provided, however, that the Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
SECTION 6.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Debentures (i) contained in
the most recent list furnished to the Trustee pursuant to Section 6.1, (ii)
received by the Trustee in its capacity as Debenture Registrar and (iii) filed
with it within the two preceding years pursuant to Section 313(c)(2) of the
Trust Indenture Act. The Trustee may (A) destroy any list furnished to it as
provided in Section 312(a) of the Trust Indenture Act upon receipt of a new list
so furnished, (B) destroy any information received by it as Paying Agent (if so
acting) hereunder upon delivering to itself as Trustee, not earlier than March
20 or September 20 of each year, a list containing the names and addresses of
the Holders of Debentures obtained from such information since the delivery of
the next previous list, if any, (C) destroy any list delivered to itself as
Trustee which was compiled from information received by it as Paying Agent (if
so acting) hereunder upon the receipt of a new list so delivered and (D) destroy
not earlier than two years after filing, any information filed with it pursuant
to Section 313(c)(2) of the Trust Indenture Act.
(b) If three or more Holders of Debentures (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of
Debentures with respect to their rights under this Indenture or under the
Debentures and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, at its
election, either (i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 6.2(a), or (ii) inform
such applicants as to the approximate number of Holders of Debentures whose
names and addresses appear in the information preserved at the time by the
Trustee in accordance with Section 6.2(a), and as to the approximate cost of
mailing to such Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of Debentures whose name and address appears in the
information preserved at the time by the Trustee in accordance with Section
6.2(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Debentures or would be in violation of
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applicable law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Holders of Debentures with reasonable promptness after the entry of such order
and the renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Debentures, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
of Debentures in accordance with Section 6.2(b), regardless of the source from
which such information was derived and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 6.2(b).
SECTION 6.3 REPORTS BY TRUSTEE.
The Trustee shall in each year transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each May 15 following the date of this Indenture deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of Section 313(a).
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Debentures are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when any Debentures are listed on any stock
exchange.
SECTION 6.4 REPORTS BY COMPANY.
The Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of such
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports required
to be filed with respect to compliance by the Company with the
conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
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(c) transmit to all Holders, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, within 30 days
after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (a) and (b) of this Section as may be required
by rules and regulations prescribed from time to time by the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE VII
DEFAULTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein with respect to the
Debentures, means any one or more of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest upon any Debenture,
including any Compounded Interest, Additional Interest, or Liquidated
Damages in respect thereof, when it becomes due and payable, and
continuance of such default for a period of 30 days (whether or not
such payment is prohibited by the subordination provisions set forth in
Article IV hereof); provided, however, that a valid extension of an
interest payment period by the Company in accordance with the terms of
this Indenture shall not constitute a default in the payment of
interest (including any Additional Payments) for this purpose; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture as and when the same shall become due and
payable whether at maturity, upon redemption, by declaration or
otherwise (whether or not such payment is prohibited by the
subordination provisions set forth in Article IV hereof); or
(c) failure by the Company to issue and deliver Common Stock
or other property issuable upon an election to convert such Debentures
pursuant to Article XV (whether or not such delivery is prohibited by
the subordination provisions set forth in Article IV); or
(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default
or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Debentures, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default"), hereunder; or
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(e) the entry by a court having jurisdiction in the premises
of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
appointing a custodian, receiver, liquidation, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of their property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidation, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of their property,
or the making by it of an assignment for the benefit of creditors; or
(g) the voluntary or involuntary dissolution, winding-up, or
termination of the Trust except in connection with (i) the distribution
of Debentures to holders of Trust Securities in liquidation of their
interest in the Trust, (ii) the redemption of all of the outstanding
Trust Securities of the Trust or (iii) certain mergers, consolidations
or amalgamations, each as permitted by the Declaration.
SECTION 7.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default described in clause (a), (b), (c), (d), or (g)
of Section 7.1 above occurs and is continuing, then, and in each and every such
case, unless the principal of all of the Debentures shall have already become
due and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Debentures then Outstanding hereunder, by
notice in writing to the Company (and to the Trustee if given by the Holders of
Debentures), may declare the entire principal of all Debentures and all interest
accrued thereon (including any Additional Payments) and any other amounts
payable hereunder to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.
If an Event of Default described in clause (e) or (f) of Section 7.1
occurs, the entire principal of all Debentures and all interest accrued thereon
(including any Additional Payments) and any other amounts payable hereunder
shall become immediately due and payable, without any declaration or other act
on the part of the Trustee or the Holders.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article hereinafter, the Holders of a majority
in aggregate principal amount of the Outstanding Debentures, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay --
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(A) all overdue interest (including any Additional
Interest, Compounded Interest and Liquidated Damages) on all
Debentures,
(B) the principal of any Debentures which have become
due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Debentures, and
(C) all sums paid or advanced by the Trustee and each
predecessor Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee and each
predecessor Trustee and their respective agents and counsel;
and
(2) all Events of Default, other than the non-payment of
the principal of Debentures that have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 7.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
In case the Trustee shall have proceeded to enforce any right with
respect to Debentures under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company and the Trustee shall continue as though no such proceedings had
been taken.
SECTION 7.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if,
(a) default is made in the payment of any interest
(including Additional Payments) on any Debenture when such interest
becomes due and payable and such default continues for a period of 30
days (provided that a valid extension of the interest payment period by
the Company pursuant to this Indenture shall not constitute a default
in the payment of any interest (including Additional Payments) for this
purpose), or
(b) default is made in the payment of the principal of
any Debenture at Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of Debentures, the whole amount then due and payable on Debentures for
principal and interest (including any Additional Payments) and, to the extent
that payment of such interest shall be legally enforceable under applicable law,
interest on any overdue principal and on any overdue interest, at the rate per
annum stated in the Debentures; and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel under Section 8.6.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may (in
addition to exercising any other rights pursuant to Section 7.2) prosecute such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon the Debentures and collect the moneys adjudged
or decreed to be payable in
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the manner provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default with respect to Debentures occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Debentures by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, either at law or in equity or in bankruptcy or otherwise whether
for the specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 7.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of Debentures
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (including Additional
Interest) owing and unpaid in respect of the Debentures and to file
such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders of Debentures
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder of Debentures to make such payments
to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders of Debentures, to pay
to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 8.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Debenture any plan of reorganization, arrangement, adjustment or composition
affecting the Debentures or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder of Debentures in any such
proceeding.
SECTION 7.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
DEBENTURES.
All rights of action and claims under this Indenture or under any of
the terms established with respect to the Debentures may be prosecuted and
enforced by the Trustee without the possession of any of the Debentures or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel due under Section 8.6, be
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for the ratable benefit of the Holders of the Debentures in respect of which
such judgment has been recovered.
SECTION 7.6 APPLICATION OF MONEY COLLECTED.
Subject to the provisions of Article IV, any money collected by the
Trustee pursuant to this Article with respect to Debentures shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal or any premium or
interest, upon presentation of the Debentures, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 8.6;
SECOND: To the payment of the amounts then due and unpaid for principal
of and interest (including any Additional Payments) on the Debentures in respect
of which such money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on Debentures for
principal and any premium and interest, respectively.
SECTION 7.7 LIMITATION ON SUITS.
No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless;
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Debentures shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
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SECTION 7.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, but subject to
Article IV of this Indenture, the Holder of any Debenture shall have the right,
which is absolute and unconditional, to receive payment of the principal of and
(subject to Section 2.3) interest (including any Additional Payments) on the
Debentures on the Stated Maturity or Maturities expressed in the Debentures (or,
in the case of redemption, on the Redemption Date) and to convert such Debenture
into Common Stock in accordance with Article XV and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.
SECTION 7.9 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of Debentures has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Debentures shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 7.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures in the last paragraph of
Section 2.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Debentures is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 7.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Debenture
to exercise any right or remedy accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Subject to the provisions of Section 7.7, every right and remedy given
by this Article or by law to the Trustee or to the Holders of Debentures may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Debentures, as the case may be.
SECTION 7.12 CONTROL BY HOLDERS OF DEBENTURES.
The Holders of a majority in aggregate principal amount of the
Outstanding Debentures shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debentures, provided that,
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(a) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
SECTION 7.13 WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Debentures may on behalf of the Holders of all the Debentures waive
any past default hereunder with respect to the Debentures and its consequences,
except a default
(a) in the payment of the principal of (or premium, if any) or
any interest (including Additional Interest, Compounded Interest and
Liquidated Damages) on any Debenture as and when the same shall become
due by the terms of Debentures otherwise than by acceleration (unless
such default has been cured and sums sufficient to pay all matured
installments of interest (including Additional Interest, Compounded
Interest and Liquidated Damages) and principal and any premium has been
deposited with the Trustee (in accordance with Section 7.2)), or
(b) in the covenants contained in Sections 5.6 and 5.7, or
(c) in respect of a covenant or provision hereof which under
Article XI cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected; provided, however, that
if the Debentures are held by the Trust or a trustee of such trust,
such waiver or modification to such waiver shall not be effective until
the holders of a majority in liquidation preference of Trust Securities
of the Trust shall have consented to such waiver or modification to
such waiver; provided further, that if the consent of the Holder of
each Outstanding Debenture is required, such waiver shall not be
effective until each holder of the Trust Securities of the Trust shall
have consented to such waiver.
Upon any such waiver, the default covered thereby shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture and the Company, the Trustee and the holders
of the Debentures shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 7.14 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Debenture
by such Holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder or group of Holders holding in the aggregate more than
10% in principal amount of the Outstanding Debentures, or to any suit instituted
by any Holder of any Debenture for the enforcement of the payment of the
principal of or any premium or interest
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(including Additional Payments) on such Debenture on or after the Stated
Maturity or Maturities expressed in such Debenture (or, in the case of
redemption, on or after the Redemption Date) or the right to convert such
Debenture in accordance with the provisions of this Indenture.
SECTION 7.15 WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 7.16 ENFORCEMENT BY HOLDERS OF CONVERTIBLE PREFERRED
SECURITIES.
(a) Notwithstanding anything to the contrary contained herein, if the
Property Trustee as Holder of the Debentures fails to enforce its rights under
the Debentures (other than rights arising from an Event of Default described in
Section 7.16(b)) for a period of 30 days after any holder of Convertible
Preferred Securities shall have made a written request to the Property Trustee
to enforce such rights, such holder of Convertible Preferred Securities may, to
the fullest extent permitted by law, institute a Direct Action to enforce the
Property Trustee's rights as Holder of the Debentures, without first instituting
any legal proceeding against the Property Trustee or any other Person.
(b) Notwithstanding anything to the contrary contained herein, if an
Event of Default has occurred and is continuing and such Event of Default is
attributable to the failure of the Company to pay interest (including any
Additional Payments) or principal on the Debentures on the date such interest or
principal is otherwise payable, the Company acknowledges that, in such event, a
holder of Convertible Preferred Securities may institute a Direct Action for
enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such Holder, on or after the respective due date
specified in the Debentures, without first instituting any legal proceeding
against the Property Trustee or any other Person.
(c) Notwithstanding any payment made to such holder of Convertible
Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of or interest on the
Debentures held by the Trust or the Property Trustee and the Company shall be
subrogated to the rights of the holder of such Convertible Preferred Securities
with respect to payments on the Convertible Preferred Securities to the extent
of any payments made by the Company to such holder in any Direct Action.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING
DEFAULT; PRIOR TO DEFAULT.
With respect to the Holders of Debentures issued hereunder, the
Trustee, prior to the occurrence of an Event of Default with respect to the
Debentures and after the curing or waiving of all Events of Default which may
have occurred with respect to Debentures, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default with respect to the Debentures has occurred (which has not been
cured or waived), the Trustee shall exercise with respect to the Debentures such
of the rights and powers vested in it by this Indenture, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs. No provision of
this Indenture shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(a) prior to the occurrence of an Event of Default with
respect to the Debentures and after the curing or waiving of all such
Events of Default with respect to the Debentures which may have
occurred:
(i) the duties and obligations of the Trustee with
respect to the Debentures shall be determined solely by the
express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not, on their face, they conform to the
requirements of this Indenture, but shall otherwise have no
duty to determine the accuracy or completeness thereof or
whether the same comply with applicable laws;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders pursuant to Section 7.12 relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
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(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or
affording protection to, the Trustee shall be subject to the provisions
of this Section 8.1
No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
SECTION 8.2 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
or as otherwise expressly provided herein and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders of Debentures pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction; provided, however, that nothing contained in this
Section 8.2(e) shall be taken to relieve the Trustee, upon the
occurrence of an Event of Default, from its obligations expressly
created hereunder to exercise the rights and powers vested in it by
this Indenture;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
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(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 8.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of any Debentures. The Trustee
or any Authenticating Agent shall not be accountable for the use or application
by the Company of Debentures or the proceeds thereof.
SECTION 8.4 MAY HOLD DEBENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any Debenture
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Debentures and, subject to Sections
8.9 and 8.11, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Debenture
Registrar or such other agent.
SECTION 8.5 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 8.6 COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee or any predecessor Trustee from time
to time such compensation as shall be agreed in writing between the
Company and the Trustee for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee or any predecessor Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any provision of this Indenture
(including the compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, damage, claim,
liability or expense, including taxes (other than taxes based on the
income of the Trustee) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of the trust or trusts
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hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 7.1(e) or Section 7.1(f), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar laws.
The provisions of this Section 8.6 shall survive the termination of
this Indenture.
SECTION 8.7 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 8.8.
(b) The Trustee may resign at any time with respect to the
Debentures by giving written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 8.8 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Debentures.
(c) The Trustee may be removed at any time with respect to the
Debentures by Act of the Holders of a majority in principal amount of the
Outstanding Debentures delivered to the Trustee and to the Company. If the
instrument of acceptance by a successor Trustee required by Section 8.8 shall
not have been delivered to the Trustee within 30 days after the delivery of such
Act of removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Debentures.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
310(b) of the Trust Indenture Act after written request
therefor by the Company or by any Holder of a Debenture who
has been a bona fide Holder of a Debenture for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 8.10 and Section 310(a) of the Trust Indenture Act and
shall fail to resign after written request therefor by the
Company or by any Holder of a Debenture who has been a bona
fide Holder of a Debenture for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the
Company by a Board Resolution may remove the Trustee with
respect to all Debentures, or (ii) subject to Section 7.14 any
Holder of a Debenture who has been a bona fide Holder of a
Debenture for at least six months may, on behalf of himself
and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with
respect to all Debentures and the appointment of a successor
Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Debentures, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the Debentures (it being
understood that at any time there shall be only one Trustee with respect to the
Debentures) and shall comply with the applicable requirements of Section 8.8.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Debentures
shall be appointed by Act of the Holders of a majority in principal amount of
Outstanding Debentures delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 8.8,
become the successor Trustee with respect to the Debentures and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Debentures shall have been so appointed by the
Company or the Holders of Debentures and accepted appointment in the manner
required by Section 8.8, any Holder of a Debenture who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debentures.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Debentures and each appointment of a
successor Trustee with respect to the Debentures in the manner provided in
Section 16.4. Each notice shall include the name of the successor Trustee with
respect to the Debentures and the address of its Corporate Trust Office.
SECTION 8.8 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Debentures, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but on the written
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) Upon the written request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 8.9 DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
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SECTION 8.10 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall be at all times a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereunder specified in this Article.
SECTION 8.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Debentures), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 8.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debentures.
SECTION 8.13 APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with respect
to Debentures which shall be authorized to act on behalf of the Trustee to
authenticate Debentures issued upon original issue or upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
2.6, and Debentures so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Debentures by the Trustee or the Trustee's certificate of
authentication such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent provided such corporation shall be otherwise eligible under
this Section, without the execution or filing of any paper or any further act on
the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall promptly give notice of
such appointment to all Holders of Debentures pursuant to Section 16.4. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder with like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to Debentures is made pursuant to this
Section, the Debentures may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternative certificate of authentication in
the following form:
This is one of the Debentures referred to in the within-mentioned
Indenture.
__________________________________
By _______________________________
Authenticating Agent
By _______________________________
Authorized Signatory
If all of the Debentures may not be originally issued at one time, and
if the Company has an Affiliate eligible to be appointed as an Authenticating
Agent hereunder or the Trustee does not have an office capable of authenticating
Debentures upon original issuance located in a Place of Payment where the
Company wishes to have Debentures authenticated upon original issuance, the
Trustee, if so requested by the Company in writing (which writing need not
comply with Section 16.1 and need not be accompanied by an Opinion of Counsel),
shall appoint in accordance with this Section an Authenticating Agent (which if
so requested by the Company, shall be such Affiliate of the Company) having an
office in a Place of Payment designated by the Company with respect to the
Debentures.
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SECTION 8.14. NOTICE OF DEFAULTS.
If a Default occurs hereunder with respect to Debentures, the Trustee
shall give the Holders of Debentures notice of such Default as and to the extent
provided by the Trust Indenture Act; provided, however, that in the case of any
Default of the character specified in Section 7.1(d), no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.
ARTICLE IX
ACTS OF HOLDERS
SECTION 9.1 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing. Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent or proxy, or of the holding by any Person of
a Debenture, shall be sufficient for any purpose of this Indenture and (subject
to Section 8.1) conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such notary public or other such
officer the execution thereof. Where such execution is by a signer acting in a
capacity other than the signer's individual capacity, such certificate or
affidavit shall also constitute sufficient proof of the signer's authority. The
fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee reasonably deems sufficient.
(c) The principal amount of Debentures held by any Person, and the date
of holding the same, shall be proved by the Debenture Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of a Debenture shall bind every future Holder
of the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
(e) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders of Outstanding Debentures entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by Holders. If
not set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior to
such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided
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pursuant to Section 6.1) prior to such first solicitation or vote, as the case
may be. With regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action. With regard to any action that may be given or taken hereunder
only by Holders of a requisite principal amount of Outstanding Debentures (or
their duly appointed agents) and for which a record date is set pursuant to this
paragraph, the Company may, at its option, set an expiration date after which no
such action purported to be given or taken by any Holder shall be effective
hereunder unless given or taken on or prior to such expiration date by Holders
of the requisite principal amount of Outstanding Debentures on such record date
(or their duly appointed agents). On or prior to any expiration date set
pursuant to this paragraph, the Company may, on one or more occasions at its
option, extend such date to any later date. Nothing in this paragraph shall
prevent any Holder (or any duly appointed agent thereof) from giving or taking,
after any expiration date, any action identical to, or, at any time, contrary to
or different from, any action given or taken, or purported to have been given or
taken, hereunder by a Holder on or prior to such date, in which event the
Company may set a record date in respect thereof pursuant to this clause.
ARTICLE X
MEETINGS OF HOLDERS OF DEBENTURES
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Debentures may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Debentures.
SECTION 10.2 CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of Debentures
for any purpose specified in Section 10.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York as the Trustee shall
determine. Notice of every meeting of Holders of Debentures setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section
16.4, not less than 21 nor more than 180 days prior to the date fixed for the
meeting (or, in the case of a meeting of Holders with respect to Debentures all
or part of which are represented by a Book-Entry Debenture, not less than 20 nor
more than 40 days).
(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 25% in principal amount of the Outstanding Debentures
shall have requested the Trustee to call a meeting of the Holders of Debentures
for any purpose specified in Section 10.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the first notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company or the Holders of
Debentures in the amount above specified, as the case may be, may determine the
time and the place in the Borough of Manhattan, The City of New York for such
meeting and may call such meeting for such purposes by giving notice thereof as
provided in Subsection (a) of this Section.
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SECTION 10.3 PERSONS ENTITLED TO VOTE AT MEETINGS.
Upon the calling of a meeting of Holders with respect to the Debentures
all or part of which are represented by a Book-Entry Debenture, a record date
shall be established for determining Holders of Outstanding Debentures entitled
to vote at such meeting, which record date shall be the close of business on the
day the notice of the meeting of Holders is given in accordance with Section
10.2. The Holders on such record date, and their designated proxies, and only
such Persons, shall be entitled to vote at any meeting of Holders. To be
entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one
or more Debentures or (b) be a Person appointed by an instrument in writing as
proxy by a Holder of one or more Debentures; provided, however, that in the case
of any meeting of Holders with respect to the Debentures all or part of which
are represented by a Book-Entry Debenture, only Holders, or their designated
proxies, of record on the record date established pursuant to Section 10.3
hereof shall be entitled to vote at such meeting. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 10.4 QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Debentures shall constitute a quorum for a meeting of Holders of
Debentures; provided, however, that if any action is to be taken at such meeting
with respect to a consent or waiver which this Indenture expressly provides may
be given by the Holders of a specified percentage in aggregate principal amount
of Outstanding Debentures that is less or greater than a majority in principal
amount of the Outstanding Debentures, then, with respect to such action (and
only such action) the Persons entitled to vote such lesser or greater percentage
in principal amount of the Outstanding Debentures shall constitute a quorum. In
the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Debentures,
be dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 10.2(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the outstanding Debentures which shall constitute a
quorum. Notwithstanding the foregoing, no meeting of Holders with respect to
Debentures which is represented in whole or in part by a Book-Entry Debenture,
shall be adjourned to a date more than 90 days after the record date for such
meeting unless the Trustee shall send out a new notice of meeting and establish,
in accordance with Section 10.3, a new record date for Holders entitled to vote
at such meeting.
Except as limited by the proviso to Section 11.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debentures; provided, however,
that, except as limited by the proviso to Section 11.2, any resolution with
respect to any consent or waiver which this Indenture expressly provides may be
given by the Holders of a specified percentage in aggregate principal amount of
Outstanding Debentures that is less or greater than a majority in principal
amount of the Outstanding Debentures may be adopted at a meeting or an
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adjourned meeting duly convened and at which a quorum is present as aforesaid
only by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Debentures.
Any resolution passed or decision taken at any meeting of Holders of
Debentures duly held in accordance with this Section shall be binding on all the
Holders of Debentures, whether or not present or represented at the meeting.
SECTION 10.5 DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debentures in regard to proof of the holding of Debentures and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Debentures shall be proved in
the manner specified in Section 9.1 and the appointment of any proxy shall be
proved in the manner specified in Section 9.1 or by having the signature of the
person executing the proxy witnessed or guaranteed by any trust company, bank or
banker authorized by Section 9.1. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified in Section 9.1 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Debentures as provided in Section 10.2(b), in which
case the Company or the Holders of Debentures calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in principal amount of the Outstanding Debentures
represented at the meeting.
(c) At any meeting each Holder of a Debenture or proxy shall be
entitled to one vote for each $ 50 principal amount of the Outstanding
Debentures held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Debenture challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Debenture or proxy.
(d) Any meeting of Holders of Debentures duly called pursuant to
Section 10.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Debentures represented at the meeting; and the meeting may be held as so
adjourned without further notice.
SECTION 10.6 COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Debentures shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debentures or of their representatives by proxy and
the principal amounts and serial numbers of the Outstanding Debentures held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Debentures shall be prepared by the secretary of the meeting and there shall be
attached to said record the original
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reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was given as
provided in Section 10.2 and, if applicable, Section 10.4. Each copy shall be
signed and verified by the affidavits of the chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Debentures, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Debentures; or
(b) to add to the covenants of the Company for the benefit of
the Holders of Debentures or to surrender any right or power herein
conferred upon the Company; or
(c) to add any additional Events of Default; or
(d) to evidence and provide for the acceptance of appointment
thereunder by a successor Trustee with respect to the Debentures and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of
Section 8.8; or
(e) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XV; or
(f) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action shall
not, in the opinion of the Board of Directors, adversely affect the
interests of the Holders of Debentures in any material respect; or
(g) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if
any, to be placed on the Debentures, and all other matters required
pursuant to Section 2.5 or otherwise necessary, desirable, or
appropriate in connection with the issuance of Debentures to holders of
Trust Securities in the event of a distribution of Debentures by the
Trust if a Special Event occurs and is continuing.
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SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debentures affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Debentures under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of each Holder of each
Outstanding Debenture,
(a) change the Stated Maturity of the principal of, or (except
as contemplated by Section 2.3(c)) any installment of interest
(including any Additional Payments) on, any Debenture, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the coin or currency in
which any Debenture or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in principal amount of the
Outstanding Debentures, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver of certain defaults hereunder and their
consequences provided for in this Indenture, or reduce the requirements
of Section 10.4 for quorum or voting; or
(c) modify any of the provisions of this Section or Section
7.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Debenture; or
(d) make any change that adversely affects the right to
convert any Debenture into Common Stock as provided in Article XV or
decrease the conversion rate or increase the conversion price of any
such Debenture, or
(e) make any change in Article IV that adversely affects the
rights of any Holders of Outstanding Debentures.
So long as any Convertible Preferred Securities are outstanding, no
supplemental indenture shall, without the consent of each holder of Convertible
Preferred Securities, amend Section 7.16 so as to eliminate or materially impair
the right of such holders to institute Direct Actions in the circumstances set
forth therein.
It shall not be necessary for any Act of Holders of Debentures under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 11.3 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 8.2) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this
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Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 11.4 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debentures theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 11.5 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act of 1939, as amended, in
effect on such date.
SECTION 11.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debentures.
ARTICLE XII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
The Company shall not merge or consolidate with any other corporation
or sell or convey all or substantially all of its assets to any Person and
another corporation may not consolidate with or merge into, or transfer its
properties and assets substantially or as an entity to the Company, unless (a)
either the Company shall be the continuing corporation, or the successor
corporation (if other than the Company) shall be a corporation organized under
the laws of the United States of America or any State thereof and shall
expressly assume the due and punctual payment of the principal of and interest
on all the Debentures, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation, (b) the Company or such successor corporation, as the case may be,
shall not, immediately after such merger or consolidation, or such sale or
conveyance, be in default in the performance of any such covenant or condition
and (c) such merger or consolidation or such sale or conveyance is permitted
under the Declaration and Trust Securities Guarantee and does not give rise to
any breach or violation of the Declaration or Trust Securities Guarantee.
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SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.
In case of any such consolidation, merger, sale or conveyance, and
following such an assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein. Such successor corporation may cause to
be signed, and may issue either in its own name or in the name of the Company
prior to such succession any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
securities which previously shall have been signed and delivered by the officers
of the Company, to the Trustee for authentication, and any Debentures which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Debentures so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Debentures
theretofore or thereafter issued in accordance with the terms or this Indenture
as though all of such Debentures had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by
way of lease) the Company or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Debentures and
may be liquidated and dissolved.
SECTION 12.3 OPINION OF COUNSEL TO TRUSTEE.
The Trustee may receive an Opinion of Counsel, prepared in accordance
with Section 16.1, as conclusive evidence that any such consolidation, merger,
sale, lease or conveyance, and any such assumption, and any such liquidation or
dissolution, complies with the applicable provisions of this Indenture.
ARTICLE XIII
SATISFACTION AND DISCHARGE
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Debentures herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:
(a) either
(1) all Debentures theretofore authenticated and
delivered (other than (i) Debentures which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.6, and (ii) Debentures for whose
payment money has
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theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 5.3) have
been delivered to the Trustee for cancellation; or
(2) all such Debentures not theretofore
delivered to the Trustee for cancellation,
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose, an amount sufficient to pay
and discharge the entire indebtedness on such Debentures not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and any interest (including
any Additional Payments) to the date of such deposit (in the
case of Debentures which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 8.6, the
obligations of the Company to any Authenticating Agent under SECTION 8.13 and,
if money shall have been deposited with the Trustee pursuant to clause (a)(2) of
this Section, the obligations of the Trustee under Section 13.2 and the last
paragraph of Section 5.3 shall survive.
SECTION 13.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 5.3, all
money deposited with the Trustee pursuant to Section 13.1 shall be held in trust
and applied by it, in accordance with the provisions of the Debentures and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and any interest for whose payment such money has been deposited with the
Trustee.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES.
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of a Debenture, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, shareholder, officer,
director or employee, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations
of the Company, and that no such personal liability whatever shall attach to, or
is or shall be incurred by, the incorporators, shareholders, officers, directors
or employees, as such, of the Company or of any successor corporation, or any of
them, because of the creation of the indebtedness hereby authorized, or under or
by reason of the obligations or agreements contained in this Indenture or in any
of the Debentures or implied therefrom; and that any and all such personal
liability, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
shareholder, officer, director or employee, as such, because of the creation of
the indebtedness hereby authorized, or under or by reason of the obligations or
agreements contained in this Indenture or in any of the Debentures or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of such
Debentures.
All payments of interest and other amounts, if any, to be made by the
Trustee hereunder shall be made only from the money deposited with the Trustee
and only to the extent that the Trustee shall have sufficient income or proceeds
to make such payments in accordance with the terms of this Indenture, and each
Holder thereof, by its acceptance of a Debenture, agrees that it will look
solely to the income and proceeds deposited with the Trustee to the extent
available for distribution to such Holder as provided and that the Trustee, its
incorporators, shareholders, officers, directors and employees are not
personally liable in any manner to such Holder for any amounts payable or any
liability under this Indenture or any Debenture.
ARTICLE XV
CONVERSION OF DEBENTURES
SECTION 15.1 CONVERSION RIGHTS.
Subject to and upon compliance with the provisions of this Article XV,
the Debentures are convertible, at the option of the Holder, at any time
beginning April 26, 1997 and prior to the close of business on February 24,
2012, (or, in the case of Debentures called for redemption, prior to the close
of business on the Business Day prior to the corresponding Redemption Date) into
fully paid and nonassessable shares of Common Stock at an initial conversion
rate of 0.6882 shares of Common Stock for each $50 in aggregate principal amount
of Debentures (equal to a Conversion Price of $72.6563 per share of Common
Stock), subject to adjustment as described in this Article XV. A Holder of
Debentures may convert any portion of the principal amount of the Debentures
into that number of fully paid and nonassessable shares of Common Stock obtained
by dividing the principal amount of the Debentures to be converted by such
Conversion Price. All calculations under this Article XV shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
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SECTION 15.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Debentures,
the Holder thereof shall deliver to the Conversion Agent an irrevocable Notice
of Conversion setting forth the principal amount of Debentures to be converted,
together with the name or names, if other than the Holder, in which the shares
of Common Stock should be issued upon conversion and, if such Debentures are
definitive Debentures, surrender to the Conversion Agent the Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Convertible Preferred Securities may exercise its right under the
Declaration to convert such Convertible Preferred Securities into Common Stock
by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and directing
the Conversion Agent (i) to exchange such Convertible Preferred Securities for a
portion of the Debentures held by the Trust (at an exchange rate of $50
principal amount of Debentures for each Convertible Preferred Security) and (ii)
to immediately convert such Debentures, on behalf of such holder, into Common
Stock pursuant to this Article XV and, if such Convertible Preferred Securities
are in definitive form, surrendering such Convertible Preferred Securities, duly
endorsed or assigned to the Trust or in blank. So long as any Convertible
Preferred Securities are outstanding, the Trust shall not convert any Debentures
except pursuant to a Notice of Conversion delivered to the Conversion Agent by a
holder of Convertible Preferred Securities.
If a Notice of Conversion is delivered on or after a Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder on the
Regular Record Date will be entitled to receive the interest payable on the
subsequent Interest Payment Date on the portion of Debentures to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the case
of any Debenture which is converted, interest whose payment date is after the
date of conversion of such Debenture shall not be payable, and the Company shall
not make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest (including Additional Payments) on the
Debentures being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Convertible Preferred Securities effecting a conversion thereof pursuant to
its conversion rights under the Declaration, as the case may be.
The Person or Persons entitled to receive Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the Conversion Date. As promptly as
practicable on or after the Conversion Date, the Company shall issue and deliver
at the office of the Conversion Agent, unless otherwise directed by the Holder
in the Notice of Conversion, a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same. The Conversion Agent shall deliver such
certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number
of shares of Common Stock into which the Debentures are convertible (together
with the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Debentures so converted and any unpaid interest (including Additional
Payments) accrued on such Debentures at the time of such conversion.
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(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the
Debentures were duly surrendered to the Conversion Agent for conversion, or, if
such day is not a Trading Day, on the next Trading Day, and the Conversion Agent
in turn will make such payment, if any, to the Holder of the Debentures or the
holder of the Convertible Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part
only, a new Debenture or Debentures for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation thereof in
accordance with this Section 15.2.
(e) In effecting the conversion transactions described in this
Section 15.2, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Debentures) and as agent of the Holders of Debentures (in the
conversion of Debentures into Common Stock), as the case may be. The Conversion
Agent is hereby authorized (i) to exchange Debentures held by the Trust from
time to time for Convertible Preferred Securities in connection with the
conversion of such Convertible Preferred Securities in accordance with this
Article XV and (ii) to convert all or a portion of the Debentures into Common
Stock and thereupon to deliver such shares of Common Stock in accordance with
the provisions of this Article XV and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
SECTION 15.3 CONVERSION PRICE ADJUSTMENTS.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to Common
Stock in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, (iii) combine outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of shares of Common Stock any shares of
capital stock of the Company, the conversion privilege and the Conversion Price
for the Debentures shall be adjusted so that the Holder of any Debenture
thereafter surrendered for conversion shall be entitled to receive the number of
shares of capital stock of the Company which such Holder would have owned
immediately following such action had such Debenture been converted immediately
prior thereto. An adjustment made pursuant to this Subsection (a) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after the
record date if a record date shall have been established for such event). If, as
a result of an adjustment made pursuant to this Subsection (a), the Holder of
any Debenture thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes or series of capital stock of the Company,
the Board of Directors (whose determination shall be conclusive and shall be
described in a Board Resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price for the Debentures between or among
shares of such classes or series of capital stock.
(b) In case the Company shall, while any of the Debentures are
outstanding, issue rights or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase shares of Common Stock at a price per share
less than the current market price per share of Common Stock (as determined
pursuant to Subsection (g) below) on the record date mentioned below, the
Conversion Price for the Debentures shall be adjusted so that the Conversion
Price shall equal the price determined by multiplying the
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Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase would purchase at
such current market price, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants. To the extent that shares of Common Stock are not so
delivered after the expiration of such rights or warrants, the Conversion Price
shall be readjusted to the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to receive such
rights or warrants had not been fixed. For the purposes of this subsection, the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not issue any
rights or warrants in respect of shares of Common Stock held in the treasury of
the Company. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Company, the Conversion Price shall be readjusted at the time of such expiration
to the Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(c) Subject to the last sentence of this subsection (c), in
case the Company shall, by dividend or otherwise, distribute to all holders of
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets or rights or warrants to subscribe for or purchase
any of its securities (excluding any rights or warrants referred to in
subsection (b), any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in subsection (a) of this Section 15.3),
the Conversion Price shall be reduced so that the Conversion Price shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated by
this subsection (c) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (g)) of the Common
Stock on the date fixed for the payment of such distribution (the "Reference
Date") less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors), on the Reference Date, of the portion of the
evidences of indebtedness, shares of capital stock, cash and assets so
distributed or of such subscription rights or warrants applicable to one share
of Common Stock and of which the denominator shall be such current market price
per share of the Common Stock, such reduction to become effective immediately
prior to the opening of business on the day following the Reference Date;
provided, however, that in the event the numerator shall be less than one, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
Holder of Debentures shall have the right to receive upon conversion the amount
of such distribution such Holder would have received had such Holder converted
each Debenture immediately prior to the Reference Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not occurred. If the Board of Directors
determines the fair market value of any distribution for purposes of this
subsection (c) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the current market price
per share of Common Stock (determined as provided in subsection (g)). For
purposes of this subsection (c), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or purchase shares
of Common Stock shall be deemed instead to be (i) a dividend or distribution of
the evidences of indebtedness, shares of capital stock, cash or assets other
than such shares of Common Stock or such rights or warrants (making any
Conversion Price reduction
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required by this subsection (c)) immediately followed by (ii) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further Conversion Price reduction required by subsection (a) or (b)),
except (A) the Reference Date of such dividend or distribution as defined in
this subsection (c) shall be substituted as (1) "the record date in the case of
a dividend or other distribution," and (2) "the record date for the
determination of stockholders entitled to receive such rights or warrants" and
(3) "the date fixed for such determination" within the meaning of subsections
(a) and (b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed outstanding for purposes of computing any
adjustment of the Conversion Price in subsection (a).
(d) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in cash (excluding any quarterly
cash dividend on Common Stock to the extent that the aggregate cash dividend per
share of Common Stock in any quarter does not exceed the greater of (i) the
amount per share of Common Stock of the immediately preceding quarterly dividend
on Common Stock to the extent such preceding quarterly dividend did not require
an adjustment of the Conversion Price pursuant to this subsection (d) (as
adjusted to reflect subdivisions or combinations of Common Stock), and (ii)
3.125% of the current market price per share determined as provided in
subsection (g), and excluding any dividend or distribution in connection with
the liquidation, dissolution or winding-up of the Company), the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this subsection
(d) by a fraction of which the numerator shall be the current market price per
share (determined as provided in subsection (g)) of Common Stock on the date
fixed for the payment of such distribution less the amount of cash so
distributed (and not excluded as provided above) applicable to one share of
Common Stock and of which the denominator shall be such current market price per
share of the Common Stock (determined as provided in subsection (g)), such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for the payment of such distribution; provided,
however, that in the event the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the current market price
per share (as defined in subsection (g)) of Common Stock on the record date
mentioned above, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Holder of Debentures shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted each Debenture immediately prior to the record date for the
distribution of the cash. If an adjustment is required to be made pursuant to
this subsection (d) as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded as
provided above. If an adjustment is required to be made pursuant to this
subsection (d) as a result of a distribution that is not a quarterly dividend,
such adjustment shall be based upon the full amount of the distribution. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion of
the Common Stock shall expire and such tender or exchange offer shall involve
the payment by the Company or such Subsidiary of consideration per share of
Common Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds the Closing Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion
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Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (e) by a fraction (which shall not be
greater than one) of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the Expiration
Time multiplied by the Closing Price of Common Stock on the Trading Day next
succeeding the Expiration Time and of which the denominator shall be the sum of
(i) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (ii) the product of the number of shares of the Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the Closing
Price of Common Stock on the Trading Day next succeeding the Expiration Time,
such reduction to become retroactively effective immediately prior to the
opening of business on the day following the Expiration Time.
(f) In case a tender or exchange offer made by a Person other
than the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer shall involve the
payment by a Person other than the Company or any Subsidiary of the Company of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) at the
applicable Expiration Time that exceeds the Closing Price of the Common Stock on
the Trading Day next succeeding the applicable Expiration Time in which as of
the closing date of the offer the Board of Directors of the Company is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (f) by a fraction (which shall not be
greater than one) of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the Expiration
Time multiplied by the Closing Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and of which the denominator shall be the sum of
(i) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (ii) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the Closing
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time, such reduction to become retroactively effective immediately prior to the
opening of business on the day following the Expiration Time; provided, however,
that the reduction of the Conversion Price contemplated by this subsection (f)
will only be made if the tender offer or exchange offer is made for an amount
which increases that Person's ownership of Common Stock to more than 25% of the
total shares of Common Stock outstanding and provided, further, that the
reduction of the Conversion Price contemplated by this subsection (f) will not
be made if as of the close of the offer, the offering documents with respect to
such offer disclose a plan or an intention to cause the Company to engage in a
consolidation or merger of the Company or a sale of all or substantially all of
the assets of the Company.
(g) For the purpose of any computation under subsections (b),
(c) or (d), the current market price per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing Prices for the
ten Trading Day period ending on the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; provided, however, that if more than
one event occurs that would require an adjustment pursuant to subsections (a)
through (f), inclusive, the Board of Directors may make such
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adjustments to the Closing Prices during such ten Trading Day period as it deems
appropriate to effectuate the intent of the adjustments in this Section 15.3, in
which case any such determination by the Board of Directors shall be set forth
in a Board Resolution and shall be conclusive. For purposes of this paragraph,
the term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the NASDAQ
National Market System or on such successor securities exchange as the Common
Stock may be listed or in the relevant market from which the Closing Prices were
obtained without the right to receive such issuance or distribution, and (2)
when used with respect to any tender or exchange offer, means the first date on
which the Common Stock trades regular way on such securities exchange or in such
market after the Expiration Time of such offer.
(h) The Company may make such reductions in the Conversion
Price, in addition to those required by subsections (a) through (f), as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. The Company from time to time may elect
to reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period, and
the Board of Directors shall have made a determination that such reduction would
be in the best interest of the Company, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding sentence, the
Company shall mail to Holders of record of the Debentures a notice of the
reduction at least 15 days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and the period
it will be in effect.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Conversion Price; provided, however, that any adjustments which by reason of
this subsection (i) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(j) If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of Debentures.
(k) No adjustment in the Conversion Price shall be required
for a transaction referred to in clauses (a) through (d) above if the Holders of
the Debentures are to participate in the transaction on a basis and with notice
that the Board of Directors determine to be fair and appropriate in light of the
basis and notice on which the Holders of the Debentures participate in the
transaction.
SECTION 15.4 CONVERSION PRICE ADJUSTMENT - RIGHTS UNDER SHAREHOLDERS
RIGHTS PLAN.
If the distribution date for the Rights provided in the Rights
Plan, as presently constituted or under any similar plan occurs prior to the
date a Debenture is converted, a Holder of the Debentures who coverts such
Debentures after the distribution date are not entitled to receive the Rights
that would otherwise be attached (but for the date of conversion) to the shares
of Common Stock received upon such conversion; provided, however, that an
adjustment shall be made to the Conversion Price pursuant to clause 15.2(b) as
if the Rights were being distributed to the common stockholders of the Company
immediately prior to such conversion. If such an adjustment is made and the
Rights are
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later redeemed, invalidated or terminated, then a corresponding reversing
adjustment shall be made to the Conversion Price, on an equitable basis, to take
account of such event.
SECTION 15.5 CONVERSION PRICE ADJUSTMENT - MERGER, CONSOLIDATION OR
SALE OF ASSETS OF THE COMPANY.
In the event that the Company is a party to any transaction
(including, without limitation, a merger other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), consolidation, sale of all or substantially all of the assets of the
Company, recapitalization or reclassification of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing being referred to as a
"Transaction"), in each case, as a result of which shares of Common Stock shall
be converted into the right to receive, or shall be exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (and subject to funds being legally available for such
purpose under applicable law at the time of such conversion), securities, cash
or other property, each Debenture shall thereafter be convertible into the kind
and, in the case of a Transaction which does not involve a Fundamental Change,
amount of securities, cash and other property receivable upon the consummation
of such Transaction by a holder of that number of shares of Common Stock into
which a Debenture was convertible immediately prior to such Transaction, or (ii)
in the case of a Transaction involving a Common Stock Fundamental Change, common
stock, each Debenture shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock (but
in each case after giving effect to any adjustment discussed in paragraphs (f)
and (g) relating to a Fundamental Change if such Transaction constitutes a
Fundamental Change). The holders of Debentures or Preferred Securities will have
no voting rights with respect to any Transaction described in this section.
(b) If any Fundamental Change occurs, then the Conversion
Price effect will be adjusted immediately after such Fundamental Change as
described paragraph (c) below. In addition, in the event of a Common Stock
Fundamental Change, each Debenture shall be convertible solely into Common Stock
of the kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change.
(c) The Conversion Price in the case of any Transaction
involving a Fundamental Change will be adjusted immediately after such
Fundamental Change:
(i) in the case of a Non-Stock Fundamental
Change, the conversion price of the Debentures will thereupon become
the lower of (A) the Conversion Price in effect immediately prior to
such Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments, and (B) the result obtained by multiplying the
greater of the Applicable Price or the then applicable Reference Market
Price by a fraction of which the numerator will be $50 and the
denominator will be (x) the amount of the redemption price for the
Debenture if the redemption date were the date of such Non-Stock
Fundamental Change (or, for the period commencing on the first date of
original issuance of the Debentures and through March 3, 1998, and the
twelve-month period commencing March 4, 1998 and March 4, 1999, the
product of 102% multiplied by $50) plus (y) any then-accrued and unpaid
interest on the Debentures; and
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(ii) in the case of a Common Stock Fundamental
Change, the conversion price of the Debentures in effect immediately
prior to such Common Stock Fundamental Change, but after giving effect
to any other prior adjustments, will thereupon be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
will be the Purchaser Stock Price and the denominator will be the
Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror, or other third party (and cash, if any, is
paid only with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all of the
Common Stock will have been exchanged for, converted into, or acquired
for common stock (and cash with respect to fractional interests) of the
successor, acquiror, or other third party, the Conversion Price of the
Debentures in effect immediately prior to such Common Stock Fundamental
Change will thereupon be adjusted by multiplying such Conversion Price
by a fraction of which the numerator will be one and the denominator
will be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of
Common Stock as a result of such Common Stock Fundamental Changes.
(d) In a Non-Stock Fundamental Change Transaction where
the initial value received per share of Common Stock (measured as described in
the definition of Applicable Price) is lower than the then applicable Conversion
Price of the Debentures but greater than or equal to the "Reference Market
Price", the Conversion Price will be adjusted as described above, with the
effect that each Debenture will be convertible into securities, cash or property
of the same type received by the holders Common Stock in the Transaction but in
an amount per Debenture that would at the time of the Transaction have had a
value equal to the then applicable Redemption Price per Debenture in Section 3.1
(or, for periods prior to the applicable amount Debenture set forth in clause
(i) of paragraph (c) above with respect to conversion prices for Non-Stock
Fundamental Changes).
In a Non-Stock Fundamental Change Transaction where the
initial value received per share of Common Stock (measured as described in the
definition of Applicable Price) is lower than both the Conversion Price of the
Debentures in effect prior to any adjustment described above and the Reference
Market Price, the Conversion Price will be adjusted as described above but
calculated as though such initial value had been the Reference Market Price.
SECTION 15.6 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) In the event that the Company shall be a party to any
transaction, (including without limitation (i) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (ii) any consolidation of the
Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (iii) any sale or transfer of all or substantially
all of the assets of the Company or (iv) any compulsory share exchange),
pursuant to which either shares of Common Stock shall be converted into the
right to receive other securities, cash or other property, or, in the case of a
sale or transfer of all or substantially all of the assets of the Company, the
holders of Common Stock shall be entitled to receive other securities, cash or
other property, then lawful provision shall be made as part of the terms of such
transaction whereby the Holder of each Debenture then outstanding shall have the
right thereafter to convert such Debenture only into the kind
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and amount of the securities, cash or other property that would have been
receivable upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of Common
Stock issuable upon conversion of such Debenture immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, subject to funds being legally available for such purpose under
applicable law at the time of such conversion.
(b) The company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article XV. The above provisions shall similarly apply to successive
transactions of the foregoing type.
SECTION 15.7 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Conversion Price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee and the transfer agent for
the Convertible Preferred Securities and the Debentures; and
(b) a notice stating the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Convertible Preferred Securities
and the Debentures at their last addresses as they appear upon the transfer
books of the Trust and the Company.
SECTION 15.8 PRIOR NOTICE OF CERTAIN EVENTS.
In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 15.3(c) or (d) or (ii) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 15.3(e);
(b) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company shall be required, or of the sale or
transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
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(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; then the Company shall (i) if any Convertible
Preferred Securities are outstanding, cause to be filed with the Trustee and the
transfer agent for the Convertible Preferred Securities, and shall cause to be
mailed to the holders of record of the Convertible Preferred Securities, at
their last addresses as they shall appear upon the transfer books of the Trust
or (ii) cause to be filed with the Trustee and mailed to all Holders at their
last addresses as they shall appear in the Debenture Register, at least 15 days
prior to the applicable record or effective date hereinafter specified, a notice
stating (A) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (B)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
SECTION 15.9 DIVIDEND OR INTEREST REINVESTMENT PLANS.
Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any such plan, and the issuance
of any shares of Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of the Company or pursuant to
any option, warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date hereof, shall not be deemed to constitute an issuance
of Common Stock or exercisable, exchangeable or convertible securities by the
Company to which any of the adjustment provisions described above applies. There
shall also be no adjustment of the Conversion Price in case of the issuance of
any stock (or securities convertible into or exchangeable for stock) of the
Company except as specifically described in this Article XV.
SECTION 15.10 CERTAIN ADDITIONAL RIGHTS.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on the Common Stock referred to in Section 15.3(c) or 15.3(d), the
Holder of Debentures, upon the conversion thereof subsequent to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution and prior to the effectiveness of the Conversion Price
adjustment in respect of such distribution, shall also be entitled to receive
for each share of Common Stock into which Debentures are converted, the portion
of the shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash and assets so distributed applicable to one share
of Common Stock; provided, however, that, at the election of the Company (whose
election shall be evidenced by a resolution of the Board of Directors) with
respect to all Holders so converting, the Company may, in lieu of distributing
to such Holder any portion of such distribution not consisting of cash or
securities of the Company, pay such Holder an amount in cash equal to the fair
market value thereof (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors). If any conversion of Debentures described in the
immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Common Stock which the Holder of Debentures so
converted is entitled to receive in accordance with
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the immediately preceding sentence, the Company may elect (such election to be
evidenced by a Board Resolution) to distribute to such Holder a due bill for the
shares of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash or assets to which such Holder is so entitled, provided,
that such due bill (a) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded and (b) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
SECTION 15.11 RESERVATION OF SHARES OF COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock or treasury
shares, for the purpose of effecting the conversion of Debentures, the full
number of shares of Common Stock then issuable upon the conversion of all
outstanding Debentures.
SECTION 15.12 PAYMENT OF CERTAIN TAXES UPON CONVERSION.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Debentures
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Debenture or Debentures to be converted, and no such issue or delivery shall
be made unless and until the person requesting such issue has paid to the
Company the amount of any such tax, or has established, to the satisfaction of
the Company, that such tax has been paid.
SECTION 15.13 NONASSESSABILITY.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Debentures will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.
SECTION 15.14 DUTIES OF TRUSTEE REGARDING CONVERSION.
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of Debentures that is convertible into
Common Stock to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, whether
herein or in any supplemental indenture (or whether a supplemental indenture
need be entered into), any resolutions of the Board of Directors or written
instrument executed by one or more officers of the Company provided to be
employed in making the same. Neither the Trustee nor any Conversion Agent shall
be accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Debentures and neither
the Trustee nor any Conversion Agent makes any representation with respect
thereto. Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock or stock certificates or other securities or property upon the surrender
of any Debenture for the purpose of conversion or to comply with any of the
covenants of the Company contained in this Article XV or in the applicable
supplemental indenture, resolutions of the Board of Directors or written
instrument
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executed by one or more duly authorized officers of the Company. All Debentures
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 2.9.
SECTION 15.15 REPAYMENT OF CERTAIN FUNDS UPON CONVERSION.
Any funds which at any time shall have been deposited by the Company or
on its behalf with the Trustee or any other paying agent for the purpose of
paying the principal of, and premium, if any, and interest, if any, on any of
the Debentures and which shall not be required for such purposes because of the
conversion of such Debentures as provided in this Article XV shall after such
conversion be repaid to the Company by the Trustee upon the Company's written
request.
SECTION 15.16 RESTRICTIONS ON COMMON STOCK ISSUABLE UPON CONVERSION.
(a) Shares of Common Stock to be issued upon conversion of a Debenture
in respect of Restricted Preferred Securities (as defined in the Declaration)
shall bear such restrictive legends as the Company may provide in accordance
with applicable law. Neither the Trustee nor the Conversion Agent shall have any
responsibility for the inclusion or content of any such restrictive legend on
such Common Stock; provided, however, that the Trustee or the Conversion Agent
shall have provided to the Company or to the Company's transfer agent for such
Common Stock, prior to or concurrently with a request to the Company to deliver
to such Conversion Agent certificates for such Common Stock, written notice that
the Convertible Preferred Securities delivered for conversion are Restricted
Preferred Securities.
(b) If shares of Common Stock to be issued upon conversion of a
Debenture in respect of Restricted Preferred Securities are to be registered in
a name other than that of the Holder of such Convertible Preferred Security,
then the Person in whose name such shares of Common Stock are to be registered
must deliver to the Conversion Agent a certificate satisfactory to the Company
and signed by such Person, as to compliance with the restrictions on transfer
applicable to such Convertible Preferred Security. Neither the Trustee nor any
Conversion Agent or Registrar shall be required to register in a name other than
that of the Holder shares of Common Stock or such Certificate Preferred
Securities issued upon conversion of any such Convertible Preferred Security in
respect of such Convertible Preferred Securities not so accompanied by a
properly completed certificate.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.1 COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished. Every certificate or
71
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opinion by or on behalf of the Company with respect to compliance with a
condition or covenant provided for in this Indenture, except for certificates
provided for in Section 5.5, shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
the individual has made such examination or investigation as is
necessary to enable such individual to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 16.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 16.3 NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or
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(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this Indenture, to the
attention of its Chief Financial Officer, or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 16.4 NOTICE TO HOLDERS OF DEBENTURES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Debentures of any event, such notice shall be
sufficiently given to Holders of Debentures if in writing and mailed,
first-class postage prepaid, to each Holder of a Debenture affected by such
event, at the address of such Holder as it appears in the Debenture Register,
not earlier than the earliest date, and not later than the latest date,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders of Debentures by mail, then such notification as shall be made with the
approval of the Trustee shall constitute sufficient notice to such Holders for
every purpose hereunder. In any case where notice to Holders of Debentures is
given by mail, neither the failure to mail such notice, nor any defect in any
notice mailed to any particular Holder of a Debenture shall affect the
sufficiency of such notice with respect to other Holders of Debentures.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.
Waivers of notice by Holders of Debentures shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 16.5 LANGUAGE OF NOTICES, ETC.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 16.6 CONFLICT WITH REQUIRED PROVISIONS OF THE TRUST INDENTURE
ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 318,
inclusive, of the Trust Indenture Act, such required provision shall control.
SECTION 16.7 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 16.8 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
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SECTION 16.9 SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 16.10 BENEFITS OF INDENTURE.
Nothing in this Indenture or the Debentures, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Debentures Registrar and their successors hereunder and the
Holders of Debentures, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 16.11 GOVERNING LAW.
This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
SECTION 16.12 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, sinking
fund payment date, Maturity or Stated Maturity of a Debenture shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Debentures other than a provision in Debentures
which specifically states that such provision shall apply in lieu of this
Section) payment of interest or principal (and premium, if any) need not be made
at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
provided that no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, to such succeeding Business Day.
SECTION 16.13 EXECUTION IN COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
QUALCOMM INCORPORATED
By: /s/ Anthony S. Thornley
----------------------------------------
Name: Anthony S. Thornley
Title: Senior Vice President and Chief
Financial Officer
WILMINGTON TRUST COMPANY
By: /s/ James P. Lawler
----------------------------------------
Name: James P. Lawler
Title: Vice President
75
<PAGE> 1
Exhibit 4.7
PREFERRED SECURITIES GUARANTEE AGREEMENT
QUALCOMM INCORPORATED
DATED AS OF FEBRUARY 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION .......................................... 1
SECTION 1.1 Definitions and Interpretation ..................................... 1
ARTICLE II TRUST INDENTURE ACT .................................................... 3
SECTION 2.1 Trust Indenture Act; Application ................................... 3
SECTION 2.2 Lists of Holders of Securities ..................................... 4
SECTION 2.3 Reports by the Preferred Guarantee Trustee ......................... 4
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee .................... 4
SECTION 2.5 Evidence of Compliance with Conditions Precedent ................... 5
SECTION 2.6 Events of Default; Waiver .......................................... 5
SECTION 2.7 Event of Default; Notice ........................................... 5
SECTION 2.8 Conflicting Interests .............................................. 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE
TRUSTEE ........................................................................ 5
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee ............... 5
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee ...................... 7
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred Securities
Guarantee ................................................................ 9
ARTICLE IV PREFERRED GUARANTEE TRUSTEE ............................................ 9
SECTION 4.1 Preferred Guarantee Trustee; Eligibility ........................... 9
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustee .................................................................. 9
ARTICLE V GUARANTEE ............................................................... 10
SECTION 5.1 Guarantee .......................................................... 10
SECTION 5.2 Waiver of Notice and Demand ........................................ 10
SECTION 5.3 Obligations Not Affected ........................................... 11
SECTION 5.4 Rights of Holders .................................................. 11
SECTION 5.5 Guarantee of Payment ............................................... 12
SECTION 5.6 Subrogation ........................................................ 12
SECTION 5.7 Independent Obligations ............................................ 12
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION .............................. 12
SECTION 6.1 Limitation of Transactions ......................................... 12
SECTION 6.2 Ranking ............................................................ 13
ARTICLE VII TERMINATION ........................................................... 13
SECTION 7.1 Termination ........................................................ 13
ARTICLE VIII INDEMNIFICATION ...................................................... 13
SECTION 8.1 Exculpation ........................................................ 13
SECTION 8.2 Indemnification .................................................... 14
ARTICLE IX MISCELLANEOUS .......................................................... 14
SECTION 9.1 Successors and Assigns ............................................. 14
SECTION 9.2 Amendments ......................................................... 14
SECTION 9.3 Notices ............................................................ 15
SECTION 9.4 Benefit ............................................................ 15
SECTION 9.5 Governing Law ...................................................... 15
</TABLE>
-i-
<PAGE> 3
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of February 25, 1997, is executed and delivered by
QUALCOMM Incorporated, a Delaware corporation (the "Guarantor"), and Wilmington
Trust Company, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of QUALCOMM Financial Trust I, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of February 25, 1997, among the trustees of the Issuer
named therein and the Guarantor, as sponsor, the Issuer is issuing 11,000,000
preferred securities (plus up to an additional 2,200,000 preferred securities
solely to cover overallotments in connection with the sale thereof), having an
aggregate liquidation amount of $550,000,000 (up to $660,000,000 if the
overallotment option is exercised in full), designated the 5-3/4% Trust
Convertible Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.
WHEREAS, as of the date hereof the Guarantor is also executing and
delivering a guarantee agreement (the "Common Securities Guarantee") in
substantially identical terms to this Preferred Securities Guarantee for the
benefit of the holders of the Common Securities (as defined herein), except that
if an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of holders of the Common Securities to receive payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee unless otherwise defined in this Preferred
Securities Guarantee;
<PAGE> 4
(c) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless otherwise defined in
this Preferred Securities Guarantee or unless the context otherwise requires;
and
(g) a reference to the singular includes the plural and vice versa.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person; provided, however, that the Authorized Officer signing an
Officers' Certificate given pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be the principal executive, financial or accounting officer of such
Person.
"Common Securities" means undivided beneficial interests in the assets of
the Issuer which rank pari passu with the Preferred Securities issued by the
Issuer; provided, however, that, upon the occurrence of an event of default
under the Declaration, the rights of holders of Common Securities to payment in
respect to distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of the Preferred Securities.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 1100 North Market Street,
Ninth Floor, Wilmington, Delaware 19890.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.
"Debentures" means the 5-3/4% Convertible Subordinated Debentures due
February 24, 2012 issued pursuant to the Indenture.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions that are
required to be paid on such Preferred Securities to the extent the Issuer shall
have funds available therefor, (ii) the Redemption Price, which includes all
accrued and unpaid Distributions to the date of the redemption, to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination, dissolution or winding-up of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Preferred Securities to the date
of payment, to the extent the Issuer shall have funds available therefor, and
(b) the amount
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<PAGE> 5
of assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
the Issuer of any Preferred Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of February 25, 1997, among the
Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as trustee.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holders of Preferred
Securities, voting separately as a class, representing 50% or more of the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities then outstanding.
"Preferred Guarantee Trustee" means Wilmington Trust Company, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice president, any assistant vice president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Securities" means the Common Securities and the Preferred
Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
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<PAGE> 6
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES
(a) The Guarantor shall provide, (i) semiannually, not later than
March 31 and September 30 of each year, a list, in such form as the Preferred
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Preferred Securities ("List of Holders") as of a date not more
than 15 days prior to the delivery thereof, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 15 days before such List of Holders is given to the
Preferred Guarantee Trustee; provided, however, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Preferred Guarantee
Trustee in its capacity as trustee under the Declaration, and in the absence of
the provision of any such List of Holders to the Preferred Guarantee Trustee,
then notice shall be deemed to have been given to the Preferred Guarantee
Trustee that the List of Holders has not changed since the most recent List of
Holders. The Preferred Guarantee Trustee shall preserve, in as current a form as
is reasonably practicable, all information contained in Lists of Holders given
to it or which it receives in the capacity as Paying Agent under the Declaration
(if acting in such capacity), provided, however, that the Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE
Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any), for
transmission to Holders of Preferred Securities as may be required by such
Section 314, and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Preferred
Guarantee Trustee is for informational purposes only and the Preferred Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Preferred Guarantee Trustee is entitled to rely
exclusively on Officers' Certificates).
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<PAGE> 7
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Preferred
Securities Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice or a Responsible Officer of the Preferred Guarantee
Trustee charged with the administration of the Declaration shall have obtained
actual knowledge.
SECTION 2.8 CONFLICTING INTERESTS
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as
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Successor Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Preferred Guarantee Trustee.
(b) Subject to the rights of any Holder of Preferred Securities to
proceed directly against the Guarantor to enforce this Preferred Securities
Guarantee, if an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Preferred Guarantee Trustee and
conforming to the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Preferred Guarantee Trustee, the Preferred Guarantee Trustee
shall be under a duty to examine the same to determine whether or
not, on their face, they conform to the requirements of this
Preferred Securities Guarantee, but shall otherwise have no duty to
determine the accuracy or completeness thereof or whether the same
comply with applicable laws;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee,
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unless it shall be proved that the Preferred Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties;
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate;
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Preferred Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) The Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees. The Preferred Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Preferred Securities Guarantee from any court of competent jurisdiction;
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(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Preferred Guarantee Trustee
such security and indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against the costs, expenses (including attorneys' fees
and expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, from its obligations expressly created hereunder to exercise
the rights and powers vested in it by this Preferred Securities Guarantee;
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
Preferred Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred Securities,
and the signature of the Preferred Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third
party shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its
agent's taking such action;
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions; and
(xi) The Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
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illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Preferred Guarantee Trustee shall be construed to be
a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF PREFERRED
SECURITIES GUARANTEE
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by federal, state, territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED
GUARANTEE TRUSTEE
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
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(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
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SECTION 5.3 OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution or other sum payable that
results from the extension of any interest payment period on the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
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(b) If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce the Preferred
Guarantee Trustee's rights under this Preferred Securities Guarantee, without
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other person or entity.
(c) Any Holder of Preferred Securities shall have the right, which
is absolute and unconditional, to proceed directly against the Guarantor to
obtain Guarantee Payments, without first waiting to determine if the Preferred
Guarantee Trustee has enforced this Preferred Security Guarantee or instituting
a legal proceeding against the Issuer, the Preferred Guarantee Trustee or any
other person or entity.
(d) The Guarantor waives any right or remedy to require that any
action be brought first against the Issuer or any other person or entity before
proceeding directly against the Guarantor.
SECTION 5.5 GUARANTEE OF PAYMENT
This Preferred Securities Guarantee creates a guarantee of payment and not
of collection.
SECTION 5.6 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Preferred Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Preferred Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Preferred Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS
So long as any Preferred Securities remain outstanding, if an Event of
Default or an event of default under the Declaration shall have occurred and be
continuing, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the Guarantor
shall not make
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any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Guarantor which rank pari passu with
or junior to the Debentures, and (c) the Guarantor shall not make any guarantee
payments (other than pursuant to the Preferred Securities Guarantee) with
respect to the foregoing. However, the foregoing restriction will not apply to
any dividend, redemption, liquidation, interest, principal or guarantee payments
by the Guarantor where the payment is made by way of securities (including
capital stock) that rank pari passu or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made.
SECTION 6.2 RANKING
This Preferred Securities Guarantee will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debentures, except those
liabilities of the Guarantor made pari passu or subordinate by their terms, (ii)
pari passu with the most senior preferred stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred stock of any subsidiary or affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock. If the Guarantor
does not make principal or interest payments on the Debentures, the Issuer will
not have sufficient funds to redeem or make distributions on the Preferred
Securities, in which event this Preferred Securities Guarantee will not apply to
such redemptions or distributions until the Issuer has sufficient funds
available therefor. If an event of default under the Indenture has occurred and
is continuing, the rights of holders of the Common Securities to receive
payments under the Common Securities Guarantee will be subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION
This Preferred Securities Guarantee shall terminate upon (i) full payment
of the Redemption Price of all Preferred Securities, or (ii) upon the
distribution of the Debentures to the Holders, or (iii) upon full payment of the
amounts payable upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must repay to the Issuer or the Guarantor, or their successors, any
payment of any sums paid to them under the Preferred Securities or under this
Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage, liability, expense or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be
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liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor 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 Guarantor, 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 Preferred Securities
might properly be paid.
SECTION 8.2 INDEMNIFICATION
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, 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 trust or trusts
hereunder, including 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 powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
When the Preferred Guarantee Trustee incurs expenses or renders services
in connection with an event of default specified in Section 7.1(e) or Section
7.1(f) of the Indenture, the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 AMENDMENTS
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of not less than 66 2/3% in liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all the outstanding Preferred Securities. The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders of the
Securities apply to the manner of obtaining any such approval.
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SECTION 9.3 NOTICES
All notices provided for in this Preferred Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
1100 North Market Street
Ninth Floor
Wilmington, DE 19890
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego California 92121
Attention: Chief Financial Officer
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 BENEFIT
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
QUALCOMM INCORPORATED,
as Guarantor
By: /s/ Anthony S. Thornley
--------------------------------------
Name: Anthony S. Thornley
Title: Senior Vice President and Chief
Financial Officer
WILMINGTON TRUST COMPANY,
as Preferred Guarantee Trustee
By: /s/ James Lawler
--------------------------------------
Name: James Lawler
Title: Vice President
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EXHIBIT 5.1
[COOLEY GODWARD LLP LOGO] ATTORNEYS AT LAW San Francisco, CA
415 693-2000
4365 Executive Drive Palo Alto, CA
Suite 1100 415 843-5000
San Diego, CA
92121-2128 Menlo Park, CA
Main 619 550-6000 415 843-5000
Fax 619 453-3555
April 28, 1997 Boulder, CO
http://www.cooley.com 303 546-4000
THOMAS A. COLL
619 550-6013
[email protected]
QUALCOMM Incorporated
6455 Lusk Blvd.
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by QUALCOMM Incorporated, a Delaware corporation (the
"Company"), and QUALCOMM Financial Trust I, a Delaware statutory business trust
(the "Trust"), of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission covering the resale (i)
up to 13,200,000 Trust Convertible Preferred Securities of the Trust, (ii) up to
$680,452,500 in aggregate principal amount of 5-3/4% Convertible Subordinated
Debentures due February 24, 2012 of the Company (the "Debt Securities"), (iii)
up to 9,084,240 shares of the Company's Common Stock issuable upon conversion of
the Debt Securities (the "Shares") and (iv) a Convertible Preferred Securities
Guarantee of the Company.
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation, as amended, your
Bylaws, as amended, and such other documents, records, certificates, memoranda
and other instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued upon conversion of the Debt Securities and sold
and issued in accordance with the Registration Statement and related
Prospectus, will be validly issued, fully paid, and nonassessable.
<PAGE> 2
[COOLEY GODWARD LLP LOGO]
QUALCOMM Incorporated
April 28, 1997
Page Two
We consent to the reference to our firm under the caption "Legal Opinions" in
the Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Thomas A. Coll
Thomas A. Coll
<PAGE> 1
EXHIBIT 5.2
[REED SMITH SHAW & MCCLAY LETTERHEAD]
April 28, 1997
QUALCOMM Incorporated
6455 Lusk Blvd.
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by QUALCOMM Incorporated, a Delaware corporation
("QUALCOMM"), and QUALCOMM Financial Trust I, a Delaware statutory business
trust (the "Trust"), of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission relating to (i) up to
$680,452,600 in aggregate principal amount of 5-3/4% Convertible Subordinated
Debentures due February 24, 2012 of QUALCOMM and (ii) a Preferred Securities
Guarantee Agreement of QUALCOMM dated as of February 25, 1997 (the "Guarantee").
The firm of Cooley Godward L.L.P., counsel for the Company and the
Trust, has requested us to express our opinion as to certain matters of New York
law relating to the Convertible Subordinated Debt Securities and the Guarantee.
In rendering this opinion, we have examined (i) a copy of the executed
Guarantee; and (ii) a copy of an executed, authenticated 5-3/4% Convertible
Subordinated Debenture of QUALCOMM due February 24, 2012 bearing Certificate No.
D-1 in the principal sum of $567,050,000, and a copy of an executed,
authenticated 5-3/4% Convertible Subordinated Debenture of QUALCOMM due February
24, 2012 bearing Certificate No. D-2 in the principal sum of $113,402,500 (the
"Convertible Subordinated Debt Securities") (the Guarantee and the Convertible
Subordinated Debt Securities being herein collectively referred to as the
"Specified Transaction Documents"). We have also made such investigation of law
as we have deemed necessary. We have not represented, and do not represent,
QUALCOMM or the Trust in connection with the Specified Transaction Documents or
the transactions contemplated thereby. We have not examined any agreements,
instruments, certificates or documents other than the Specified Transaction
Documents and the Purchase Agreement (as defined below), whether or not referred
to or incorporated therein. We have not examined the Declaration or the
certificate of incorporation, by-laws or other constitutional documents of, or
any corporate records of, the Trust or QUALCOMM. We have made no inquiry into
the nature of the property owned or business conducted by the Trust or QUALCOMM,
and we have not reviewed the Registration Statement, any related Prospectus or
any other disclosure documents relating to the issuance, sale or resale of the
Convertible
<PAGE> 2
[REED SMITH SHAW & MCCLAY LETTERHEAD]
-2- April 28, 1997
Subordinated Debt Securities, the Convertible Preferred Securities of the Trust,
or any other securities involved in this transaction or any prior transaction.
In our review of the foregoing documents, we have assumed the conformity
to original documents of all documents submitted to us as copies and the
authenticity and completeness of such original documents. As to questions of
fact material to the opinions herein expressed, we have relied upon the
representations and warranties of QUALCOMM set forth in that certain Purchase
Agreement dated February 19, 1997 (the "Purchase Agreement") among the Trust,
QUALCOMM, and the Initial purchasers referred to therein. Capitalized terms used
herein and not defined herein shall have the respective meanings ascribed
thereto in the Purchase Agreement.
We have also assumed, without any investigation or verification, the
following: (a) that QUALCOMM is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Specified Transaction Documents, and all such action has
been duly authorized by all necessary corporate action on the part of QUALCOMM;
(b) that the Specified Transaction Documents have been duly authorized, executed
and delivered by QUALCOMM; (c) that the Specified Transaction Documents have
been duly authorized, executed and delivered by each party thereto other than
QUALCOMM and are the valid and binding agreements of each such other party,
enforceable against each such other party in accordance with their terms, and
each such other party has complied with all legal requirements pertaining to its
status as such status relates to its rights to enforce the Specified Transaction
Documents against QUALCOMM; and (d) that there have been no modifications to the
Specified Transaction Documents, whether written, oral, or through course of
dealing or performance.
We understand that you may be separately receiving an opinion with
respect to certain of the foregoing assumptions from Cooley Godward L.L.P., and
we understand that such opinion may contain qualifications. Our opinions herein
are based on the assumptions specified herein, and we express no opinion as to
the effect on the opinions herein stated of any qualifications contained in any
opinions rendered by Cooley Godward L.L.P.
We express no opinion as to the laws of any jurisdiction other than the
laws of the State of New York.
Based upon the foregoing, and subject to the assumptions,
qualifications, exceptions and limitations set forth herein, we are of the
following opinion:
1. The Guarantee is the valid and binding obligation of QUALCOMM,
enforceable against QUALCOMM in accordance with its terms.
<PAGE> 3
REED SMITH SHAW & McCLAY
-3-
April 28, 1997
2. Assuming they have been duly authenticated by the Indenture Trustee,
issued in accordance with the Indenture and delivered to the Trust against
payment therefor as described in the Offering Memorandum, the Convertible
Subordinated Debt Securities constitute valid and binding obligations of
QUALCOMM, enforceable against QUALCOMM in accordance with their terms.
The foregoing opinions are subject to the following assumptions,
qualifications, exceptions and limitations:
A. Such opinions are subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other laws of
general application relating to or affecting the rights and remedies of
creditors generally, and to the effect of general equitable principles (whether
considered in a proceeding in equity or at law). As applied by a court, such
principles might include, without limitation, requirements of materiality,
reasonableness, good faith and fair dealing. Further, without limitation, we
express no opinion as to the availability of the equitable remedies of specific
performance and injunctive relief.
B. Certain laws and decisions applicable in the State of New York may
limit, render unenforceable or otherwise affect the enforceability of, certain
rights, remedies, waivers and other provisions contained in the Specified
Transaction Documents, but such laws and decisions do not, in our judgment,
make the rights and remedies provided for in the Specified Transaction
Documents and available at law, when considered in their entirety, inadequate
for the practical realization of the essential benefits intended to be provided
thereby.
C. We express no opinion as to the enforceability of (i) any rights to
indemnification or contribution provided for in any of the Specified
Transaction Documents which may be deemed violative of public policy, or (ii)
any provisions imposing liquidated damages contained in any of the Specified
Transaction Documents (including without limitation any provisions imposing
penalties, forfeitures or increased rates upon delinquency in payment or the
occurrence of a default to the extent they are found to be penalties or
forfeitures or to be unreasonable in light of the actual amount of damages
incurred).
D. We express no opinion as to any federal, state or local (i) tax,
pension or employee benefit laws or regulations; (ii) securities or "blue sky"
laws or regulations; or (iii) antitrust, trade regulation or unfair competition
laws or regulations.
E. We express no opinion as to whether a federal or state court
outside of the State of New York would give effect to the choice of New York
law to the extent provided for in any of the Specified Transaction Documents.
<PAGE> 4
REED SMITH SHAW & McCLAY
-4-
April 28, 1997
This opinion is limited to the matters set forth herein, and no opinion
may be inferred or implied beyond the matters expressly stated in this letter.
We assume no obligation to update this opinion to advise you of any changes in
facts or law subsequent to the date hereof.
We consent to the reference to our firm under the caption "Legal
Opinions" in the Prospectus included in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
REED SMITH SHAW & McCLAY
<PAGE> 1
EXHIBIT 5.3
[LETTERHEAD OF RICHARDS, LAYTON & FINGER]
April 28, 1997
QUALCOMM Financial Trust I
c/o QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, California 92121
Re: QUALCOMM Financial Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for QUALCOMM Incorporated, a
Delaware corporation (the "Company"), and QUALCOMM Financial 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, dated February 7, 1997
as filed with the office of the Secretary of State of the State of Delaware
(the "Secretary of State") on February 7, 1997;
(b) The Declaration of the Trust, dated as of February 7, 1997,
among QUALCOMM Incorporated, as Sponsor, Wilmington Trust Company, as Delaware
Trustee and Property Trustee, and Irwin Mark Jacobs, Harvey P. White, and
Anthony Thornley, as Regular Trustees;
(c) The Registration Statement (the "Registration Statement") on
Form S-3, including a Prospectus (the "Prospectus"), relating to the 5 3/4%
Trust Convertible Preferred Securities of the Trust representing undivided
beneficial interests in the assets of the Trust (each,
<PAGE> 2
QUALCOMM Incorporated
April 28, 1997
Page 2
a "Preferred Security" and collectively, the "Preferred Securities"), to be
filed by the Company and the Trust with the Securities and Exchange Commission;
(d) An Amended Certificate of Trust of QUALCOMM Financial Trust I,
dated as of February 25, 1997, filed with the Secretary of State of the State
of Delaware on February 25, 1997;
(e) An Amended and Restated Declaration of Trust, dated as of February
25, 1997 (including Annex I and Exhibits A-1 and A-2 thereto), among QUALCOMM,
as Sponsor, the trustees of the Trust named therein (collectively, the
"Trustees") and the holders, from time to time, of undivided beneficial
interests in the Trust; attached as an exhibit to the Registration Statement;
and
(f) a Certificate of Good Standing for the Trust, dated April 28, 1997,
obtained from the Secretary of State of the State of Delaware.
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 (f) above. In particular,
we have not reviewed any document (other than the documents listed in
paragraphs (a) through (f) 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
are in full force and effect and have not 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
<PAGE> 3
QUALCOMM Incorporated
April 28, 1997
Page 3
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 Registration Statement,
and (vii) that the Preferred Securities are issued and sold to the Preferred
Security Holders in accordance with the Declaration and the Registration
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
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 as a
business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security 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 Security
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 Opinions" 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. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
GCK/KS
<PAGE> 1
EXHIBIT 8.1
[COOLEY GODWARD LLP LOGO] ATTORNEYS AT LAW Palo Alto, CA
415 843-5000
One Maritime Plaza Menlo Park, CA
20th Floor 415 843-5000
San Francisco, CA
94111-3580 San Diego, CA
Main 415 693-2000 619 550-6000
Fax 415 951-3699
April 28, 1997 Boulder, CO
http://www.cooley.com 303 546-4000
SUSAN COOPER PHILPOT Denver, CO
415 693-2078 303 606-4800
[email protected]
April 28, 1997
QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, California 92121
Ladies and Gentlemen:
We have acted as counsel to QUALCOMM Incorporated, a Delaware corporation (the
"Company"), and QUALCOMM Financial Trust I, a Delaware statutory business trust
(the "Trust"), in connection with the filing of a Registration Statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the resale of (i) up to 13,200,000 Trust Convertible
Preferred Securities of the Trust, (ii) up to $680,452,500 in aggregate
principal amount of 5-3/4% Convertible Subordinated Debentures due February 24,
2012 of the Company (the "Debt Securities"), (iii) up to 9,084,240 shares of
the Company's Common Stock issuable upon conversion of the Debt Securities (the
"Shares"), and (iv) a Convertible Preferred Securities Guarantee of the Company.
At your request, we have reviewed the discussion entitled "Certain United
States Federal Income Tax Consequences" contained in the Registration Statement
and are of the opinion that, subject to the qualifications and limitations
contained therein, such information fairly presents the current United States
federal income tax law applicable to the Trust and the material United States
federal tax consequences to a United States person of the purchase, ownership
and disposition of the Convertible Preferred Securities of the Trust and
insofar as it relates to statements of law or legal conclusions is correct in
all material respects.
We consent to the reference to our firm under the caption "Certain United
States Federal Income Tax Consequences" and to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Susan Cooper Philpot
Susan Cooper Philpot
SCP/jkw
<PAGE> 1
EXHIBIT 10.1
QUALCOMM FINANCIAL TRUST I
5 3/4% TRUST CONVERTIBLE PREFERRED SECURITIES
(THE "CONVERTIBLE PREFERRED SECURITIES")
GUARANTEED BY AND CONVERTIBLE INTO SHARES OF
COMMON STOCK OF QUALCOMM INCORPORATED
REGISTRATION RIGHTS AGREEMENT
FEBRUARY 25, 1997
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO., INC.
ALEX. BROWN & SONS INCORPORATED
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Initial Purchasers
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
QUALCOMM Financial Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust") by QUALCOMM Incorporated,
a Delaware corporation ("QUALCOMM"), proposes to issue and sell to Lehman
Brothers Inc., Bear, Stearns & Co., Inc., Merrill Lynch & Co., Goldman, Sachs &
Co., and Alex. Brown & Sons Incorporated (the "Initial Purchasers"), upon the
terms set forth in a purchase agreement dated February 19, 1997 (the "Purchase
Agreement"), among the Initial Purchasers, QUALCOMM and the Trust, 5 3/4% trust
convertible preferred securities (liquidation amount $50 per convertible
preferred security) (the "Convertible Preferred Securities"). As an inducement
to the Initial Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Initial Purchasers
thereunder, the Trust and QUALCOMM agree with you, (i) for the benefit of the
Initial Purchasers, and (ii) for the benefit of the holders from time to time of
the Convertible Preferred Securities, the 5 3/4% Convertible Subordinated
Debentures Due February 24, 2012 (the "Debt Securities"), and the Common Stock,
par value $0.0001 per share (the "Common Stock"), of QUALCOMM initially issuable
upon conversion of the Convertible Preferred Securities or the Debt Securities
(collectively, together with the Guarantee of QUALCOMM of the Convertible
Preferred Securities, the "Securities"), including the Initial Purchasers (each
of the foregoing a "Holder" and together the "Holders"), as follows:
<PAGE> 2
1. DEFINITIONS.
Capitalized terms used herein without definition shall have
their respective meanings set forth in or pursuant to the Purchase Agreement or
the Offering Memorandum dated February 19, 1997, in respect of the Convertible
Preferred Securities. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Act" or
"Securities Act" means the Securities Act of 1933, as amended.
"Affiliate" of any means any other person which, directly or
specified person indirectly, is in control of, is controlled by,
or is under common control with such specified
person. For purposes of this definition,
control of a person means the power, direct or
indirect, to direct or cause the direction of
the management and policies of such person
whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"DTC" means The Depository Trust Company.
"Effectiveness has the meaning set forth in Section 2(b)
Period hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Managing means the investment banker or investment
Underwriters bankers and manager or managers that shall
administer an underwritten offering, if any,
as set forth in Section 6 hereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated
organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without
limitation, a prospectus that discloses
information previously omitted from a prospectus
filed as part of an effective registration
statement in reliance upon Rule 430A under the
Act), as amended or supplemented by any
prospectus supplement, with respect to the terms
of the offering of any portion of the
Registrable Securities.
-2-
<PAGE> 3
"Registrable Securities: means all or any portion of the
Securities issued from time to time;
provided, however, that a security
ceases to be a Registrable Security
when it is no longer a Restricted
Security.
"Restricted Security" means any Security except any such
Security which (i) has been effectively
registered under the Securities Act and
sold in a manner contemplated by the
Shelf Registration Statement, (ii) has
been transferred in compliance with
Rule 144 under the Securities Act (or
any successor provision thereto) or is
transferable pursuant to paragraph (k)
of such Rule 144 (or any successor
provision thereto), (iii) has been sold
in compliance with Regulation S under
the Securities Act (or any successor
thereto) and does not constitute the
unsold allotment of a distributor within
the meaning of Regulation S under the
Securities Act, or (iv) has otherwise
been transferred and a new Security not
subject to transfer restrictions under
the Securities Act has been delivered by
or on behalf of QUALCOMM in accordance
with the terms of the Declaration or the
Indenture, as the case may be.
"Shelf Registration means a "shelf" registration statement
Statement of the Trust and QUALCOMM pursuant to
the provisions of Section 2 hereof filed
with the Commission which covers some or
all of the Registrable Securities, as
applicable, on an appropriate form under
Rule 415 under the Act, or any similar
rule that may be adopted by the
Commission, amendments and supplements
to such registration statement,
including post-effective amendments, in
each case including the Prospectus
contained therein, all exhibits thereto
and all material incorporated by
reference therein.
"Shelf Registration" means a registration effected pursuant
to Section 2 hereof.
"Underwriter" means any underwriter of Registrable
Securities in connection with an
offering thereof under a Shelf
Registration Statement.
2. SHELF REGISTRATION.
(a) The Trust and QUALCOMM shall, within 90 days following
the date of initial issuance (the "Issue Date") of the Convertible Preferred
Securities, file with the Commission a Shelf Registration Statement relating to
the offer and sale of the Registrable Securities by the Holders from time to
time in accordance with the methods of distribution elected by such Holders and
set forth in such Shelf Registration Statement and, thereafter, shall each use
all reasonable efforts to cause such Shelf Registration Statement to be declared
effective under the Act as soon as practicable and in no event later than 180
days after the Issue Date;
-3-
<PAGE> 4
provided, however, that no Holder shall be entitled to have the Registrable
Securities held by it covered by such Shelf Registration unless such Holder is
in compliance with Section 3(m) hereof.
(b) The Trust and QUALCOMM shall each use all reasonable
efforts (i) to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming a part thereof to be usable by Holders
for a period of three years from the latest date of issuance of any Convertible
Preferred Securities or such shorter period that will terminate when there are
no Registrable Securities outstanding (in either case, such period being called
the "Effectiveness Period") and (ii) after the effectiveness of the Shelf
Registration Statement, promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of any Registrable Securities
of such Holder and to identify such Holder as a selling securityholder. The
Trust and QUALCOMM shall be deemed not to have used all reasonable efforts to
keep the Shelf Registration Statement effective during the requisite period if
either the Trust or QUALCOMM voluntarily takes any action that would result in
Holders of Registrable Securities covered thereby not being able to offer and
sell any such Registrable Securities during that period, unless (i) such action
is required by applicable law or the rules of any national securities exchange
or other market on which any of the Registrable Securities are then listed or
quoted, (ii) upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) below, and such action is taken by the Trust or QUALCOMM in good
faith and for valid business reasons or (iii) the continued effectiveness of the
Shelf Registration Statement would require QUALCOMM to disclose a material
financing, acquisition or other corporate transaction, and the Board of
Directors shall have determined in good faith that such disclosure is not in the
best interests of QUALCOMM and its stockholders, and, in the case of clause (i)
or (ii) above, the Trust and QUALCOMM thereafter promptly comply with the
requirements of paragraph 3(i) below.
(c) If (i) on or prior to the date 90 days after the Issue
Date a Shelf Registration Statement has not been filed with the Commission or
(ii) on or prior to the date 180 days after the Issue Date such Shelf
Registration Statement has not been declared effective (each such event, a
"Registration Default"), additional interest ("Liquidated Damages") will accrue
on the Debt Securities, and, accordingly, additional distributions will accrue
on the Convertible Preferred Securities, from and including the day following
such Registration Default until such date as such Registration Degault is cured
(i.e., the date the Shelf Registration Statement is filed or declared effective,
as the case may be). Liquidated Damages will be paid quarterly in arrears, with
the first quarterly payment due on the first interest or distribution payment
date, as applicable, following the date on which such Liquidated Damages begin
to accrue, and will accrue at a rate per annum equal to an additional
one-quarter of one percent (0.25%) of the principal amount or liquidation
amount, as applicable, to and including the 90th day following such Registration
Default and one-half of one percent (0.50%) thereof from and after the 91st day
following such Registration Default. In the event that the Shelf Registration
Statement ceases to be effective during the Effectiveness Period for more than
90 days, whether or not consecutive, in any 12-month period, then the interest
rate borne by the Debt Securities and the distribution rate borne by the
Convertible Preferred Securities will each increase by an additional one-half of
one percent (0.50%) per annum from the 91st day of the applicable 12-month
period such Shelf Registration Statement ceases to be effective until such time
as the Shelf Registration Statement again becomes effective.
-4-
<PAGE> 5
3. REGISTRATION PROCEDURES.
In connection with any Shelf Registration Statement, the
following provisions shall apply:
(a) The Trust and QUALCOMM shall furnish to the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein, and shall each use all
reasonable efforts to reflect in each such document, when so filed with the
Commission, such comments as the Initial Purchasers reasonably may propose.
(b) The Trust and QUALCOMM shall take such action as may be
necessary so that (i) any Shelf Registration Statement and any amendment thereto
and any Prospectus forming a part thereof and any amendment or supplement
thereto (and each report or other document incorporated therein by reference in
each case) complies in all material respects with the applicable provisions of
the Securities Act and the Exchange Act and the respective rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, 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 and (iii) any Prospectus forming part
of any Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
(c) (1) QUALCOMM shall advise the Initial Purchasers and, in
the case of clause (i), the Holders and, if requested by the Initial Purchasers
or any such Holder, confirm such advice in writing: (i) when a Shelf
Registration Statement and any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and (ii) of any request by the
Commission for amendments or supplements to the Shelf Registration Statement or
the Prospectus included therein or for additional information.
(2) QUALCOMM shall advise the Initial Purchasers and the
Holders and, if requested by the Initial Purchasers or any such Holder, confirm
such advice in writing of: (i) the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement or the initiation
of any proceedings for that purpose; (ii) the receipt by the Trust or QUALCOMM
of any notification with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or the initiation of
any proceeding for such purpose; and (iii) the happening of any event that
requires the making of any changes in the Shelf Registration Statement or the
Prospectus so that, as of such date, the Shelf Registration Statement and the
Prospectus do not contain an untrue statement of a material fact and do not omit
to state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading (which advice shall be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made).
-5-
<PAGE> 6
(d) QUALCOMM shall use all reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal at the earliest possible time,
of any order suspending the effectiveness of any Shelf Registration Statement.
(e) The Trust and QUALCOMM shall furnish to each Holder of
Registrable Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
reports, other documents and exhibits (including those incorporated by
reference).
(f) The Trust and QUALCOMM shall, during the Effectiveness
Period, deliver to each Holder of Registrable Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and each of the Trust and QUALCOMM consents (except upon
and during the continuance of any event described in paragraph 3(c)(2)(iii)
above) to the use of the Prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto during the Effectiveness Period.
(g) Prior to any offering of Registrable Securities pursuant
to any Shelf Registration Statement, the Trust and QUALCOMM shall register or
qualify or cooperate with the Holders of Registrable Securities included therein
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holders reasonably
request in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such United States jurisdictions of
the Registrable Securities covered by such Shelf Registration Statement;
provided, however, that in no event shall the Trust or QUALCOMM be obligated to
(i) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(g), (ii) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof so subject or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in book-entry
only form, the Trust and QUALCOMM shall cooperate with the Holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to any
Shelf Registration Statement free of any restrictive legends and in such
permitted denominations and registered in such names as Holders may request in
connection with the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Trust and QUALCOMM shall prepare as soon as reasonably
practical a post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Registrable
Securities included therein, the Prospectus will not include an untrue statement
of
-6-
<PAGE> 7
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Trust or QUALCOMM notifies the Holders of the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) above, the
Holders shall suspend the use of the Prospectus until the requisite changes to
the Prospectus have been made.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Trust and QUALCOMM shall provide a CUSIP
number for the Preferred Securities registered under such Shelf Registration
Statement; in the event of and at the time of any distribution of the Debt
Securities to Holders, QUALCOMM shall provide a CUSIP number for the Debt
Securities and provide the applicable trustee with certificates for such
Registrable Securities, in a form eligible for deposit with DTC.
(k) The Trust and QUALCOMM shall use their best efforts to
comply with all applicable rules and regulations of the Commission and shall
make generally available to their security holders or otherwise provide in
accordance with Section 11(a) of the Securities Act as soon as practicable after
the effective date of the applicable Shelf Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Trust and QUALCOMM shall cause the Indenture, the
Declaration and the Guarantee to be qualified under the Trust Indenture Act in a
timely manner.
(m) The Trust and QUALCOMM may require each Holder of
Registrable Securities to be sold pursuant to any Shelf Registration Statement
to furnish to the Trust and QUALCOMM such information regarding the Holder and
the distribution of such Registrable Securities as the Trust and QUALCOMM may
from time to time reasonably request for inclusion in such Shelf Registration
Statement, and QUALCOMM and the Trust may exclude from such registration the
Registrable Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(n) The Trust and QUALCOMM shall, if requested, promptly
include or incorporate in a Prospectus supplement or post-effective amendment to
a Shelf Registration Statement, such information as the Managing Underwriters
reasonably agree should be included therein and to which the Trust and QUALCOMM
do not reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after they are
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment.
(o) The Trust and QUALCOMM shall enter into such customary
agreements (including underwriting agreements in customary form) to take all
other appropriate actions in order to expedite or facilitate the registration or
the disposition of the Registrable Securities, and in connection therewith, if
an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures substantially identical to those set
forth in Section 5 (or such other provisions and procedures reasonably
acceptable to the Managing Underwriters, if any) with respect to all parties to
be indemnified pursuant to Section 5.
-7-
<PAGE> 8
(p) The Trust and QUALCOMM shall (i) make reasonably available
for inspection by the Holders of Registrable Securities to be registered
thereunder, any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and any attorney, accountant or other agent
retained by such Holders or any such Underwriter all relevant financial and
other records, pertinent corporate documents and properties of the Trust and
QUALCOMM and its subsidiaries; (ii) cause QUALCOMM's officers, directors and
employees and the Regular Trustees to make reasonably available for inspection
all relevant information reasonably requested by such Holders or any such
Underwriter, attorney, accountant or agent in connection with any such Shelf
Registration Statement, in each case as is customary for similar due diligence
examinations; provided, however, that any information that is designated in
writing by the Trust and QUALCOMM, in good faith, as confidential at the time of
delivery of such information shall not be used for any purpose other than the
preparation and filing of the Shelf Registration Statement and shall be kept
confidential by such Holders or any such Underwriter, attorney, accountant or
agent, unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public generally
or through a third party without an accompanying obligation of confidentiality;
and provided further that the foregoing inspection and information gathering
shall, to the greatest extent possible, be coordinated on behalf of the Holders
and the other parties entitled thereto by one counsel designated by and on
behalf of such Holders and other parties; (iii) make such representations and
warranties to the Holders of Registrable Securities registered thereunder and
the Underwriters, if any, in form, substance and scope as are customarily made
to Underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement; (iv)
obtain opinions of counsel to the Trust and QUALCOMM (who may be the general
counsel of QUALCOMM) and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) in customary form addressed to each selling Holder and the
Underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and the Managing Underwriters (it being
agreed that the matters to be covered by such opinion or a written statement by
such counsel delivered in connection with such opinions shall include, without
limitation, as of the date of the opinion and as of the effective date of the
Shelf Registration Statement or most recent post-effective amendment thereto, as
the case may be, that nothing has come to the attention of such counsel that
causes such counsel to believe that such Shelf Registration Statement or the
prospectus included therein, as then amended or supplemented, including the
documents incorporated by reference therein, included an untrue statement of a
material fact or omitted to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading); (v) obtain
"cold comfort" letters and updates thereof from the independent public
accountants of QUALCOMM (and, if necessary, any other independent public
accountants of any subsidiary of QUALCOMM or of any business acquired by
QUALCOMM for which financial statements and financial data are, or are required
to be, included in the Shelf Registration Statement), addressed to each such
Holder of Registrable Securities registered thereunder and the Underwriters, if
any, in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings; and
(vi) deliver such other customary documents and certificates as may be
reasonably requested by any such Holders and the Managing Underwriters, if any,
including
-8-
<PAGE> 9
those to evidence compliance with Section 3(i) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Trust and QUALCOMM. The foregoing actions set forth in clauses (iii), (iv), (v)
and (vi) of this Section 3(p) shall be performed at each closing under any
underwritten offering to the extent required thereunder.
(q) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-Laws
of the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Registrable Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
QUALCOMM shall assist such broker-dealer in complying with the requirements of
such Rules and By-Laws, including, without limitation, by (A) if such Rules or
By-Laws, including Schedule E thereto, shall so require, engaging at the expense
of the Holders a "qualified independent underwriter" (as defined in Schedule E)
to participate in the preparation of the Shelf Registration Statement relating
to such Registrable Securities and to exercise usual standards of due diligence
with respect thereto, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of Underwriters provided in
Section 5 hereof and (C) providing such information to such broker-dealer as may
be reasonably required in order for such broker-dealer to comply with the
requirements of the Rules of Fair Practice of the NASD.
(r) The Trust and QUALCOMM shall use all reasonable efforts to
take all other steps necessary to effect the registration, offering and sale of
the Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.
4. REGISTRATION EXPENSES.
Except as otherwise provided in Section 6, QUALCOMM shall bear
all fees and expenses incurred by it and the Trust in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by the Initial Purchasers and reasonably acceptable to
QUALCOMM and the Holders of a majority of the Registrable Securities covered by
the Shelf Registration Statement to act as counsel therefor in connection
therewith, including any underwritten offering pursuant to Section 6.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) In connection with any Shelf Registration Statement,
QUALCOMM shall indemnify and hold harmless the Trust, the Initial Purchasers,
each Holder, each Underwriter who participates in an offering of Registrable
Securities, each of their respective directors, officers, employees, and
trustees, and each Person, if any, who controls the Trust, the Initial
Purchasers and any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
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<PAGE> 10
(i) from and against any loss, liability, claim, damage
and expense whatsoever, including any amounts paid in settlement of any
investigation, litigation, proceeding or claim, joint or several, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated therein by
reference, 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 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; provided, that
QUALCOMM shall not be liable under this clause (i) for any settlement of any
action effected without its written consent, which consent shall not be
unreasonably withheld; and (ii) against any and all expenses (including
reasonable fees and disbursements of counsel chosen by the Holders, such Holder
or any Underwriter (except to the extent otherwise expressly provided in Section
5(c) hereof)), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any court or
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, as such expenses are incurred to the extent that any such
expense is not paid under subparagraph (i) of this Section 5(a); provided
further, that the indemnity provided for in this Section 5(a) shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission (i) made in
reliance upon and in conformity with written information furnished to the Trust
or QUALCOMM by the Initial Purchasers, such Holder or any Underwriter in writing
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto) or (ii) contained in
any preliminary prospectus or the Prospectus if the Initial Purchasers, such
Holder or such Underwriter failed to send or deliver a copy of the Prospectus
(or any amendment or supplement thereto) to the Person asserting such losses,
claims, damages or liabilities on or prior to the delivery of written
confirmation of any sale of securities covered thereby to such Person in any
case where such Prospectus (or any amendment or supplement thereto) corrected
such untrue statement or omission. Any amounts advanced by QUALCOMM to an
indemnified party pursuant to this Section 5 as a result of such losses shall be
returned to QUALCOMM if it shall be finally determined by such a court in a
judgment not subject to appeal or final review that such indemnified party was
not entitled to indemnification by QUALCOMM.
(b) Each Holder, severally and not jointly, shall indemnify
and hold harmless the Trust, QUALCOMM, the Initial Purchasers, each Underwriter
who participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors, officers (including each officer
of QUALCOMM who signed the Shelf Registration Statement), employees and trustees
and each Person, if any, who controls the Trust, QUALCOMM, the Initial
Purchasers, any Underwriter or any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, liability, claim, damage and expense whatsoever described in
the indemnity contained in Section 5(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
-10-
<PAGE> 11
statements or omissions, made in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to QUALCOMM
by such selling Holder expressly for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto); provided, however, that no such Holder shall be liable for any claims
hereunder in excess of the amount of gross proceeds received by such Holder from
the sale of Registrable Securities pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any claim or any action commenced against it in respect of
which indemnity may be sought hereunder, enclosing a copy of all papers served
on such indemnified party, but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability which it may have other
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action. If an
indemnifying party so elects within a reasonable time after receipt of such
notice, such indemnifying party, jointly with any other indemnifying party, may
assume the defense of such action with counsel chosen by it and reasonably
satisfactory to the indemnified party or parties defendant in such action,
provided that if any such indemnified party reasonably determines that
representation of such indemnifying party and any indemnified party by the same
counsel would present a conflict of interest, then such indemnifying party or
parties shall not be entitled to assume such defense. If an indemnifying party
is not entitled to assume the defense of such action as a result of the proviso
to the preceding sentence, counsel for such indemnifying party shall be entitled
to conduct the defense of such indemnifying party and counsel for each
indemnified party or parties shall be entitled to conduct the defense of such
indemnified party or parties. If an indemnifying party assumes the defense of an
action in accordance with and as permitted by the provisions of this paragraph,
such indemnifying party shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action.
In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from its 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. No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there shall be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 5(a) or
(b) is for any reason held to be unavailable to the indemnified parties although
applicable in accordance with its terms,
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<PAGE> 12
QUALCOMM, the Initial Purchasers and the Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by QUALCOMM, the Initial
Purchasers and the Holders, as incurred; provided that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between QUALCOMM, the Initial
Purchasers and the Holders, such parties shall contribute to such aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement in such proportion as shall be appropriate to reflect
the relative fault of QUALCOMM, on the one hand, and the Initial Purchasers and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of QUALCOMM, on the one hand, and of the Initial Purchasers and
the Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by QUALCOMM, on the one hand, or by or on behalf of the Initial
Purchasers or the Holders, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. QUALCOMM, the Initial Purchasers and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 5(d), each
director, officer, employee and trustee of an Initial Purchaser or Holder, and
each Person, if any, who controls an Initial Purchaser or Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as such Initial Purchaser or Holder,
and each director, officer, employee and trustee of QUALCOMM and the Trust, and
each Person, if any, who controls QUALCOMM or the Trust within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as QUALCOMM or the Trust. No party shall be
liable for contribution with respect to any action, suit, proceeding or claim
settled without its written consent.
6. UNDERWRITTEN OFFERING.
The Holders of Registrable Securities covered by the Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an underwritten offering. In any such underwritten offering, the investment
banker or bankers and manager or managers that will administer the offering will
be selected by, and the underwriting arrangements with respect thereto will be
approved by, the Holders of a majority of the Registrable Securities to be
included in such offering; provided however, that (i) such investment bankers
and managers and underwriting arrangements (including indemnification
agreements) must be reasonably satisfactory to QUALCOMM and the Trust and (ii)
QUALCOMM and the Trust shall not be obligated to cooperate with the Initial
Purchasers or Holders in more than one underwritten offering during the
Effectiveness Period. No Holder may participate in the underwritten offering
contemplated hereby unless such Holder (a) agrees to sell such Holder's
Registrable Securities in accordance with any approved underwriting
arrangements, (b) completes and executes all
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<PAGE> 13
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
approved underwriting arrangements and (c) at least 20% of the outstanding
Registrable Securities are included in such underwritten offering. The Holders
participating in the underwritten offering shall be responsible for any
underwriting discounts and commissions. The Trust and QUALCOMM shall pay all
expenses customarily borne by issuers, including but not limited to filing fees,
the fees and disbursements of their counsel, their independent public
accountants and any printing and other out-of-pocket expenses incurred by them
in connection with such underwritten offering, and in accordance with Section 4
hereof the reasonable fees and disbursements of counsel to the selling
securityholders. Notwithstanding the foregoing or the provisions of Section 3(n)
hereof, upon receipt of a request from the Managing Underwriter or a
representative of Holders of a majority of the Registrable Securities
outstanding to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an underwritten
offering, QUALCOMM may delay the filing of any such amendment or supplement for
up to 90 days if QUALCOMM in good faith has a valid business reason for such
delay.
7. MISCELLANEOUS.
(a) Other Registration Rights.
QUALCOMM may grant registration rights that would permit any
Person that is a third party the right to piggy-back on any Shelf Registration
Statement, provided that if the Managing Underwriter, if any, of such offering
delivers an opinion to the selling Holders that the total amount of securities
which they and the holders of such piggy-back rights intend to include in any
Shelf Registration Statement is so large as to materially adversely affect the
success of such offering (including the price at which such securities can be
sold), then (except to the extent otherwise required under the terms of any
registration rights granted by QUALCOMM prior to the date hereof) only the
amount, number or kind of securities to be offered for the account of holders of
such piggy-back rights will be reduced to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount, number
or kind recommended by the Managing Underwriter prior to any reduction in the
amount of Registrable Securities to be included.
(b) Amendments and Waivers.
The provision of this Agreement, including the provisions of
this sentence, may not be amended, qualified, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Trust and QUALCOMM have obtained the written consent of the Initial
Purchasers. Any such written consent of the Initial Purchasers shall be binding
upon each Holder and each subsequent Holder.
(c) Notices.
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<PAGE> 14
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by
such Holder to QUALCOMM in accordance with the provisions of this Section 7(c);
(2) if to the Initial Purchasers, initially at the
address set forth in the Purchase Agreement; and
(3) if to the Trust or QUALCOMM, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Initial Purchasers or the Trust and QUALCOMM by notice to
the other may designate additional or different addresses for subsequent notices
or communications.
(d) Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties and the Holders,
including, without the need for an express assignment or any consent by the
Trust or QUALCOMM thereto, subsequent Holders of Registrable Securities. The
Trust and QUALCOMM hereby agree to extend the benefits of this Agreement to any
Holder of Registrable Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
(e) Counterparts.
This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(f) Headings.
The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
(g) Governing law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
(h) Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect
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<PAGE> 15
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions hereof shall not be in
any way impaired or affected thereby, it being intended that all of the rights
and privileges of the parties shall be enforceable to the fullest extent
permitted by law.
Please confirm that the foregoing correctly sets forth the
agreement between QUALCOMM, the Trust and you.
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<PAGE> 16
Very truly yours,
QUALCOMM FINANCIAL TRUST I
By: /s/ Anthony S. Thornley
------------------------------------------
Name: Anthony S. Thornley
Title: Regular Trustee
QUALCOMM INCORPORATED
By: /s/ Anthony S. Thornley
------------------------------------------
Name: Anthony S. Thornley
Title: Senior Vice President and Chief
Financial Officer
Accepted:
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO., INC.
ALEX. BROWN & SONS INCORPORATED
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: LEHMAN BROTHERS INC.
By: [illegible]
----------------------------------------
Authorized Representative
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<PAGE> 1
EXHIBIT 12.1
RATIO
QUALCOMM INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Q1 FISCAL YEARS
1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from operations before Income taxes 12,168 26,627 39,880 17,313 13,258 (2,283)
Add (deduct)
Fixed charges 2,969 6,132 4,037 3,241 3,094 676
Capitalized interest (147) (319) (642)
Amortization of capitalized interest 69 53 21
Net losses related to certain 50%
or less owned affiliates 198 1,261
Minority interest in consolidated
affiliates 3,320 (13,178) (12,016) (2,893)
----------------------------------------------------------------
Adjusted earnings 18,379 19,315 31,280 17,661 16,550 (346)
================================================================
Fixed charges:
Interest on indebtedness and amortization
of deferred financing costs 2,131 3,673 2,906 2,025 2,013 --
Portions of rents representative of the
interest factor 838 2,459 1,131 1,216 1,081 676
Debt service guarantee interest expense
of unconsolidated affiliates
----------------------------------------------------------------
Total Fixed Charges 2,969 6,132 4,037 3,241 3,094 676
================================================================
RATIO OF EARNINGS TO FIXED CHARGES 6.2 3.1 7.7 5.4 5.3 X
</TABLE>
X As a result of the loss incurred in 1992, the Company was unable
to fully cover the indicated fixed charges.
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated November 8, 1996 appearing on page F-1 of QUALCOMM Incorporated's Annual
Report on Form 10-K for the year ended September 30, 1996. We also consent to
the references to us under the headings "Experts".
PRICE WATERHOUSE LLP
San Diego, California
April 25, 1997
<PAGE> 1
Exhibit 25.1
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
QUALCOMM INCORPORATED
QUALCOMM FINANCIAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware 95-3685934
Delaware 52-6845046
(State of incorporation) (I.R.S. employer identification no.)
6455 Lusk Boulevard
San Diego, California 92121-2779
(Address of principal executive offices) (Zip Code)
Trust Convertible Preferred Securities
of QUALCOMM Financial Trust I
(Title of the indenture securities)
<PAGE> 2
ITEM 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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 14th day
of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Norma P. Closs By: /s/ Emmett R. Harmon
------------------------------- ---------------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such
officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent with
the Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive
deposits of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation which are
proper or necessary for the transaction of the business of the
Corporation hereby created.
(2) To insure titles to real and personal property, or any estate
or interests therein, and to guarantee the holder of such
property, real or personal, against any claim or claims, adverse
to his interest therein, and to prepare and give certificates of
title for any lands or premises in the State of Delaware, or
elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private,
and to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or
underwriting the stock, bonds or other obligations of any
corporation, association, state or municipality, and may receive
and manage any sinking fund therefor on such terms as may be
agreed upon between the two parties, and in like manner may act as
Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
2
<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding places
of responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any trust, office, duty,
contract or agreement, either by itself or in conjunction with any
other person, or persons, corporation, or corporations, or in like
manner become surety upon any bond, recognizance, obligation,
judgment, suit, order, or decree to be entered in any court of
record within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian or bailee by any persons, corporations, court, officer,
or authority, in the State of Delaware or elsewhere; and whenever
this Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in bankruptcy,
receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity,
it shall not be required to give bond with surety, but its capital
stock shall be taken and held as security for the performance of
the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of
the duties which it may undertake or be called upon to perform, or
for the assumption of any responsibility the said Corporation may
be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or
of any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for,
and dispose of interest, dividends and income upon and from any of
the bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property, any and all the rights, powers
and privileges of individual
3
<PAGE> 7
owners thereof, including the right to vote thereon; to invest and
deal in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper, and
from time to time to vary or realize such investments; to issue
bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds, as
and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property
of any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of
the world.
(2) To acquire the good will, rights, property and franchises and
to undertake the whole or any part of the assets and liabilities
of any person, firm, association or corporation, and to pay for
the same in cash, stock of this Corporation, bonds or otherwise;
to hold or in any manner to dispose of the whole or any part of
the property so purchased; to conduct in any lawful manner the
whole or any part of any business so acquired, and to exercise all
the powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and
to lease, sell, exchange, transfer, or in any manner whatever
dispose of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and,
without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent
as natural persons might or could do, to purchase or otherwise
acquire, to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every class and
description, in any State, District, Territory or Colony of the
United States, and in any foreign country or place.
4
<PAGE> 8
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any
other clause of this or any other paragraph in this charter, but
that the objects, purposes and powers specified in each of the
clauses of this paragraph shall be regarded as independent
objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock");
and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of the
Board of Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall
be paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes,
or series of the same or other class of
5
<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares
of any other class or classes or of any series of the same or any
other class or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under
such circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred
Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding-up, of the
Corporation, the holders of the Common Stock shall be entitled to
6
<PAGE> 10
receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted by
the Board of Directors pursuant to section (b) of this Article
FOURTH, each holder of Common Stock shall have one vote in respect
of each share of Common Stock held on all matters voted upon by
the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
7
<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the
8
<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for that
purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
9
<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any other
corporation (whether or not itself an Interested Stockholder),
which, after such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on
11
<PAGE> 15
such business combination, or immediately prior to the consummation of
any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities
Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
12
<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis
of information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4)
whether the assets subject to any business combination or the
consideration received for the issuance or transfer of securities
by the Corporation, or any Subsidiary has an aggregate fair market
value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary
obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its own
members and who
2
<PAGE> 20
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section ) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none of
whom shall be an officer of the Company, and shall hold office at the pleasure
of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected
by the Board of Directors as an associate director, to serve during the pleasure
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: April 14, 1997 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------------- ----------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1996.
------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins ................ 213,895
Interest-bearing balances .......................................... 0
Held-to-maturity securities ................................................ 465,818
Available-for-sale securities .............................................. 752,297
Federal funds sold ......................................................... 95,000
Securities purchased under agreements to resell ............................ 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income ........................... 3,634,003
LESS: Allowance for loan and lease losses ......................... 51,847
LESS: Allocated transfer risk reserve ............................. 0
Loans and leases, net of unearned income, allowance, and reserve.... 3,582,156
Assets held in trading accounts ............................................ 0
Premises and fixed assets (including capitalized leases) ................... 89,129
Other real estate owned .................................................... 3,520
Investments in unconsolidated subsidiaries and associated companies ........ 52
Customers' liability to this bank on acceptances outstanding ............... 0
Intangible assets .......................................................... 4,593
Other assets ............................................................... 114,300
Total assets ............................................................... 5,359,950
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices ........................................................ 3,749,697
Noninterest-bearing ................................................ 852,790
Interest-bearing ................................................... 2,896,907
Federal funds purchased .................................................... 77,825
Securities sold under agreements to repurchase ............................. 192,295
Demand notes issued to the U.S. Treasury ................................... 53,526
Trading liabilities ........................................................ 0
Other borrowed money: ...................................................... ///////
With original maturity of one year or less ......................... 714,000
With original maturity of more than one year ....................... 43,000
Mortgage indebtedness and obligations under capitalized leases ............. 0
Bank's liability on acceptances executed and outstanding ................... 0
Subordinated notes and debentures .......................................... 0
Other liabilities .......................................................... 98,756
Total liabilities .......................................................... 4,929,099
Limited-life preferred stock and related surplus ........................... 0
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock and related surplus .............................. 0
Common Stock ............................................................... 500
Surplus .................................................................... 62,118
Undivided profits and capital reserves ..................................... 367,371
Net unrealized holding gains (losses) on available-for-sale securities...... 862
Total equity capital ....................................................... 430,851
Total liabilities, limited-life preferred stock, and equity capital ........ 5,359,950
</TABLE>
2
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EXHIBIT 25.2
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
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WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
QUALCOMM INCORPORATED
(Exact name of obligor as specified in its charter)
Delaware 95-3685934
(State of incorporation) (I.R.S. employer identification no.)
6455 Lusk Boulevard
San Diego, California 92121-2779
(Address of principal executive offices) (Zip Code)
Convertible Subordinated Debentures
of QUALCOMM Incorporated
(Title of the indenture securities)
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ITEM 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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 14th day
of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Norma P. Closs By: /s/ Emmett R. Harmon
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Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
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EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
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AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
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Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
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(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to receive
a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual
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owners thereof, including the right to vote thereon; to invest
and deal in and with any of the moneys of the Corporation upon
such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by pledges or
deeds of trust or mortgages of or upon the whole or any part
of the property held or owned by the Corporation, and to sell
and pledge such bonds, as and when the Board of Directors
shall determine, and in the promotion of its said corporate
business of investment and to the extent authorized by law, to
lease, purchase, hold, sell, assign, transfer, pledge,
mortgage and convey real and personal property of any name and
nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
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(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
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stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
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receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article FOURTH, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation), any
director or the entire Board of Directors of the
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Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for that
purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
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(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on
11
<PAGE> 15
such business combination, or immediately prior to the consummation of
any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
12
<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its own
members and who
2
<PAGE> 20
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: April 14, 1997 By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks
with state publication requirements. It has not been approved by any
state banking authorities. Refer to your appropriate state banking
authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------- --------------------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1996.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins................ 213,895
Interest-bearing balances.......................................... 0
Held-to-maturity securities.................................................... 465,818
Available-for-sale securities.................................................. 752,297
Federal funds sold............................................................. 95,000
Securities purchased under agreements to resell................................ 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income .......................... 3,634,003
LESS: Allowance for loan and lease losses ........................ 51,847
LESS: Allocated transfer risk reserve ............................ 0
Loans and leases, net of unearned income, allowance, and reserve... 3,582,156
Assets held in trading accounts................................................ 0
Premises and fixed assets (including capitalized leases)....................... 89,129
Other real estate owned........................................................ 3,520
Investments in unconsolidated subsidiaries and associated companies............ 52
Customers' liability to this bank on acceptances outstanding................... 0
Intangible assets.............................................................. 4,593
Other assets................................................................... 114,300
Total assets................................................................... 5,359,950
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 1
Exhibit 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
QUALCOMM INCORPORATED
(Exact name of obligor as specified in its charter)
Delaware 95-3685934
(State of incorporation) (I.R.S. employer identification no.)
6455 Lusk Boulevard
San Diego, California 92121-2779
(Address of principal executive offices) (Zip Code)
Convertible Preferred Securities Guarantee
of QUALCOMM Incorporated
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 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.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 14th day
of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Norma P. Closs By: /s/ Emmett R. Harmon
----------------------------- -----------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
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<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
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(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual
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owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it
may think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
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<PAGE> 8
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of
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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to
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<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
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(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
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<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for that
purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
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<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
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(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on
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such business combination, or immediately prior to the consummation of
any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
12
<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its
<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who
2
<PAGE> 20
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than
4
<PAGE> 22
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of
5
<PAGE> 23
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE> 24
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE> 25
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses
9
<PAGE> 27
under applicable law.
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: April 14, 1997 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------- -------------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1996.
----------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins........................................... 213,895
Interest-bearing balances .................................................................... 0
Held-to-maturity securities .............................................................................. 465,818
Available-for-sale securities............................................................................. 752,297
Federal funds sold........................................................................................ 95,000
Securities purchased under agreements to resell .......................................................... 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income ..................................................... 3,634,003
LESS: Allowance for loan and lease losses ................................................... 51,847
LESS: Allocated transfer risk reserve ....................................................... 0
Loans and leases, net of unearned income, allowance, and reserve.............................. 3,582,156
Assets held in trading accounts........................................................................... 0
Premises and fixed assets (including capitalized leases).................................................. 89,129
Other real estate owned .................................................................................. 3,520
Investments in unconsolidated subsidiaries and associated companies ...................................... 52
Customers' liability to this bank on acceptances outstanding.............................................. 0
Intangible assets......................................................................................... 4,593
Other assets.............................................................................................. 114,300
Total assets.............................................................................................. 5,359,950
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices....................................................................................... 3,749,697
Noninterest-bearing .......................................................................... 852,790
Interest-bearing ............................................................................. 2,896,907
Federal funds purchased .................................................................................. 77,825
Securities sold under agreements to repurchase ........................................................... 192,295
Demand notes issued to the U.S. Treasury.................................................................. 53,526
Trading liabilities....................................................................................... 0
Other borrowed money:..................................................................................... ///////
With original maturity of one year or less.................................................... 714,000
With original maturity of more than one year.................................................. 43,000
Mortgage indebtedness and obligations under capitalized leases ........................................... 0
Bank's liability on acceptances executed and outstanding.................................................. 0
Subordinated notes and debentures......................................................................... 0
Other liabilities ........................................................................................ 98,756
Total liabilities ........................................................................................ 4,929,099
Limited-life preferred stock and related surplus.......................................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus............................................................. 0
Common Stock.............................................................................................. 500
Surplus................................................................................................... 62,118
Undivided profits and capital reserves.................................................................... 367,371
Net unrealized holding gains (losses) on available-for-sale securities.................................... 862
Total equity capital...................................................................................... 430,851
Total liabilities, limited-life preferred stock, and equity capital....................................... 5,359,950
</TABLE>
2
