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FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-36112
PROSPECTUS
$345,000,000
[TRIQUINT LOGO]
4% CONVERTIBLE SUBORDINATED NOTES DUE 2007 AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
We issued the notes in private placements in February 2000 and March 2000.
This prospectus will be used by selling securityholders to resell their notes
and the common stock issuable upon conversion of their notes.
The notes are convertible, at the option of the holder, at any time on or
prior to maturity into shares of our common stock. The notes are convertible at
a conversion price of $135.60 per share, which is equal to 7.3746 shares per
$1,000 principal amount of notes, subject to adjustment. We will pay interest on
the notes on March 1 and September 1 of each year, beginning September 1, 2000.
The notes will mature on March 1, 2007, unless earlier converted or redeemed.
We may redeem some or all of the notes at any time before March 5, 2003 at a
redemption price of $1,000 per $1,000 principal amount of notes, plus accrued
and unpaid interest, if any, to the redemption date, if the closing price of our
common stock has exceeded 150% of the conversion price then in effect for at
least 20 trading days within a period of 30 consecutive trading days ending on
the trading day before the date of mailing of the provisional redemption notice.
We will make an additional payment in cash with respect to the notes called for
provisional redemption in an amount equal to $166.67 per $1,000 principal amount
of notes, less the amount of any interest actually paid on the notes before the
date of redemption. We may redeem some or all of the notes at any time on or
after March 5, 2003 at the redemption prices described in this prospectus.
TriQuint's common stock is quoted on the Nasdaq National Market under the
symbol "TQNT." On May 19, 2000, the last reported sale price of the common stock
on the Nadsaq National Market was $83.75 per share.
INVESTING IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus is dated May 22, 2000.
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information that is different. We
are offering to sell and seeking offers to buy shares of our common stock only
in jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or any sale of our common
stock.
TABLE OF CONTENTS
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Where You Can Find More Information.... 3
Forward-Looking Statements............. 4
Summary................................ 5
Risk Factors........................... 8
Use of Proceeds........................ 19
Ratio of Earnings to Fixed Charges..... 19
Description of Notes................... 20
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Description of Capital Stock........... 37
Certain United States Federal Income
Tax Considerations................... 42
Selling Securityholders................ 47
Plan of Distribution................... 53
Legal Matters.......................... 54
Experts................................ 54
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REFERENCES IN THIS PROSPECTUS TO "TRIQUINT," "WE," "OUR" AND "US" REFER TO
TRIQUINT SEMICONDUCTOR, INC., A DELAWARE CORPORATION.
WE MAINTAIN A WEB SITE AT WWW.TRIQUINT.COM. INFORMATION CONTAINED ON OUR WEB
SITE DOES NOT CONSTITUTE PART OF THIS PROSPECTUS.
EACH TRADEMARK, TRADE NAME OR SERVICE MARK OF ANY OTHER COMPANY APPEARING IN
THIS PROSPECTUS BELONGS TO ITS HOLDER.
2
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WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Commission,
in accordance with the Securities Exchange Act of 1934. You may read and copy
our reports, proxy statements and other information filed by us at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices;
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for further information about the public
reference rooms. Our reports, proxy statements and other information filed with
the Commission are available to the public over the Internet at the Commission's
World Wide Web site at http://www.sec.gov.
The Commission allows us to "incorporate by reference" into this prospectus
the information we filed with the Commission. This means that we can disclose
important information by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus.
Information that we file later with the Commission will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made by us with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering is complete.
- The description of the common stock in our Registration Statement on
Form 8-A as filed with the Commission on October 21, 1993.
- The description of our common stock in our registration statement on
Form 8-B as filed with the Commission on February 18, 1997.
- The description of our Preferred Share Purchase Rights in our Registration
Statement on Form 8-A as filed with the Commission on July 24, 1998.
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
- Current Report on Form 8-K filed on February 14, 2000.
- Current Report on Form 8-K filed on February 18, 2000.
- Schedule 14A filed on April 19, 2000.
- Quarterly Report on Form 10-Q for the quarter ended April 1, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Edson H. Whitehurst, Jr.
Vice President, Finance and Administration, Chief Financial Officer and
Secretary
TriQuint Semiconductor, Inc.
2300 N.E. Brookwood Parkway
Hillsboro, Oregon 97124
(503) 615-9000
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume the
information in this prospectus is accurate as of any date other than the date on
the front of those documents.
3
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FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled "Prospectus Summary" and
"Risk Factors," contains forward-looking statements. These statements relate to
future events or our future financial performance and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. Such risks
and other factors include, among other things, those listed under "Risk Factors"
and elsewhere in this prospectus. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially. In evaluating these statements, you should specifically
consider various factors, including the risks outlined under "Risk Factors."
These factors may cause our actual results to differ materially from any
forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither any other person nor we
assume responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform such statements to actual results.
4
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN OUR NOTES. YOU SHOULD
READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING OUR FINANCIAL STATEMENTS AND THE
RISKS OF INVESTING IN OUR NOTES DISCUSSED UNDER "RISK FACTORS," BEFORE MAKING AN
INVESTMENT DECISION.
TRIQUINT SEMICONDUCTOR, INC.
We are a leading supplier of high-performance gallium arsenide integrated
circuits for the wireless communications, telecommunications, data
communications and aerospace markets. Our integrated circuits are incorporated
into a variety of communications products, including cellular phones and pagers,
fiber optic telecommunications equipment, satellite communications systems, high
performance data networking products and aerospace applications. We use our
proprietary gallium arsenide technology to enable our products to overcome the
performance barriers of silicon devices in a variety of applications. Gallium
arsenide has inherent physical properties that allow its electrons to move up to
five times faster than those of silicon. This higher electron mobility permits
the manufacture of gallium arsenide integrated circuits that operate at much
higher speeds than silicon devices, or operate at the same speeds with reduced
power consumption. We sell our products worldwide to end user customers,
including Ericsson, Hughes, Lucent, Motorola, Nokia, Nortel, QUALCOMM and
Raytheon.
We own and operate advanced wafer fabrication facilities and utilize
proprietary processes designed to enable us to cost effectively produce analog
and mixed signal integrated circuits in high volumes. We believe that control of
wafer fabrication assures a reliable source of supply and provides greater
opportunities to enhance quality and reliability and achieve manufacturing
efficiency. In addition, this control can facilitate new process and product
development and enables us to be more responsive to customer requirements. Our
wafer fabrication capabilities have allowed us to establish a strategic foundry
business serving leading communications companies. Our foundry business
leverages our extensive library of proprietary analog and mixed signal cells and
our advanced integrated circuit manufacturing processes.
Our strategy is to focus on the communications market by offering a broad
range of standard and custom designed integrated circuits and manufacturing
services which address numerous applications in our target markets. Key elements
of this strategy include:
- focusing on analog and mixed signal design excellence;
- continuing to serve customers across a broad array of applications in
communications markets;
- targeting high growth markets with high performance solutions;
- offering foundry services; and
- capitalizing on partnerships with industry leaders in our target markets.
We are incorporated under the laws of the state of Delaware. Our principal
executive offices are located at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon
97124, and our telephone number is (503) 615-9000.
5
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THE OFFERING
The following is a brief summary of some of the terms of the notes offered
for resale in this prospectus. For a more complete description of the terms of
the notes, see "Description of Notes" in this prospectus.
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Issuer................................. TriQuint Semiconductor, Inc.
Notes offered.......................... $345,000,000 principal amount of 4% Convertible
Subordinated Notes due 2007.
Maturity............................... March 1, 2007.
Interest............................... We will pay 4% per annum on the principal amount, payable
semiannually on March 1 and September 1, beginning on
September 1, 2000.
Conversion rights...................... The notes are convertible, at the option of the holder, at
any time on or prior to maturity into shares of our common
stock at a conversion price of $135.60 per share, which is
equal to a conversion rate of 7.3746 shares per $1,000
principal amount of notes. The conversion rate is subject
to adjustment.
Ranking................................ The notes are unsecured and subordinated to our existing
and future senior indebtedness, as defined. In addition,
the notes effectively rank junior to our subsidiaries'
liabilities. At December 31, 1999, we had approximately
$55.6 million of senior indebtedness outstanding, and the
aggregate amount of liabilities of our subsidiaries was
approximately $8.8 million. Because the notes are
subordinated, in the event of bankruptcy, liquidation,
dissolution or acceleration of payment on the senior
indebtedness, holders of the notes will not receive any
payment until holders of the senior indebtedness have been
paid in full. The indenture under which the notes were
issued does not prevent us or our subsidiaries from
incurring additional senior indebtedness or other
obligations.
Provisional redemption................. We may redeem the notes, in whole or in part, at any time
before March 5, 2003, at a redemption price equal to
$1,000 per $1,000 principal amount of notes to be redeemed
plus accrued and unpaid interest, if any, to the date of
redemption if (i) the closing price of our common stock
has exceeded 150% of the conversion price then in effect
for at least 20 trading days within a period of 30
consecutive trading days ending on the trading day before
the date of mailing of the provisional redemption notice,
and (ii) the shelf registration statement covering resales
of the notes and the common stock issuable upon conversion
of the notes is effective and available for use and is
expected to remain effective and available for use for the
30 days following the provisional redemption date, unless
registration is no longer required. Upon any provisional
redemption, we will make an additional payment in cash
with respect to the notes called for redemption in an
amount equal to $166.67 per $1,000 principal amount of
notes, less the amount of any interest actually paid on
the note before the date of redemption. We will be
obligated to make this additional payment on all notes
called for provisional
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6
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redemption, including any notes converted after the notice
date and before the provisional redemption date.
Optional redemption.................... We may redeem all or a portion of the notes on or after
March 5, 2003 at the redemption prices listed in this
offering memorandum, plus accrued and unpaid interest.
Change in control...................... Upon a change in control event, each holder of the notes
may require us to repurchase some or all of its notes at a
purchase price equal to 100% of the principal amount of
the notes plus accrued and unpaid interest. We may, at our
option, instead of paying the change in control purchase
price in cash, pay it in shares of our common stock valued
at 95% of the average of the closing sales prices of our
common stock for the five trading days immediately
preceding and including the third day prior to the date we
are required to repurchase the notes. We cannot pay the
change in control purchase price in common stock unless we
satisfy the conditions described in the indenture under
which the notes will be issued.
Use of proceeds........................ TriQuint will not receive any of the proceeds of the
resale of the notes by the selling stockholders or common
stock to which they may be converted.
Registration rights.................... We agreed to file with the Securities and Exchange
Commission this shelf registration statement for the
resale of the notes and the common stock issuable upon
conversion. We have agreed to keep the shelf registration
statement effective until two years after March 3, 2000.
If we do not comply with these registration obligations,
we will be required to pay liquidated damages to the
holders of the notes or the common stock issuable upon
conversion.
Trading................................ The notes are eligible for trading in the PORTAL Market;
however, we can provide no assurance as to the liquidity
of, or trading markets for, the notes. Our common stock is
quoted on the Nasdaq National Market under the symbol
"TQNT."
Risk Factors........................... See "Risk Factors" and the other information in this
prospectus for a discussion of the factors you should
carefully consider before deciding to invest in the notes
or the common stock into which the notes are convertible.
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7
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RISK FACTORS
ANY INVESTMENT IN OUR NOTES OR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CONSIDER THE RISKS DESCRIBED BELOW CAREFULLY AND ALL OF THE
INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE DECIDING WHETHER TO PURCHASE OUR
NOTES OR THE COMMON STOCK INTO WHICH THEY MAY BE CONVERTED. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY RISKS AND UNCERTAINTIES WE FACE.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS WOULD SUFFER. IN THAT EVENT, THE PRICE OF OUR NOTES AND COMMON STOCK
COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT IN OUR NOTES AND
COMMON STOCK. THE RISKS DISCUSSED BELOW ALSO INCLUDE FORWARD-LOOKING STATEMENTS
AND OUR ACTUAL RESULTS MAY DIFFER SUBSTANTIALLY FROM THOSE DISCUSSED IN THESE
FORWARD-LOOKING STATEMENTS.
OUR OPERATING RESULTS MAY FLUCTUATE SUBSTANTIALLY, WHICH MAY CAUSE OUR STOCK
PRICE TO FALL.
Our quarterly and annual results of operations have varied in the past and
may vary significantly in the future due to a number of factors including, but
not limited to, the following:
- cancellation or delay of customer orders or shipments;
- our success in achieving design wins in which our products are designed
into those of our customers;
- market acceptance of our products and those of our customers;
- variability of the life cycles of our customers' products;
- variations in manufacturing yields;
- timing of announcements and introduction of new products by us and our
competitors;
- changes in the mix of products we sell;
- declining average sales prices for our products;
- changes in manufacturing capacity and variations in the utilization of
that capacity;
- variations in operating expenses;
- the long sales cycles associated with our customer-specific products;
- the timing and level of product and process development costs;
- the cyclicality of the semiconductor industry;
- the timing and level of nonrecurring engineering revenues and expenses
relating to customer-specific products; and
- significant changes in our and our customers' inventory levels.
We expect that our operating results will continue to fluctuate in the
future as a result of these and other factors. Any unfavorable changes in these
or other factors could cause our results of operations to suffer as they have in
the past, based upon some of these factors. If our operating results are not
within the market's expectations, then our stock price may fall. For example, in
June 1994, Nortel, formerly Northern Telecom, requested that we delay shipment
of some of our products. Nortel was then our largest customer and the delay,
together with lower than expected orders, materially reduced our revenues and
results of operations in the second quarter and for the remainder of 1994. Due
to potential fluctuations, we believe that period to period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as indicators of our future performance.
8
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WE RELY ON A LIMITED NUMBER OF CUSTOMERS FOR A SUBSTANTIAL PART OF OUR REVENUES.
Sales to a limited number of customers have accounted for a significant
portion of our revenues in each fiscal period. In recent periods, sales to some
of our major customers as a percentage of total revenues have fluctuated. In
1997, Nortel accounted for approximately 12.0% of total revenues. In 1998, Nokia
accounted for approximately 12.0% and Raytheon accounted for approximately 11.7%
of total revenues. In 1999, Nokia and Nortel accounted for approximately 21.0%
and 17.3%, respectively, of our total revenues. We expect that sales to a
limited number of customers will continue to account for a substantial portion
of our total revenues in future periods. We do not have long-term agreements
with any of our customers. Customers generally purchase our products pursuant to
cancelable short-term purchase orders. Our results of operations have been
negatively affected in the past by the failure of anticipated orders to
materialize and by delays in or cancellations of orders. If we were to lose a
major customer or if orders by or shipments to a major customer were to
otherwise decrease or be delayed, our results of operations would be harmed.
WE FACE RISKS FROM FAILURES IN OUR MANUFACTURING PROCESSES.
The fabrication of integrated circuits, particularly those made of gallium
arsenide, is a highly complex and precise process. Our integrated circuits are
manufactured from four-inch round wafers made of gallium arsenide. During
manufacturing, each wafer is processed to contain numerous die, the individual
integrated circuits. We may reject or be unable to sell a substantial percentage
of wafers or the die on a given wafer because of:
- minute impurities;
- difficulties in the fabrication process;
- defects in the masks used to print circuits on a wafer;
- electrical performance;
- wafer breakage; or
- other factors.
We refer to the proportion of final good integrated circuits that have been
processed, assembled and tested relative to the gross number of integrated
circuits that could be constructed from the raw materials as our manufacturing
yield. Compared to the manufacture of silicon integrated circuits, gallium
arsenide technology is less mature and more difficult to design and manufacture
within specifications in large volume. In addition, the more brittle nature of
gallium arsenide wafers can result in lower manufacturing yields than with
silicon wafers. We have in the past experienced lower than expected
manufacturing yields, which have delayed product shipments and negatively
impacted our results of operations. We may experience difficulty maintaining
acceptable manufacturing yields in the future.
In addition, the maintenance of our two fabrication facilities is subject to
risks, including:
- the demands of managing and coordinating workflow between two
geographically separate production facilities;
- disruption of production in one of our facilities as a result of a
slowdown or shutdown in our other facility; and
- higher operating costs from managing two geographically separate
manufacturing facilities.
9
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IF WE FAIL TO SELL A HIGH VOLUME OF PRODUCTS, OUR OPERATING RESULTS WILL BE
HARMED.
Because the majority of our manufacturing costs are relatively fixed, our
manufacturing volumes are critical to our operating results. If we fail to
achieve acceptable manufacturing volumes or experience product shipment delays,
our results of operations could be harmed. During periods of decreased demand,
our high fixed manufacturing costs could have a negative effect on our results
of operations. We base our expense levels in part on our expectations of future
orders and these expense levels are predominantly fixed in the short-term. If we
receive fewer customer orders than expected, we may not be able to reduce our
manufacturing costs in the short-term and our operating results would be harmed.
IF WE DO NOT SELL OUR CUSTOMER-SPECIFIC PRODUCTS IN LARGE VOLUMES, OUR OPERATING
RESULTS MAY BE HARMED.
We manufacture a substantial portion of our products to address the needs of
individual customers. Frequent product introductions by systems manufacturers
make our future success dependent on our ability to select development projects
which will result in sufficient volumes to enable us to achieve manufacturing
efficiencies. Because customer-specific products are developed for unique
applications, we expect that some of our current and future customer-specific
products may never be produced in volume and may impair our ability to cover our
fixed manufacturing costs. In addition, if we experience delays in completing
designs or if we fail to obtain development contracts from customers whose
products are successful, our revenues could be harmed.
OUR OPERATING RESULTS COULD BE HARMED IF WE LOSE ACCESS TO SOLE OR LIMITED
SOURCES OF MATERIALS OR SERVICES.
We currently obtain some components and services for our products from
limited or single sources, such as ceramic packages from Kyocera. We purchase
these components and services on a purchase order basis, do not carry
significant inventories of these components and do not have any long-term supply
contracts with these vendors. Our requirements are relatively small compared to
silicon semiconductor manufacturers. Because we often do not account for a
significant part of our vendors' business, we may not have access to sufficient
capacity from these vendors in periods of high demand. If we were to change any
of our sole or limited source vendors, we would be required to requalify each
new vendor. Requalification could prevent or delay product shipments that could
negatively affect our results of operations. In addition, our reliance on these
vendors may negatively affect our production if the components vary in
reliability or quality. If we are unable to obtain timely deliveries of
sufficient components of acceptable quality or if the prices of components for
which we do not have alternative sources increase, our results of operations
could be harmed.
IF OUR PRODUCTS FAIL TO PERFORM OR MEET CUSTOMER REQUIREMENTS, WE COULD INCUR
SIGNIFICANT ADDITIONAL COSTS.
The fabrication of gallium arsenide integrated circuits is a highly complex
and precise process. Our customers specify quality, performance and reliability
standards that we must meet. If our products do not meet these standards, we may
be required to rework or replace the products. Gallium arsenide integrated
circuits may contain undetected defects or failures that only become evident
after we commence volume shipments. We have experienced product quality,
performance or reliability problems from time to time. Defects or failures may
occur in the future. If failures or defects occur, we could:
- lose revenue;
- incur increased costs such as warranty expense and costs associated with
customer support;
10
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- experience delays, cancellations or rescheduling of orders for our
products; or
- experience increased product returns or discounts.
OUR OPERATING RESULTS MAY SUFFER IF WE DO NOT EXPAND OUR MANUFACTURING CAPACITY
IN A TIMELY MANNER.
We plan to increase our capacity by converting our existing Hillsboro,
Oregon facility to accommodate equipment that uses six-inch (150 millimeter)
wafer production. We do not have any experience processing six-inch wafers in
our fabrication facilities. Our inexperience may result in lower volume of
production or higher cost of goods sold. We may be required to redesign our
processes and procedures substantially to accommodate the larger wafers. As a
result, implementing additional capacity for six-inch wafers may take longer
than planned, which could harm our results of operations. If we fail to
successfully transition to six-inch wafers in a timely manner or our
manufacturing yields decline, our relationships with our customers may be
harmed.
Our facilities have a level of capacity beyond which we cannot cost
effectively produce our products. Although we are not currently approaching
those constraints, we may be unable to further expand our business if we fail to
plan and build sufficient capacity. The process of building, testing and
qualifying a gallium arsenide integrated circuit fabrication facility is time
consuming. We must begin to design and implement additional manufacturing
facilities well in advance of our needs.
WE MAY FACE FINES OR OUR FACILITIES COULD BE CLOSED IF WE FAIL TO COMPLY WITH
ENVIRONMENTAL REGULATIONS.
Federal, state and local regulations impose various environmental controls
on the storage, handling, discharge and disposal of chemicals and gases used in
our manufacturing process. For our manufacturing facility located in Hillsboro,
Oregon, we provide our own manufacturing waste treatment and contract for
disposal of some materials. We are required by the State of Oregon Department of
Environmental Quality to report usage of environmentally hazardous materials.
At our Texas facility, we utilize Texas Instruments' industrial waste water
treatment facilities and services for the pre-treatment and discharge of waste
water generated by us, pursuant to our Asset Purchase Agreement dated
January 8, 1998 with Raytheon. Our waste water streams are commingled with those
of Texas Instruments and are covered by Texas Instruments' waste water permit.
The failure to comply with present or future regulations could result in
fines being imposed on us and we could be required to suspend production or
cease our operations. These regulations could require us to acquire significant
equipment or to incur substantial other expenses to comply with environmental
regulations. We rely to a great extent on Texas Instruments' hazardous waste
disposal system at our Texas facility. Any failure by us, or by Texas
Instruments with respect to our Texas facility, to control the use of, or to
adequately restrict the discharge of, hazardous substances could subject us to
future liabilities and harm our results of operations.
WE DEPEND ON THE CONTINUED GROWTH OF COMMUNICATIONS MARKETS.
We derive a substantial portion of our product revenues from sales of
products for communication applications. These markets are characterized by the
following:
- intense competition;
- rapid technological change; and
- short product life cycles, especially in the cellular telephone market.
In addition, although the communications markets have grown rapidly in the
last few years, these markets may not continue to grow or a significant slowdown
in these markets may occur.
Products for communications applications are often based on industry
standards, which are continually evolving. Our future success will depend, in
part, upon our ability to successfully develop and introduce new products based
on emerging industry standards, which could render our existing products
unmarketable or obsolete. If communications markets evolve to new standards, we
may be unable to successfully design and manufacture new products that address
the needs of our customers or that will meet with substantial market acceptance.
11
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OUR BUSINESS WILL BE IMPACTED IF SYSTEMS MANUFACTURERS DO NOT USE GALLIUM
ARSENIDE COMPONENTS.
Silicon semiconductor technologies are the dominant process technologies for
integrated circuits and the performance of silicon integrated circuits continues
to improve. Our prospective customers may be systems designers and manufacturers
who are evaluating such silicon technologies and, in particular, silicon
germanium, versus gallium arsenide integrated circuits for use in their next
generation high performance systems. Customers may be reluctant to adopt our
products because of:
- their unfamiliarity with designing systems with gallium arsenide products;
- their concerns related to manufacturing costs and yields;
- their unfamiliarity with design and manufacturing processes; and
- uncertainties about the relative cost effectiveness of our products
compared to high-performance silicon components.
Systems manufacturers may not use gallium arsenide components because the
production of gallium arsenide integrated circuits has been and continues to be
more costly than the production of silicon devices. As a result, we must offer
devices that provide superior performance to that of silicon-based devices.
In addition, customers may be reluctant to rely on a smaller company like us
for critical components. We cannot be certain that additional systems
manufacturers will design our products into their systems, that the companies
that have utilized our products will continue to do so in the future or that
gallium arsenide technology will continue to achieve widespread market
acceptance. If our gallium arsenide products fail to achieve market acceptance,
our results of operations would suffer.
CUSTOMERS MAY DELAY OR CANCEL ORDERS DUE TO REGULATORY DELAYS.
The increasing demand for communications products has exerted pressure on
regulatory bodies worldwide to adopt new standards for these products, generally
following extensive investigation of and deliberation over competing
technologies. The delays inherent in the regulatory approval process may in the
future cause the cancellation, postponement or rescheduling of the installation
of communications systems by our customers. These delays have in the past had
and may in the future have a negative effect on our sales and our results of
operations.
OUR REVENUES ARE AT RISK IF WE DO NOT INTRODUCE NEW PRODUCTS AND/OR DECREASE
COSTS.
Historically, the average selling prices of our products have decreased over
the products' lives, and we expect them to continue to do so. To offset these
decreases, we rely primarily on achieving yield improvements and other cost
reductions for existing products and on introducing new products that can often
be sold at higher average selling prices. We believe our future success depends,
in part, on our timely development and introduction of new products that compete
effectively on the basis of price and performance and adequately address
customer requirements. The success of new product and process introductions
depends on several factors, including:
- proper selection of products and processes;
- successful and timely completion of product and process development and
commercialization;
- market acceptance of our or our customers' new products;
- achievement of acceptable manufacturing yields; and
- our ability to offer new products at competitive prices.
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Our product and process development efforts may not be successful and our
new products or processes may not achieve market acceptance. To the extent that
our cost reductions and new product introductions do not occur in a timely
manner, our results of operations could suffer.
WE MUST IMPROVE OUR PRODUCTS AND PROCESSES TO REMAIN COMPETITIVE.
If technologies or standards supported by our or our customers' products
become obsolete or fail to gain widespread commercial acceptance, our results of
operations may be materially impacted. Because of continual improvements in
semiconductor technology, including those in high-performance silicon where
substantially more resources are invested than in gallium arsenide, we believe
that our future success will depend, in part, on our ability to continue to
improve our product and process technologies. We must also develop new
technologies in a timely manner. In addition, we must adapt our products and
processes to technological changes and to support emerging and established
industry standards. We may not be able to improve our existing products and
process technologies, develop new technologies in a timely manner or effectively
support industry standards. If we fail to do so, our customers may select
another gallium arsenide product or move to an alternative technology.
OUR RESULTS OF OPERATIONS MAY SUFFER IF WE DO NOT COMPETE SUCCESSFULLY.
The semiconductor industry is intensely competitive and is characterized by
rapid technological change, rapid product obsolescence and price erosion.
Currently, we compete primarily with manufacturers of high performance silicon
integrated circuits such as Applied Micro Circuits, Motorola and Philips and
with manufacturers of gallium arsenide integrated circuits such as Anadigics,
Conexant, Raytheon, RF MicroDevices and Vitesse. We also face competition from
the internal semiconductor operations of some of our current and potential
customers. We expect increased competition from existing competitors and from a
number of companies that may enter the gallium arsenide integrated circuits
market, as well as future competition from companies that may offer new or
emerging technologies such as silicon germanium. Most of our current and
potential competitors have significantly greater financial, technical,
manufacturing and marketing resources than we do. Manufacturers of high
performance silicon integrated circuits have achieved greater market acceptance
of their existing products and technologies in some applications.
We compete with both gallium arsenide and silicon suppliers in the wireless,
data communications and telecommunications markets. In the microwave and
millimeter wave markets, our competition is primarily from a limited number of
gallium arsenide suppliers, which are in the process of expanding their product
offerings to address commercial applications other than aerospace.
Our prospective customers are typically systems designers and manufacturers
that are considering the use of gallium arsenide integrated circuits for their
high performance systems. Competition is primarily based on performance elements
such as speed, complexity and power dissipation, as well as price, product
quality and ability to deliver products in a timely fashion. Due to the
proprietary nature of our products, competition occurs almost exclusively at the
system design stage. As a result, a design win by us or our competitors
typically limits further competition with respect to manufacturing a given
design.
OUR OPERATING RESULTS MAY SUFFER DUE TO DECLINING DEMAND FOR SEMICONDUCTORS.
From time to time, the semiconductor industry has experienced significant
downturns and wide fluctuations in product supply and demand. This cyclicality
has led to significant imbalances in demand and production capacity. It has also
accelerated the decrease of average selling prices per unit. We may experience
periodic fluctuations in our future financial results because of these or other
industry-wide conditions.
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IF WE FAIL TO INTEGRATE ANY FUTURE ACQUISITIONS, OUR BUSINESS WILL BE HARMED.
We face risks from any future acquisitions, including the following:
- we may fail to combine and coordinate the operations and personnel of
newly acquired companies with our existing business;
- our ongoing business may be disrupted or receive insufficient management
attention;
- we may not cost effectively and rapidly incorporate the technology we
acquire;
- we may not be able to recognize the cost savings or other financial
benefits we anticipated;
- we may not be able to retain the existing customers of newly acquired
operations;
- our corporate culture may clash with that of the acquired businesses; and
- we may incur unknown liabilities associated with acquired businesses.
We may not successfully address these risks or any other problems that arise
in connection with future acquisitions.
We will continue to evaluate strategic opportunities available to us and we
may pursue product, technology or business acquisitions. On January 13, 1998, we
acquired our Millimeter Wave Communications operation, which included
substantially all of the assets of the monolithic microwave integrated circuit
operation of Texas Instruments' former Defense Systems & Electronics Group. In
addition, in connection with any future acquisitions, we may issue equity
securities that could dilute the percentage ownership of our existing
stockholders, we may incur additional debt and we may be required to amortize
expenses related to goodwill and other intangible assets that may negatively
affect our results of operations.
WE MUST MANAGE OUR GROWTH.
Our total number of employees grew from 371 in 1997 to 679 in 1998 and 802
in 1999. The resulting growth has placed, and is expected to continue to place,
significant demands on our personnel, management and other resources. We must
continue to improve our operational, financial and management information
systems to keep pace with the growth of our business.
IF WE DO NOT HIRE AND RETAIN KEY EMPLOYEES, OUR BUSINESS WILL SUFFER.
Our future success depends in large part on the continued service of our key
technical, marketing and management personnel. We also depend on our ability to
continue to identify, attract and retain qualified technical employees,
particularly highly skilled design, process and test engineers involved in the
manufacture and development of our products and processes. We must also recruit
and train employees to manufacture our products without a substantial reduction
in manufacturing yields. There are many other semiconductor companies located in
the communities near our facilities and it may become increasingly difficult for
us to attract and retain those employees. The competition for these employees is
intense, and the loss of key employees could negatively affect us.
OUR BUSINESS MAY BE HARMED IF WE FAIL TO PROTECT OUR PROPRIETARY TECHNOLOGY.
We rely on a combination of patents, trademarks, copyrights, trade secret
laws, confidentiality procedures and licensing arrangements to protect our
intellectual property rights. We currently have patents granted and pending in
the United States and in foreign countries and intend to seek further
international and United States patents on our technology. We cannot be certain
that patents will be issued from any of our pending applications or that patents
will be issued in all countries where our products can be sold or that any
claims allowed from pending applications or will be of sufficient scope
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or strength to provide meaningful protection or any commercial advantage. Our
competitors may also be able to design around our patents. The laws of some
countries in which our products are or may be developed, manufactured or sold,
including various countries in Asia, may not protect our products or
intellectual property rights to the same extent as do the laws of the United
States, increasing the possibility of piracy of our technology and products.
Although we intend to vigorously defend our intellectual property rights, we may
not be able to prevent misappropriation of our technology. Our competitors may
also independently develop technologies that are substantially equivalent or
superior to our technology.
OUR ABILITY TO PRODUCE OUR SEMICONDUCTORS MAY SUFFER IF SOMEONE CLAIMS WE
INFRINGE ON THEIR INTELLECTUAL PROPERTY.
The semiconductor industry is characterized by vigorous protection and
pursuit of intellectual property rights or positions, which have resulted in
significant and often protracted and expensive litigation. If it is necessary or
desirable, we may seek licenses under such patents or other intellectual
property rights. However, we cannot be certain that licenses will be offered or
that we would find the terms of licenses that are offered acceptable or
commercially reasonable. Our failure to obtain a license from a third party for
technology used by us could cause us to incur substantial liabilities and to
suspend the manufacture of products. Furthermore, we may initiate claims or
litigation against third parties for infringement of our proprietary rights or
to establish the validity of our proprietary rights. Litigation by or against us
could result in significant expense and divert the efforts of our technical
personnel and management, whether or not the litigation results in a favorable
determination. In the event of an adverse result in any litigation, we could be
required to:
- pay substantial damages;
- indemnify our customers;
- stop manufacturing, use and sale of the infringing products;
- expend significant resources to develop non-infringing technology;
- discontinue the use of certain processes; or
- obtain licenses to the technology.
We may be unsuccessful in developing non-infringing products or negotiating
licenses upon reasonable terms, or at all. These problems might not be resolved
in time to avoid harming our results of operations. If any third party makes a
successful claim against our customers or us and a license is not made available
to us on commercially reasonable terms, our business could be harmed.
On February 26, 1999, a lawsuit was filed against 88 firms, including
TriQuint, in the United States District Court for the District of Arizona. The
suit alleges that the defendants, including us, infringe upon certain patents
held by The Lemelson Medical, Education and Research Foundation, Limited
Partnership. Although we believe the suit is without merit and intend to
vigorously defend ourselves against the charges, we cannot be certain that we
will be successful. Moreover, this litigation may require us to spend a
substantial amount of time and money and could distract management from our day
to day operations.
OUR BUSINESS MAY SUFFER DUE TO RISKS ASSOCIATED WITH INTERNATIONAL SALES.
Our sales outside of the United States were 34.0% of total revenues in 1997,
24.0% of total revenues in 1998 and 38.4% total revenues in 1999. We face
inherent risks from these sales, including:
- imposition of government controls;
- currency exchange fluctuations;
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- longer payment cycles and difficulties related to the collection of
receivables from international customers;
- reduced protection for intellectual property rights in some countries;
- the impact of recessionary environments in economies outside the United
States;
- unfavorable tax consequences;
- political instability; and
- tariffs and other trade barriers.
In addition, due to the technological advantages provided by gallium
arsenide integrated circuits in many military applications, all of our sales
outside of North America must be licensed by the Office of Export Administration
of the U.S. Department of Commerce. If we fail to obtain these licenses or
experience delays in obtaining these licenses in the future, our results of
operations could be harmed. Also, because substantially all of our foreign sales
are denominated in U.S. dollars, increases in the value of the dollar would
increase the price in local currencies of our products and make our products
less price competitive.
WE MAY BE SUBJECT TO A SECURITIES CLASS ACTION SUIT IF OUR STOCK PRICE FALLS.
Following periods of volatility in the market price of a company's stock,
some stockholders may file a securities class action litigation. For example, in
1994, a stockholder class action lawsuit was filed against us, our underwriters,
and some of our officers, directors and investors, which alleged that we, our
underwriters, and certain of our officers, directors and investors intentionally
misled the investing public regarding our financial prospects. We settled the
action and recorded a special charge of $1.4 million associated with the
settlement of this lawsuit and related legal expenses, net of accruals in 1998.
Any future securities class action litigation could be expensive and divert our
management's attention and harm our business, regardless of its merits.
OUR STOCK AND THE NOTES WILL LIKELY BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME
FLUCTUATIONS DUE TO A NUMBER OF FACTORS, MANY OF WHICH WILL BE BEYOND OUR
CONTROL, THAT MAY PREVENT YOU FROM RESELLING OUR NOTES AT A PROFIT.
The securities markets have experienced significant price and volume
fluctuations and the market prices of the securities of semiconductor companies
have been especially volatile. The market price of the notes or our common stock
may experience significant fluctuations in the future. For example, our common
stock price has fluctuated from a high of $135.50 to a low of $9.668 during the
52 weeks ended May 11, 2000. This market volatility, as well as general
economic, market or political conditions, could reduce the market price of our
common stock, or the notes, in spite of our operating performance. In addition,
our operating results could be below the expectations of public market analysts
and investors, and in response, the market price of our common stock or the
notes could decrease significantly. Investors may be unable to resell the notes
at or above the offering price.
WE FACE RISKS FROM THE YEAR 2000 ISSUE.
Many information technology hardware and software systems, as well as other
non-information technology equipment utilizing microprocessors, can accept only
two digit entries in the date code field. To operate using dates after
December 31, 1999, the date code fields will need to accept four digit entries
to distinguish twenty-first century dates from twentieth century dates. This is
commonly referred to as the "Year 2000" issue. Prior to December 31, 1999, we
initiated and completed a comprehensive Year 2000 audit program, which consisted
of a six step plan to inventory and correct any systems that were not Year 2000
compliant. Because of the existence of numerous systems and related components
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within our organization and the interdependency of these systems, it is possible
that some of our systems, or systems at our suppliers, may still fail to operate
in the year 2000. To date, we have not, nor to our knowledge, have our
suppliers, manufacturers and third party vendors, experienced any material Year
2000-related problems. However, we cannot determine if we will be subject to
Year 2000 compliance problems in the future, particularly with respect to
February 29, 2000, or if Year 2000 problems have arisen that we have failed to
detect to date. Our inability to maintain Year 2000 compliance or the failure of
one or more of our systems or our suppliers' systems may have a material impact
on our future operating results.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS INCLUDE ANTITAKEOVER PROVISIONS
WHICH MAY DETER OR PREVENT A TAKEOVER ATTEMPT.
Some provisions of our certificate of incorporation and bylaws and
provisions of Delaware law may deter or prevent a takeover attempt, including a
takeover that might result in a premium over the market price for our common
stock. These provisions include:
CUMULATIVE VOTING. Our stockholders are entitled to cumulate their votes
for directors. This may limit the ability of the stockholders to remove a
director other than for cause.
STOCKHOLDER PROPOSALS AND NOMINATIONS. Our stockholders must give advance
notice, generally 120 days prior to the relevant meeting, to nominate a
candidate for director or present a proposal to our stockholders at a meeting.
These notice requirements could inhibit a takeover by delaying stockholder
action.
STOCKHOLDER RIGHTS PLAN. We may trigger our stockholder rights plan in the
event our board of directors does not agree to an acquisition proposal. The
rights plan may make it more difficult and costly to acquire our company.
PREFERRED STOCK. Our certificate of incorporation authorizes our board of
directors to issue up to 5 million shares of preferred stock and to determine
what rights, preferences and privileges such shares have. No action by our
stockholders is necessary before our board of directors can issue the preferred
stock. Our board of directors could use the preferred stock to make it more
difficult and costly to acquire our company.
DELAWARE ANTI-TAKEOVER STATUTE. The Delaware anti-takeover law restricts
business combinations with some stockholders once the stockholder acquires 15%
or more of our common stock. The Delaware statute makes it harder for our
company to be acquired without the consent of our board of directors and
management.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS SUBORDINATED TO ALL OF OUR
EXISTING AND FUTURE SENIOR INDEBTEDNESS. IN ADDITION, THE NOTES ARE EFFECTIVELY
SUBORDINATED TO INDEBTEDNESS OF OUR SUBSIDIARIES.
The notes are unsecured obligations and are subordinated in right of payment
to the prior payment in full in cash or other payment satisfactory to holders of
senior indebtedness of all of our existing and future senior indebtedness.
Senior indebtedness is defined to include, among other things, all indebtedness
for money borrowed and indebtedness evidenced by securities, debentures, bonds
or other similar instruments. Senior indebtedness does not include indebtedness
that is expressly junior in right of payment to the notes or ranks equally in
right of payment to the notes. As of December 31, 1999, we had $55.6 million of
senior indebtedness. The terms of the notes do not limit the amount of
additional indebtedness, including senior indebtedness, that we, or any of our
presently existing or future subsidiaries, can create, incur, assume or
guarantee. We may have difficulty paying our obligations under the notes if we,
or any of our subsidiaries, incur additional indebtedness. Upon any distribution
of our assets upon any insolvency, dissolution or reorganization, assets will
only be available for the payment of the principal of and interest on the notes
after the payment in full of all
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of our senior indebtedness. As a result, there may not be sufficient assets
remaining to pay amounts due on any or all of the notes then outstanding.
The notes are effectively subordinated to all existing and future
liabilities of our subsidiaries. Any right of ours to receive assets of any
subsidiary upon its liquidation or reorganization, and the consequent right of
the holders of the notes to participate in those assets, will be subject to the
claims of that subsidiary's creditors. If we ourselves are a creditor of that
subsidiary, our claims would still be subordinate to any security interests in
the assets of that subsidiary and any senior indebtedness of that subsidiary. As
of December 31, 1999, our subsidiaries had approximately $8.8 million of
liabilities to which the notes would be effectively subordinated.
WE MAY NOT BE ABLE TO SATISFY A CHANGE IN CONTROL OFFER.
The indenture governing the notes contains provisions that apply to a change
in our control. If someone triggers a change in control as defined in the
indenture, we must offer to purchase those notes with cash, or at our option
with our common stock, subject to the terms and conditions of the indenture. If
we have to make that offer, we cannot be sure that we will have enough funds,
that we will be able to arrange for additional financing or that we will be able
to issue enough common stock to pay for all the notes that the holders could
tender.
WE INCREASED OUR INDEBTEDNESS SUBSTANTIALLY.
As a result of the sale of the notes, we incurred $345.0 million of
additional indebtedness, increasing our ratio of debt to equity (expressed as a
percentage) from approximately 3.0% to approximately 117.3% as of December 31,
1999, on a pro forma basis giving effect to the sale of the notes. Our other
indebtedness is principally comprised of operating, synthetic and capital
leases. We may incur substantial additional indebtedness in the future. The
level of our indebtedness, among other things, could:
- make it difficult for us to make payments on the notes,
- make it difficult for us to obtain any necessary future financing for
working capital, capital expenditures, debt service requirements or other
purposes;
- require us to dedicate a substantial portion of our expected cash flow
from operations to service our indebtedness, which would reduce the amount
of our expected cash flow available for other purposes, including working
capital and capital expenditures;
- limit our flexibility in planning for, or reacting to changes in, our
business; and
- make us more vulnerable in the event of a downturn in our business.
There can be no assurance that we will be able to meet our debt service
obligations, including our obligation under the notes.
WE MAY NOT BE ABLE TO PAY OUR DEBT AND OTHER OBLIGATIONS.
If our cash flow is inadequate to meet our obligations, we could face
substantial liquidity problems. If we are unable to generate sufficient cash
flow or otherwise obtain funds necessary to make required payments on the notes
or our other obligations, we would be in default under the terms thereof. A
default under the indenture would permit the holders of the notes to accelerate
the maturity of the notes and could cause defaults under future indebtedness we
may incur. Any such default could have a material adverse effect on our
business, prospects, financial condition and operating results. In addition, we
can not assure you that we would be able to repay amounts due in respect of the
notes if payment of the notes were to be accelerated following the occurrence of
an event of default as defined in the indenture.
ANY ADVERSE RATING OF THE NOTES MAY CAUSE THEIR TRADING PRICE TO FALL.
We believe that one or more rating agencies may rate the notes. If the
rating agencies rate the notes, they may assign a lower rating than expected by
investors. Rating agencies may also lower ratings on the notes in the future. If
the rating agencies assign a lower than expected rating or reduce their ratings
in the future, the trading price of the notes could decline.
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USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling securityholder
of the notes or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
1995 1996 1997 1998(2) 1999 MARCH 31, 2000
-------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)....... 6.81x 7.35x 2.85x NM 5.43x 6.10x
</TABLE>
- ------------------------
(1) These ratios are calculated by dividing (i) earnings before taxes adjusted
for fixed charges by (ii) fixed charges, which includes interest expense
plus capitalized interest and the portion of interest expense under
operating leases we deemed to be representative of the interest factor.
(2) In 1998, earnings were insufficient to cover fixed charges by $3.9 million.
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DESCRIPTION OF NOTES
The notes were issued under the indenture (the "Indenture") between us and
State Street Bank and Trust Company of California, N.A., as trustee (the
"Trustee"). Copies of the form of Indenture, notes and registration rights
agreement will be made available to prospective investors in the notes upon
request to us.
We have summarized portions of the Indenture below. This summary is not
complete. We urge you to read the Indenture because it defines your rights as a
holder of the notes. Terms not defined in this description have the meanings
given them in the Indenture. In this section, "TriQuint," "we," "our," and "us"
each refers only to TriQuint Semiconductor, Inc. and not to any of its
subsidiaries.
GENERAL
The notes are unsecured, subordinated obligations of TriQuint in an
aggregate principal amount of $345,000,000 and mature on March 1, 2007. The
principal amount of each note is $1,000 and is payable at the office of the
Paying Agent, which initially is the Trustee, or an office or agency maintained
by us for that purpose in the Borough of Manhattan, The City of New York.
The notes bear interest at the rate of 4% per annum on the principal amount
from the date of issuance of the notes, or from the most recent date to which
interest has been paid or provided for until the notes are paid in full,
converted or funds are made available for payment in full of the notes in
accordance with the Indenture. Interest will be payable at the date of maturity
(or earlier purchase, redemption or, in some circumstances, conversion) and
semiannually on March 1 and September 1 of each year (each an "Interest Payment
Date"), commencing on September 1, 2000, to holders of record at the close of
business on February 15 and August 15 (whether or not a business day)
immediately preceding each Interest Payment Date (each a "Regular Record Date").
Each payment of interest on the notes will include interest accrued through the
day before the applicable Interest Payment Date or the date of maturity (or
earlier purchase, redemption or, in some circumstances, conversion), as the case
may be. Any payment of principal and cash interest required to be made on any
day that is not a business day will be made on the next succeeding business day.
Interest will be computed on the basis of a 360-day year composed of twelve
30-day months.
In the event of the maturity, conversion, purchase by us at the option of a
holder or redemption of a note, interest will cease to accrue on that note under
the terms and subject to the conditions of the Indenture. We may not reissue a
note that has matured or has been converted, redeemed or otherwise cancelled,
except for registration of transfer, exchange or replacement of that note.
You may present the notes for conversion at the office of the Conversion
Agent and for exchange or registration of transfer at the office of the
Registrar. Each of these agents will initially be the Trustee.
The Indenture does not contain any financial covenants or restrictions on
the payment of dividends, the incurrence of Senior Indebtedness (defined below)
or the issuance or repurchase of securities by us. The Indenture contains no
covenants or other provisions to protect holders of the notes in the event of a
highly leveraged transaction or a change in control, except to the extent
described below under "--Change in Control Permits Purchase of Notes at the
Option of the Holder."
SUBORDINATION
The notes are unsecured obligations and are subordinated in right of
payment, as provided in the Indenture, to the prior payment in full in cash or
other payment satisfactory to holders of Senior Indebtedness of all existing and
future Senior Indebtedness.
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The term "Senior Indebtedness" means that the principal, premium, if any,
interest (including all interest accrued subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and all other amounts
owed in respect of all our Indebtedness (defined below), whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by us, including all deferrals, renewals, extensions,
refinancings, replacements, restatements or refundings of, or amendments,
modifications or supplements to, the foregoing, except for:
- any such Indebtedness that is by its terms subordinated to or ranking
equal with the notes; and
- any Indebtedness between or among us and any of our subsidiaries, a
majority of the voting stock of which we directly or indirectly own.
The term "Indebtedness" means:
- all of our indebtedness, obligations and other liabilities, contingent or
otherwise, for borrowed money (including obligations in respect of
overdrafts, foreign exchange contracts, currency exchange or similar
agreements, interest rate protection, hedging or similar agreements, and
any loans or advances from banks, whether or not evidenced by notes or
similar instruments) or evidenced by bonds, debentures, notes or similar
instruments (whether or not the recourse of the holder is to the whole of
the assets or only to a portion thereof), other than any account payable
or other accrued current liability or current obligation, in each case not
constituting indebtedness, obligations or other liabilities for borrowed
money and incurred in the ordinary course of business in connection with
the obtaining of materials or services;
- all of our reimbursement obligations and other liabilities, contingent or
otherwise, with respect to letters of credit, bank guarantees, bankers'
acceptances, security purchase facilities or similar credit transactions;
- all of our obligations and liabilities, contingent or otherwise, in
respect of deferred and unpaid balances on any purchase price of any
property;
- all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet and all obligations and other
liabilities, contingent or otherwise, under any lease or related document,
including, without limitation, the balance deferred and unpaid on any
purchase price of any property and a purchase agreement in connection with
the lease of real property that provides that we are contractually
obligated to purchase or cause a third party to purchase the leased
property and thereby guarantee a residual value of the leased property to
the lessor and our obligations under that lease or related document to
purchase or to cause a third party to purchase that leased property;
- all of our obligations, contingent or otherwise, with respect to an
interest rate or other swap, cap or collar agreement or other similar
instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement;
- all of our direct or indirect guarantees or similar agreements in respect
of, and obligations or liabilities, contingent or otherwise, to purchase
or otherwise acquire or otherwise assure a creditor against loss in
respect of indebtedness, obligations or liabilities of another person of
the kind described in the above clauses;
- recourse or repurchase obligations arising in connection with sales of
assets in transactions that are in the nature of asset-based financings,
whether or not such transactions are treated as sales under generally
accepted accounting principles or bankruptcy, tax or other applicable
laws, where such recourse or repurchase obligations arise out of the
failure of such assets to provide
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the economic benefit to which the purchaser is entitled under the
agreements relating to such transactions;
- any indebtedness, or other obligations described in the above clauses
secured by any mortgage, pledge, lien or other encumbrance existing on
property that is owned or held by us, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed
by us; and
- any and all deferrals, renewals, extensions, refinancings, replacements,
restatements and refundings of, or amendments, modifications or
supplements to, or any indebtedness or obligation issued in exchange for,
any indebtedness, obligation or liability of the kind described in the
above clauses.
Any Senior Indebtedness will continue to be Senior Indebtedness and will be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any of its terms.
By reason of the application of the subordination provisions, in the event
of dissolution, winding up, insolvency, bankruptcy or other similar proceedings,
upon any distribution of our assets:
- the holders of the notes are required to pay over their share of that
distribution to the trustee in bankruptcy, receiver or other person
distributing our assets for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all holders
of Senior Indebtedness in full in cash or other payment satisfactory to
the holders of Senior Indebtedness; and
- our unsecured creditors may recover less, ratably, than holders of our
Senior Indebtedness, and may recover more, ratably, than the holders of
notes.
In addition, we may not pay the principal amount, the Change in Control
Purchase Price (defined below), any redemption amounts or interest with respect
to any notes, and we may not acquire any notes for cash or property, except as
provided in the Indenture, if:
- any payment default on any Senior Indebtedness has occurred and is
continuing beyond any applicable grace period (including any payment
default arising from acceleration of any Senior Indebtedness); or
- any default, other than a payment default, with respect to Senior
Indebtedness occurs and is continuing that permits the acceleration of the
maturity of that Senior Indebtedness and that default is either the
subject of judicial proceedings or we receive a written notice of that
default (a "Senior Indebtedness Default Notice").
Notwithstanding the foregoing, payments with respect to the notes may resume
and we may acquire notes for cash when:
- the default with respect to the Senior Indebtedness is cured or waived or
ceases to exist; or
- in the case of a Senior Indebtedness Default Notice, 179 or more days pass
after notice of the default is received by us, provided that the terms of
the Indenture otherwise permit the payment or acquisition of the notes at
that time.
If we receive a Senior Indebtedness Default Notice, then any subsequent
Senior Indebtedness Default Notice received within one year after receiving that
Senior Indebtedness Default Notice relating to the same default on the same
issue of Senior Indebtedness will not be effective to prevent the payment or
acquisition of the notes as provided above. In addition, no payment may be made
on
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<PAGE>
the notes if any notes are declared due and payable prior to their Stated
Maturity by reason of the occurrence of an Event of Default until the earlier
of:
- 120 days after the date of acceleration of the notes; or
- the payment in full of all Senior Indebtedness in cash or other
consideration satisfactory to the holders of such Senior Indebtedness;
but only if payment on the notes is then otherwise permitted under the terms of
the Indenture.
The notes are effectively subordinated to all existing and future
liabilities of our subsidiaries. Any rights of ours to receive assets of any
subsidiary upon its liquidation or reorganization, and the consequent right of
the holders of the notes to participate in those assets, will be subject to the
claims of that subsidiary's creditors, including trade creditors, except to the
extent that we ourselves are recognized as a creditor of that subsidiary, in
which case our claims would still be subordinate to any security interests in
the assets of that subsidiary and any indebtedness of that subsidiary senior to
that held by us.
At December 31, 1999, we had $55.6 million of Senior Indebtedness
outstanding. The Indenture does not restrict the incurrence by us or our
subsidiaries of indebtedness or other obligations. As of December 31, 1999, our
subsidiaries had approximately $8.8 million of liabilities to which the notes
would be effectively subordinated.
CONVERSION RIGHTS
You may convert your notes into shares of common stock at any time on or
prior to maturity, provided, that if we call your note for redemption, you are
entitled to convert it at any time before the close of business on the last
business day prior to the redemption date. A note in respect of which you have
delivered a Change in Control Purchase Notice (as defined below) exercising your
option to require us to purchase that holder's note, may be converted only if
the Change in Control Purchase Notice is withdrawn by a written notice of
withdrawal delivered by you to the Paying Agent prior to the close of business
on the Change in Control Purchase Date, in accordance with the terms of the
Indenture.
The initial conversion price is $135.60 per share and the initial Conversion
Rate is 7.3746 shares per $1,000 principal amount of notes. The Conversion Rate
is subject to adjustment upon the occurrence of the events described below. We
will not issue fractional shares of our common stock upon the conversion of the
notes. You will receive cash in an amount equal to the market value of that
fractional share based on the closing sale price on the trading day immediately
preceding the Conversion Date. You may convert a portion of your notes so long
as that portion is $1,000 principal amount or an integral multiple of $1,000.
To convert a note, you must:
- complete and manually sign the conversion notice on the back of the note,
or complete and manually sign a facsimile of the note, and deliver the
conversion notice to the Conversion Agent, initially the Trustee, at the
office maintained by the Conversion Agent for that purpose;
- surrender the note to the Conversion Agent;
- if required, furnish appropriate endorsements and transfer documents; and
- if required, pay all transfer or similar taxes.
Under the Indenture, the date on which all of these requirements have been
satisfied is the Conversion Date.
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Upon conversion of a note, except as provided below, you will not receive
any cash payment representing accrued interest on the note. Our delivery to you
of the fixed number of shares of common stock into which the note is
convertible, together with any cash payment to be made instead of any fractional
shares, will satisfy our obligation to pay the principal amount of the note, and
the accrued and unpaid interest to the Conversion Date. Thus, the accrued but
unpaid interest to the Conversion Date will be deemed to be paid in full rather
than cancelled, extinguished or forfeited. Notwithstanding the foregoing,
accrued but unpaid cash interest will be payable upon any conversion of notes at
the option of the holder made concurrently with or after acceleration of the
notes following an Event of Default described under "--Events of Default" below.
Notes surrendered for conversion during the period from the close of business on
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on that Interest Payment Date, except notes to be redeemed on a date
within that period, must be accompanied by payment of an amount equal to the
interest on the surrendered notes that the registered holder is to receive.
Except where notes surrendered for conversion must be accompanied by payment as
described above, no interest on converted notes will be payable by us on any
Interest Payment Date subsequent to the date of conversion. The Conversion Rate
will not be adjusted at any time during the term of the notes for accrued
interest.
We will deliver to you a certificate for the number of full shares of common
stock into which any note is converted, and any cash payment to be made instead
of any fractional shares, as soon as practicable, but in any event no later than
the seventh business day following the Conversion Date. For a summary of the
U.S. federal income tax treatment that may affect you upon receiving common
stock upon conversion, see "Certain United States Federal Income Tax
Considerations--U.S. Holders--Conversion of the Notes" and "--Special Tax Rules
Applicable Non-U.S. Holders--Conversion of the Notes."
The Conversion Rate is subject to adjustment in some events, including:
- the issuance of shares of our common stock as a dividend or a distribution
with respect to common stock;
- subdivisions and combinations of our common stock;
- the issuance to all holders of common stock of rights, warrants or options
entitling them, for a period not exceeding 45 days from the record date
for such issuance, to subscribe for shares of our common stock at less
than the current market price as defined in the Indenture;
- the distribution to holders of common stock of evidences of our
indebtedness, securities or capital stock, cash or assets, including
securities, but excluding common stock distributions covered above, those
rights, warrants, dividends and distributions referred to above, dividends
and distributions paid exclusively in cash and distributions upon mergers
or consolidations resulting in a reclassification, conversion, exchange or
cancellation of common stock covered in a Transaction adjustment described
below;
- the payment of dividends and other distributions on common stock paid
exclusively in cash, if the aggregate amount of these dividends and other
distributions, when taken together with:
-- other all-cash distributions made within the preceding 12 months not
triggering a Conversion Rate adjustment, and
-- any cash and the fair market value, as of the expiration of the tender
or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by us or one of our subsidiaries for the
common stock concluded within the preceding 12 months not triggering a
Conversion Rate adjustment,
exceeds 10% of our aggregate market capitalization on the date of the
payment of those dividends and other distributions. The aggregate market
capitalization is the product of the
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<PAGE>
current market price of our common stock as of the trading day immediately
preceding the date of declaration of the applicable dividend multiplied by
the number of shares of common stock then outstanding; and
- payment to holders of common stock in respect of a tender or exchange
offer, other than an odd-lot offer, by us or one of our subsidiaries for
common stock as of the trading day next succeeding the last date tenders
or exchanges may be made pursuant to a tender or exchange offer by us or
one of our subsidiaries, which involves an aggregate consideration that,
together with:
-- any cash and the fair market value of other consideration payable in
respect of any tender or exchange offer by us or one of our subsidiaries
for the common stock concluded within the preceding 12 months not
triggering a Conversion Rate adjustment, and
-- the aggregate amount of any all-cash distributions to all holders of
our common stock made within the preceding 12 months not triggering a
Conversion Rate adjustment,
exceeds 10% of our aggregate market capitalization.
However, adjustment is not necessary if you may participate in the
transactions otherwise giving rise to an adjustment on a basis and with notice
that our Board of Directors determines to be fair and appropriate, or in some
other cases specified in the Indenture. In cases where the fair market value of
the portion of assets, debt securities or rights, warrants or options to
purchase our securities applicable to one share of common stock distributed to
stockholders exceeds the Average Sale Price (as defined in the Indenture) per
share of common stock, or the Average Sale Price per share of common stock
exceeds the fair market value of that portion of assets, debt securities or
rights, warrants or options so distributed by less than $1.00, rather than being
entitled to an adjustment in the Conversion Rate, you will be entitled to
receive upon conversion, in addition to the shares of common stock into which
your note is convertible, the kind and amounts of assets, debt securities or
rights, options or warrants comprising the distribution you would have received
if you had converted your note immediately prior to the record date for
determining the stockholders entitled to receive the distribution. The Indenture
permits us to increase the Conversion Rate from time to time.
Under the provisions of our rights agreement, you will receive, in addition
to the common stock issuable upon such conversion, the rights, whether or not
the rights have separated from the common stock at the time of the conversion.
In addition, if we implement a new shareholder rights plan, this new rights plan
must provide that upon conversion of the existing notes you will receive, in
addition to the common stock issuable upon such conversion, the rights whether
or not such rights have separated from the common stock at the time of such
conversion.
In the event that we become a party to any transaction, including, and with
some exceptions:
- any recapitalization or reclassification of the common stock;
- any consolidation of us with, or merger of us into, any other person, or
any merger of another person into us;
- any sale, transfer or lease of all or substantially all of our assets; or
- any compulsory share exchange,
pursuant to which the common stock is converted into the right to receive other
securities, cash or other property (each of the above being referred to as a
"Transaction"), then you will have the right to convert your notes that are then
outstanding only into the kind and amount of securities, cash or other property
receivable upon the consummation of that Transaction by you of the number of
shares of common stock issuable upon conversion of those notes immediately prior
to that Transaction.
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<PAGE>
This calculation will be made based on the assumption that you, as a holder
of common stock, failed to exercise any rights of election that you may have to
select a particular type of consideration. The adjustment will not be made for a
merger that does not result in any reclassification, conversion, exchange or
cancellation of our common stock.
In the case of a Transaction, each note will become convertible into the
securities, cash or property receivable by you of the number of shares of the
common stock into which the note was convertible immediately prior to that
Transaction. This change could substantially lessen or eliminate the value of
the conversion privilege associated with the notes in the future. For example,
if we were acquired in a cash merger each note would become convertible solely
into cash and would no longer be convertible into securities whose value would
vary depending on our future prospects and other factors.
In the event of a taxable distribution to holders of common stock that
results in an adjustment of the Conversion Rate, or in which you otherwise
participate, or in the event the Conversion Rate is increased at our discretion,
you may, in some circumstances, be deemed to have received a distribution
subject to United States federal income tax as a dividend. Moreover, in some
other circumstances, the absence of an adjustment to the Conversion Rate may
result in a taxable dividend to you. See "Certain United States Federal Income
Tax Considerations--U.S. Holders--Dividends."
PROVISIONAL REDEMPTION
We may redeem the notes, in whole or in part, at any time before March 5,
2003, at a redemption price equal to $1,000 per $1,000 principal amount of notes
to be redeemed plus accrued and unpaid interest, if any, to the provisional
redemption date if
- the closing price of our common stock has exceeded 150% of the conversion
price then in effect (as determined based on the then effective Conversion
Rate) for at least 20 trading days within a period of 30 consecutive
trading days ending on the trading day prior to the date of mailing of the
provisional redemption notice (which date shall be not less than 30 nor
more than 60 days prior to the provisional redemption date) and
- this shelf registration statement covering resales of the notes and the
common stock issuable upon conversion of the notes is effective and
available for use and is expected to remain effective for the 30 days
following the provisional redemption date unless registration is no longer
required.
Upon any provisional redemption, we will make an additional payment in cash
with respect to the notes called for redemption to the holders of those notes on
the notice date in an amount equal to $166.67 per $1,000 principal amount of
notes, less the amount of any interest actually paid per $1,000 principal amount
of notes prior to the redemption date. We are obligated to make this additional
payment on all notes called for provisional redemption, including any notes
converted after the notice date and before the provisional redemption date.
REDEMPTION OF NOTES AT OUR OPTION
There is no sinking fund for the notes. On or after March 5, 2003, we are
entitled to redeem the notes for cash as a whole at any time, or from time to
time, in part, upon not less than 30 days' nor more than 60-days' notice of
redemption given by mail to the record holders of notes, unless a shorter notice
is satisfactory to the trustee, at the redemption prices set out below plus
accrued cash interest to the redemption date. Any redemption of the notes in
part must be in integral multiples of $1,000 principal amount.
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<PAGE>
The table below shows redemption prices of a note per $1,000 principal
amount if redeemed during the following periods:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ -----
<S> <C>
March 5, 2003 through February 29, 2004..................... 102.286%
March 1, 2004 through February 28, 2005..................... 101.714%
March 1, 2005 through February 28, 2006..................... 101.143%
March 1, 2006 through February 28, 2007..................... 100.571%
</TABLE>
and 100% of the principal amount on March 1, 2007, in each case together with
accrued interest to the redemption date.
If fewer than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed in principal amounts at maturity of $1,000 or integral
multiples of $1,000 by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your notes is selected for partial
redemption and you convert a portion of those notes prior to the redemption, the
converted portion will be deemed, solely for purposes of determining the
aggregate principal amount of the notes to be redeemed by us, to be of the
portion selected for redemption.
CHANGE IN CONTROL PERMITS PURCHASE OF NOTES AT THE OPTION OF THE HOLDER
In the event of any change in control (as defined below) of TriQuint, you
have the right, at your option, subject to the terms and conditions of the
Indenture, to require us to purchase all or any part of your notes provided that
the principal amount must be $1,000 or an integral multiple of $1,000. You will
have the right to require us to make that purchase on the date that is 45
business days after the occurrence of the change in control (the "Change in
Control Purchase Date") at a price equal to 100% of the principal amount of your
notes plus accrued interest to the Change in Control Purchase Date (the "Change
in Control Purchase Price").
We may, at our option, instead of paying the Change in Control Purchase
Price in cash, pay the Change in Control Purchase Price in our common stock
valued at 95% of the average of the closing sales prices of our common stock for
the five trading days immediately preceding and including the third day prior to
the Change in Control Date. We cannot pay the Change in Control Purchase Price
in common stock unless we satisfy the conditions described in the Indenture.
Within 25 business days after the Change in Control, we will mail to the
trustee, all record holders of the notes, and beneficial owners as required by
applicable law, a notice regarding the Change in Control, which will state,
among other things:
- the date of the Change in Control and, briefly, the events causing the
Change in Control;
- the date by which the Change in Control Purchase Notice (as defined below)
must be given;
- the Change in Control Purchase Date;
- the Change in Control Purchase Price;
- the name and address of the Paying Agent and the Conversion Agent;
- the Conversion Rate and any adjustments to the Conversion Rate;
- that notes with respect to which a Change in Control Purchase Notice is
given by the record holder may be converted only if the Change in Control
Purchase Notice has been withdrawn in accordance with the terms of the
Indenture;
- the procedures that you must follow to exercise these rights;
- the procedures for withdrawing a Change in Control Purchase Notice;
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- that record holders who want to convert notes must satisfy the
requirements provided in the notes; and
- briefly, the conversion rights of holders of notes.
To exercise the purchase right, you must deliver written notice of the
exercise of the purchase right (a "Change in Control Purchase Notice") to the
Paying Agent or an office or agency maintained by us for that purpose in the
Borough of Manhattan, The City of New York, prior to the close of business, on
the business day prior to the Change in Control Purchase Date. Any Change in
Control Purchase Notice must state:
- the name of the record holder of the notes;
- the certificate numbers of the notes to be delivered by you for purchase
by us;
- the portion of the principal amount of notes to be purchased, which
portion must be $1,000 or an integral multiple of $1,000; and
- that the notes are to be purchased by us pursuant to the applicable
provisions of the notes.
You may withdraw any Change in Control Purchase Notice by a written notice
of withdrawal delivered to the Paying Agent prior to the close of business on
the business day immediately preceding the Change in Control Purchase Date. Your
notice of withdrawal must state the principal amount and the certificate numbers
of the notes as to which the withdrawal notice relates and the principal amount,
if any, which remains subject to a Change in Control Purchase Notice.
In order for us to pay the Change in Control Purchase Price, you must
deliver your notes together with necessary endorsements, and your Change in
Control Purchase Notice has been delivered and not withdrawn, to the Paying
Agent or an office or agency maintained by us for that purpose in the Borough of
Manhattan, The City of New York, at any time, whether prior to, on or after the
Change in Control Purchase Date, after the delivery of the Change in Control
Purchase Notice. We will pay the Change in Control Purchase Price for the note
promptly following the later of the business day following the Change in Control
Purchase Date and the time of delivery of the note. If the Paying Agent holds,
in accordance with the terms of the Indenture, money sufficient to pay the
Change in Control Purchase Price of your note on the business day following the
Change in Control Purchase Date, then, immediately after the Change in Control
Purchase Date, your note will cease to be outstanding and interest on your note
will cease to accrue and will be deemed paid, whether or not that note is
delivered to the Paying Agent, and all of your other rights will terminate,
other than the right to receive the Change in Control Purchase Price upon
delivery of your note.
Under the Indenture, a "change in control" of TriQuint is deemed to have
occurred upon the occurrence of any of the following events:
- any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")),
acquires the beneficial ownership (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, directly or indirectly, through a purchase, merger
or other acquisition transaction, of more than 50% of the total voting
power of our total outstanding voting stock other than an acquisition by
us, any of our subsidiaries or any of our employee benefit plans;
- we consolidate with, or merge with or into another person or convey,
transfer, lease or otherwise dispose of all or substantially all of our
assets to any person, or any person consolidates with or merges with or
into us, in any such event pursuant to a transaction in which our
outstanding voting stock is converted into or exchanged for cash,
securities or other property, other than where:
-- our voting stock is not converted or exchanged at all, except to the
extent necessary to reflect a change in our jurisdiction of
incorporation, or is converted into or exchanged for
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<PAGE>
voting stock, other than redeemable capital stock, of the surviving or
transferee corporation; and
-- immediately after such transaction, no "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Persons who were the "beneficial owner" (as described
below), directly or indirectly, of more than 50% of the total voting
power of all of our voting stock immediately before such transaction, is
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
outstanding voting stock of the surviving or transferee corporation;
- during any consecutive two-year period, individuals who at the beginning
of that two-year period constituted our Board of Directors (together with
any new directors whose election to such Board of Directors, or whose
nomination for election by our stockholders, was approved by a vote of a
majority of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of our Board of Directors then in office; or
- our stockholders pass a special resolution approving a plan of liquidation
or dissolution and no additional approvals of our stockholders are
required under applicable law to cause a liquidation or dissolution.
"Redeemable capital stock" means any class or series of capital stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the final
stated maturity of the notes or is redeemable at the option of the holder of the
notes at any time prior to such final stated maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final stated
maturity. Redeemable capital stock does not include any common stock the holder
of which has a right to put to us upon some terminations of employment.
The definition of change in control includes a phrase relating to the lease,
transfer, conveyance or other disposition of "all or substantially all" of our
assets. There is no precise established definition of the phrase "substantially
all" under applicable law. Accordingly, your ability to require us to repurchase
such notes as a result of a lease, transfer, conveyance or other disposition of
less than all of our assets may be uncertain.
The Indenture does not permit our Board of Directors to waive our obligation
to purchase notes at your option in the event of a change in control of
TriQuint.
We are not required to make an offer to purchase the notes upon a change in
control if a third party makes an offer to purchase the notes in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture for the offer to purchase we would otherwise be required to make and
that third party purchases all notes validly tendered to it and not withdrawn.
We will comply with the provisions of any tender offer rules under the
Exchange Act which may then be applicable, and will file any schedule required
under the Exchange Act in connection with any offer by us to purchase notes at
the option of the holders of notes upon a change in control. In some
circumstances, the change in control purchase feature of the notes may make more
difficult or discourage a takeover of us and thus the removal of incumbent
management. The change in control purchase feature, however, is not the result
of our knowledge of any specific effort to accumulate shares of common stock or
to obtain control of us by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, the change in control purchase feature was the result of
negotiations between us and the initial purchasers.
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<PAGE>
If a change in control were to occur, we do not know whether we would have
funds sufficient to pay the Change in Control Purchase Price for all of the
notes that might be delivered by holders seeking to exercise the purchase right,
because we or our subsidiaries might also be required to prepay some
indebtedness or obligations having financial covenants with change of control
provisions in favor of the holders of that indebtedness or those obligations. In
addition, our other indebtedness or obligations may have cross-default
provisions that could be triggered by a default under the change in control
provisions thereby possibly resulting in acceleration of the maturity of that
other indebtedness or those obligations. In any of these circumstances, the
holders of the notes would be subordinated to the prior claims of the holders of
other indebtedness or obligations. In addition, our ability to purchase the
notes with cash may be limited by the terms of our then-existing borrowing
agreements. No notes may be purchased pursuant to the provisions described above
if there has occurred and is continuing an Event of Default described under
"--Events of Default" below (other than a default in the payment of the Change
in Control Purchase Price with respect to those notes).
CONSOLIDATION, MERGER AND SALE OR LEASE OF ASSETS
Without your consent, we may consolidate with or merge into or transfer or
lease our assets substantially as an entirety to, any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof (each a "person"), and any person is entitled to
consolidate with or merge into, or transfer or lease its assets substantially as
an entirety to us, provided that:
- the person, if other than us, formed by a consolidation or into which we
are merged, or the person, if other than one of our subsidiaries, which
receives the transfer of our assets substantially as an entirety, is a
corporation, partnership, limited liability company or trust organized and
existing under the laws of any United States jurisdiction and expressly
assumes our obligations on the notes and under the Indenture;
- immediately after giving effect to the consolidation, merger, transfer or
lease, no Event of Default (as defined above), and no event which, after
notice or lapse of time or both, would become an Event of Default,
happened and is continuing; and
- if required by the Indenture, an officer's certificate and an opinion of
counsel, each stating that the consolidation, merger, transfer or lease
complies with the provisions of the Indenture, have been delivered by us
to the Trustee.
EVENTS OF DEFAULT
The Indenture provides that, if an Event of Default specified in the
Indenture occurs and is continuing, either the trustee or the holders of not
less than 25% in aggregate principal amount of the notes then outstanding may
declare the principal amount of, and accrued interest to the date of that
declaration, on all the notes to be immediately due and payable. In the case of
some events of bankruptcy or insolvency, the principal of, and accrued interest
on all the notes to the date of the occurrence of that event, will automatically
become and be immediately due and payable. Upon any acceleration of the payment
of principal and accrued interest with respect to the notes, the subordination
provisions of the Indenture will preclude any payment being made to you until
the earlier of:
- 120 days or more after the date of that acceleration; and
- the payment in full of all Senior Indebtedness in cash or other
consideration satisfactory to such Senior Indebtedness.
but only if such payment is then otherwise permitted under the terms of the
Indenture. See "--Subordination."
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<PAGE>
Under some circumstances, the holders of a majority in aggregate principal
amount of the notes may rescind any acceleration with respect to the notes and
its consequences.
Interest will continue to accrue and be payable on demand upon a default in:
- the payment of:
-- principal and interest when due,
-- redemption amounts, or
-- Change in Control Purchase Price;
- the delivery of shares of common stock to be delivered on conversion of
notes; or
- the payment of cash in lieu of fractional shares to be paid on conversion
of notes,
in each case to the extent that the payment of interest that is due is legally
enforceable.
Under the Indenture, Events of Default include:
- default in payment of the principal amount, interest when due (if that
default in payment of interest continues for 30 days), any redemption
amounts or the Change in Control Purchase Price with respect to any note,
when that principal amount, interest, redemption amount or Change in
Control Purchase Price becomes due and payable (whether or not that
payment is prohibited by the provisions of the Indenture);
- failure by us to deliver shares of common stock, together with cash
instead of fractional shares, when those shares of common stock, or cash
instead of fractional shares, are required to be delivered following
conversion of a note, and that default continues for 10 days;
- failure by us to comply with any of our other agreements in the notes or
the Indenture, the receipt by us of notice of that default from the
trustee or from holders of not less than 25% in aggregate principal amount
of the notes then outstanding and our failure to cure that default within
60 days after our receipt of that notice;
- default under any bond, note or other evidence of indebtedness for money
borrowed by us having an aggregate outstanding principal amount in excess
of $35 million, which default shall have resulted in that indebtedness
being accelerated, without that indebtedness being discharged or that
acceleration having been rescinded or annulled within 60 days after our
receipt of the notice of default from the trustee or receipt by us and the
trustee of the notice of default from the holders of not less than 25% in
aggregate principal amount of the notes then outstanding, unless that
default has been cured or waived; or
- some events of bankruptcy or insolvency.
The trustee will, within 90 days after the occurrence of any default, mail
to all holders of the notes notice of all defaults of which the trustee is
aware, unless those defaults have been cured or waived before the giving of that
notice. The trustee may withhold notice as to any default other than a payment
default, if it determines in good faith that withholding the notice is in the
interests of the holders. The term "default" for the purpose of this provision
means any event that is, or after notice or lapse of time or both would become,
an Event of Default with respect to the notes.
The holders of a majority in aggregate principal amount of the outstanding
notes may direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee, provided that the direction must not be in conflict with any law or
the Indenture and the direction is subject to some other limitations. The
trustee may refuse to perform any duty or exercise any right or power or extend
or risk its own funds or otherwise incur any financial liability unless it
receives indemnity satisfactory to it against any loss,
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<PAGE>
liability or expense. You will not have any right to pursue any remedy with
respect to the Indenture or the notes, unless:
- you have previously given the trustee written notice of a continuing Event
of Default;
- the holders of at least 25% in aggregate principal amount of the
outstanding notes have made a written request to the trustee to pursue the
relevant remedy;
- you have, or the holders making that written request have, offered to the
trustee reasonable security or indemnity against any loss, liability or
expense satisfactory to it;
- the trustee has failed to comply with the request within 60 days after
receipt of that notice, request and offer of security or indemnity; and
- the holders of a majority in aggregate principal amount of the outstanding
notes have not given the trustee a direction inconsistent with that
request within 60 days after receipt of that request.
Your right:
- to receive payment of principal, any redemption amounts, the Change in
Control Purchase Price or interest in respect of the notes you hold on or
after the respective due dates expressed in the notes;
- to convert those notes; or
- to bring suit for the enforcement of any payment of principal, any
redemption amounts, the Change in Control Purchase Price or interest in
respect of those notes held by you on or after the respective due dates
expressed in the notes, or the right to convert;
will not be impaired or adversely affected without your consent.
The holders of a majority in aggregate principal amount of notes at the time
outstanding may waive any existing default and its consequences except:
- any default in any payment on the notes;
- any default with respect to the conversion rights of the notes; or
- any default in respect of the covenants or provisions in the Indenture
that may not be modified without the consent of the holder of each note as
described in "--Modification, Waiver and Meetings" below.
When a default is waived, it is deemed cured and will cease to exist, but
that waiver does not extend to any subsequent or other default or impair any
consequent right.
We are required to furnish to the trustee annually a statement as to any
default by us in the performance and observance of our obligations under the
Indenture. In addition, we are required to file with the trustee written notice
of the occurrence of any default or Event of Default within five business days
of our becoming aware of the occurrence of any default or Event of Default.
MODIFICATION, WAIVER AND MEETINGS
The Indenture or the notes may be modified or amended by us and the Trustee
with the consent of the holders of not less than a majority in aggregate
principal amount of the notes then outstanding except as specified below. The
Indenture or the notes may not be modified or amended by us without the consent
of each holder affected thereby, to, among other things:
- reduce the principal amount, Change in Control Purchase Price or any
redemption amounts with respect to any note, or extend the stated maturity
of any note or alter the manner of payment or rate of interest on any note
or make any note payable in money or securities other than that stated in
the note;
- make any reduction in the principal amount of notes whose holders must
consent to an amendment or any waiver under the Indenture or modify the
Indenture provisions relating to those amendments or waivers;
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- make any change that adversely affects the right of a holder to convert
any note;
- modify the provisions of the Indenture relating to the ranking of the
notes in a manner adverse to the holders of the notes; or
- impair the right to institute suit for the enforcement of any payment with
respect to, or conversion of, the notes.
Without the consent of any holder of notes, we and the Trustee may amend the
Indenture to:
- cure any ambiguity, defect or inconsistency, provided, however, that the
amendment to cure any ambiguity, defect or inconsistency does not
materially adversely affect the rights of any holder of notes;
- provide for the assumption by a successor of our obligations under the
Indenture;
- provide for uncertificated notes in addition to certificated notes, as
long as those uncertificated notes are in registered form for United
States federal income tax purposes;
- make any change that does not adversely affect the rights of any holder of
notes;
- make any change to comply with any requirement of the Securities and
Exchange Commission in connection with the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended;
- add to our covenants or our obligations under the Indenture for the
protection of holders of the notes; or
- surrender any right, power or option conferred by the Indenture on us.
FORM, DENOMINATION, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
We initially issued the notes in the form of one or more global notes. The
global notes were deposited with, or on behalf of, The Depository Trust Company
("DTC"), and registered in the name of DTC or its nominee. The notes were issued
in denominations of $1,000 and integral multiples of $1,000.
The principal, any premium and any interest on the notes are payable,
without coupons, and the exchange of and the transfer of the notes are
registrable, at our office or agency maintained for that purpose in the Borough
of Manhattan, The City of New York and at any other office or agency maintained
for that purpose.
You may present the notes for exchange, and for registration of transfer,
with the form of transfer endorsed on those notes, or with a satisfactory
written instrument of transfer, duly executed, at the office of the appropriate
securities registrar or at the office of any transfer agent designated by us for
that purpose, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. We appointed the trustee of
the notes as securities registrar under the Indenture. We may at any time
rescind designation of any transfer agent or approve a change in the location
through which any transfer agent acts, provided that we maintain a transfer
agent in each place of payment for the notes. We may at any time designate
additional transfer agents for the notes.
All monies paid by us to a paying agent for the payment of principal, any
premium or any interest, on any note which remains unclaimed for two years after
the principal, premium or interest has become due and payable may be repaid to
us, and after the two-year period, you may look only to us for payment.
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In the event of any redemption, we are not required to:
- issue, register the transfer of or exchange notes during a period
beginning at the opening of business 15 days before the day of the mailing
of a notice of redemption of notes to be redeemed and ending at the close
of business on the day of that mailing; or
- register the transfer of or exchange any note called for redemption,
except, in the case of any notes being redeemed in part, any portion not
being redeemed.
BOOK-ENTRY SYSTEM
Upon the issuance of a global note, DTC credited, on its book-entry
registration and transfer system, the respective principal amounts of the notes
represented by that global note to the accounts of institutions or persons,
commonly known as participants, that have accounts with DTC or its nominee. The
accounts to be credited will be designated by the underwriters, dealers or
agents. Ownership of beneficial interests in a global note will be limited to
participants or persons that may hold interests through participants. Ownership
of interests in a global note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by DTC
(with respect to participants' interests) and the participants (with respect to
the owners of beneficial interests in that global note). The laws of some
jurisdictions may require that some purchasers of securities take physical
delivery of the securities in definitive form. These limits and laws may impair
the ability to transfer beneficial interests in a global note.
So long as DTC, or its nominee, is the registered holder and owner of the
global note, DTC or its nominee, as the case may be, is considered the sole
owner and holder for all purposes of the notes and for all purposes under the
Indenture. Except as described below, owners of beneficial interests in a global
note is not entitled to have the notes represented by that global note
registered in their names, will not receive or be entitled to receive physical
delivery of notes in definitive form and are not be considered to be the owners
or holders of any notes under the Indenture or that global note. Accordingly,
each person owning a beneficial interest in a global note must rely on the
procedures of DTC and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder of notes under the Indenture of that global note. We
understand that under existing industry practice, in the event we request any
action of holders of notes or if an owner of a beneficial interest in a global
note desires to take any action that DTC, as the holder of that global note is
entitled to take, DTC would authorize the participants to take that action, and
that the participants would authorize beneficial owners owning through them to
take those actions or would otherwise act upon the instructions of beneficial
owners owning through them.
Payments of principal of and any premium and any interest on the notes
represented by a global note will be made to DTC or its nominee, as the case may
be, as the registered owner and holder of that global note, against surrender of
the notes at the principal corporate trust office of the trustee. Interest
payments will be made at the principal corporate trust office of the trustee or
by a check mailed to the holder at its registered address.
We expect that DTC, upon receipt of any payment of principal, and any
premium and any interest, in respect of a global note, will immediately credit
the participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that global note as
shown on the records of DTC. We expect that payments by participants to owners
of beneficial interests in a global note held through those participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of those participants. We, our
agent, the trustee and its agent do not have any responsibility or liability for
any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in a global note or for maintaining, supervising
or reviewing any records relating to those beneficial ownership interests or for
any other
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aspect of the relationship between DTC and its participants or the relationship
between those participants and the owners of beneficial interests in that global
note owning through those participants.
Unless and until it is exchanged in whole or in part for notes in definitive
form, a global note may not be transferred except as a whole by DTC to a nominee
of DTC or by a nominee of DTC to DTC or a successor to DTC selected or approved
by us or to a nominee of that successor to DTC.
The notes represented by a global note will be exchangeable for notes in
definitive form of like tenor as that global note in denominations of $1,000 and
in any greater amount that is an integral multiple of $1,000 if:
- DTC notifies us and the trustee that it is unwilling or unable to continue
as DTC for that global note or if at any time DTC ceases to be a clearing
agency registered under the Exchange Act and a successor depositary is not
appointed by us within 90 days;
- we, in our sole discretion, determine not to have all of the notes
represented by a global note and notify the trustee of that determination;
or
- there is, or continues to be, an Event of Default or there is an event
which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the notes.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for notes registered in the names which DTC will instruct the
trustee. It is expected that DTC's instructions may be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interests in that global note. Subject to the foregoing, a global note is not
exchangeable except for a global note or global notes of the same aggregate
denominations to be registered in the name of DTC or its nominee.
NOTICES
Except as otherwise provided in the Indenture, notices to holders of notes
will be given by mail to the addresses of holders of the notes as they appear in
the security register.
REPLACEMENT OF NOTES
Any mutilated note will be replaced by us at the expense of the holder upon
surrender of that note to the trustee. Notes that become destroyed, stolen or
lost will be replaced by us at the expense of the holder upon delivery to the
trustee of notes or evidence of the destruction, loss or theft of the notes
satisfactory to us and the trustee. In the case of a destroyed, lost or stolen
note, an indemnity satisfactory to the trustee and us may be required at the
expense of the holder of that note before a replacement note will be issued.
GOVERNING LAW
The Indenture, the notes and the registration rights agreement is governed
by, and construed in accordance with, the laws of the State of New York.
INFORMATION REGARDING THE TRUSTEE
State Street Bank and Trust Company of California, N.A. is the trustee,
securities registrar, paying agent and conversion agent under the Indenture.
REGISTRATION RIGHTS OF HOLDERS OF THE NOTES
We and the initial purchasers entered into the registration rights agreement
on February 24, 2000.
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Under the registration rights agreement, we generally are required to:
- File, within 90 days after February 24, 2000, a shelf registration
statement covering the notes and the common stock issuable upon conversion
of the notes;
- use our reasonable efforts to cause the shelf registration to become
effective as promptly as practicable; and
- use our reasonable efforts to keep the shelf registration statement
effective except as specified below until the earlier of the sale of all
the transfer restricted securities or two years after March 3, 2000.
When we use the term "transfer restricted securities" in this section, we
mean the common stock issued upon conversion until the earlier of the following
events:
- the date the note or common stock issued upon conversion has been
effectively registered under the Securities Act of 1933 and sold or
transferred pursuant to the shelf registration statement;
- the date on which the note or common stock issued upon conversion is
distributed to the public pursuant to Rule 144 under the Securities Act of
1933 or is available for sale pursuant to Rule 144(k) under the Securities
Act of 1933; or
- the date the note or common stock issued upon conversion ceases to be
outstanding.
We will be required to pay predetermined liquidated damages if one of the
following "registration defaults" occurs:
- we do not file the shelf registration statement within 90 days after
February 24, 2000;
- the Securities and Exchange Commission does not declare the shelf
registration statement effective within 180 days after February 24, 2000;
or
- after it has been declared effective, the shelf registration statement
ceases to be effective or available for more than 90 days in any period of
365 consecutive days.
If a registration default occurs, liquidated damages initially accrue
(a) for the notes that are transfer restricted securities, at the rate of $.05
per week per $1,000 principal amount of the notes and (b) for any common stock
issued on conversion of the notes that are transfer restricted securities, at an
equivalent rate based on the conversion price. If the registration default has
not been cured within 90 days, the liquidated damages rate will increase by $.05
per week per $1,000 principal amount of the notes that are transfer restricted
securities (and an equivalent amount for any common stock issued upon conversion
that are transfer restricted securities) for each subsequent 90-day
noncompliance period, up to a maximum rate of $.25 per week per $1,000 principal
amount of the notes that are transfer restricted securities. Liquidated damages
generally are payable at the same time as interest payments on the notes.
We may suspend the use of the shelf registration statement in certain
circumstances described in the registration rights agreement upon notice to the
holders of the transfer restricted securities, subject to the rights of the
holders of transfer restricted securities to receive liquidated damages in
accordance with the registration rights agreement.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Our authorized capital stock consists of 200,000,000 shares of common stock,
$.001 par value, and 5,000,000 shares of preferred stock, $.001 par value.
COMMON STOCK
Subject to preferences that may be applicable to any outstanding preferred
stock, holders of common stock are entitled to receive ratably such dividends as
may be declared by our board of directors out of funds legally available
therefor. We have not paid any cash dividends on our common stock. Each holder
of our common stock is entitled to one vote for each share held of record on all
matters submitted to a vote of stockholders, except that upon giving notice
required by law and in our bylaws, stockholders may cumulate their votes in the
election of directors. In the event of a liquidation, dissolution or winding up
of TriQuint, holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preference of
any outstanding preferred stock. Holders of our common stock have no preemptive
or conversion rights or other subscription rights. There are no redemption or
sinking fund provisions available to the common stock. All outstanding shares of
common stock are fully paid and nonassessable, and the shares of common stock to
be issued upon completion of this offering will be fully paid and nonassessable.
Pursuant to our shareholder rights plan, each share of common stock
currently outstanding and all shares of common stock to be issued upon
conversion of the notes offered herein has received or will receive, as the case
may be, one preferred share purchase right per share of common stock, which
until such right becomes exercisable, trades with the shares of our common
stock.
At December 31, 1999, 37,843,440 shares of common stock were outstanding.
There were 225 stockholders of record at February 1, 2000. At December 31, 1999,
options to purchase an aggregate of 6,755,038 shares of common stock were also
outstanding.
PREFERRED STOCK
Our board of directors has the authority to issue up to 5,000,000 shares of
preferred stock (less 25,000 shares which have been designated series A
participating preferred stock) in one or more series and to determine the
powers, preferences and rights and the qualifications, limitations or
restrictions, any or all of which may be greater than the rights of our common
stock, granted to or imposed upon any wholly unissued shares of undesignated
preferred stock and to fix the number of shares constituting any series and the
designation of such series, without any further vote or action by our
stockholders. It is not possible to state the actual effect of the issuance of
any shares of preferred stock upon the rights of holders of the common stock
until the board of directors determines the specific rights of the holders of
the preferred stock. However, these effects might include:
- restricting dividends on the common stock;
- diluting the voting power of the common stock;
- impairing the liquidation rights of the common stock; and
- delaying or preventing a change in control of our company without further
action by the stockholders.
In connection with our shareholder rights plan, 25,000 shares of such
preferred stock have been designated series A participating preferred stock. No
shares of the series A participating preferred stock have been issued or are
issuable until the occurrence of certain triggering events. See "--Shareholder
Rights Plan." The issuance of preferred stock may have the effect of delaying,
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deferring or preventing a change in control of TriQuint without further action
by the stockholders, may adversely affect the voting and other rights of the
holders of common stock and may have the effect of decreasing the market price
of the common stock. At present, we have no plans to issue any shares of
preferred stock.
ANTI-TAKEOVER EFFECTS OF SOME PROVISIONS OF DELAWARE LAW AND OUR CHARTER
DOCUMENTS
A number of the provisions of Delaware law and our certificate of
incorporation and bylaws could make the acquisition of our company through a
tender offer, a proxy contest or other means more difficult and could make the
removal of incumbent officers and directors more difficult. These provisions
include our failure to "opt out" of the protections of Section 203 of the
Delaware General Corporation Law, as described below, as well as our reservation
of 5,000,000 shares of blank check preferred and our staggered board of
directors. We expect these provisions to discourage coercive takeover practices
and inadequate takeover bids and to encourage persons seeking to acquire control
of our company to first negotiate with our board of directors. We believe that
the benefits provided by our ability to negotiate with the proponent of an
unfriendly or unsolicited proposal outweigh the disadvantages of discouraging
such proposals. We believe the negotiation of an unfriendly or unsolicited
proposal could result in an improvement of its terms.
DELAWARE LAW
We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless:
- prior to the date of the transaction, the board of directors of the
corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder;
- the stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding (a) shares owned by
persons who are directors and also officers, and (b) shares owned by
employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or
- on or subsequent to the date of the transaction, the business combination
is approved by the board and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns or, within three years prior to the
determination of interested stockholder status, did own 15% or more of a
corporation's outstanding voting securities. We expect the existence of this
provision to have an anti-takeover effect with respect to transactions our board
of directors does not approve in advance. We also anticipate that Section 203
may also discourage attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.
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CHARTER DOCUMENTS
Our certificate of incorporation provides for cumulative voting for the
election of directors. Section 141 of the Delaware General Corporation Law
provides that a director elected by cumulative voting may not be removed without
cause if the number of votes cast against removal would be sufficient to elect
such director under cumulative voting. Our bylaws define "cause" for the purpose
of these provisions to mean:
- continued willful failure to perform the obligations of a director,
- gross negligence by the director,
- engaging in transactions that defraud our company,
- fraud or intentional misrepresentation including falsifying use of funds
and intentional misstatements made in financial statements, books, records
or reports to stockholders or governmental agencies,
- material violation of any agreement between the director and TriQuint,
- knowingly causing us to commit violations of applicable law (including by
failure to act),
- acts of moral turpitude or
- conviction of a felony.
Our bylaws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of our stockholders, including proposed
nominations of persons for election to the board of directors. At an annual
meeting, stockholders may only consider proposals or nominations specified in
the notice of meeting or brought before the meeting by or at the direction of
the board of directors. Stockholders may also consider a proposal or nomination
by a person who was a stockholder of record on the record date for the meeting,
who is entitled to vote at the meeting and who has given to our Secretary timely
written notice, in proper form, of his or her intention to bring that business
before the meeting. The bylaws do not give the board of directors the power to
approve or disapprove stockholder nominations of candidates or proposals
regarding other business to be conducted at a special or annual meeting of the
stockholders. However, our bylaws may have the effect of precluding the conduct
of that item of business at a meeting if the proper procedures are not followed.
These provisions may also discourage or deter a potential acquirer from
conducting a solicitation of proxies to elect the acquirer's own slate of
directors or otherwise attempting to obtain control of our company.
Under Delaware law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the bylaws. The following persons are authorized to call a
special meeting of stockholders:
- a majority of our board of directors;
- the chairman of the board; or
- the chief executive officer.
The limitation on the right of our stockholders to call a special meeting
will make it more difficult for a stockholder to force stockholder consideration
of a proposal over the opposition of the board of directors by calling a special
meeting of stockholders. The restriction on the ability of stockholders to call
a special meeting also will make it more difficult to replace the board until
the next annual meeting.
Although Delaware law provides that stockholders may execute an action by
written consent in lieu of a stockholder meeting, it also allows us to eliminate
stockholder actions by written consent. Elimination of written consents of
stockholders may lengthen the amount of time required to take
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stockholder actions since actions by written consent are not subject to the
minimum notice requirement of a stockholder's meeting. However, we believe that
the elimination of stockholders' written consents may deter hostile takeover
attempts. Without the availability of stockholder's actions by written consent,
a holder controlling a majority of our capital stock would not be able to amend
our bylaws or remove directors without holding a stockholders meeting. The
holder would have to obtain the consent of a majority of the board of directors,
the chairman of the board or the chief executive officer to call a stockholders'
meeting and satisfy the notice periods determined by the board of directors. Our
certificate of incorporation provides for the elimination of actions by written
consent of stockholders.
SHAREHOLDER RIGHTS PLAN
In June 1998, our board of directors adopted the shareholder rights plan
(the "rights plan"). Pursuant to the rights plan, we declared a dividend of one
preferred share purchase right (a "right") for each outstanding share of common
stock and each share of common stock issued thereafter. Initially, each right
entitles the holder thereof to purchase from TriQuint one share of common stock
at an exercise price of $400.00, subject to adjustment for stock splits, stock
dividends and similar events. The rights are not exercisable until the
occurrence of certain triggering events. The rights will become exercisable only
if a person or group acquires 15% or more of our common stock or announces a
tender offer or exchange offer that would result in their ownership of 15% or
more of our common stock.
Ten days after an acquisition or offer by a person or group for 15% or more
of TriQuint's common stock, each right becomes exercisable at the right's then
current exercise price, for shares of our common stock (or, in certain
circumstances as determined by our board of directors, a combination of cash,
property, common stock or other securities) having a value of twice the right's
exercise price. Alternatively, if TriQuint is involved in a merger or other
business combination transaction with another person ten or more days after such
acquisition or offer, each right becomes exercisable, at the right's then
current exercise price, for shares of common stock of such other person having a
value of twice the right's exercise price. The rights are redeemable up to ten
days following the announcement of such acquisition or offer, subject to
extension by our board of directors, at a price of $0.01 per right. The rights
plan expires in June 2008 unless we redeem the rights earlier.
Pursuant to the rights plan, we designated 25,000 shares of preferred stock
series A participating preferred, and reserved those shares for issuance under
the rights plan. The series A participating preferred purchasable upon exercise
of the rights will be nonredeemable and junior to any other series of preferred
stock we may issue (unless otherwise provided in the terms of such stock). Each
share of series A participating preferred will have a preferential cumulative
quarterly dividend in an amount equal to 1,000 times the dividend declared on
each share of common stock and, in the event of liquidation, the holders of
series A participating preferred will receive a preferred liquidation payment
equal to $125,000 per share, plus accrued and unpaid dividends (the "series A
liquidation preference"). Following payment of the series A liquidation
preference, and after the holders of shares of common stock shall have received
an amount per share equal to the quotient obtained by dividing the series A
liquidation preference by 1,000, the holders of series A participating preferred
and holders of common stock shall share ratably and proportionately the
remaining assets to be distributed in liquidation. Each share of series A
participating preferred stock will have 1,000 votes, voting together with the
shares of common stock as a single class. In the event of any merger,
consolidation or other transaction in which shares of common stock are exchanged
for or changed into other securities, cash and/or other property, each share of
series A participating preferred will be entitled to receive 1,000 times the
amount and type of consideration received per share of common stock.
The rights plan is intended to protect TriQuint's stockholders in the event
of an unsolicited offer to acquire, or the acquisition of, 15% or more of the
common stock of TriQuint. The rights are not intended to prevent a takeover of
TriQuint and will not interfere with any tender offer or business
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combination approved by the board of directors. The rights encourage persons
seeking control of TriQuint to initiate such an acquisition or offer to acquire
through arm's-length negotiations with the board of directors.
INDEMNIFICATION ARRANGEMENTS
Our certificate of incorporation limits the liability of our directors and
executive officers to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for:
- any breach of their duty of loyalty to our company or our stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
Law; or
- any transaction from which the director derived an improper personal
benefit.
The limits on a director or officer's liability in our certificate of
incorporation do not apply to liabilities arising under the federal securities
laws and do not affect the availability of equitable remedies such as injunctive
relief or rescission.
Our certificate of incorporation together with our bylaws provide that we
must indemnify our directors and executive officers and may indemnify our other
officers and employees and other agents to the fullest extent permitted by law.
We believe that indemnification under our bylaws covers at least negligence
and gross negligence on the part of indemnified parties. Our bylaws also permit
us to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in that capacity,
regardless of whether our bylaws would otherwise permit indemnification. We
believe that the indemnification provisions of our certificate of incorporation
and bylaws are necessary to attract and retain qualified persons as directors
and officers. We also maintain directors' and officers' liability insurance.
We have entered into agreements to indemnify our directors, executive
officers and other employees as determined by the board of directors. These
agreements provide for indemnification for related expenses including attorneys'
fees, judgments, fines and settlement amounts incurred by any such person in any
action or proceeding. We believe that these provisions and agreements are
necessary to attract and retain qualified persons as our directors and executive
officers.
At present we are not aware of any pending litigation or proceeding
involving any director, officer, employee or agent of our company where
indemnification will be required or permitted. Nor are we aware of any
threatened litigation or proceeding that might result in a claim for
indemnification.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services LLC serves as the transfer agent and
registrar for our common stock. ChaseMellon's address is 85 Challenger Road,
Ridgefield Park, New Jersey 07660 and its telephone number is 1-800-522-6645.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes some of the U.S. federal income tax considerations
relating to the purchase, ownership and disposition of the notes and of common
stock into which the notes may be converted. This summary does not provide a
complete analysis of all potential tax considerations. The information provided
below is based on authorities now in effect. These authorities may change, or
the Internal Revenue Service (the "IRS") might interpret the existing
authorities differently. In either case, the tax consequences of purchasing,
owning or disposing of notes or common stock could differ from those described
below. The summary generally applies only to U.S. Holders that purchase notes in
the initial offering at their issue price and hold the notes or common stock as
"capital assets" (generally, for investment). For this purpose, U.S. holders
include citizens or residents of the United States and corporations organized
under the laws of the United States or any state. Trusts are U.S. holders if
they are subject to the primary supervision of a U.S. court and the control of
one of more U.S. persons. Special rules apply to nonresident alien individuals
and foreign corporations or trusts ("Non-U.S. holders"). This summary describes
some, but not all, of these special rules. For U.S. federal income tax purposes,
income earned through a foreign or domestic partnership or similar entity is
attributed to its owners. The summary generally does not address tax
considerations that may be relevant to particular investors because of their
specific circumstances, or because they are subject to special rules. Finally,
the summary does not describe the effect of the federal estate and gift tax laws
on U.S. holders or the effects of any applicable foreign, state, or local laws.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL ESTATE OR GIFT TAX LAWS,
FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.
U.S. HOLDERS
TAXATION OF INTEREST. U.S. holders are required to recognize ordinary
interest income when interest on the notes is paid or accrued, in accordance
with the holders' regular method of tax accounting. In general, if a holder of a
debt instrument may receive payments of other than fixed periodic interest that
exceed the issue price of the instrument, the holder may be required to
recognize additional interest as "original issue discount" over the term of the
instrument. The notes were not issued with original issue discount. In certain
circumstances, we may be obligated to pay noteholders amounts in excess of
stated interest or principal. For example, we are required to pay liquidated
damages to noteholders in certain circumstances described in "Description of
Notes--Registration Rights of the Holders of the Notes." In addition, if the
price of our common stock exceeds 150% of the conversion price of the notes
during a prescribed period, and certain other conditions are met regarding the
registration of the notes and common stock, we may call the notes for redemption
at a price that will include an additional amount in excess of their principal
amount. The original issue discount regulations allow contingent payments such
as these to be disregarded in computing a holder's interest income if the
contingency is either "incidental" or "remote." If we are required to pay
liquidated damages, we believe that these payments would be insignificant
relative to the total expected amount of remaining payments on the notes.
Therefore, we will treat the possible payment of liquidated damages as an
incidental contingency. If we exercise our provisional redemption right, it is
likely that holders of the notes would convert them into common stock.
Therefore, we believe that the possibility that we will pay the prescribed
redemption premium is remote. Our determination that these contingencies are
incidental or remote is binding on holders unless they disclose their contrary
position. If we pay liquidated damages, noteholders would be required to
recognize additional interest income. If we pay a redemption premium in
connection with our exercise of our provisional redemption right, the premium
would most likely be treated as capital gain under the rules described under
"U.S. Holders--Sale, Exchange or Redemption of the Notes."
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<PAGE>
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. A U.S. holder will generally
recognize capital gain or loss if the holder disposes of a note in a sale,
redemption or exchange other than a conversion of the note into common stock.
The holder's gain (or loss) will equal the amount by which the proceeds received
by the holder exceed (or are less than) the holder's adjusted tax basis in the
note. The proceeds received by the holder will include the amount of any cash
and the fair market value of any other property received for the note. The
holder's tax basis in the note will generally equal the amount the holder paid
for the note. The portion of any proceeds that is attributable to accrued
interest will not be taken into account in computing the holder's capital gain
or loss. Instead, that portion will be recognized as ordinary interest income to
the extent that the holder has not previously included the accrued interest in
income. The gain or loss recognized by a holder on a disposition of the note
will be long-term capital gain or loss if the holder held the note for more than
one year. In the case of individuals, long-term capital gains are generally
taxed at a maximum rate of 20%, while the deductibility of capital losses is
subject to limitation.
CONVERSION OF THE NOTES. A U.S. holder generally will not recognize any
income, gain or loss on converting a note into common stock. If the holder
receives cash in lieu of a fractional share of stock, however, the holder will
be treated as if it received the fractional share and then had the fractional
share redeemed for the cash. The holder would recognize gain (or loss) in the
amount by which the cash exceeds (or is less than) the holder's basis
attributable to the fractional share. The holder's basis in the common stock
received on conversion will equal the holder's adjusted basis in the note. The
holder's holding period for the stock will include the period during which the
holder held the note.
DIVIDENDS. If, after converting a note into common stock, a U.S. holder
receives a distribution from us in respect of the stock, the distribution will
be treated as a dividend, taxable to the U.S. holder as ordinary income, to the
extent it is paid from our current or accumulated earnings and profits. If the
distribution exceeds our current and accumulated profits, the excess will be
treated first as a tax-free return of the holder's investment, up to the
holder's basis in our common stock. Any remaining excess will be treated as
capital gain. If the U.S. holder is a U.S. corporation, it would generally be
able to claim a deduction equal to a portion of any dividends received.
The terms of the notes allow for changes in the conversion price of the
notes in certain circumstances. A change in conversion price that allows
noteholders to receive more shares of common stock on conversion may increase
the noteholders' proportionate interests in our earnings and profits or assets.
In that case, the noteholders would be treated as though they received a
dividend paid in stock. Such a constructive stock dividend could be taxable to
the noteholders, although they would not actually receive any cash or other
property. A taxable constructive stock dividend would result, for example, if
the conversion price were adjusted to compensate noteholders for distributions
of cash or property to our stockholders. Not all changes in conversion price
that allow noteholders to receive more stock on conversion, however, increase
the noteholders' proportionate interests in TriQuint. Such a change could simply
prevent the dilution of the noteholders' interests upon a stock split or other
change in capital structure. These changes, if made by a bona fide, reasonable
adjustment formula, are not treated as constructive stock dividends. Conversely,
if an event occurs that dilutes the noteholders' interests and the conversion
price is not adjusted, the resulting increase in the proportionate interests of
our stockholders could be treated as a taxable stock dividend to them. Any
taxable constructive stock dividends resulting from a change to, or failure to
change, the conversion price would be treated like distributions paid in cash or
other property. They would result in ordinary income to the recipient, to the
extent of TriQuint's current or accumulated earnings and profits, with any
excess treated as a tax-free return of capital or as capital gain.
SALE OF COMMON STOCK. A U.S. holder will generally recognize capital gain
or loss on a sale or exchange of common stock. The holder's gain (or loss) will
equal the amount by which the proceeds received by the holder exceed (or are
less than) the holder's adjusted tax basis in the stock. The
43
<PAGE>
proceeds received by the holder will include the amount of any cash and the fair
market value of any other property received for the stock. The gain or loss
recognized by a holder on a sale or exchange of stock will be long-term capital
gain or loss if the holder held the stock for more than one year. In the case of
individuals, long-term capital gains are generally taxed at a maximum rate of 20
percent, while the deductibility of capital losses is subject to limitation.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
TAXATION OF INTEREST. Payments of interest to nonresident persons or
entities are generally subject to U.S. federal income tax at a rate of 30%,
collected by means of withholding by the payor. Payments of interest on the
notes to most Non-U.S. holders, however, will qualify as "portfolio interest,"
and thus will be exempt from the withholding tax, if the holders certify their
nonresident status as described below. The portfolio interest exception will not
apply to payments of interest to a Non-U.S. holder that
- owns, directly or indirectly, our voting stock with 10% or more of the
total voting power, or
- is a "controlled foreign corporation" that is related to TriQuint.
In general, a controlled foreign corporation is a foreign corporation more than
50% of the stock of which (by vote or value) is owned, directly or indirectly,
by one or more U.S. persons that each owns, directly or indirectly, voting stock
with at least 10% of the total voting power.
The portfolio interest exception and several of the special rules for
Non-U.S. holders described below apply only if the holder certifies its
nonresident status. A Non-U.S. holder can meet this certification requirement by
providing a Form W-8BEN to us or our paying agent. If the Non-U.S. holder holds
a note through a financial institution, or other agent acting on the owner's
behalf, the certification requirement will be met if the Non-U.S. holder
provides a Form W-8BEN to the agent and the agent provides to us or our paying
agent a Form W-8IMY along with a copy of the Non-U.S. holder's Form W-8BEN. The
certification requirement can also be met using appropriate substitute forms for
the standard IRS forms. For payments made to a foreign partnership after
December 31, 2000, the certification requirements generally apply to the
partners rather than the partnership.
SALE, EXCHANGE OR REDEMPTION OF NOTES. Non-U.S. holders generally will not
be subject to U.S. federal income tax on any gain realized on the sale,
exchange, or other disposition of notes. This general rule, however, is subject
to several exceptions. For example, the gain would be subject to U.S. federal
income tax if
- the gain is effectively connected with the conduct by the Non-U.S. holder
of a U.S. trade or business,
- the Non-U.S. holder was a citizen or resident of the United States and
thus is subject to special rules that apply to expatriates, or
- the rules of the Foreign Investment in Real Property Tax Act ("FIRPTA")
(described below) treat the gain as effectively connected with a U.S.
trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of notes if
we are, or were within five years before the transaction, a "U.S. real property
holding corporation" ("USRPHC"). In general, we would be a USRPHC if interests
in U.S. real estate comprised most of our assets. We do not believe that we are
a USRPHC or that we will become one in the future. Even if we were a USRPHC, the
FIRPTA rules would apply to a disposition of notes by a Non-U.S. holder only if
the holder owned, directly or indirectly, more than 5% of our common stock
within five years before the holder's disposition of the notes. For this
purpose, the Non-U.S. holder would be treated as owning the stock of TriQuint
that the holder could acquire on conversion of the holder's notes. If all of
these conditions were met, and the FIRPTA rules applied to the sale, exchange,
or other disposition of notes by a
44
<PAGE>
Non-U.S. holder, then any gain recognized by the holder would be treated as
effectively connected with a U.S. trade or business, and would thus be subject
to U.S. federal income tax and withholding.
CONVERSION OF THE NOTES. A Non-U.S. holder generally will not recognize any
income, gain or loss on converting a note into common stock. Any gain recognized
as a result of the holder's receipt of cash in lieu of a fractional share of
stock would also generally not be subject to U.S. federal income tax. See
"Special Tax Rules Applicable to Non-U.S. Holders--Sale of Common Stock," below.
DIVIDENDS. Dividends paid to a Non-U.S. holder on common stock received on
conversion of a note will generally be subject to U.S. withholding tax at a 30%
rate. The withholding tax might not apply, however, or might apply at a reduced
rate, under the terms of a tax treaty between the United States and the Non-U.S.
holder's country of residence. A Non-U.S. holder must demonstrate its
entitlement to treaty benefits by certifying its nonresident status. Some of the
common means of meeting this requirement are described above under "Special Tax
Rules Applicable to Non-U.S. Holders--Taxation of Interest."
SALE OF COMMON STOCK. Non-U.S. holders will generally not be subject to
U.S. federal income tax on any gains realized on the sale, exchange, or other
disposition of common stock. This general rule, however, is subject to
exceptions, some of which are described above under "Special Tax
Rules Applicable to Non-U.S. Holders--Sale, Exchange or Redemption of Notes."
INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS. The
preceding discussion of the tax consequences of the purchase, ownership or
disposition of notes or common stock by a Non-U.S. holder assumes that the
holder is not engaged in a U.S. trade or business. If any interest on the notes,
dividends on common stock, or gain from the sale, exchange or other disposition
of the notes or stock is effectively connected with a U.S. trade or business
conducted by the Non-U.S. holder, then the income or gain will be subject to
U.S. federal income tax at the regular graduated rates. If the Non-U.S. holder
is eligible for the benefits of a tax treaty between the United States and the
holder's country of residence, any "effectively connected" income or gain will
be subject to U.S. federal income tax only if it is also attributable to a
permanent establishment maintained by the holder in the United States. Payments
of dividends that are effectively connected with a U.S. trade or business, and
therefore included in the gross income of a Non-U.S. holder, will not be subject
to the 30% withholding tax. To claim exemption from withholding, the holder must
certify its qualification, which can be done by filing a Form W-8ECI. If the
Non-U.S. holder is a corporation, that portion of its earnings and profits that
are effectively connected with its U.S. trade or business would generally be
subject to a "branch profits tax." The branch profits tax rate is generally 30%,
although an applicable tax treaty might provide for a lower rate.
U.S. FEDERAL ESTATE TAX. The estates of nonresident alien individuals are
subject to U.S. federal estate tax on property with a U.S. situs. The notes will
not be U.S. situs property as long as interest on the notes paid immediately
before the death of the holder would have qualified as portfolio interest,
exempt from withholding tax as described above under "Special Tax Rules
Applicable to Non-U.S. Holders--Taxation of Interest," and would not have been
effectively connected with a U.S. trade or business. Because TriQuint is a U.S.
corporation, our common stock will be U.S. situs property, and therefore will be
included in the taxable estate of a nonresident alien decedent. The U.S. federal
estate tax liability of the estate of a nonresident alien may be affected by a
tax treaty between the United States and the decedent's country of residence.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Code and the Treasury regulations require those who make specified
payments to report the payments to the IRS. Among the specified payments are
interest, dividends and proceeds paid by brokers to their customers. The
required information returns enable the IRS to determine whether the
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<PAGE>
recipient properly included the payments in income. This reporting regime is
reinforced by "backup withholding" rules. These rules require the payors to
withhold tax at a 31% rate from payments subject to information reporting if the
recipient fails to cooperate with the reporting regime by failing to provide his
taxpayer identification number to the payor, furnishing an incorrect
identification number, or repeatedly failing to report interest or dividends on
his returns. The information reporting and backup withholding rules do not apply
to payments to corporations, whether domestic or foreign.
Payments of interest or dividends to individual U.S. holders of notes or
common stock will generally be subject to information reporting, and will be
subject to backup withholding unless the holder provides us or our paying agent
with a correct taxpayer identification number.
The information reporting and backup withholding rules do not apply to
payments that are subject to the 30% withholding tax on dividends or interest
paid to nonresidents, or to payments that are exempt from that tax by
application of a tax treaty or special exception. Therefore, payments of
dividends on common stock, or interest on notes, will generally not be subject
to information reporting or backup withholding. To avoid backup withholding on
dividends paid after December 31, 2000, a Non-U.S. holder will have to certify
its nonresident status. Some of the common means of doing so are described above
under "Special Rules Applicable to Non-U.S. Holders--Taxation of Interest."
Payments made to U.S. holders by a broker upon a sale of notes or common
stock will generally be subject to information reporting and backup withholding.
If, however, the sale is made January 1, 2001, through a foreign office of a
U.S. broker, the sale will be subject to information reporting but not backup
withholding. If the sale is made through a foreign office of a foreign broker,
the sale will generally not be subject to either information reporting or backup
withholding. If the foreign broker is controlled by U.S. persons or engaged in a
U.S. trade or business, information reporting, but not backup withholding, may
apply.
Payments made to Non-U.S. holders by a broker upon a sale of notes or common
stock will not be subject to information reporting or backup withholding as long
as the Non-U.S. holder certifies his nonresident status.
Any amounts withheld from a payment to a holder of notes or common stock
under the backup withholding rules can be credited against any U.S. federal
income tax liability of the holder.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT SUCH INVESTOR'S OWN TAX ADVISOR REGARDING THE PARTICULAR U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND
DISPOSING OF NOTES OR COMMON STOCK OF TRIQUINT, INCLUDING THE CONSEQUENCES OF
ANY PROPOSED CHANGE IN APPLICABLE LAWS.
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<PAGE>
SELLING SECURITYHOLDERS
We originally issued the notes in private placements in February 2000 and
March 2000. The notes were resold by the initial purchasers to qualified
institutional buyers under Rule 144A under the Securities Act and to a limited
number of institutional accredited investors as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act in transactions exempt from registration
under the Securities Act. Selling securityholders may offer and sell the notes
and the underlying common stock pursuant to this prospectus.
The following table contains information as of April 3, 2000, with respect
to the selling securityholders and the principal amount of notes and the
underlying common stock beneficially owned by each selling security holder that
may be offered using this prospectus.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT NOTES THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
- ---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
State of Oregon Equity...................... $8,700,000 2.5% 64,159 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Onyx Capital Management LLC................. 8,500,000 2.5 62,684 *
50 Broadway
Suite 702
New York, New York 10004
Fidelity Financial Trust: Fidelity
Convertible Securities Fund............... 7,440,000 2.2 59,867 *
c/o FMR Corp.
82 Devonshire Street
Boston, MA 02109
PRIM Board.................................. 5,025,000 1.5 37,057 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Bear Stearns & Co., Inc.(3)................. 3,550,000 1.0 25,811 *
245 Park Avenue
New York, NY 10167
White River Securities LLC.................. 3,550,000 1.0 25,811 *
c/o Bear Stearns & Co., Inc.
Global Fund Management
245 Park Avenue
New York, NY 10167
State of Connecticut Combined
Investment Funds.......................... 3,395,000 * 25,036 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT NOTES THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
- ---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Arkansas PERS............................... 3,315,000 * 24,446 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Vanguard Convertible Securities Fund,
Inc....................................... 3,005,000 * 22,160 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
Delaware PERS............................... 2,675,000 * 19,727 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Chrysler Corporation Master
Retirement Trust.......................... 2,655,000 * 19,579 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
BNP Arbitrage SNC........................... 2,500,000 * 18,436 *
555 Croton Road, 4th Floor
King of Prussia, PA 19406
Grace Brothers, Ltd......................... 2,500,000 * 18,436 *
1560 Sherman Avenue
Suite 900
Evanston, IL 60201
Banc of America Securities LLC(3)........... 1,800,000 * 13,274 *
9 West 57th Street
46th Floor
New York, New York 10019
OCM Convertible Trust....................... 1,590,000 * 11,725 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
ICI American Holdings Trust................. 1,425,000 * 10,508 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Starvest Combined Portfolio................. 1,325,000 * 9,771 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT NOTES THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
- ---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
AIG/National Union Fire Insurance........... 1,200,000 * 8,849 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Zeneca Holdings Trust....................... 1,100,000 * 8,112 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Delta Airlines Master Trust................. 1,065,000 * 7,853 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
SG Cowen Securities Corp. (3)............... 1,065,000 * 7,853 *
Financial Square
25th Floor
New York, NY 10005
Bank Austria Cayman Island Ltd.............. 1,000,000 * 7,375 *
c/o Ramius Capital Group
757 Third Avenue
New York, New York 10017
CALAMOS Growth and Income Fund--CALAMOS
Investment Trust.......................... 920,000 * 6,785 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
CALAMOS Market Neutral Fund--CALAMOS
Investment Trust.......................... 750,000 * 5,495 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
KBC Financial Products...................... 750,000 * 5,495 *
120 W. 45th Street
25th Floor
New York, New York 10036
Associated Electric & Gas Insurance Services
Limited................................... 700,000 * 5,162 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT NOTES THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
- ---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
State Employees' Retirement
Fund of the State of Delaware............. 700,000 * 5,162 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
Partner Reinsurance Company Ltd............. 590,000 * 4,351 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
Castle Convertible Fund, Inc................ 500,000 * 3,687 *
One World Trade Center
Suite 9333
New York, NY 10048
Nalco Chemical Company...................... 475,000 * 3,502 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
Consulting Group Capital Market Funds....... 370,000 * 2,729 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563-1493
Motion Picture Industry Health Plan--Active
Member Fund............................... 335,000 * 2,470 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
CALAMOS Global Growth and Income Fund--
CALAMOS Investment Trust.................. 230,000 * 1,696 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
ZCM/HFR Index Management, L.L.C............. 230,000 * 1,696 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
First Republic Bank......................... 185,000 * 1,364 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT NOTES THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
- ---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Motion Picture Industry Health Plan--Retiree
Member Fund............................... 165,000 * 1,216 *
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
Jackson Investment Fund Ltd................. 115,000 * 848 *
c/o Leeds Management Services
(Cayman) Ltd.
One Capital Place
P.O. Box 847
Grand Cayman, Cayman Islands
British West Indies
Aventis Pharmaceuticals..................... 70,000 * 516 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
Island Holdings............................. 65,000 * 479 *
c/o Froley, Revy Investment Co., Inc.
10900 Wilshire Boulevard
Suite 900
Los Angeles, CA 90024
CALAMOS Convertible Portfolio--
CALAMOS Advisors Trust.................... 50,000 * 369 *
c/o CALAMOS Asset Management, Inc.
1111 East Warrenville Road
Naperville, IL 60563
Any other holder of notes or future
transferee, pledgee, donee or successor of
any holder(4)(5)..........................
</TABLE>
- ------------------------
* Less than 1%.
(1) Assumes conversion of all of the holder's notes at a conversion price of
$135.60 per share of common stock. However, this conversion price will be
subject to adjustment as described under "Description of Notes--Right of
Conversion." As a result, the amount of common stock issuable upon
conversion of the notes may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using
38,387,139 shares of common stock outstanding as of April 3, 2000. In
calculating this amount, we treated as outstanding the number of shares
of common stock issuable upon conversion of all of that particular
holder's notes. However, we did not assume the conversion of any other
holder's notes.
(3) Each of Bear Stearns, Banc of America Securities LLC and SG Cowen
Securities Corp. has acted as a underwriter for an issuance of our
securities within the past three years.
(4) Information about other selling security holders will be set forth in
prospectus supplements, if required.
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<PAGE>
(5) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of
notes, do not beneficially own any common stock other than the common
stock issuable upon conversion of the notes at the initial conversion
rate.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information in the above table is presented. Information about the selling
securityholders may change from over time. Any changed information will be set
forth in prospectus supplements.
Because the selling securityholders may offer all or some of their notes or
the underlying common stock from time to time, we cannot estimate the amount of
the notes or underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
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PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and the
underlying common stock offered by this prospectus. The notes and the underlying
common stock may be sold from time to time to purchasers:
- directly by the selling securityholders;
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders or the purchasers of the notes and the underlying
common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
notes and underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
If the selling securityholders were to deemed underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
If the notes and underlying common stock are sold through underwriters or
broker-dealers, the selling securityholders will be responsible for underwriting
discounts or commissions or agent's commissions.
The notes and underlying common stock may be sold in one or more
transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which the
notes and underlying common stock may be listed or quoted at the time of
the sale, including the Nasdaq National Market in the case of the common
stock;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
- through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
notes and underlying common stock in the course of hedging their positions. The
selling securityholders may also sell the notes and underlying common stock
short and deliver notes and underlying common stock to close out short
positions, or loan or pledge notes and underlying common stock to broker-dealers
that in turn may sell the notes and underlying common stock.
To our knowledge, there are currently no plans, arrangement or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes and
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the underlying common stock by the selling securityholders. Selling
securityholders may not sell any or all of the notes and the underlying common
stock offered by them pursuant to this prospectus. In addition, we cannot assure
you that any such selling securityholder will not transfer, devise or gift the
notes and the underlying common stock by other means not described in this
prospectus.
Our common stock trades on the Nasdaq National Market under the symbol
"TQNT". We do not intend to apply for listing of the notes on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be given
as to the development of liquidity or any trading market for the notes. See
"Risk Factors--A public market may not develop for the notes."
There can be no assurance that any selling securityholder will sell any or
all of the notes or underlying common stock pursuant to this prospectus. In
addition, any notes or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying common stock by the
selling securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the notes and the underlying common stock to engage in
market-making activities with respect to the particular notes and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
notes and the underlying common stock and the ability of any person or entity to
engage in market-making activities with respect to the notes and the underlying
common stock.
Pursuant to the registration rights agreement filed as an exhibit to this
registration statement, we and the selling securityholders will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act or will be entitled to contribution in connection with these
liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
TriQuint by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.
EXPERTS
The consolidated financial statements of TriQuint Semiconductor, Inc. as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, have been incorporated by reference herein in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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