-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GjPqCSWzp4Yk0FL3EVlhUT+2SMa9l391sKmU1a9nQrI4mhyYTwcYB6QovmTAtYk4 V4BUC5zuH1fCtURnORoB3g== 0000950131-99-000287.txt : 19990127 0000950131-99-000287.hdr.sgml : 19990127 ACCESSION NUMBER: 0000950131-99-000287 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19990126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOROLA INC CENTRAL INDEX KEY: 0000068505 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 361115800 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-70827 FILM NUMBER: 99512591 BUSINESS ADDRESS: STREET 1: 1303 E ALGONQUIN RD CITY: SCHAUMBURG STATE: IL ZIP: 60196 BUSINESS PHONE: 8475765000 FORMER COMPANY: FORMER CONFORMED NAME: MOTOROLA DELAWARE INC DATE OF NAME CHANGE: 19760414 S-3/A 1 AMENDMENT #1 TO S-3 As filed with the Securities and Exchange Commission on January 26, 1999 Registration No. 333-70827 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT Under the Securities Act of 1933 -------------- Motorola, Inc. Motorola Capital Trust I (Exact name of Registrant as specified in its charter) -------------- Delaware Delaware 36-1115800 (State or other jurisdiction of 51-6509317 incorporation) (I.R.S. Employer Identification No.) -------------- 1303 East Algonquin Road Schaumburg, Illinois 60196 (847) 576-5000 (Address, including zip code, and telephone number, including area code, of Registrants' principal executive offices) -------------- Carl F. Koenemann Executive Vice President and Chief Financial Officer 1303 East Algonquin Road Schaumburg, Illinois 60196 (847) 576-5000 (Name, address, including zip code, and telephone number, including area code, of agent for service) With copies to: Carol H. Forsyte Gerald T. Nowak Michael A. Campbell Senior Corporate Counsel Kirkland & Ellis Mayer, Brown & Platt 1303 East Algonquin Road 200 East Randolph Drive 190 South LaSalle Street Schaumburg, Illinois Chicago, Illinois Chicago, Illinois 60603 60196 (312) 861-2000 (312) 782-0600 (847) 576-7646 -------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box. [_] -------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. This + +prospectus is not an offer to sell these securities and it is not soliciting + +an offer to buy these securities in any state where the offer or sale is not + +permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion Preliminary Prospectus dated January 26, 1999 PROSPECTUS 20,000,000 Preferred Securities Motorola Capital Trust I % Trust Originated Preferred SecuritiesSM ("TOPrSSM") (Liquidation Amount $25 per Preferred Security) Fully and Unconditionally Guaranteed by [MOTOROLA, INC. LOGO] ------------ A brief description of the preferred securities can be found under "Summary Information--Q&A" in this prospectus. We urge you to carefully read the "Risk Factors" section beginning on page 11, where we describe specific risks associated with these preferred securities, along with the rest of this prospectus before you make your investment decision. The preferred securities have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the trading symbol "MOT PrA." We expect that the preferred securities will begin trading on the New York Stock Exchange within 30 days after they are first issued. ------------
Per Preferred Security Total ------------- ----- Public Offering Price (1)....................... $ $ Underwriting Commission to be paid by Motorola, Inc. (2)....................................... $ $ Proceeds to the Trust........................... $ $
(1) Plus accrued distributions from , 1999, if settlement occurs after that date. (2) For sales of 10,000 or more preferred securities to a single purchaser, the underwriting commission will be $ per preferred security and, to the extent of such sales, the total underwriting commission will be less than that set forth in the table above. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The preferred securities will be ready for delivery in book-entry form only through The Depository Trust Company on or about , 1999. ------------ Merrill Lynch & Co. A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. Morgan Stanley Dean Witter PaineWebber Incorporated Prudential Securities Incorporated Salomon Smith Barney ------------ The date of this prospectus is , 1999. SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co., Inc. TABLE OF CONTENTS Where You Can Find More Information....................................... 3 Summary Information--Q&A.................................................. 5 Risk Factors.............................................................. 11 Motorola Capital Trust I.................................................. 16 Motorola.................................................................. 18 Recent Developments....................................................... 20 Use of Proceeds........................................................... 21 Ratios of Earnings to Fixed Charges....................................... 21 Capitalization............................................................ 22 Selected Financial Data................................................... 23 Description of the Preferred Securities................................... 24 Description of the Subordinated Debentures................................ 36 Description of the Trust Guarantee........................................ 45 Effect of Obligations Under the Subordinated Debentures and the Trust Guarantee................................................................ 48 United States Federal Income Taxation..................................... 50 Underwriting.............................................................. 55 Legal Matters............................................................. 57 Experts................................................................... 57 Index of Defined Terms.................................................... 58
----------------- You should rely only on the information incorporated by reference or set forth in this prospectus. Neither we nor the underwriters have authorized anyone else to provide you with different information. We are only offering these securities in states where the offer is permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front cover. 2 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. Our SEC filings are also available at the office of the New York Stock Exchange (the "NYSE"). For further information on obtaining copies of our public filings at the NYSE, you should call (212) 656-5060. We "incorporate by reference" into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus and information that we file subsequently with the SEC will automatically update this prospectus. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the initial filing of the registration statement that contains this prospectus and prior to the time that we sell all the securities offered by this prospectus: . Motorola, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (the "Form 10-K"). . Motorola, Inc.'s Quarterly Reports on Form 10-Q for the quarters ended March 28, 1998, June 27, 1998 and September 26, 1998. . Motorola, Inc.'s Current Reports on Form 8-K dated June 4, 1998 and November 5, 1998. You may request a copy of these filings (other than exhibits, unless that exhibit is specifically incorporated by reference into that filing) at no cost, by writing to or telephoning us at the following address: A. Peter Lawson Secretary, Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Telephone: (847) 576-5000 There are no separate financial statements of Motorola Capital Trust I (the "Trust") in this prospectus. We do not believe such financial statements would be helpful because: . The Trust is a direct wholly-owned subsidiary of Motorola, Inc., which files consolidated financial information under the Exchange Act. . The Trust does not have any independent operations other than issuing the Preferred Securities and Common Securities and purchasing the Subordinated Debentures (each as defined under "Summary Information--Q&A"). . The obligations of Motorola, Inc. under the Subordinated Debentures and the Trust Guarantee (as defined under "Summary Information--Q&A--What is the nature of Motorola's guarantee of the Preferred Securities?") have the effect of providing a full, irrevocable and unconditional guarantee of the Trust's obligations under the Preferred Securities. Holders of Preferred Securities may, under certain circumstances, enforce these obligations directly against Motorola, Inc. See "Description of the Trust Guarantee" and "Effect of Obligations Under the Subordinated Debentures and the Trust Guarantee." 3 The Trust is not currently subject to the information reporting requirements of the Exchange Act. The Trust will become subject to such requirements upon the effectiveness of the registration statement that contains this prospectus, although it intends to seek and expects to receive an exemption therefrom. If the Trust did not receive such an exemption, the expenses of operating the Trust would increase, as would the likelihood that Motorola would exercise its option to liquidate the Trust early. See "Description of the Preferred Securities--Distribution of the Subordinated Debentures." 4 SUMMARY INFORMATION--Q & A This summary includes questions and answers that highlight selected information from the prospectus to help you understand the Trust Originated Preferred Securities (the "Preferred Securities"). This summary may not contain all the information that may be important to you. You should carefully read the prospectus to fully understand the terms of the Preferred Securities, as well as the tax and other considerations that are important to you in making a decision about whether to invest in the Preferred Securities. You should pay special attention to the "Risk Factors" section to determine whether an investment in the Preferred Securities is appropriate for you. You should also read the documents described under "Where You Can Find More Information" to learn more about Motorola's business, financial condition and results of operations. As used in this prospectus, the term "Motorola" refers to Motorola, Inc. and not to any of its consolidated subsidiaries, and the term the "Company" refers to Motorola and its consolidated subsidiaries. Certain other terms used in this summary are defined elsewhere in this prospectus. See "Index of Defined Terms" for a cross reference to the location in this prospectus where such terms are defined. What are the Preferred Securities? Each Preferred Security represents a preferred undivided beneficial interest in the assets of the Trust. The Trust will offer 20,000,000 Preferred Securities to the public at a price of $25 per Preferred Security and will sell its common securities (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities") to Motorola. The Trust will use the proceeds from these sales to buy a series of % Deferrable Interest Junior Subordinated Debentures due , 2039 (the "Subordinated Debentures") from Motorola with the same payment terms as the Preferred Securities. Who is the Trust? The Trust is a Delaware statutory business trust recently created by Motorola for the sole purpose of issuing the Trust Securities and investing the proceeds in the Subordinated Debentures and engaging in incidental activities. The Trust's principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196 and its telephone number at that address is (847) 576-5000. There are four trustees of the Trust (the "Trustees"). Two of the Trustees are officers of Motorola. Harris Trust and Savings Bank ("Harris") will act as the property trustee of the Trust (the "Property Trustee") and First Union Trust Company, National Association ("First Union"), will act as the Delaware trustee of the Trust (the "Delaware Trustee"). Harris will also act as trustee under the Indenture (as defined under "Description of the Subordinated Debentures") governing the Subordinated Debentures (the "Indenture Trustee"). Who is Motorola? Motorola is a global leader in advanced electronic systems and services. It liberates the power of technology by creating software-enhanced products that provide integrated customer solutions and Internet access via wireless and satellite communications, as well as computing, networking and automotive electronics. Motorola also provides essential digital building blocks in the form of embedded semiconductors, controls and systems. The Company's net sales in 1998 were $29.4 billion. Its principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196 and its telephone number at that address is (847) 576-5000. 5 What distributions will you receive? If you purchase the Preferred Securities, you will be entitled to receive cumulative cash distributions at an annual rate of % of the liquidation amount of $25 per Preferred Security. Distributions will accumulate from , 1999. Distributions will be paid quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on , 1999, subject to deferral as described below. The initial cash distribution payable on , 1999, will equal $ for each $25 Preferred Security. Subsequent cash distributions will equal $ for each $25 Preferred Security. Can distributions be deferred? So long as no event of default under the Subordinated Debentures has occurred and is continuing, Motorola has the right, at one or more times, to defer interest payments on the Subordinated Debentures for up to 20 consecutive quarters, but not beyond the maturity date of the Subordinated Debentures. If, and to the extent that, Motorola defers interest payments on the Subordinated Debentures, the Trust will also defer distributions on the Preferred Securities. During any deferral period distributions will not be paid on a current basis. However, you will still accumulate distributions at an annual rate of % of the liquidation amount of $25 per Preferred Security, plus you will accumulate additional distributions at the same rate, compounded quarterly, on any unpaid distributions (to the extent permitted by law). During any period in which Motorola defers interest payments on the Subordinated Debentures, Motorola will not be permitted to (with limited exceptions described under "Description of the Subordinated Debentures--Option to Extend Interest Payment Period"): . declare or pay dividends or make other distributions on its capital stock; . redeem, purchase or acquire, or make liquidation payments with respect to, its capital stock; . pay interest, principal or premium on, or repay, repurchase or redeem, any of its debt securities that rank equal with or junior to the Subordinated Debentures; or . make guarantee payments with respect to the foregoing. If Motorola defers payments of interest on the Subordinated Debentures, the Preferred Securities will be treated as being issued with original issue discount ("OID") for United States federal income tax purposes. This means you will be required to recognize interest income with respect to distributions (even if they are deferred) and include such amounts in your gross income for United States federal income tax purposes before you receive any cash distributions relating to such interest income. See "Risk Factors--Motorola's Ability to Defer Interest Payments Has Tax Consequences For You and May Affect the Trading Price of the Preferred Securities," "Description of the Subordinated Debentures--Option to Extend Interest Payment Period" and "United States Federal Income Taxation." What will affect the distributions you receive? The ability of the Trust to pay distributions to you is entirely dependent on its receipt of payments on the Subordinated Debentures from Motorola. What are the Subordinated Debentures? The Subordinated Debentures are long-term loans made by the Trust to Motorola. Motorola's obligations under the Subordinated Debentures are subordinated to its Senior Indebtedness (as defined 6 under "Description of the Subordinated Debentures--Subordination") and will be effectively subordinated to all existing and future liabilities and obligations of Motorola's subsidiaries. As of December 31, 1998, the aggregate amount of Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries that would have effectively ranked senior to the Subordinated Debentures was approximately $10.6 billion. When do the Subordinated Debentures mature? The Subordinated Debentures mature on , 2039, which date may be extended at any time at the election of Motorola for one or more periods, but in no event to a date later than the earlier of (i) , 2048 or (ii) the Interest Deduction Date (as defined under "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date"), provided certain conditions are met. The maturity date may be shortened to a date not earlier than , 2004 if Motorola chooses to liquidate the Trust and distribute the Subordinated Debentures. See "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date." The Preferred Securities may be redeemed, in whole or in part, if certain tax events occur or if there is a change in the Investment Company Act of 1940 (the "1940 Act") that requires the Trust to register under the 1940 Act. See "Description of the Preferred Securities--Special Event Redemption." When can the Preferred Securities be redeemed? The Trust must redeem the Preferred Securities when the Subordinated Debentures are paid at maturity or when and to the extent they are redeemed by Motorola. Motorola has the option at any time on or after , 2004 to redeem the Subordinated Debentures, in whole or in part. In addition, Motorola may redeem the Subordinated Debentures at any time at its option, in whole or in part, if certain tax events occur or if there is a change in the 1940 Act that requires the Trust to register under that law. Upon any redemption, you will receive the liquidation amount of $25 per Preferred Security plus any unpaid distributions to the date of redemption (the "Redemption Price"). See "Description of the Preferred Securities--Special Event Redemption." What is the nature of Motorola's guarantee of the Preferred Securities? Motorola's obligations relating to the Preferred Securities include: . its obligations to make payments on the Subordinated Debentures; . its obligations under the trust guarantee (the "Trust Guarantee"); and . its obligations under the Declaration (as defined under "Motorola Capital Trust I"). Taken together, these obligations represent a full and unconditional guarantee of amounts due under the Preferred Securities, subject only to the limitations described in this prospectus. For a discussion of Motorola's obligations listed above, see "Description of the Trust Guarantee" and "Effect of Obligations Under the Subordinated Debentures and the Trust Guarantee." The Trust Guarantee will not apply to any payment of distributions on the Preferred Securities except to the extent the Trust shall have funds available therefor. If Motorola does not make interest or principal payments on the Subordinated Debentures, the Trust will not pay distributions on the Preferred Securities and will not have sufficient funds available to make such distributions. As a result, you will not be able to rely upon the Trust Guarantee for payment of these amounts. Instead, you or the Property Trustee may enforce the rights of the Trust under the Subordinated Debentures directly against Motorola. See "Risk Factors--Payments on the Preferred Securities Are Entirely 7 Dependent on Motorola Making Payments on the Subordinated Debentures; The Trust Guarantee Covers Payments Only if the Trust Has Cash Available." Motorola's obligations under the Subordinated Debentures and the Trust Guarantee are subject to payment on its Senior Indebtedness, which includes obligations under all outstanding series of its Liquid Yield Option(TM) Notes ("LYONs(TM)"), and will be effectively subordinated to all existing and future liabilities and obligations of Motorola's subsidiaries. As of December 31, 1998, the aggregate amount of Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries that would have effectively ranked senior to the Subordinated Debentures was approximately $10.6 billion. When can the Trust be liquidated? Motorola will have the right at any time to liquidate the Trust and cause the Subordinated Debentures to be distributed to the holders of the Trust Securities in liquidation of the Trust. What happens if the Trust is liquidated and the Subordinated Debentures are distributed? If Motorola elects to liquidate the Trust and thereby causes the Subordinated Debentures to be distributed to holders of the Trust Securities in liquidation of the Trust, Motorola shall have the right to shorten the maturity of such Subordinated Debentures to a date not earlier than , 2004. In addition, Motorola would retain the right to extend the maturity of such Subordinated Debentures to a date not later than the earlier of (i) , 2048 or (ii) the Interest Deduction Date, provided, that it can extend the maturity only if certain conditions are met on the date Motorola exercises such right and on the Maturity Date (as defined under "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date") in effect prior to such proposed extension. If the Subordinated Debentures are distributed, Motorola will use its best efforts to list them on the NYSE, or such other exchange on which the Preferred Securities are then listed. What happens if the Trust is liquidated and the Subordinated Debentures are not distributed? In the event of the involuntary or voluntary liquidation, dissolution, winding up or termination of the Trust, the holders of the Preferred Securities will be entitled to receive, for each Preferred Security, a liquidation amount of $25 plus accrued and unpaid distributions thereon (including interest thereon) to the date of payment (the "Liquidation Distribution"), unless, in connection with such liquidation, dissolution, winding up or termination, the Subordinated Debentures are distributed to the holders of the Preferred Securities. What is an event of default and what are the consequences? The following are events of default under both the Indenture and the Declaration: . Motorola's failure to pay principal of (or premium, if any) on the Subordinated Debentures when due; . Motorola's failure to pay any installment of interest on the Subordinated Debentures when due (other than pursuant to its deferral rights), which continues for 30 days; . Motorola's failure to perform any other covenant in the Indenture which continues for 60 days after notice; and . certain bankruptcy, insolvency or reorganization events. 8 If any of these events of default occurs and is continuing, either the Indenture Trustee or the holders of at least 25% of the principal amount of the Subordinated Debentures may declare the principal of and interest on the Subordinated Debentures to be due and payable immediately, unless the event of default is the result of certain bankruptcy, insolvency or reorganization events, in which case the principal amount of and interest on the Subordinated Debentures will automatically become due and payable immediately. Since the Trust initially will hold all of the Subordinated Debentures, upon an event of default, the Property Trustee will have the authority to declare the principal of and interest on the Subordinated Debentures due and payable. If the Property Trustee fails to enforce its rights, any holder of the Preferred Securities may proceed directly against Motorola to enforce the Property Trustee's rights. In addition, if the event of default arises due to the failure of Motorola to pay principal or interest on the Subordinated Debentures, any holder of Preferred Securities may proceed directly against Motorola to collect its pro rata share of unpaid principal and interest. Holders of Preferred Securities have similar rights in the event of a default by Motorola under the Trust Guarantee. The holders of a majority of the principal amount of the Subordinated Debentures may, under certain circumstances, rescind and annul any acceleration as a result of an event of default. See "Description of the Preferred Securities--Declaration Events of Default" and "--Voting Rights" and "Description of the Subordinated Debentures--Indenture Events of Default." If an event of default has occurred under the Declaration or if Motorola has defaulted on its obligations under the Trust Guarantee, Motorola will not be permitted to (with limited exceptions described under "Description of the Trust Guarantee--Certain Covenants of Motorola"): . declare or pay dividends or make other distributions on its capital stock; . redeem, purchase or acquire, or make liquidation payments with respect to, its capital stock; . pay interest, principal or premium on, or repay, repurchase or redeem, any of its debt securities that rank equal with or junior to the Subordinated Debentures; or . make guarantee payments with respect to the foregoing. Will you have voting rights? Generally, holders of the Preferred Securities will not have any voting rights, except under the limited circumstances described under "Description of the Preferred Securities--Voting Rights." The holders of a majority in liquidation amount of the Preferred Securities, however, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or direct the exercise of any trust or power conferred upon the Property Trustee. Will you receive a certificate representing the Preferred Securities? No. The Preferred Securities will be represented by a global security that will be deposited with and registered in the name of The Depository Trust Company, New York, New York ("DTC") or its nominee. This means that you will not receive a certificate for the Preferred Securities. Where will the Preferred Securities be listed? The Preferred Securities have been approved for listing on the NYSE, subject to official notice of issuance, under the trading symbol "MOT PrA." We expect that the Preferred Securities will begin trading on the NYSE within 30 days after they are first issued. 9 How will the proceeds be used? All of the proceeds of the sale of the Preferred Securities, together with the proceeds of the sale of the Common Securities to Motorola, will be invested by the Trust in the Subordinated Debentures. Motorola will, in turn, use the proceeds from the sale of the Subordinated Debentures to repay short- term indebtedness and for general corporate purposes. 10 RISK FACTORS Your investment in the Preferred Securities will involve certain risks. You should carefully read the following risk factors and the other sections of this prospectus, and the documents incorporated by reference herein, before purchasing any Preferred Securities. You should also consider risks relating to Motorola's business, as described in our 1998 Proxy Statement on pages F-8 and F-9, in our other SEC filings and elsewhere in this prospectus. Motorola's Obligations under the Trust Guarantee and the Subordinated Debentures are Subordinated Motorola's obligations under the Trust Guarantee are unsecured and will rank in priority of payment: . junior to all of Motorola's other liabilities, except those liabilities made equal with or subordinate to such obligations by their terms; . equal with Motorola's most senior preferred and preference stock now or hereafter issued and equal with Motorola's obligations under other similar trust guarantees; and . senior to Motorola's common stock. This means that Motorola cannot make any payments on the Trust Guarantee if it defaults on a payment of any of its other liabilities, except those liabilities made equal with or subordinate to the Trust Guarantee by their terms. In the event of the bankruptcy, liquidation or dissolution of Motorola, its assets would be available to pay obligations under the Trust Guarantee only after all payments had been made on its other liabilities, except those liabilities made equal with or subordinate to the Trust Guarantee by their terms. Motorola's obligations under the Subordinated Debentures are unsecured and will rank junior in priority of payment to Motorola's Senior Indebtedness (whether now existing or hereafter incurred) and effectively will rank junior to all existing and future liabilities and obligations of Motorola's subsidiaries. This means that Motorola cannot make any payments of principal (including redemption payments) or interest on the Subordinated Debentures if it defaults on a payment on its Senior Indebtedness. In the event of the bankruptcy, liquidation or dissolution of Motorola, its assets would be available to pay obligations under the Subordinated Debentures only after all payments had been made on its Senior Indebtedness. At December 31, 1998, the aggregate amount of Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries that would have effectively ranked senior to the Subordinated Debentures was approximately $10.6 billion. The Preferred Securities, the Subordinated Debentures and the Trust Guarantee do not limit the ability of Motorola or any of its subsidiaries to incur additional indebtedness, including indebtedness that ranks senior to the Subordinated Debentures and the Trust Guarantee. For more information please refer to "Description of the Trust Guarantee--Status of the Trust Guarantee" and "Description of the Subordinated Debentures--Subordination." The Subordinated Debentures and the Trust Guarantee will be obligations exclusively of Motorola. Since the operations of Motorola are partially conducted through subsidiaries, its cash flow and consequent ability to service debt, including the Subordinated Debentures, and to satisfy its other obligations, including those under the Trust Guarantee, are partially dependent upon the earnings of its subsidiaries. The subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Subordinated Debentures or the Trust Guarantee or to make funds available therefor, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to Motorola by its subsidiaries may be subject to statutory or contractual restrictions, are contingent upon the earnings of those subsidiaries and are subject to various business considerations. 11 Any right of Motorola to receive assets of any of its subsidiaries upon their liquidation or reorganization (and the right of the holder(s) of the Subordinated Debentures or a party seeking to enforce the Trust Guarantee to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that Motorola is itself recognized as a creditor of such subsidiary, in which case the claims of Motorola would be subordinate to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by Motorola. As of December 31, 1998, Motorola's subsidiaries had outstanding approximately $4.0 billion of liabilities. Payments on the Preferred Securities Are Entirely Dependent on Motorola Making Payments on the Subordinated Debentures; The Trust Guarantee Covers Payments Only if the Trust Has Cash Available The ability of the Trust to timely pay distributions on the Preferred Securities and the Liquidation Distribution is entirely dependent upon Motorola's making the related payments on the Subordinated Debentures when due. If Motorola defaults on its obligation to pay principal of or interest on the Subordinated Debentures, the Trust will not have sufficient funds to pay distributions or the $25 per Preferred Security Liquidation Distribution. In those circumstances, you will not be able to rely upon the Trust Guarantee for payment of these amounts. Instead, you may directly sue Motorola or seek other remedies to collect your pro rata share of payments owed or rely on the Property Trustee to enforce the Trust's rights under the Subordinated Debentures. For more information, please refer to "Description of the Subordinated Debentures--Subordination" and "Description of the Trust Guarantee--Status of the Trust Guarantee." There Are Limitations Regarding the Enforcement of Certain Rights by Holders of the Preferred Securities If an event of default under the Subordinated Debentures occurs and is continuing, such event would also be an event of default under the Preferred Securities. In that case, the holders of the Preferred Securities would rely on the enforcement by the Property Trustee of its rights as holder of the Subordinated Debentures against Motorola. The holders of a majority in liquidation amount of the Preferred Securities will have the right to direct the Property Trustee to exercise its remedies, and if the Property Trustee does not enforce its rights to the fullest extent permitted by law, any holder of Preferred Securities may take action directly against Motorola to enforce the Property Trustee's rights. If an event of default under the Preferred Securities occurs that is attributable to Motorola's failure to pay interest or principal on the Subordinated Debentures, any holder of the Preferred Securities may proceed directly against Motorola to collect its pro rata share of unpaid principal and interest. The holders of Preferred Securities will not be able to exercise directly any other remedies available to the holders of the Subordinated Debentures unless the Property Trustee fails to do so. See "Description of the Preferred Securities--Declaration Events of Default" and "Description of the Subordinated Debentures--Indenture Events of Default." Motorola's Ability to Defer Interest Payments Has Tax Consequences for You and May Affect the Trading Price of the Preferred Securities So long as no event of default under the Subordinated Debentures has occurred and is continuing, Motorola has the right, at one or more times, to defer interest payments on the Subordinated Debentures for up to 20 consecutive quarters, but not beyond the maturity date of the Subordinated Debentures. If Motorola defers interest payments on the Subordinated Debentures, the Trust will also defer distributions on the Preferred Securities. During this deferral period, you will still accumulate 12 distributions at an annual rate of % of the liquidation amount of $25 per Preferred Security, plus you will accumulate additional distributions at the same rate, compounded quarterly, on any unpaid distributions (to the extent permitted by law). During a deferral period, you will be required to accrue interest income (in the form of OID) for United States federal income tax purposes in respect of your pro-rata share of the Subordinated Debentures. As a result, you must include the accrued interest in your gross income for United States federal income tax purposes prior to your receiving cash. You will not receive the cash distribution related to any accrued and unpaid interest from the Trust if you sell the Preferred Securities before the end of any deferral period. During a deferral period, accrued but unpaid distributions will increase your tax basis in the Preferred Securities. If you sell the Preferred Securities during a deferral period, your increased tax basis will decrease the amount of any capital gain or increase the amount of any capital loss that you may have otherwise realized on the sale. A capital loss, except in certain limited circumstances, cannot be applied to offset ordinary income. Motorola has no current intention of exercising its right to defer interest payments on the Subordinated Debentures. However, if Motorola exercises this right in the future, the market price of the Preferred Securities may not fully reflect the value of accrued but unpaid interest on the Subordinated Debentures. If you sell the Preferred Securities during an interest deferral period, you may receive a lower return on your investment than someone who continued to hold the Preferred Securities. See "United States Federal Income Taxation" for more information regarding the tax consequences of purchasing the Preferred Securities. Preferred Securities May Be Redeemed Before , 2004 if a Special Event Occurs The occurrence of (i) certain adverse tax consequences to the Trust or Motorola or (ii) the Trust being considered an "investment company" under the 1940 Act would constitute a "Special Event." At any time a Special Event occurs and is continuing, Motorola has the right to redeem the Subordinated Debentures, in whole or in part. The redemption of the Subordinated Debentures will cause a mandatory redemption of an equivalent amount of the Trust Securities on a pro rata basis within 90 days of the event at an amount equal to the Redemption Price of the Trust Securities. See "Description of the Preferred Securities--Special Event Redemption" for more information. Preferred Securities May Be Redeemed After , 2004 At Motorola's Option At the option of Motorola, the Subordinated Debentures may be redeemed, in whole or in part, at any time on or after , 2004, at an amount equal to the Redemption Price. See "Description of the Subordinated Debentures-- Optional Redemption." You should assume that Motorola will exercise its redemption option if Motorola is able to refinance its obligations at a lower interest rate or it is otherwise beneficial to Motorola to redeem the Subordinated Debentures. If the Subordinated Debentures are redeemed, the Trust must redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of Subordinated Debentures so redeemed. See "Description of the Preferred Securities--Mandatory Redemption." The Maturity Date of the Preferred Securities Could Be Extended Motorola also has the option to extend the maturity date of the Subordinated Debentures for one or more periods, but in no event to a date later than the earlier of (i) , 2048 and (ii) the Interest Deduction Date, provided certain conditions are met. See "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date." You should assume that Motorola will exercise its option to extend the term of the Subordinated Debentures if Motorola is unable to refinance its obligations at a lower interest rate or it is otherwise beneficial to Motorola to extend the maturity of 13 the Subordinated Debentures. The Preferred Securities will not be redeemed until the Subordinated Debentures have been repaid or redeemed. See "Description of the Preferred Securities--Mandatory Redemption." Distribution of the Subordinated Debentures May Have An Adverse Effect on Market Price and May Have Tax Consequences for You The Trust may be terminated at any time before its expiration on , 2054, at Motorola's option. As a result, and subject to the terms of the Declaration, the Trustees may distribute the Subordinated Debentures to the holders of the Trust Securities. Although Motorola has agreed to use its best efforts to list the Subordinated Debentures on the NYSE, or such other exchange on which the Preferred Securities are then listed, if this occurs, there can be no assurance that the Subordinated Debentures will be approved for listing or that a liquid trading market will develop for the Subordinated Debentures. If the Trustees distribute the Subordinated Debentures after the dissolution of the Trust, Motorola may shorten the maturity of the Subordinated Debentures to a date not earlier than , 2004. In addition, Motorola would retain the right to extend the maturity of such Subordinated Debentures to any date up to the earlier of (i) , 2048 and (ii) the Interest Deduction Date, provided, that it can only extend the maturity if certain conditions are met. See "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date." Under current United States federal income tax laws, a distribution of the Subordinated Debentures to you upon the dissolution of the Trust would not be a taxable event to you. Nevertheless, if the Trust is classified for United States federal income tax purposes as an association taxable as a corporation at the time it is dissolved, the distribution of the Subordinated Debentures would be a taxable event to you. In addition, if there is a change in law, a distribution of the Subordinated Debentures upon the dissolution of the Trust could be a taxable event to you. See "United States Federal Income Taxation-- U.S. Holders--Receipt of Subordinated Debentures or Cash Upon Liquidation of the Trust" where we discuss applicable United States federal income tax consequences. Motorola cannot predict the market prices for the Subordinated Debentures that may be distributed. Accordingly, the Subordinated Debentures that you receive upon a distribution or the Preferred Securities you hold pending such a distribution may trade at a discount to the price that you paid to purchase the Preferred Securities. Because you may receive Subordinated Debentures, you must make an investment decision with regard to the Subordinated Debentures in addition to the Preferred Securities. You should carefully review all the information regarding the Subordinated Debentures contained in this prospectus. Motorola has no current intention of causing the termination of the Trust and the distribution of the Subordinated Debentures. However, there are no restrictions on its ability to do so at any time. Motorola anticipates that it would consider exercising this right in the event that expenses associated with maintaining the Trust were substantially greater than currently expected, such as if a Special Event occurred or if the Trust did not, as expected, receive an exemption from the information reporting requirements of the Exchange Act, or if the accounting treatment currently given to securities such as the Preferred Securities and the Subordinated Debentures were changed such that such securities were treated as liabilities for financial reporting purposes. See "Motorola Capital Trust I--Accounting Treatment." Motorola cannot predict other circumstances under which this right would be exercised. Limited Voting Rights Holders of Preferred Securities will have limited voting rights primarily in connection with directing the activities of the Property Trustee as the holder of the Subordinated Debentures and will not be entitled to vote to appoint, remove or replace, or to increase or decrease the number of Trustees, which 14 voting rights are vested exclusively in the holder of the Common Securities. See "Description of the Preferred Securities--Voting Rights." Potential Tax Law Changes From time to time, certain tax law changes have been proposed that would deny interest deductions to corporate issuers of debt instruments with terms that include certain of the terms of the Subordinated Debentures. In addition, the Internal Revenue Service ("IRS") has challenged taxpayers' treatment as indebtedness of securities issued with characteristics similar to the Subordinated Debentures. To date, such tax law change proposals have not been enacted and the only known challenge that has advanced as far as litigation was settled short of trial, with a resolution favorable to the taxpayer's position. However, if any similar tax law change were enacted or any such challenge by the IRS were upheld, such event could give rise to a Tax Event (as defined under "Description of the Preferred Securities--Special Event Redemption") which could result in an early redemption of the Preferred Securities. See "Description of the Preferred Securities--Special Event Redemption." Absence of Prior Public Market Prior to this offering, there has been no public market for the Preferred Securities. Although the Preferred Securities have been approved for listing on the NYSE, subject to official notice of issuance, there can be no assurance that an active trading market will develop. Furthermore, even if such a market develops, there can be no assurance that the market price will equal or exceed the public offering price set forth on the cover page of this prospectus. The price at which the Preferred Securities may trade may not fully reflect the value of any accumulated but unpaid distributions on the Preferred Securities. In addition, in the event that Motorola exercised its right to defer payment on the Subordinated Debentures, the market price of the Preferred Securities may be adversely affected. 15 MOTOROLA CAPITAL TRUST I General The Trust is a statutory business trust formed under Delaware law pursuant to (i) a declaration of trust to be amended and restated on the closing date of this offering (as so amended and restated, the "Declaration"), executed by Motorola, as sponsor (the "Sponsor"), and the Trustees of the Trust and (ii) a certificate of trust, as filed with the Secretary of State of the State of Delaware on January 19, 1999. The Declaration will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities, the purchasers thereof will own all of the Preferred Securities. See "Description of the Preferred Securities--Book-Entry Issuance--The Depository Trust Company." Motorola will directly or indirectly acquire all of the issued and outstanding Common Securities, which will be in an aggregate liquidation amount equal to at least 3% of the total capital of the Trust. The Trust exists for the exclusive purposes of (i) issuing the Trust Securities representing undivided beneficial interests in the assets of the Trust, (ii) investing the gross proceeds of the Trust Securities in the Subordinated Debentures and (iii) engaging in only those other activities necessary, appropriate, convenient or incidental thereto. The Trust has a term of approximately 55 years, but may be terminated earlier as provided in the Declaration. Pursuant to the Declaration, the number of Trustees initially is four. Two of the Trustees (the "Regular Trustees") will be persons who are officers of Motorola. The third Trustee will be a financial institution unaffiliated with Motorola that will serve as Property Trustee under the Declaration and as indenture trustee for the purposes of the Trust Indenture Act. The fourth Trustee will be a legal entity which maintains its principal place of business in the State of Delaware and meets the requirements of applicable law. Harris will act as the Property Trustee and First Union will act as the Delaware Trustee, in each case until removed or replaced by the holder of the Common Securities. For purposes of compliance with the provisions of the Trust Indenture Act, Harris will also act as trustee under the Trust Guarantee (in such capacity, the "Guarantee Trustee") and as Indenture Trustee. See "Description of the Trust Guarantee." The Trust's business and affairs will be conducted by the Trustees. The Property Trustee will hold title to the Subordinated Debentures for the benefit of the Trust and the holders of the Trust Securities and, so long as the Subordinated Debentures are held by the Trust, the Property Trustee will have the power to exercise all rights, powers and privileges of a holder of Subordinated Debentures under the Indenture. In addition, the Property Trustee will maintain exclusive control of a segregated non-interest bearing bank account (the "Property Trustee Account") to hold all payments made in respect of the Subordinated Debentures for the benefit of the holders of the Trust Securities. The Property Trustee will make payments of distributions and payments on liquidation, redemption and otherwise to the holders of the Trust Securities out of funds from the Property Trustee Account. The Guarantee Trustee will hold the Trust Guarantee for the benefit of the holders of the Preferred Securities. Motorola, as the direct or indirect holder of all the Common Securities, will have the right to appoint, remove or replace any Trustee (subject to the limitations set forth in the Declaration) and to increase or decrease the number of Trustees, provided that the number of Trustees shall be at least three. Motorola will pay all fees, expenses, debts and obligations (other than with respect to the Trust Securities) related to the Trust and the offering of the Trust Securities. The rights of the holders of the Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"), the Indenture and the Trust Indenture Act. See "Description of the Preferred Securities." 16 Accounting Treatment The financial statements of the Trust will be reflected in Motorola's consolidated financial statements, with the Preferred Securities shown as "company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company-guaranteed debentures" in the same caption as minority interest in consolidated subsidiaries. A footnote to Motorola's audited financial statements will include a statement that the Trust is wholly- owned by Motorola and that the sole asset of the Trust is the Subordinated Debentures (indicating the principal amount, interest rate and maturity date thereof). See "Capitalization." 17 MOTOROLA Motorola is a corporation organized under the laws of the State of Delaware as the successor to an Illinois corporation organized in 1928. Motorola is a global leader in advanced electronic systems and services. It liberates the power of technology by creating software-enhanced products that provide integrated customer solutions and Internet access via wireless and satellite communications, as well as computing, networking and automotive electronics. Motorola also provides essential digital building blocks in the form of embedded semiconductors, controls and systems. The Company's net sales in 1998 were $29.4 billion."Motorola" is a registered trademark. Cellular Products The Cellular Subscriber Sector ("CSS") primarily designs, manufactures, distributes, markets and services subscriber radio-telephone equipment for cellular and personal communications networks. In addition, CSS resells cellular line service in the United States. CSS's products include mobile, personal and wearable cellular telephones and related accessories. The Cellular Infrastructure Group ("CIG") primarily designs, manufactures, distributes, installs, markets and services wireless infrastructure equipment. CIG's products include electronic exchanges (i.e., telephone switches), base site controllers and radio base stations for Code Division Multiple Access (CDMA), Personal Communication Systems (PCS), Personal Digital Cellular (PDC), Global System for Mobile Communications (GSM), wireless local loop (WILL(R)) and analog technologies. The Company also is a joint venture partner in cellular operating systems in a number of international jurisdictions and is an investor in IRIDIUM(R) gateway companies. Semiconductor Products The Semiconductor Products Sector ("SPS") offers multiple DigitalDNA(TM) solutions which enable its customers in the consumer, networking and computing, transportation and wireless communications markets to create new business opportunities. Semiconductors control and amplify electrical signals and are used in a broad range of electronic products, including consumer electronic products, computers, communications equipment, solid-state ignition systems and other automotive electronic products, major home appliances, industrial controls, robotics, aircraft, space vehicles, calculators and automatic controls. Land Mobile Products The Land Mobile Products Sector ("LMPS") designs, manufactures and sells analog and digital two-way voice and data products and systems for a variety of worldwide applications. As a principal supplier of mobile and portable FM two- way radio products and systems, LMPS provides equipment and systems to meet the communication needs of individuals and many different types of business, institutional and governmental organizations. LMPS products provide voice and data communications between vehicles, persons and base stations. Also, LMPS provides network services for two-way radio subscribers in international markets through joint ventures. The principal customers for two-way radio products and systems include public safety agencies, such as police, fire, highway maintenance departments and forestry services; petroleum companies; gas, electric and water utilities; telephone companies; diverse industrial companies; mining companies; transportation companies such as railroads, airlines, taxicab operations and trucking firms; institutions, such as schools and hospitals; and companies in the construction, vending machine and service businesses. Also, there is an emerging consumer two-way radio market using the products for personal and family communications needs. 18 Messaging, Information and Media Products The Messaging, Information and Media Sector ("MIMS") manufactures, distributes and sells paging subscriber, paging infrastructure and related products, such as paging software and accessories. MIMS also provides network services for paging and wireless data. It also manufactures and sells modems, analog and digital transmission devices and other data communication devices. In addition, MIMS manufactures equipment that enables voice, video and high- speed data communications over cable networks. It offers handwriting and speech recognition software for various applications and provides equipment and systems to meet the communication needs of many different types of business, institutional and governmental organizations. Other Products Integrated Electronic Systems Sector The Integrated Electronic Systems Sector (formerly the Automotive, Component, Computer and Energy Sector) ("IESS") manufactures and sells products in four major categories: automotive and industrial electronics; energy storage products and systems; ceramic and quartz electronic components and electronic fluorescent ballasts; and multi-function embedded board and computer system products. IESS includes the Motorola Computer Group, which develops, manufactures, sells and services multi-function computer systems and board level products, together with operating systems and system enablers based on the Motorola 68000, 88000, PowerPC(TM) series microprocessors and Intel Pentium(TM) microprocessors. In addition, IESS now contains the Telematics Communications Group, which focuses resources on creating products designed to provide security, information, convenience and entertainment from a central service center to drivers and their passengers. IESS has also established a Flat Panel Display Division to develop the next generation of flat panel displays and is involved in several joint ventures. Space and Systems Technology Group The Space and Systems Technology Group ("SSTG") is engaged in the design, development and production of advanced electronic communication systems and products for a host of international and domestic commercial and government users. SSTG's government business operations primarily perform research, development and production work under contracts with governmental agencies, but also conduct independent research and development programs. The satellite communications business, Satellite Communications Group ("SCG"), designs, builds and markets space-based telecommunications systems. Currently, SCG is fulfilling the terms of contracts with Iridium LLC, an entity of which Motorola owns approximately 19%, to build, deploy, operate and maintain a satellite communications network, known as the IRIDIUM(R) system, as well as undertaking research and development on other communications systems. The IRIDIUM system is designed to provide global digital service to handheld telephones and related equipment. 19 RECENT DEVELOPMENTS Recent Earnings On January 13, 1999, Motorola reported unaudited financial results for the fiscal quarter and year ended on December 31, 1998. . Motorola reported sales of $8.34 billion in the fourth quarter of 1998, up 1 percent from $8.28 billion a year earlier. . Net earnings were $159 million in the fourth quarter of 1998, or 26 cents per share, compared with net earnings of $321 million, or 53 cents per share, in the fourth quarter of 1997. The year-earlier quarter included special charges against pre-tax earnings of $110 million, or 12 cents per share after-tax, largely from decisions to exit several unprofitable businesses that no longer had strategic value to the Company. Excluding special charges, fourth-quarter 1997 earnings would have been $393 million, or 65 cents per share after-tax. There were no special charges in the fourth quarter of 1998. . For the full year 1998, sales decreased 1 percent to $29.4 billion from $29.8 billion in 1997. . The full-year loss for 1998, including special charges, was $1.0 billion, or $1.61 per share after-tax, compared with earnings of $1.2 billion, or $1.94 per share after-tax, in 1997. 1998's loss includes special charges of $1.9 billion pre-tax, or $2.19 per share after-tax, as a result of the Company's manufacturing consolidation, cost reduction and restructuring programs. The year-earlier period also includes special charges against pre-tax earnings of $306 million, or 32 cents per share after-tax. Excluding special charges, earnings for all of 1998 were $347 million, or 58 cents per share after-tax, compared with $1.4 billion, or $2.26 per share after-tax in 1997. Restructuring Program Last June, Motorola announced a restructuring program to improve its long-term profitability and efficiency. In connection with that program, in the second quarter of 1998 the Company recorded a pre-tax restructuring charge of $1.98 billion. Steps included in the restructuring program are: (i) reductions in worldwide employment, (ii) consolidation of manufacturing operations, (iii) exiting non-strategic and poorly performing businesses and (iv) the writedown of assets that have become impaired. Last July, Motorola announced the realignment of its communications- related businesses into one organization called the Motorola Communications Enterprise. The new structure links together all of the Company's communications-related businesses so that they can easily share resources and cooperate on key business and technology issues. Business segments in the Motorola Communications Enterprise include cellular, space, land mobile, and messaging, information and media, which together accounted for about three- fourths of the Company's $29.4 billion in sales in 1998. During 1998, IESS sold its printed circuit board business located in Singapore and signed definitive agreements to sell its component products business. The sale of the component products business is expected to be completed in the first quarter of 1999, although there can be no assurance that the pending transaction will be completed. SPS closed four major semiconductor facilities in North Carolina, California, Arizona and the Philippines and exited four different semiconductor business segments during 1998. MIMS closed a major paging facility in Puerto Rico and IESS closed a quartz and ceramics-based components manufacturing facility in Costa Rica. Motorola also continues to evaluate several strategic options with respect to its semiconductor components business and its cellular infrastructure business. No decision has been made and no assurances can be made that any action will be taken with respect to these businesses. 20 At the end of the fourth quarter, the Company had reduced its employee headcount by approximately 17,000 people and, assuming the pending sale of IESS's component products business is completed during the first quarter, there will be a resulting additional reduction in the Company's employee population of approximately 4,500 people. Iridium Financing In December, Iridium LLC announced that it received significant new financing to replace existing credit lines. Motorola has increased its guarantee of such bank financing by $475 million to a total of $750 million, the majority of which matures on December 31, 2000 and the remainder of which matures on December 31, 2001. Motorola has also agreed to extend the availability date for Iridium LLC to draw on its existing standby guarantee of $350 million of bank financing to October 1, 1999. The Company is also providing $400 million of additional financial support to Iridium LLC. USE OF PROCEEDS All of the proceeds of the sale of the Trust Securities will be invested by the Trust in the Subordinated Debentures. Motorola will, in turn, use the proceeds from the sale of the Subordinated Debentures to repay short-term indebtedness and for general corporate purposes. On January 22, 1999, Motorola had outstanding approximately $2.876 billion of commercial paper, with a weighted average maturity of approximately 82 days and bearing a weighted average interest rate of approximately 5.00% per annum. RATIOS OF EARNINGS TO FIXED CHARGES The following are the unaudited consolidated ratios of earnings to fixed charges for each of the years in the five-year period ended December 31, 1998:
Year Ended December 31, ------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- -- (a) 6.4 6.1 11.6 9.8
- -------- (a) Earnings were inadequate to cover fixed charges by $1.4 billion. For purposes of computing the ratios of earnings to fixed charges, we have divided earnings (loss) before income tax expense (excluding interest costs capitalized) plus fixed charges by fixed charges. Fixed charges consist of interest costs (including interest costs capitalized) and estimated interest included in rentals (one-third of net rental expense). 21 CAPITALIZATION The following table sets forth the consolidated short-term debt and capitalization of Motorola as of December 31, 1998, and as adjusted to give effect to the sale of the Preferred Securities (after deducting underwriting compensation and estimated offering expenses) and the anticipated application of the net proceeds from such sale to reduce short-term indebtedness. From time to time, Motorola may issue additional debt or equity securities. The following information should be read in conjunction with Motorola's consolidated financial statements, including the notes thereto, which are incorporated herein by reference. See "Where You Can Find More Information."
December 31, 1998 ---------------------------- Actual As Adjusted ------------ -------------- (in millions of dollars) Short-Term Debt Commercial paper............................... $ 2,739 $ 2,255 Notes payable and other short-term debt........ 162 162 Current portion of long-term debt.............. 8 8 ------------ ------------ Total short-term debt........................ $ 2,909 $ 2,425 ============ ============ Long-Term Debt (a) Senior notes and debentures.................... $ 2,481 $ 2,481 Other senior debt.............................. 160 160 Less current portion of long-term debt......... (8) (8) ------------ ------------ Total long-term debt......................... 2,633 2,633 ------------ ------------ Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company-guaranteed debentures (b)........ -- 500 ------------ ------------ Stockholders' Equity (c) Common stock................................... 1,804 1,804 Preferred stock................................ -- -- Additional paid-in-capital..................... 2,164 2,164 Retained earnings.............................. 8,254 8,254 ------------ ------------ Total stockholders' equity................... 12,222 12,222 ------------ ------------ Total capitalization......................... $ 14,855 $ 15,355 ============ ============
- -------- (a) See Notes 3 and 4 of the Notes to Consolidated Financial Statements for December 31, 1997, incorporated by reference in the Form 10-K and incorporated herein by reference, for additional information on long-term debt. (b) The sole assets of the Trust will be the Subordinated Debentures. Upon prepayment of the Subordinated Debentures, the related Preferred Securities will be mandatorily redeemable. (c) See the Consolidated Financial Statements for December 31, 1997, incorporated by reference in the Form 10-K and incorporated herein by reference, and Notes 5 and 9 thereto for additional information on stockholders' equity. 22 SELECTED FINANCIAL DATA MOTOROLA, INC. AND SUBSIDIARIES
Year Ended December 31, ---------------------------------------- 1998 1997(1) 1996 1995 1994 ------- ------- ------- ------- ------- Operating Results: Net sales............................ $29,398 $29,794 $27,973 $27,037 $22,245 ------- ------- ------- ------- ------- Manufacturing and other cost of sales............................... 20,886 20,003 18,990 17,545 13,760 Selling, general and administrative expenses............................ 5,493 5,188 4,715 4,642 4,381 Depreciation expense................. 2,197 2,329 2,308 1,919 1,525 Restructuring charges................ 1,980 327 -- -- -- Interest expense, net................ 216 131 185 149 142 ------- ------- ------- ------- ------- Total costs and expenses............. 30,772 27,978 26,198 24,255 19,808 ------- ------- ------- ------- ------- Net gain on Nextel asset exchange.... -- -- -- 443 -- ------- ------- ------- ------- ------- Earnings (loss) before income taxes.. (1,374) 1,816 1,775 3,225 2,437 Income tax (benefit) provision....... (412) 636 621 1,177 877 ------- ------- ------- ------- ------- Net earnings (loss).................. $ (962) $ 1,180 $ 1,154 $ 2,048 $ 1,560 ======= ======= ======= ======= ======= Per Share Data (2): Basic earnings (loss)................ $ (1.61) $ 1.98 $ 1.95 $ 3.47 $ 2.76 Diluted earnings (loss).............. (1.61) 1.94 1.90 3.37 2.66 Dividends declared................... $ 0.48 $ 0.48 $ 0.46 $ 0.40 $ 0.31 As of December 31, ---------------------------------------- 1998 1997 1996 1995 1994 ------- ------- ------- ------- ------- Balance Sheet: Total assets......................... $28,728 $27,278 $24,076 $22,738 $17,495 Working capital...................... 2,091 4,181 3,324 2,717 3,008 Long-term debt....................... 2,633 2,144 1,931 1,949 1,127 Total debt........................... 5,542 3,426 3,313 3,554 2,043 Total stockholders' equity........... $12,222 $13,272 $11,795 $10,985 $ 9,055
- -------- (1) Certain amounts have been reclassified to conform with the 1998 presentation. (2) Per share data reflects the requirements of Statement of Financial Accounting Standard No. 128. 23 DESCRIPTION OF THE PREFERRED SECURITIES Set forth below is a summary of the material terms of the Preferred Securities that will be issued by the Trust pursuant to the terms of the Declaration, which will be qualified as an indenture under the Trust Indenture Act. The Property Trustee will act as the indenture trustee for purposes of compliance with the provisions of the Trust Indenture Act. The terms of the Preferred Securities will include those stated in the Declaration, including those required to be made part of the Declaration by the Trust Indenture Act. The following summary of the material terms and provisions of the Preferred Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Declaration, the Trust Act and the Trust Indenture Act. General The Declaration authorizes the Regular Trustees to cause the Trust to issue the Trust Securities, which represent undivided beneficial interests in the assets of the Trust. All of the Common Securities will be owned directly or indirectly by Motorola. The Common Securities will have equivalent terms to and will rank equal with, and payments will be made thereon on a pro rata basis with, the Preferred Securities, except as described under "--Subordination of Common Securities." In addition, holders of the Common Securities have the exclusive right (subject to the terms of the Declaration) to appoint, replace or remove any of the Trustees and to increase or decrease the number of Trustees, provided that the number of Trustees shall be at least three. The Declaration does not permit the issuance by the Trust of any securities other than the Trust Securities or the incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the Property Trustee will hold the Subordinated Debentures purchased by the Trust for the benefit of the holders of the Trust Securities. The payment of distributions out of money held by the Trust, and payments upon redemption of the Preferred Securities or liquidation of the Trust, are guaranteed by Motorola to the extent described under "Description of the Trust Guarantee." The Trust Guarantee, when taken together with the back-up undertakings, consisting of obligations of Motorola as set forth in the Declaration (including the obligation to pay expenses of the Trust), the Indenture and any applicable supplemental indentures thereto and the Subordinated Debentures issued to the Trust, provide a full and unconditional guarantee by Motorola of the amounts due on the Preferred Securities. The Trust Guarantee will be held by the Guarantee Trustee for the benefit of the holders of the Preferred Securities. The Trust Guarantee only covers payment of distributions when Motorola has made the corresponding payment of interest or principal on the Subordinated Debentures held by the Trust. In the absence of such payment of interest or principal, the remedy of any holder of Preferred Securities is to direct the Property Trustee to enforce against Motorola the Property Trustee's rights as the holder of the Subordinated Debentures, except in the limited circumstances where the holder may take direct action against Motorola. See "--Voting Rights." Distributions; Option to Extend Interest Payment Period Rate Distributions on the Preferred Securities will be fixed at a rate per annum of % of the stated liquidation amount of $25 per Preferred Security. Distributions in arrears for more than one quarter will (to the extent permitted by applicable law) accrue interest at the rate per annum of % thereof compounded quarterly. The term "distributions" as used herein includes any such interest payable unless otherwise stated. The amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarter, on the basis of the actual number of days elapsed in such 90-day quarter. Dates Distributions on the Preferred Securities will be cumulative, will accrue from , 1999 and will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing , 1999 when, as and if available for payment by the Property Trustee, except as otherwise described below. The initial cash distribution payable on , 1999, will equal 24 $ for each $25 Preferred Security. Subsequent cash distributions will equal $ for each $25 Preferred Security. Right to Defer Motorola has the right under the Indenture to defer payments of interest on the Subordinated Debentures by extending the interest payment period from time to time on the Subordinated Debentures, which, if exercised, would automatically defer quarterly distributions on the Preferred Securities. However, since interest would continue to accrue on the Subordinated Debentures during any such extension period (each, an "Extension Period"), to the extent permitted by law, such distributions would continue to accrue with interest. Such right to extend the interest payment period for the Subordinated Debentures is limited to a period not exceeding 20 consecutive quarters or extending beyond the Maturity Date of the Subordinated Debentures. In the event that Motorola exercises this right, then during any Extension Period Motorola may not (a) declare or pay dividends on, make distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (b) make any payment of interest, principal or premium, if any, on, or repay, repurchase or redeem, any debt securities issued by Motorola that rank equal with or junior to the Subordinated Debentures or (c) make guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee); provided, however, that the restriction in clause (a) does not apply to (i) purchases or acquisitions of Motorola's capital stock in connection with the satisfaction of its obligations under any employee benefit plans, stock option plans, employee stock purchase plans or direct reinvestment plans as may be in effect from time to time or the satisfaction of its obligations pursuant to any contract or security outstanding on the date of such event requiring Motorola to purchase its capital stock (other than a contractual obligation ranking equal with or junior to the Subordinated Debentures), (ii) reclassifications of Motorola's capital stock or the exchange or conversion of one class or series of Motorola's capital stock for another class or series of Motorola's capital stock, provided that such reclassification, exchange or conversion does not result in a change in the priority vis-a-vis the Preferred Securities of any class or series of capital stock that is being so reclassified or that is the subject of such exchange or conversion, (iii) purchases of fractional interests in shares of Motorola's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) stock dividends paid by Motorola where the dividend stock is the same stock as that on which the dividend is being paid or (v) redemptions or purchases of any rights pursuant to purchase rights contained in any rights agreement as shall be in effect from time to time, which purchase rights are substantially similar to those contained in Motorola's current rights agreement. Prior to the termination of any such Extension Period, Motorola may further extend the interest payment period; provided that such Extension Period, together with all such previous and further extensions thereof, may not exceed 20 consecutive quarters and may not extend beyond the Maturity Date of the Subordinated Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, Motorola may commence a new Extension Period, subject to the above requirements. See "Description of the Subordinated Debentures--Interest" and "--Option to Extend Interest Payment Period." If distributions are deferred, the deferred distributions and accrued interest thereon shall be paid to holders of record of the Preferred Securities as they appear on the books and records of the Trust on the record date for distributions due at the end of such deferral period. Motorola has no present intention of exercising its right to defer payments of interest by extending the interest payment date of the Subordinated Debentures. Availability of Funds Distributions on the Preferred Securities must be paid on the dates payable only to the extent that the Trust has funds available for the payment of such distributions in the Property Trustee Account. The Trust's funds available for distribution to the holders of the Preferred Securities will be limited to payments received from Motorola under the Subordinated Debentures. See "Description of the Subordinated Debentures" and "Risk Factors--Payments on the Preferred Securities Are Entirely Dependent on Motorola Making Payments on the Subordinated Debentures; The Trust Guarantee Covers Payments Only if the Trust Has Cash Available." 25 Record Holders Distributions on the Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which, as long as the Preferred Securities remain in global form, will be one Business Day (as defined below) prior to the relevant payment dates. Such distributions will be paid through the Property Trustee, who will hold amounts received in respect of the Subordinated Debentures in the Property Trustee Account for the benefit of the holders of the Trust Securities. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment will be made as described under "--Book-Entry Issuance--The Depository Trust Company" below. In the event that the Preferred Securities do not continue to remain in global form, the relevant record dates for the Preferred Securities shall conform to the rules of any securities exchange on which the Preferred Securities are listed and, if none, shall be selected by the Regular Trustees, which dates shall be at least ten Business Days but less than 60 Business Days prior to the relevant payment dates. Distributions payable on any Preferred Securities that are not punctually paid on any distribution payment date will cease to be payable to the person in whose name such Preferred Securities are registered on the relevant record date, and such defaulted distribution will instead be payable to the person in whose name such Preferred Securities are registered on the special record date or other specified date determined in accordance with the Declaration. In the event that any date on which distributions are to be made on the Preferred Securities is not a Business Day, then payment of the distributions payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such record date. A "Business Day" shall mean any day other than a day on which banking institutions in New York, New York are authorized or required by law to close. Subordination of Common Securities Payment of distributions on, and the Redemption Price of, the Preferred Securities and Common Securities, as applicable, shall be made pro rata based on the Liquidation Distribution of the Preferred Securities and Common Securities; provided, however, that if on any payment date for distributions or the Redemption Price an Indenture Event of Default (as defined under "-- Declaration Events of Default") shall have occurred and be continuing, no payment of any distribution on, or applicable Redemption Price of, any of the Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of the Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid distributions on all of the outstanding Preferred Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price, the full amount of such Redemption Price, shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all distributions on, or the Redemption Price of, the Preferred Securities then due and payable. In the case of any Declaration Event of Default (as defined under "-- Declaration Events of Default"), Motorola as holder of the Common Securities will be deemed to have waived any right to act with respect to such Declaration Event of Default until the effect of such Declaration Event of Default shall have been cured, waived or otherwise eliminated. Until any such Declaration Event of Default has been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the holders of the Preferred Securities and not on behalf of Motorola as holder of the Common Securities, and only the holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. Mandatory Redemption Upon the repayment of the Subordinated Debentures, whether at maturity or upon redemption, the proceeds from such repayment or redemption shall simultaneously be applied to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the 26 Subordinated Debentures so repaid or redeemed at the Redemption Price; provided that, holders of Trust Securities shall be given not less than 30 nor more than 60 days' notice of such redemption. See "--Special Event Redemption." The Subordinated Debentures will mature on , 2039 unless the Maturity Date is changed at the option of Motorola (provided in the case of an extension of the Maturity Date that certain financial conditions are met), and may be redeemed, in whole or in part, at any time on or after , 2004 or at any time, in whole or in part, upon the occurrence of a Special Event. See "Description of the Subordinated Debentures--Optional Redemption" and "--Option to Change Scheduled Maturity Date." In the event that fewer than all of the outstanding Trust Securities are to be redeemed, the Trust Securities will be redeemed pro rata to each holder according to the aggregate liquidation amount of Trust Securities held by the relevant holder in relation to the aggregate liquidation amount of all Trust Securities outstanding. See "--Book-Entry Issuance--The Depository Trust Company" below for a description of DTC's procedures in the event of redemption. Special Event Redemption If, at any time, a Tax Event or an Investment Company Event (each, as defined below, a "Special Event") shall occur and be continuing, Motorola shall have the right, upon not less than 30 nor more than 60 days' notice, to redeem the Subordinated Debentures, in whole or in part, for cash within 90 days following the occurrence of such Special Event, and, following such redemption, Trust Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on a pro rata basis. "Tax Event" means that the Regular Trustees shall have received an opinion of an independent tax counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after the date of original issuance of the Preferred Securities, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days after the date thereof, subject to United States federal income tax with respect to interest accrued or received on the Subordinated Debentures, (ii) the Trust is, or will be within 90 days after the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges, or (iii) interest payable to the Trust on the Subordinated Debentures is not, or within 90 days of the date thereof will not be, deductible, in whole or in part, by the Company for United States federal income tax purposes. "Investment Company Event" means that the Regular Trustees shall have received an opinion of an independent counsel experienced in practice under the 1940 Act, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Preferred Securities. Redemption Procedures The Trust may not redeem fewer than all of the outstanding Preferred Securities unless all accrued and unpaid distributions have been paid on all Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. If a partial redemption of the Preferred Securities would result in the delisting of the Preferred Securities by a national securities exchange or other organization on which the Preferred Securities are listed, then, pursuant to the Indenture, Motorola may only redeem the Subordinated Debentures in whole and, as a result, the Trust may only redeem the Preferred Securities in whole. 27 If the Trust gives a notice of redemption in respect of Preferred Securities (which notice will be irrevocable), then, by 12:00 noon, New York City time, on the redemption date, provided that Motorola has paid to the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Subordinated Debentures, the Trust will irrevocably deposit with DTC or its nominee funds sufficient to pay the applicable Redemption Price and will give DTC irrevocable instructions to pay the Redemption Price to the holders of the Preferred Securities. If notice of redemption shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, distributions will cease to accrue and all rights of holders of such Preferred Securities so called for redemption will cease, except the right of the holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price. In the event that any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day. In the event that Motorola fails to repay the Subordinated Debentures on maturity or payment of the Redemption Price in respect of Preferred Securities is improperly withheld or refused and not paid either by the Trust or by Motorola pursuant to the Trust Guarantee, distributions on such Preferred Securities will continue to accrue at the then applicable rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. In the event that fewer than all of the outstanding Preferred Securities are to be redeemed, the Preferred Securities will be redeemed as described below under "--Book-Entry Issuance--The Depository Trust Company." Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), Motorola or its subsidiaries may at any time, and from time to time, purchase outstanding Preferred Securities by tender offer, in the open market or by private agreement. Distribution of the Subordinated Debentures At any time, Motorola will have the right to terminate the Trust and, after satisfaction of the liabilities of creditors of the Trust as provided by applicable law, cause the Subordinated Debentures to be distributed to the holders of the Trust Securities in liquidation of the Trust. Under current United States federal income tax law and interpretations and assuming, as expected, the Trust is treated as a grantor trust, a distribution of the Subordinated Debentures should not be a taxable event to holders of the Preferred Securities. Should there be a change in such law, a change in the legal interpretation thereof, a Special Event or other circumstances, however, the distribution of the Subordinated Debentures could be a taxable event to the holders of the Preferred Securities. In addition, a dissolution of the Trust in which holders of the Preferred Securities receive cash would be a taxable event to such holders. See "United States Federal Income Taxation--US Holders--Receipt of Subordinated Debentures or Cash Upon Liquidation of the Trust." If the Subordinated Debentures are distributed to the holders of the Preferred Securities, Motorola will use its best efforts to cause the Subordinated Debentures to be listed on the NYSE or on such other exchange, interdealer quotation system or other organization as the Preferred Securities are then listed. After the date for any distribution of Subordinated Debentures upon dissolution of the Trust, (i) the Preferred Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee, as the record holder of the Preferred Securities, will receive a registered global certificate or certificates representing the Subordinated Debentures to be delivered upon such distribution and (iii) any certificates 28 representing Preferred Securities not held by DTC or its nominee will be deemed to represent Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, such Preferred Securities until such certificates are presented to Motorola or its agent for transfer or reissuance. If Motorola elects to liquidate the Trust and thereby causes the Subordinated Debentures to be distributed to holders of the Preferred Securities in liquidation of the Trust, Motorola shall have the right to shorten the maturity of such Subordinated Debentures to a date not earlier than , 2004. In addition, Motorola would retain the right to extend the maturity of such Subordinated Debentures to a date not later than the earlier of (i) , 2048 or (ii) the Interest Deduction Date, provided that it can extend the maturity only if certain conditions are met. See "Description of the Subordinated Debentures--Option to Change Scheduled Maturity Date." There can be no assurance as to the market prices for either the Preferred Securities or the Subordinated Debentures that may be distributed in exchange for the Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Preferred Securities that an investor may purchase, whether pursuant to the offer made hereby or in the secondary market, or the Subordinated Debentures that an investor may receive if a dissolution and liquidation of the Trust were to occur, may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. Liquidation Distribution upon Dissolution In the event of any voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each, a "Liquidation"), the then holders of the Preferred Securities will be entitled to receive on a pro rata basis solely out of the assets of the Trust, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, a Liquidation Distribution in an amount equal to the aggregate of the stated liquidation amount of $25 per Preferred Security plus accrued and unpaid distributions thereon to the date of payment, unless, in connection with such Liquidation, Subordinated Debentures in an aggregate stated principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, the Preferred Securities have been distributed on a pro rata basis to the holders of the Preferred Securities. If, upon any such Liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Preferred Securities shall be paid on a pro rata basis. The holders of the Common Securities will be entitled to receive distributions upon any such dissolution pro rata with the holders of the Preferred Securities, except that if an Indenture Event of Default has occurred and is continuing, the Preferred Securities shall have a preference over the Common Securities with respect to such distributions. Termination Pursuant to the Declaration, the Trust shall dissolve upon the earliest of (i) , 2054, (ii) the bankruptcy of Motorola, (iii) the filing of a certificate of dissolution or its equivalent with respect to Motorola or the revocation of the charter of Motorola and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iv) the distribution of the Subordinated Debentures from the Trust, (v) the entry of a decree of a judicial dissolution of Motorola or the Trust, (vi) the redemption of all the Trust Securities, (vii) the occurrence and continuance of a Special Event pursuant to which the Trust shall have been dissolved and all Subordinated Debentures shall have been distributed or (viii) before the issuance of any Trust Securities, when all Regular Trustees and the Sponsor shall have consented. 29 Declaration Events of Default An event of default under the Indenture (an "Indenture Event of Default") constitutes an event of default under the Declaration with respect to the Trust Securities (a "Declaration Event of Default"), provided that, pursuant to the Declaration, the holder of the Common Securities will be deemed to have waived any Declaration Event of Default with respect to the Common Securities until all Declaration Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. See "Description of the Subordinated Debentures--Indenture Events of Default." Until such Declaration Event of Default with respect to the Preferred Securities has been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Preferred Securities and only the holders of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration, and therefore the Indenture. Upon the occurrence of a Declaration Event of Default, the Indenture Trustee or the Property Trustee, as the holder of the Subordinated Debentures, will have the right under the Indenture to declare the principal of and interest on the Subordinated Debentures to be immediately due and payable. Motorola and the Trust are each required to file annually with the Property Trustee an officer's certificate as to its compliance with all conditions and covenants under the Declaration. Voting Rights Except as described herein or under "Description of the Trust Guarantee-- Modification of the Trust Guarantee; Assignment," as otherwise provided under the Trust Act or the Trust Indenture Act or as otherwise required by law or the Declaration, the holders of the Preferred Securities will have no voting rights. Subject to the requirement of the Property Trustee obtaining a tax opinion in certain circumstances set forth in the last sentence of this paragraph, the holders of a majority of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee, as holder of the Subordinated Debentures, to (i) exercise the remedies available under the Indenture with respect to the Subordinated Debentures, (ii) waive any past default and its consequences that is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures, where such consent would be required; provided, however, that, where a consent or action under the Indenture would require the consent or act of the holders of greater than a majority in principal amount of Subordinated Debentures affected thereby (a "Super Majority"), the Property Trustee may only give such consent or take such action at the written direction of the holders of at least the proportion of the Preferred Securities which the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. The Property Trustee shall, within 90 days after the occurrence of an Indenture Event of Default, notify all holders of the Preferred Securities of any notice of default received from the Indenture Trustee with respect to the Subordinated Debentures. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the Property Trustee shall not take any of the actions described in clauses (i), (ii), (iii) or (iv) above unless the Property Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. In the event the consent of the Property Trustee, as the holder of the Subordinated Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Subordinated Debentures, the Property Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where a consent under the 30 Indenture would require the consent of a Super Majority, the Property Trustee may only give such consent at the direction of the holders of at least the proportion in liquidation amount of the Trust Securities which the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. The Property Trustee shall not take any such action in accordance with the directions of the holders of the Trust Securities unless the Property Trustee has obtained an opinion of tax counsel to the effect that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes on account of such action. A waiver of an Indenture Event of Default will constitute a waiver of the corresponding Declaration Event of Default. Any required approval or direction of holders of Preferred Securities may be given at a separate meeting of holders of Preferred Securities convened for such purpose, at a meeting of all of the holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Preferred Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or distribute Subordinated Debentures in accordance with the Declaration. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned at such time by Motorola or any entity directly or indirectly controlling or controlled by, or under direct or indirect common control with, Motorola, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if such Preferred Securities were not outstanding. The procedures by which holders of Preferred Securities may exercise their voting rights are described under "--Book-Entry Issuance--The Depository Trust Company" below. Holders of the Preferred Securities will have no rights to appoint or remove the Trustees, who may be appointed, removed or replaced solely by Motorola as the direct or indirect holder of all of the Common Securities. Modification of the Declaration The Declaration may be modified and amended if approved by a majority of the Regular Trustees (and, in certain circumstances, the Property Trustee and/or the Delaware Trustee), provided that, if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or termination of the Trust other than pursuant to the terms of the Declaration, then the holders of the Trust Securities voting together as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least a majority of the Trust Securities affected thereby; provided that, if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a majority of such class of Trust Securities. Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified as other than a grantor trust for United States federal income tax purposes, (ii) reduce or otherwise adversely affect the powers of the Property Trustee or (iii) cause a Special Event. 31 Mergers, Consolidations or Amalgamations The Trust may not consolidate, amalgamate, merge with or into or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any corporation or other body, except as described below. The Trust may, with the consent of a majority of the Regular Trustees and without the consent of the holders of the Trust Securities, the Property Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State; provided that, (i) such successor entity either (A) expressly assumes all of the obligations of the Trust under the Trust Securities or (B) substitutes for the Trust Securities other securities having substantially the same terms as the Trust Securities (the "Successor Securities"), so long as the Successor Securities rank the same as the Trust Securities rank with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) Motorola expressly acknowledges a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Subordinated Debentures, (iii) the Preferred Securities or any Successor Securities with respect to the Preferred Securities are listed, or any such Successor Securities will be listed upon notification of issuance, on any national securities exchange or with another organization on which the Preferred Securities are then listed or quoted, (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities with respect to the Preferred Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (vi) such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation or replacement, Motorola has received an opinion of an independent counsel to the Trust experienced in such matters to the effect that, (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act and (C) the Trust will continue to be classified as a grantor trust for federal income tax purposes, and (viii) Motorola guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Trust Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of all holders of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it, if such consolidation, amalgamation, merger or replacement would cause the Trust or the Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes or each holder of the Trust Securities not to be treated as owning an undivided interest in the Subordinated Debentures. Book-Entry Issuance--The Depository Trust Company DTC will act as securities depository for the Preferred Securities. The Preferred Securities initially will be issued only as fully registered securities registered in the name of Cede & Co. (DTC's nominee). One or more fully registered global Preferred Securities certificates, representing the total aggregate number of Preferred Securities, will be issued and delivered to DTC. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in the global Preferred Securities as represented by a global certificate. DTC has advised Motorola and the Trust that DTC is (i) a limited-purpose trust company organized under the New York Banking Law, (ii) a "banking organization" within the meaning of the New York Banking Law, (iii) a member of the Federal Reserve System, (iv) a "clearing corporation" within the meaning of the New York Uniform Commercial Code and (v) a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants 32 ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the NYSE, the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a Direct Participant ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the SEC. Purchases of Preferred Securities within the DTC system must be made by or through Direct Participants, which will receive a credit for the Preferred Securities on DTC's records. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Preferred Securities, except in the event that use of the book-entry system for the Preferred Securities is discontinued. To facilitate subsequent transfers, all the Preferred Securities deposited by Participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Preferred Securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Preferred Securities. DTC's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Preferred Securities are being redeemed, DTC will reduce pro rata the amount of the interest of each Direct Participant in such Preferred Securities to be redeemed in accordance with its procedures. Although voting with respect to the Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to Preferred Securities. Under its usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Motorola and the Trust believe that the arrangements among DTC, Direct and Indirect Participants, and Beneficial Owners will enable the Beneficial Owners to exercise rights equivalent in substance to the rights that can be directly exercised by a holder of a beneficial interest in the Trust. Distribution payments on the Preferred Securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in 33 bearer form or registered in "street name," and such payments will be the responsibility of such Participant and not of DTC, the Trust or Motorola, subject to any statutory or regulatory requirements that may be in effect from time to time. Payment of distributions to DTC is the responsibility of the Trust, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. Except as provided herein, a Beneficial Owner in a global Preferred Security certificate will not be entitled to receive physical delivery of Preferred Securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under the Preferred Securities. DTC may discontinue providing its services as depository with respect to the Preferred Securities at any time by giving reasonable notice to the Trust. Under such circumstances, in the event that a successor securities depository is not obtained, Preferred Securities certificates would be required to be printed and delivered. Additionally, the Regular Trustees (with the consent of the Company) may decide to discontinue use of the system of book-entry transfers through DTC (or any successor depository) with respect to the Preferred Securities. In that event, certificates for the Preferred Securities would be printed and delivered. We have been informed by DTC that its management is aware that some computer applications, systems, and the like for processing data ("Systems") that are dependent upon calendar dates, including dates before, on, and after January 1, 2000, may encounter "Year 2000 problems." We have also been informed by DTC that it has informed its Participants and other members of the financial community (the "Industry") that it has developed and is implementing a program so that its Systems, as the same relate to the timely payments of distributions (including principal and income payments) to securityholders, book-entry deliveries, and settlement of trades within DTC ("DTC Services"), continue to function appropriately. According to DTC, this program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC has informed us that its plan includes a testing phase, which is expected to be completed within appropriate time frames. However, we have been informed by DTC that its ability to perform properly its services is also dependent upon other parties, including but not limited to issuers and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on whom DTC relies for information or the provision of services, including telecommunications and electrical utility service providers, among others. DTC has informed us that it is contacting (and will continue to contact) third party vendors from whom DTC acquires services to: (1) impress upon them the importance of such services being Year 2000 compliant; and (2) determine the extent of their efforts for Year 2000 remediation (and, as appropriate, testing) of their services. In addition, DTC has informed us that it is in the process of developing such contingency plans as it deems appropriate. According to DTC, the foregoing information with respect to DTC has been provided to the Industry for informational purposes only and is not intended to serve as a representation, warranty, or contract modification of any kind. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Motorola and the Trust believe to be reliable, but neither Motorola nor the Trust takes responsibility for the accuracy thereof. Information Concerning the Property Trustee The Property Trustee, prior to the occurrence of an event of default with respect to the Trust Securities, undertakes to perform only such duties as are specifically set forth in the Declaration, in the terms of the Trust Securities or in the Trust Indenture Act and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Property Trustee is under no obligation to exercise any of the powers vested in it by 34 the Declaration at the request of any holder of Preferred Securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The holders of Preferred Securities will not be required to offer such indemnity in the event such holders, by exercising their voting rights, direct the Property Trustee to take any action following a Declaration Event of Default. The Property Trustee also serves as Guarantee Trustee. Harris is trustee under indentures with Motorola (i) dated as of March 15, 1985 relating to its 8.40% Debentures due August 15, 2031, (ii) dated as of October 1, 1991 relating to its 7.60% Notes due January 1, 2007 and 6 1/2% Notes due March 1, 2008 and (iii) dated as of May 1, 1995 relating to its 5.80% Notes due October 15, 2008, 7 1/2% Debentures due May 15, 2025, 6 1/2% Debentures due September 1, 2025, 6 1/2% Debentures due November 15, 2028 and 5.22% Debentures due October 1, 2097. Harris has also extended credit facilities to Motorola and a subsidiary of Motorola and conducts business with Motorola and certain of its affiliates, including cash management and stock transfer services. Harris also serves as the rights agent under Motorola's Rights Agreement dated as of November 5, 1998. Paying Agent In the event that the Preferred Securities do not remain in book-entry form, the following provisions would apply: . The Property Trustee will act as paying agent, and may designate an additional or substitute paying agent at any time. . Registration of transfers of Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Trust or Motorola may require) in respect of any tax or other government charges that may be imposed in relation to it. . The Trust will not be required to register or cause to be registered the transfer of Preferred Securities after such Preferred Securities have been called for redemption. Governing Law The Declaration and the Preferred Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. Miscellaneous The Regular Trustees are authorized and directed to operate the Trust in such a way so that the Trust will not be required to register as an "investment company" under the 1940 Act or be characterized as other than a grantor trust for United States federal income tax purposes. Motorola is authorized and directed to conduct its affairs so that the Subordinated Debentures will be treated as indebtedness of Motorola for United States federal income tax purposes. In this connection, Motorola and the Regular Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust of the Trust or the restated certificate of incorporation of Motorola, as amended, that each of Motorola and the Regular Trustees determines in their discretion to be necessary or desirable to achieve such end, as long as such action does not adversely affect the interests of the holders of the Preferred Securities or vary the terms thereof. Holders of the Preferred Securities have no preemptive rights. References in this prospectus to any payment, distribution or treatment as being "pro rata" means pro rata to each holder of Trust Securities according to the aggregate liquidation amount of the Trust Securities held by the relevant holder in relation to the aggregate liquidation amount of all Trust Securities outstanding unless, in relation to a payment, a Declaration Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each holder of 35 the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by the relevant holder relative to the aggregate liquidation amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the holders of the Preferred Securities, to each holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant holder relative to the aggregate liquidation amount of all Common Securities outstanding. When the Property Trustee is making payments on the Trust Securities, it is entitled to assume that no Declaration Event of Default has occurred and is continuing unless the Declaration Event of Default is actually known to a responsible officer of the Property Trustee. DESCRIPTION OF THE SUBORDINATED DEBENTURES Set forth below is a description of the material terms of the Subordinated Debentures in which the Trust will invest the proceeds from the issuance and sale of the Trust Securities. The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Indenture, dated as of January , 1999, as supplemented by a Supplemental Indenture, dated as of January , 1999, between Motorola and Harris as Indenture Trustee (the "Indenture"), each of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Certain capitalized terms used herein are defined in the Indenture. At any time, Motorola will have the right to liquidate the Trust and cause the Subordinated Debentures to be distributed to the holders of the Trust Securities in liquidation of the Trust. See "Description of the Preferred Securities--Distribution of the Subordinated Debentures." If the Subordinated Debentures are distributed to the holders of the Preferred Securities, Motorola will use its best efforts to have the Subordinated Debentures listed on the NYSE or on such other exchange on which the Preferred Securities are then listed. General The Subordinated Debentures: . will be issued as unsecured subordinated debt securities under the Indenture; . will be limited in aggregate principal amount to approximately $515 million, such amount being the sum of the aggregate stated liquidation amount of the Preferred Securities and the capital contributed by Motorola in exchange for the Common Securities (the "Company Payment"); and . will mature and become due and payable, together with any accrued and unpaid interest thereon including Compounded Interest (as defined under "--Option to Extend Interest Payment Period"), if any, on , 2039, subject to the election of Motorola to shorten or extend the scheduled Maturity Date of the Subordinated Debentures, which election in the case of an extension of the scheduled Maturity Date is subject to Motorola's satisfying certain financial conditions. See "--Option to Change Scheduled Maturity Date." If Subordinated Debentures are distributed to holders of Preferred Securities in liquidation of such holders' interests in the Trust, it is presently anticipated that such Subordinated Debentures will initially be issued in the form of one or more Global Securities (as defined under "--Book- Entry and Settlement"). As described herein, under certain limited circumstances, Subordinated Debentures may be issued in definitive certificated form in exchange for a Global Security. See "--Book-Entry and Settlement" below. In the event that Subordinated Debentures are issued in definitive certificated form, such Subordinated Debentures will be in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Subordinated Debentures issued as a Global Security will be made to DTC or its nominee, or a successor depository or its nominee. In the event Subordinated Debentures are issued in definitive certificated form, principal and interest will be 36 payable, the transfer of the Subordinated Debentures will be registrable and Subordinated Debentures will be exchangeable for Subordinated Debentures of other denominations of a like aggregate principal amount at the corporate trust offices of the Indenture Trustee in Chicago, Illinois or that of any successor Trustee; provided that payment of interest may be made at the option of Motorola by check mailed to the address of the persons entitled thereto. The Indenture does not contain provisions that afford holders(s) of the Subordinated Debentures protection in the event of a highly leveraged transaction involving Motorola or other similar transaction that may adversely affect such holders. The Subordinated Debentures are not entitled to the benefit of any sinking fund provisions. Subordination The Indenture provides that the Subordinated Debentures are subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness of Motorola whether now existing or hereafter incurred. In the event and during the continuation of any default by Motorola in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness of Motorola, or in the event that the maturity of any Senior Indebtedness of Motorola has been accelerated because of a default, then in either case, no payment will be made by Motorola with respect to the principal (including redemption payments) of or interest on the Subordinated Debentures. Upon any distribution of assets of Motorola to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due on all Senior Indebtedness of Motorola must be paid in full before the holders of Subordinated Debentures are entitled to receive or retain any payment. In the event that the Subordinated Debentures are declared due and payable before the Maturity Date, then all amounts due or to become due on all Senior Indebtedness shall have been paid in full before holders of the Subordinated Debentures are entitled to receive or retain any payment. Upon satisfaction of all claims of all Senior Indebtedness then outstanding, the rights of the holders of the Subordinated Debentures will be subrogated to the rights of the holders of Senior Indebtedness of Motorola to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Subordinated Debentures are paid in full. The term "Senior Indebtedness" means all indebtedness of Motorola, whether now existing or hereafter created, but excluding trade accounts payable arising in the ordinary course of business, and includes all series of Motorola's outstanding LYONs(TM). Without limiting the generality of the foregoing, "Senior Indebtedness" shall include the principal of, premium, if any, and interest on: (i) all indebtedness of Motorola outstanding, created, incurred or assumed, which is for money borrowed, or evidenced by a note or similar instrument given in connection with the acquisition of any business, properties or assets, including securities; (ii) any indebtedness of others of the kinds described in the preceding clause (i) for the payment of which Motorola is responsible or liable as guarantor or otherwise; and (iii) amendments, renewals, extensions and refundings of any such indebtedness, unless in any instrument or instruments evidencing or securing such indebtedness or pursuant to which the same is outstanding, or in any such amendment, renewal, extension or refunding, it is expressly provided that such indebtedness is not superior in right of payment to the Subordinated Debentures. "Senior Indebtedness" does not include any indebtedness of Motorola to any of its Subsidiaries. Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of the Senior Indebtedness or extension or renewal of the Senior Indebtedness. The Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued by Motorola. At December 31, 1998, the aggregate amount of Senior Indebtedness and liabilities and obligations of Motorola's subsidiaries that would have effectively ranked senior to the Subordinated Debentures was approximately $10.6 billion. 37 The Indenture does not limit the amount of additional indebtedness Motorola or any of its subsidiaries may incur. The Subordinated Debentures will be obligations exclusively of Motorola. Since the operations of Motorola are partially conducted through subsidiaries, its cash flow and consequent ability to service debt, including the Subordinated Debentures, are partially dependent upon the earnings of its subsidiaries. The subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Subordinated Debentures or to make funds available therefor, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to Motorola by its subsidiaries may be subject to statutory or contractual restrictions, are contingent upon the earnings of those subsidiaries, and are subject to various business considerations. Any right of Motorola to receive assets of any of its subsidiaries upon their liquidation or reorganization (and the right of the holder(s) of the Subordinated Debentures to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that Motorola is itself recognized as a creditor of such subsidiary, in which case the claims of Motorola would be subordinate to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by Motorola. As of December 31, 1998, Motorola's subsidiaries had outstanding approximately $4.0 billion of liabilities. Optional Redemption Motorola shall have the right to redeem the Subordinated Debentures (i) at any time, in whole or in part, from time to time, on or after , 2004 or (ii) at any time, in whole or in part, upon the occurrence of a Special Event as described under "Description of the Preferred Securities--Special Event Redemption," upon not less than 30 nor more than 60 days' notice, at an amount equal to the Redemption Price. If a partial redemption of the Preferred Securities resulting from a partial redemption of the Subordinated Debentures would result in the delisting of the Preferred Securities, Motorola may only redeem the Subordinated Debentures in whole. Interest Each Subordinated Debenture shall bear interest at the rate of % per annum from the original date of issuance, or from the most recent interest payment date to which interest has been paid or provided for, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each an "Interest Payment Date"), commencing , 1999, to the person in whose name such Subordinated Debenture is registered, subject to certain exceptions, at the close of business on the Business Day next preceding such Interest Payment Date. In the event the Preferred Securities are no longer in book-entry only form, or if the Subordinated Debentures shall be distributed to the holders of the Preferred Securities and shall not be in book-entry form, Motorola shall have the right to select record dates, which shall conform to the rules of any securities exchange on which the Subordinated Debentures are then listed and shall be at least ten Business Days but less than 60 Business Days prior to the Interest Payment Date. Any installment of interest not punctually paid will cease to be payable to the holders of the Subordinated Debentures on the regular record date and may be paid to the person in whose name the Subordinated Debentures are registered at the close of business on a special record date to be fixed by the Indenture Trustee for the payment of such defaulted interest, notice of which shall be given to the holders of the Subordinated Debentures not less than ten days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, interdealer quotation system or other organization on which the Subordinated Debentures may be listed, and upon such notice as may be required by such exchange, system or organization. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any period shorter than a full quarterly period for which interest is computed, will be computed on the basis of the actual number of days elapsed per 90-day quarter. In the event that any date on which interest is payable on the Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay), 38 except that, if such Business Day is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. Option to Change Scheduled Maturity Date The "Scheduled Maturity Date" of the Subordinated Debentures is , 2039. Motorola, however, may extend such maturity date ( , 2039 or the maturity date then in effect, as the case may be, is referred to herein as the "Maturity Date") for one or more periods but in no event later than the earlier of (i) , 2048 or (ii) the Interest Deduction Date. The "Interest Deduction Date" shall mean the date which is six months earlier than the ending date of the maximum term (beginning on the date of issue of the Subordinated Debentures and including any extensions thereof), as determined under any federal statute applicable by its terms to the Subordinated Debentures which is enacted at any time after the issuance of the Subordinated Debentures (including, but not limited to, at any time after an extension of the Maturity Date), of a debt instrument for which interest is deductible for federal income tax purposes. In no event shall the extended Maturity Date be later than the Interest Deduction Date even if the Maturity Date has previously been extended to a date beyond the Interest Deduction Date. Motorola must exercise its right to extend the term at least 90 days prior to the Maturity Date then in effect and must satisfy the following conditions on the date Motorola exercises such right and on the Maturity Date then in effect prior to such proposed extension: (a) Motorola is not in bankruptcy or otherwise insolvent, (b) Motorola is not in default on any Subordinated Debenture issued to the Trust or to any trustee of the Trust in connection with an issuance of Trust Securities by the Trust, (c) Motorola has made timely payments on the Subordinated Debentures for the immediately preceding six quarters without deferrals, (d) the Trust is not in arrears on payments of distributions on the Trust Securities, (e) the Subordinated Debentures or Preferred Securities are rated investment grade by any one of Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., Moody's Investors Service, Inc., Fitch Investor Services, Duff & Phelps Credit Rating Company or any other nationally recognized statistical rating organization and (f) the final maturity of such Subordinated Debentures is not later than , 2048. Pursuant to the Declaration, the Regular Trustees are required to give notice of Motorola's election to change the Maturity Date to the holders of the Preferred Securities. In addition, if Motorola exercises its right to liquidate the Trust and distribute the Subordinated Debentures as discussed above under "Description of the Preferred Securities--Distribution of the Subordinated Debentures," effective upon such exercise the Maturity Date of the Subordinated Debentures may be changed to any date elected by Motorola that is no earlier than , 2004. In addition, the Company would retain the right to extend the maturity of the Subordinated Debentures to any date elected by Motorola which is not later than the earlier of (a) , 2048 or (b) the Interest Deduction Date; provided that on the date Motorola exercises such right and on the Maturity Date in effect prior to such proposed extension the conditions specified in the previous paragraph are satisfied. Option to Extend Interest Payment Period Motorola has the right at any time, and from time to time, during the term of the Subordinated Debentures to defer payments of interest by extending the interest payment period for a period not exceeding 20 consecutive quarters, at the end of which Extension Period, Motorola shall pay all interest then accrued and unpaid, together with interest thereon compounded quarterly at the rate specified for the Subordinated Debentures to the extent permitted by applicable law ("Compounded Interest"); provided that no Extension Period shall extend beyond the Maturity Date; and provided further that, during any such Extension Period, Motorola may not (a) declare or pay dividends on, make distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (b) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Motorola that rank equal with or junior to the Subordinated Debentures or (c) make guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee); 39 provided, further, that the restriction in clause (a) does not apply to (i) purchases or acquisitions of Motorola's capital stock in connection with the satisfaction of its obligations under any employee benefit plans, stock option plans, employee stock purchase plans or direct reinvestment plans as may be in effect from time to time or the satisfaction of its obligations pursuant to any contract or security outstanding on the date of such event requiring Motorola to purchase its capital stock (other than a contractual obligation ranking equal with or junior to the Subordinated Debentures), (ii) reclassifications of Motorola's capital stock or the exchange or conversion of one class or series of Motorola's capital stock for another class or series of Motorola's capital stock, provided that such reclassification, exchange or conversion does not result in a change in the priority vis-a-vis the Preferred Securities of any class or series of capital stock that is being so reclassified or that is the subject of such exchange or conversion, (iii) purchases of fractional interests in shares of Motorola's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) stock dividends paid by Motorola where the dividend stock is the same stock as that on which the dividend is being paid or (v) redemptions or purchases of any rights pursuant to purchase rights contained in any rights agreement as shall be in effect from time to time, which purchase rights are substantially similar to those contained in Motorola's current rights agreement. Prior to the termination of any such Extension Period, Motorola may further defer payments of interest by extending the interest payment period; provided, however, that such Extension Period, including all such previous and further extensions, may not exceed 20 consecutive quarters or extend beyond the Maturity Date. Upon the termination of any Extension Period and the payment of all amounts then due, Motorola may commence a new Extension Period, subject to the terms set forth in this section. No interest during an Extension Period, except at the end thereof, shall be due and payable. Motorola has no present intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. If the Property Trustee shall be the sole holder of the Subordinated Debentures, Motorola shall give the Regular Trustees and the Property Trustee notice of its selection of such Extension Period one Business Day prior to the earlier of (i) the date distributions on the Preferred Securities are payable or (ii) the date the Regular Trustees are required to give notice to holders of the Preferred Securities (or to any national securities exchange or other organization on which the Preferred Securities are listed) of the record date or the date such distribution is payable. The Regular Trustees shall give notice of Motorola's selection of such Extension Period to the holders of the Preferred Securities. If the Property Trustee shall not be the sole holder of the Subordinated Debentures, Motorola shall give the holders of the Subordinated Debentures notice of its selection of such Extension Period ten Business Days prior to the earlier of (i) the next succeeding Interest Payment Date or (ii) the date upon which Motorola is required to give notice to holders of the Subordinated Debentures (or to any national securities exchange or other organization on which the Subordinated Debentures are listed) of the record or payment date of such related interest payment. Additional Interest If the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges (other than withholding taxes), Motorola will pay as additional interest on the Subordinated Debentures held by the Property Trustee, such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other governmental charges been imposed. Certain Covenants Motorola has covenanted, with respect to the Subordinated Debentures, that for so long as the Preferred Securities and the Common Securities remain outstanding Motorola will (i) maintain 100% direct or indirect ownership of the Common Securities; provided, however, that any permitted successor of Motorola under the Indenture may succeed to Motorola's ownership of the Common Securities, (ii) not voluntarily dissolve, wind-up or terminate the Trust, except in connection with the distribution of 40 Subordinated Debentures or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, (iii) timely perform its duties as sponsor of the Trust, (iv) use its reasonable efforts to cause the Trust (a) to remain a business trust, except in connection with a distribution of the Subordinated Debentures, the redemption of all of the Preferred Securities and Common Securities of the Trust or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (b) otherwise continue not to be treated as an association taxable as a corporation or partnership for United States federal income tax purposes and (v) to use its reasonable efforts to cause each holder of Preferred Securities and Common Securities to be treated as owning an individual beneficial interest in the Subordinated Debentures. Consolidation, Merger, Conveyance, Transfer or Lease Motorola, without the consent of any holder of Subordinated Debentures, may consolidate or merge with or into, or transfer or lease its assets substantially as an entirety to, any entity, and any other entity may consolidate or merge with or into, or transfer or lease its assets substantially as an entirety to, Motorola; provided that (i) the entity (if other than Motorola) formed by such consolidation or into which Motorola is merged or which acquires or leases such assets of Motorola is organized and existing under the laws of any United States jurisdiction and assumes Motorola's obligations on the Subordinated Debentures and under the Indenture, (ii) after giving effect to such transaction, no Indenture Event of Default, and no event which, after notice or lapse of time or both, would become an Indenture Event of Default, shall have happened and be continuing and (iii) certain other conditions are met. Indenture Events of Default The following are Indenture Events of Default: (a) failure to pay principal of (or premium, if any) on the Subordinated Debentures when due; (b) failure to pay any installment of interest on the Subordinated Debentures when due (other than pursuant to Motorola's deferral rights), which failure shall continue for 30 days; (c) failure to perform any other covenant of Motorola in the Indenture (other than a covenant included in the Indenture solely for the benefit of any series of securities other than the Subordinated Debentures), continued for 60 days after written notice as provided in the Indenture; and (d) certain events in bankruptcy, insolvency or reorganization. If an Indenture Event of Default with respect to the Subordinated Debentures shall occur and be continuing, either the Indenture Trustee or the holders of at least 25% in principal amount of the Subordinated Debentures may declare the principal amount of and interest on the Subordinated Debentures (including any Compounded Interest and any other amounts payable under the Indenture) to be due and payable immediately; provided that, in the case of certain events of bankruptcy, insolvency or reorganization, such principal amount (or portion thereof) shall automatically become due and payable. However, at any time after an acceleration with respect to the Subordinated Debentures has occurred, but before a judgment or decree based on such acceleration has been obtained, the holders of a majority in principal amount of the Subordinated Debentures may, under certain circumstances, rescind and annul such acceleration. The Indenture provides that, subject to the duty of the Indenture Trustee during default to act with the required standard of care, the Indenture Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless such holders shall have offered to the Indenture Trustee reasonable security or indemnity. Subject to such provisions for indemnification of the Indenture Trustee and certain other limitations, the holders of a majority in principal amount of the Subordinated Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee, with respect to the Subordinated Debentures. An Indenture Event of Default also constitutes a Declaration Event of Default. If any Indenture Event of Default shall occur and be continuing, the Property Trustee, as the holder of the Subordinated Debentures, will have the right to declare the principal of and the interest on the Subordinated Debentures (including any Compounded Interest and any other amounts payable under the Indenture) to be forthwith due and payable immediately and to enforce its other rights as a creditor with respect to the Subordinated 41 Debentures. If the Property Trustee fails to enforce its rights with respect to the Subordinated Debentures held by the Trust to the fullest extent permitted by law, any holder of Preferred Securities may institute legal proceedings directly against Motorola to enforce the Property Trustee's rights under such Subordinated Debentures without first instituting any legal proceedings against the Property Trustee or any other person or entity. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Motorola to pay interest or principal on the Subordinated Debentures issued to the Trust on the date such interest or principal is otherwise payable, then any holder of Preferred Securities may institute a proceeding directly against Motorola for enforcement of payment to the holder of the Preferred Securities of the principal of or interest on the Subordinated Debentures on or after the respective due dates specified in the Subordinated Debentures (taking into account any Extension Periods), and the amount of the payment will be based on the holder's pro rata share of the amount due and owing on all of the Preferred Securities. The holders of Preferred Securities in certain circumstances have the right to direct the Property Trustee to exercise its rights, with respect to other than principal and interest payments on the Subordinated Debentures, as the holder of the Subordinated Debentures. See "Description of the Preferred Securities-- Declaration Events of Default" and "Description of the Preferred Securities-- Voting Rights." The rights of the holders of Preferred Securities and the Property Trustee upon the occurrence of an Indenture Event of Default or a Declaration Event of Default are subject to the subordination provisions of the Indenture, as described under "--Subordination." Motorola will be required to furnish to the Indenture Trustee annually a statement as to the performance by Motorola of certain of its obligations under the Indenture and as to any default in such performance. Defeasance and Covenant Defeasance The Indenture provides that Motorola may elect either (A) to defease and be discharged from any and all obligations in respect of the Subordinated Debentures (except for certain obligations to register the transfer or exchange of the Subordinated Debentures, to replace temporary, destroyed, stolen, lost or mutilated certificates, to maintain paying agencies and to hold monies for payment in trust) ("defeasance") or (B) to omit to comply with substantially all of the restrictive covenants in the Indenture ("covenant defeasance"), in either case upon the deposit with the Indenture Trustee (or other qualifying trustee), in trust, of money and/or U.S. government obligations, which through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of (and premium, if any) and each installment of interest, if any, on the Subordinated Debentures as and when due. Such a trust may only be established if, among other things, Motorola has delivered to the Indenture Trustee an opinion of counsel (who may be counsel for Motorola) to the effect that the holders of the Subordinated Debentures will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. Such opinion, in the case of defeasance under clause (A) above, must refer to and be based upon a ruling of Internal Revenue Service or a change in applicable Federal income tax law occurring after the date of the Indenture. In the event Motorola exercises its option to omit compliance with certain covenants of the Indenture as described above and the Subordinated Debentures are declared due and payable because of the occurrence of any Indenture Event of Default, the amount of money and U.S. government obligations on deposit with the Indenture Trustee would be sufficient to pay amounts due on the Subordinated Debentures as and when due, but might not be sufficient to pay amounts due on the Subordinated Debentures at the time of the acceleration resulting from such Indenture Event of Default. However, Motorola would remain liable for such payments. 42 Modification and Waiver Modifications and amendments of the Indenture may be made by Motorola and the Indenture Trustee with the consent of the holders of a majority in principal amount of the Subordinated Debentures; provided, however, that no such modification or amendment may, without the consent of the holder(s) of each of the Subordinated Debentures, (a) change the stated maturity date of the principal of, or any installment of principal of or interest on, any Subordinated Debenture, (b) reduce the principal amount of (or premium, if any) or interest, if any, on, any Subordinated Debenture, (c) change the place or currency of payment of principal of (or premium, if any) or interest, if any, on, any Subordinated Debenture, (d) impair the right to institute suit for the enforcement of any payment on or with respect to any Subordinated Debenture or (e) reduce the percentage in principal amount of the Subordinated Debentures, the consent of the holders of which is required for modification or amendment of the Indenture or for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults. The holders of a majority in principal amount of the Subordinated Debentures may on behalf of the holders of all Subordinated Debentures waive compliance by Motorola with certain restrictive provisions of the Indenture. The holders of a majority in principal amount of the Subordinated Debentures may on behalf of the holders of all Subordinated Debentures waive any past default under the Indenture with respect to the Subordinated Debentures except a default in the payment of the principal of (or premium, if any) or interest, if any, on any Subordinated Debenture or in respect of any provision which under the Indenture cannot be modified or amended without the consent of the holder(s) of each Subordinated Debenture. Book-Entry and Settlement If distributed to holders of Preferred Securities in connection with the involuntary or voluntary dissolution, winding-up or liquidation of the Trust, it is presently anticipated that the Subordinated Debentures will be issued in the form of one or more global certificates (each a "Global Security") registered in the name of DTC or its nominee. Except under the limited circumstances described below, Subordinated Debentures represented by the Global Security will not be exchangeable for, and will not otherwise be issuable as, Subordinated Debentures in definitive form. The Global Securities described above may not be transferred except by the depository to a nominee of the depository or by a nominee of the depository to the depository or another nominee of the depository or to a successor depository or its nominee. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in such a Global Security. Except as provided below under "--Discontinuance of Depository Services," owners of beneficial interests in such a Global Security will not be entitled to receive physical delivery of Subordinated Debentures in definitive form and will not be considered the holders (as defined in the Indenture) thereof for any purpose under the Indenture, and no Global Security representing Subordinated Debentures shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the depository or its nominee or to a successor depository or its nominee. Accordingly, each beneficial owner must rely on the procedures of the depository or if such person is not a Participant, on the procedures of the Participant through which such person owns its interest to exercise any rights of a holder under the Indenture. The Depository If Subordinated Debentures are distributed to holders of Preferred Securities in liquidation of such holders' interests in the Trust, DTC will act as securities depository for the Subordinated Debentures. For a description of DTC and the specific terms of the depository arrangements, see "Description of the Preferred Securities--Book-Entry Issuance--The Depository Trust Company." As of 43 the date of this prospectus, the description therein of DTC's book-entry system and DTC's practices as they relate to purchases, transfers, notices and payments with respect to the Preferred Securities apply in all material respects to any debt obligations represented by one or more Global Securities held by DTC. Motorola may appoint a successor to DTC or any successor depository in the event DTC or such successor depository is unable or unwilling to continue as the depository for the Global Securities. None of Motorola, the Trust, the Indenture Trustee, any paying agent and any other agent of Motorola or the Indenture Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security for such Subordinated Debentures or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Discontinuance of the Depository's Services A Global Security shall be exchangeable for Subordinated Debentures in definitive certificated form registered in the names of persons other than the depository or its nominee only if (i) the depository notifies Motorola that it is unwilling or unable to continue as a depository for such Global Security and no successor depository shall have been appointed, (ii) the depository, at any time, ceases to be a clearing agency registered under the Exchange Act at which time the depository is required to be so registered to act as such depository and no successor depository shall have been appointed or (iii) Motorola, in its sole discretion, determines that such Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Subordinated Debentures registered in such names as the depository shall direct. It is expected that such instructions will be based upon directions received by the depository from its Participants with respect to ownership of beneficial interests in such Global Security. Governing Law The Indenture and the Subordinated Debentures will be governed by, and construed in accordance with, the internal laws of the State of New York. Miscellaneous Motorola will pay all fees and expenses related to (i) the offering of the Trust Securities and the Subordinated Debentures, (ii) the organization, maintenance and dissolution of the Trust, (iii) the retention of the Trustees and (iv) the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities. 44 DESCRIPTION OF THE TRUST GUARANTEE Set forth below is a summary of the material terms of the Trust Guarantee that will be executed and delivered by Motorola for the benefit of the holders of Preferred Securities. The Trust Guarantee will be qualified as an indenture under the Trust Indenture Act. Harris will act as independent indenture trustee for Trust Indenture Act purposes under the Trust Guarantee. The terms of the Trust Guarantee will be those set forth in the Trust Guarantee itself and those made part of such Trust Guarantee by the Trust Indenture Act. The following summary does not purport to be complete and is subject to and qualified in its entirety by reference to the provisions of the Trust Guarantee, a copy of which has been filed as an exhibit to the Registration Statement of which this prospectus forms a part, and the Trust Indenture Act. The Trust Guarantee will be held by the Guarantee Trustee for the benefit of the holders of the Preferred Securities. General Pursuant to the Trust Guarantee, Motorola will agree, to the extent set forth therein, to pay in full to the holders of the Preferred Securities, the Guarantee Payments (as defined below) (except to the extent paid by the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Trust may have or assert. The following payments or distributions with respect to the Preferred Securities (the "Guarantee Payments"), to the extent not paid by the Trust, will be subject to the Trust Guarantee (without duplication): (i) any accrued and unpaid distributions that are required to be paid on such Preferred Securities, to the extent the Trust shall have funds available therefor, (ii) the Redemption Price, to the extent the Trust has funds available therefor, with respect to any Preferred Securities called for redemption by the Trust and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with a distribution of the Subordinated Debentures to the holders of Preferred Securities or the redemption of all of the Preferred Securities upon maturity or redemption of the Subordinated Debentures) the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on such Preferred Securities to the date of payment, to the extent the Trust has funds available therefor or (b) the amount of assets of the Trust remaining for distribution to holders of such Preferred Securities in liquidation of the Trust. Motorola's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by Motorola to the holders of Preferred Securities or by causing the Trust to pay such amounts to such holders. The Trust Guarantee will not apply to any payment of distributions except to the extent the Trust shall have funds available therefor. If Motorola does not make interest or principal payments on the Subordinated Debentures, the Trust will not pay distributions on the Preferred Securities issued by the Trust and will not have funds available therefor. As a result, holders of Preferred Securities will not be able to rely upon the Trust Guarantee for payment of these amounts. Instead, holders of Preferred Securities or the Property Trustee may enforce the rights of the Trust under the Subordinated Debentures directly against Motorola. Certain Covenants of Motorola In the Trust Guarantee, Motorola will covenant that, so long as any Preferred Securities issued by the Trust remain outstanding, if there shall have occurred any event of default under the Trust Guarantee or under the Declaration, then Motorola may not (a) declare or pay dividends on, make distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (b) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Motorola that rank equal with or junior to the Subordinated Debentures or (c) make any guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee); provided, however, that the restriction in clause (a) does not apply to (i) purchases or acquisitions of Motorola's capital stock in connection with the satisfaction of its obligations under any employee benefit plans, stock option plans, employee stock purchase plans or direct reinvestment plans as may be in effect from time to time or the satisfaction of its obligations pursuant to any contract or security outstanding on the date of such event requiring Motorola to purchase its capital stock (other than a contractual obligation ranking equal with or junior to the Subordinated Debentures), 45 (ii) reclassifications of Motorola's capital stock or the exchange or conversion of one class or series of Motorola's capital stock for another class or series of Motorola's capital stock, provided that such reclassification, exchange or conversion does not result in a change in the priority vis-a-vis the Preferred Securities of any class or series of capital stock that is being so reclassified or that is the subject of such exchange or conversion, (iii) purchases of fractional interests in shares of Motorola's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) stock dividends paid by Motorola where the dividend stock is the same stock as that on which the dividend is being paid or (v) redemptions or purchases of any rights pursuant to purchase rights contained in any rights agreement as shall be in effect from time to time, which purchase rights are substantially similar to those contained in Motorola's current rights agreement. Modification of the Trust Guarantee; Assignment Except with respect to any changes that do not adversely affect the rights of holders of Preferred Securities (in which case no consent of such holders will be required), the Trust Guarantee may be amended only with the prior approval of the holders of not less than a majority in liquidation amount of the outstanding Preferred Securities. All guarantees and agreements contained in the Trust Guarantee shall bind the successors, assigns, receivers, trustees and representatives of Motorola and shall inure to the benefit of the holders of the Preferred Securities then outstanding. Events of Default An event of default under the Trust Guarantee will occur upon the failure of Motorola to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation amount of the outstanding Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Trust Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under the Trust Guarantee. If the Guarantee Trustee fails to enforce the Trust Guarantee to the fullest extent permitted by law, any holder of Preferred Securities may institute a legal proceeding directly against Motorola to enforce the Guarantee Trustee's rights under the Trust Guarantee without first instituting a legal proceeding against the Trust, the Guarantee Trustee or any other person or entity. Notwithstanding the foregoing, if Motorola has failed to make a Guarantee Payment under the Trust Guarantee, a holder of Preferred Securities may directly institute a proceeding against Motorola for enforcement of the Trust Guarantee for such payment to the holder of the Preferred Securities of the principal of or interest on the Subordinated Debentures on or after the respective due dates specified in the Subordinated Debentures, and the amount of the payment will be based on such holder's pro rata share of the amounts due and owing on all of the Preferred Securities. Motorola has waived any right or remedy to require that any action be brought first against the Trust or any other person or entity before proceeding directly against Motorola. The rights of the holders of Preferred Securities and the Guarantee Trustee upon the occurrence of an event of default under the Trust Guarantee are subject to the subordination provisions of the Trust Guarantee, as described under "--Status of the Trust Guarantee," below. Motorola will be required to provide annually to the Guarantee Trustee a statement as to the performance by Motorola of certain of its obligations under the Trust Guarantee and as to any default in such performance. Information Concerning the Guarantee Trustee The Guarantee Trustee, prior to the occurrence of an event of default with respect to the Trust Guarantee, undertakes to perform only such duties as are specifically set forth in the Trust Guarantee and, after an event of default with respect to the Trust Guarantee, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provision, the Guarantee Trustee is under no obligation to exercise any of the powers vested in it by the Trust 46 Guarantee at the request of any holder of Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. Termination The Trust Guarantee will terminate as to the Preferred Securities issued by the Trust upon (i) full payment of the Redemption Price of all Preferred Securities, (ii) distribution of the Subordinated Debentures to the holders of all of the Preferred Securities or (iii) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Trust. Notwithstanding the foregoing, the Trust Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Preferred Securities issued by the Trust must restore payment of any sums paid under the Preferred Securities or the Trust Guarantee. Status of the Trust Guarantee The Trust Guarantee will constitute an unsecured obligation of Motorola and will rank (i) subordinate and junior in right of payment to all other liabilities of Motorola, including all series of Motorola's outstanding LYONs(TM), except those made equal or subordinate by their terms, (ii) equal with the most senior preferred or preference stock now or hereafter issued by Motorola and with any guarantee now or hereafter entered into by Motorola in respect of any preferred or preference stock of any affiliate of Motorola, (iii) senior to Motorola's Common Stock and (iv) effectively subordinated to the liabilities and obligations of Motorola's subsidiaries to the same extent as the Subordinated Debentures, as described below. The terms of the Preferred Securities provide that each holder of Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Trust Guarantee. The Trust Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against Motorola to enforce its rights under such Trust Guarantee without instituting a legal proceeding against any other person or entity). The Indenture does not limit the amount of additional indebtedness Motorola or any of its subsidiaries may incur. The Subordinated Debentures and the Trust Guarantee will be obligations exclusively of Motorola. Since the operations of Motorola are partially conducted through subsidiaries, its cash flow and consequent ability to service debt and satisfy its other obligations, including those under the Trust Guarantee, are partially dependent upon the earnings of its subsidiaries. The subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Subordinated Debentures or the Trust Guarantee or to make funds available therefor, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to Motorola by its subsidiaries may be subject to statutory or contractual restrictions, are contingent upon the earnings of those subsidiaries, and are subject to various business considerations. Any right of Motorola to receive assets of any of its subsidiaries upon their liquidation or reorganization (and the consequent right of the holder(s) of the Subordinated Debentures or a party seeking to enforce the Trust Guarantee to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that Motorola is itself recognized as a creditor of such subsidiary, in which case the claims of Motorola would be subordinate to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by Motorola. As of December 31, 1998, Motorola's subsidiaries had outstanding approximately $4.0 billion of liabilities. Governing Law The Trust Guarantee will be governed by, and construed in accordance with, the internal laws of the State of New York. 47 EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBENTURES AND THE TRUST GUARANTEE As set forth in the Declaration, the sole purpose of the Trust is to (i) issue the Trust Securities evidencing undivided beneficial interests in the assets of the Trust, (ii) invest the proceeds from such issuance and sale in the Subordinated Debentures and (iii) engage in only those other activities necessary or incidental thereto. As long as payments of interest and other payments are made when due on the Subordinated Debentures, such payments will be sufficient to cover distributions and payments due on the Trust Securities because: (i) the aggregate principal amount of Subordinated Debentures will be equal to the sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the interest rate and the interest and other payment dates on the Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Preferred Securities; (iii) Motorola shall pay all, and the Trust shall not be obligated to pay, directly or indirectly, any, costs, expenses, debts and obligations (other than with respect to the Trust Securities) related to the Trust; and (iv) the Declaration provides that the Trustees shall not cause or permit the Trust to, among other things, engage in any activity that is not consistent with the purposes of the Trust. Payments of distributions (to the extent funds therefor are available) and other payments due on the Preferred Securities (to the extent funds therefor are available) are guaranteed by Motorola as and to the extent set forth above under "Description of the Trust Guarantee." If Motorola does not make interest and/or principal payments on the Subordinated Debentures purchased by the Trust, the Trust will not have sufficient funds to pay distributions on the Preferred Securities. The Trust Guarantee will not apply to the payment of distributions and other payments on the Preferred Securities when the Trust does not have sufficient funds to make such distributions or other payments. As a result, holders of Preferred Securities will not be able to rely upon the Trust Guarantee for payment of these amounts. Instead, holders of Preferred Securities or the Property Trustee may enforce the rights of the Trust under the Subordinated Debentures directly against Motorola. The Trust Guarantee will constitute an unsecured obligation of Motorola and will rank (i) subordinate and junior in right of payment to all other liabilities of Motorola, including all series of Motorola's outstanding LYONs(TM), except those made equal or subordinate by their terms, (ii) equal with the most senior preferred or preference stock now or hereafter issued by Motorola and with any guarantee now or hereafter entered into by Motorola in respect of any preferred or preference stock of any affiliate of Motorola, (iii) senior to Motorola's Common Stock and (iv) effectively subordinated to the liabilities and obligations of Motorola's subsidiaries to the same extent as the Subordinated Debentures, as described below. The Indenture does not limit the amount of additional indebtedness Motorola or any of its subsidiaries may incur. The Subordinated Debentures and the Trust Guarantee will be obligations exclusively of Motorola. Since the operations of Motorola are partially conducted through subsidiaries its cash flow and consequent ability to service debt, including the Subordinated Debentures, and to satisfy its other obligations, including those under the Trust Guarantee, are partially dependent upon the earnings of its subsidiaries. The subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Subordinated Debentures or the Trust Guarantee or to make funds available therefor, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to Motorola by its subsidiaries may be subject to statutory or contractual restrictions, are contingent upon the earnings of those subsidiaries, and are subject to various business considerations. Any right of Motorola to receive assets of any of its subsidiaries upon their liquidation or reorganization (and the right of the holder(s) of the Subordinated Debentures or a party seeking to enforce the Trust Guarantee to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that Motorola is itself 48 recognized as a creditor of such subsidiary, in which case the claims of Motorola would be subordinate to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by Motorola. As of December 31, 1998, Motorola's subsidiaries had outstanding approximately $4.0 billion of liabilities. The Trust Guarantee, when taken together with the back-up undertakings, consisting of obligations of Motorola as set forth in the Declaration (including the obligation to pay expenses of the Trust), the Indenture and any applicable supplemental indentures thereto, and the Subordinated Debentures issued to the Trust, provide a full and unconditional guarantee by Motorola of the amounts due on the Preferred Securities. If Motorola fails to make interest or other payments on the Subordinated Debentures when due (taking into account any Extension Period), the Declaration provides a mechanism whereby the holders of the Preferred Securities, using the procedures described in "Description of the Preferred Securities--Book-Entry Issuance--The Depository Trust Company" and "Description of the Preferred Securities--Voting Rights," may direct the Property Trustee to enforce its rights under the Subordinated Debentures. If the Property Trustee fails to enforce its rights under the Subordinated Debentures to the fullest extent permitted by law, any holder of Preferred Securities may institute a legal proceeding against Motorola to enforce the Property Trustee's rights under the Subordinated Debentures without first instituting any legal proceeding against the Property Trustee or any other person or entity. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Motorola to pay interest or principal on the Subordinated Debentures on the date such interest or principal is otherwise payable (taking into account any Extension Periods), then any holder of Preferred Securities may directly institute a legal proceeding against Motorola for payment of its pro rata share of principal and interest. Motorola, under the Trust Guarantee, acknowledges that the Guarantee Trustee shall enforce the Trust Guarantee on behalf of the holders of the Preferred Securities. If Motorola fails to make payments under the Trust Guarantee, the Trust Guarantee provides a mechanism whereby the holders of the Preferred Securities may direct the Guarantee Trustee to enforce its rights thereunder. Notwithstanding the foregoing, if Motorola has failed to make a payment under the Trust Guarantee, any holder of Preferred Securities may institute a legal proceeding directly against Motorola for enforcement of the Trust Guarantee with respect to payment to the record holder of the Preferred Securities of the principal or interest on the Subordinated Debentures held by the Trust on or after the respective due dates specified in the Subordinated Debentures (taking into account any Extension Periods), without first instituting a legal proceeding against the Trust, the Guarantee Trustee, or any other person or entity. 49 UNITED STATES FEDERAL INCOME TAXATION General This general summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations thereunder, and administrative and judicial interpretations thereof, each as of the date hereof, all of which are subject to change, possibly on a retroactive basis. The authorities on which this general summary is based are subject to various interpretations, and the opinions expressed herein are not binding on the IRS or the courts, either of which could take a contrary position. Moreover, no rulings have been or will be sought from the IRS with respect to the transactions described herein. Accordingly, there can be no assurance that the IRS will not challenge the opinions expressed herein or that a court would not sustain such a challenge. Except as otherwise stated, this general summary deals only with Preferred Securities held as a capital asset (within the meaning of section 1221 of the Code) by a holder who or which (i) purchased the Preferred Securities upon original issuance at their original offering price and (ii) is a US Holder (as defined below). This summary does not address all the tax consequences that may be relevant to a US Holder, nor does it address the tax consequences, except as stated below, to holders that are not US Holders ("Non- US Holders") or to holders that may be subject to special tax treatment (such as banks, thrift institutions, real estate investment trusts, regulated investment companies, insurance companies, brokers and dealers in securities or currencies, other financial institutions, tax-exempt organizations, persons holding the Preferred Securities as a position in a "straddle," or as part of a "synthetic security," "hedging," as part of a "conversion" transaction or other integrated investment, persons having a functional currency other than the U.S. Dollar, and certain United States expatriates). Further, this summary does not address (a) the income tax consequences to shareholders in, or partners or beneficiaries of, a holder of the Preferred Securities, (b) the United States federal alternative minimum tax consequences of the purchase, ownership or disposition of the Preferred Securities, or (c) any state, local or foreign tax consequences of the purchase, ownership and disposition of Preferred Securities. A "US Holder" is a holder of the Preferred Securities who or which is (i) a citizen or individual resident (or is treated as a citizen or individual resident under the Code) of the United States for income tax purposes, (ii) a corporation or partnership created or organized (or treated as created or organized for federal income tax purposes) in or under the laws of the United States or any political subdivision thereof (other than any such partnership treated as foreign under U.S. Treasury regulations which may be issued under a recently enacted amendment to the Code), (iii) an estate the income of which is includible in its gross income for United States federal income tax purposes without regard to its source, or (iv) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and (b) one or more United States persons have the authority to control all substantial decisions of the trust. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS. Classification of the Subordinated Debentures In the opinion of Kirkland & Ellis, legal counsel for Motorola and the Trust, the Subordinated Debentures will be classified for United States federal income tax purposes as indebtedness of Motorola under current law. By acceptance of Preferred Securities, each holder covenants to treat the Subordinated Debentures as indebtedness and the Preferred Securities as evidence of an indirect beneficial ownership interest in the Subordinated Debentures. No assurance can be given, however, that the classification of the Subordinated Debentures as debt will not be challenged by the IRS or, if challenged, that such a 50 challenge will not be successful. A successful IRS challenge to the classification of the Subordinated Debentures as debt would prevent Motorola from deducting the interest paid or accrued on the Subordinated Debentures for United States federal income tax purposes and could constitute a Tax Event. Additionally, if the interest on the Subordinated Debentures is not deductible it could adversely affect Motorola's ability to make payments on the Subordinated Debentures. The remainder of this discussion assumes that the Subordinated Debentures will be classified as indebtedness of Motorola for United States federal income tax purposes. Classification of the Trust In the opinion of Kirkland & Ellis, legal counsel for Motorola and the Trust, the Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation under current law and assuming full compliance with the terms of the Declaration. Accordingly, for United States federal income tax purposes, each holder of Preferred Securities generally will be considered the owner of an undivided interest in the Subordinated Debentures and each US Holder will be required to include in gross income all interest on (including OID accrued, if any) or gain recognized for United States federal income tax purposes with respect to its allocable share of the Subordinated Debentures. US Holders Interest Income and Original Issue Discount Under applicable Treasury regulations (the "Regulations"), remote contingencies that stated interest will not be timely paid are ignored in determining whether a debt instrument is issued with OID. If the Subordinated Debentures are treated as issued with OID, such OID must be included in income by all holders as it accrues economically on a daily basis, without regard to when it is paid in cash or whether a particular holder generally uses the cash method of accounting. Motorola has concluded that the likelihood of its exercising its option to defer payments of interest is remote. This conclusion is based on Motorola's analysis, as of the date of issue of the Subordinated Debentures, of various facts and circumstances deemed relevant to exercising such deferral option, including, among other things, the inability of Motorola (a) to declare or pay a dividend, or engage in certain other capital transactions, with respect to its capital stock, or (b) to make any payment of principal of or interest or premium, if any, on, or repay, repurchase or redeem, any debt of Motorola that ranks equal with or junior to the Subordinated Debentures if the deferral option is exercised. Based upon this conclusion and in the absence of any specific definition of "remote" in the applicable Regulations, in the opinion of Kirkland & Ellis, although the matter is not entirely free from doubt, the Subordinated Debentures will not be subject to the OID rules unless Motorola exercises its option to extend the interest payment period. As a consequence, holders of the Preferred Securities should report interest under their own methods of accounting (e.g., cash or accrual) instead of under the daily economic accrual rules for OID instruments. Under the Regulations, if Motorola exercises its option to defer payments of interest, the Subordinated Debentures would be treated as redeemed and reissued for OID purposes and the sum of the remaining interest payments on the Subordinated Debentures would thereafter be treated as OID, which would accrue, and be includible in a US Holder's taxable income, on an economic accrual basis (regardless of the US Holder's method of accounting for income tax purposes) over the remaining term of the Subordinated Debentures (including any period of interest deferral), without regard to the timing of payments under the Subordinated Debentures. The IRS could take the position that the likelihood that Motorola would exercise its right to defer payments of interest is not a "remote" contingency for purposes of the OID rules, in which case, the Subordinated Debentures would be treated as initially issued with OID in an amount equal to the aggregate stated interest over the term of the Subordinated Debentures. That OID would generally be includible in a US Holder's taxable income, over the term of the Subordinated Debentures, on an economic accrual basis. 51 Characterization of Income Because the income underlying the Preferred Securities will not be classified as dividends for income tax purposes, corporate US Holders of Preferred Securities will not be entitled to a dividends-received deduction for any income recognized with respect to the Preferred Securities. Sales of Preferred Securities A US Holder that sells Preferred Securities will recognize gain or loss equal to the difference between the amount realized on the sale of the Preferred Securities and such holder's adjusted tax basis in such Preferred Securities. To the extent of any accrued but unpaid interest, the amount realized on the sale of such Preferred Securities will be treated as ordinary income. Assuming Motorola does not defer interest on the Subordinated Debentures by extending the interest payment period, a US Holder's "adjusted tax basis" in the Preferred Securities generally will equal its initial purchase price. If Motorola elects to defer interest payments, a US Holder's adjusted tax basis in the Preferred Securities generally will be its initial purchase price increased by any OID previously included in such holder's gross income to the date of disposition and decreased by payments received on the Preferred Securities after Motorola exercises its option to extend the current interest payment period and prior to the date of disposition. Any gain or loss recognized generally will be a capital gain or loss. The highest marginal individual federal income tax rate (which applies to ordinary income and gain from sales or exchanges of capital assets held for one year or less) is 39.6%. The maximum regular federal income tax rate on capital gains derived by individual taxpayers is 20% for sales and exchanges of capital assets held for more than one year. All net capital gain of a corporate taxpayer is subject to tax at ordinary corporate income tax rates of up to 35%. The Preferred Securities may trade at a price that does not accurately reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. A holder who disposes of Preferred Securities between record dates for payments of distributions thereon will be required to include in income (to the extent not previously included in income) as ordinary income amounts attributable to accrued and unpaid interest on the Subordinated Debentures through the date of disposition and the amount realized on disposition excludes the portion of the sales price treated as interest. To the extent the selling price is less than the holder's adjusted tax basis, a holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. If Motorola elects to defer payments of interest, the market value of the Preferred Securities will likely fall. Furthermore, the market value of the Preferred Securities may not reflect the accumulated distribution that will be paid at the end of the Extension Period. A US Holder who disposes of Preferred Securities during an Extension Period will be required to include as ordinary income the accrued OID on the Subordinated Debentures through the date of disposition as ordinary income and add such amount to the US Holder's adjusted basis in the pro rata share of Preferred Securities disposed of. To the extent the selling price is less than the US Holder's adjusted tax basis, the US Holder will recognize capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. Receipt of Subordinated Debentures or Cash Upon Liquidation of the Trust Under certain circumstances described herein (see "Description of the Preferred Securities--Distribution of the Subordinated Debentures"), the Trust may distribute the Subordinated Debentures to holders in exchange for the Preferred Securities and in liquidation of the Trust. Except as discussed below, such a distribution would not be a taxable event for United States federal income tax purposes, and each US Holder would have an aggregate adjusted basis in its Subordinated Debentures for United States federal income tax purposes equal to such holder's aggregate adjusted basis in its Preferred Securities. (For a description of adjusted basis in the Preferred Securities, see discussion above in "--Sales of Preferred Securities.") For United States federal income tax purposes, a US Holder's 52 holding period in the Subordinated Debentures received in such a liquidation of the Trust would include the period during which the Preferred Securities were held by the holder. Under certain circumstances described herein (see "Description of the Preferred Securities" and "Description of the Subordinated Debentures"), the Subordinated Debentures may be redeemed for cash and the proceeds of such redemption distributed to holders in redemption of their Preferred Securities. Such a redemption would be taxable for United States federal income tax purposes, and a US Holder would recognize gain or loss as if it had sold the Preferred Securities for cash. See "--Sales of Preferred Securities" above. Potential Tax Law Changes From time to time, certain tax law changes have been proposed that would deny interest deductions to corporate issuers of debt instruments with terms that include certain of the terms of the Subordinated Debentures. In addition, the IRS has challenged taxpayers' treatment as indebtedness of securities issued with characteristics similar to the Subordinated Debentures. To date, such tax law change proposals have not been enacted and the only known challenge that has advanced as far as litigation was settled short of trial, with a resolution favorable to the taxpayer's position. However, if any similar tax law change were enacted or any such challenge by the IRS were upheld, such event could give rise to a Tax Event which could result in an early redemption of the Preferred Securities. See "Description of the Preferred Securities-- Special Event Redemption." Non-US Holders Payments to a Non-US holder will generally not be subject to withholding of income tax, provided that such holder of the Preferred Securities (a) does not (directly or indirectly, actually or constructively) own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (b) is not a controlled foreign corporation that is related to the Company through stock ownership and (c) is not a bank receiving interest described in section 881(c)(3)(A) of the Code. To qualify for this exemption from withholding taxation, the last United States payor in the chain of payment prior to payment to a Non-US Holder (the "Withholding Agent") must have received in the year in which a payment of interest or principal occurs prior to such payment, or in either of the two preceding calendar years, a statement that (a) is signed by the holder of the Preferred Securities under penalties of perjury, (b) certifies that such holder is not a US Holder and (c) provides the name and address of the holder. The statement may be made on an IRS Form W-8 or a substantially similar form, and the holder must inform the Withholding Agent of any change in the information on the statement within 30 days of such change. If the Preferred Securities are held through a securities clearing organization or certain other financial institutions, the organization or institution may provide a signed statement to the Withholding Agent. However, in such case, the signed statement must be accompanied by a copy of the IRS Form W-8 or the substitute form provided by the holder to the organization or institution. As discussed above (see "--Potential Tax Law Changes"), changes in legislation, if any, affecting the income tax consequences of the Subordinated Debentures could adversely affect the ability of Motorola to deduct the interest payable on the Subordinated Debentures. Moreover, any such legislation could adversely affect Non-US Holders by characterizing income derived from the Subordinated Debentures as dividends, generally subject to a 30% income tax (on a withholding basis) when paid to a Non-US Holder, rather than as interest which, as discussed above, is generally exempt from income tax in the hands of a Non-US Holder. A Non-US Holder of a Preferred Security will generally not be subject to withholding of income tax on any gain realized upon the sale or other disposition of Preferred Securities. 53 A Non-US Holder that holds Preferred Securities in connection with the active conduct of a United States trade or business will be subject to income tax on all income and gains recognized with respect to its proportionate share of the Subordinated Debentures. Backup Withholding Backup withholding of United States federal income tax at a rate of 31% may apply to payments made in respect of the Preferred Securities to registered owners who are not "exempt recipients" and who fail to provide certain identifying information (such as the registered owner's taxpayer identification number) in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Payments made in respect of the Preferred Securities to a US Holder must be reported to the IRS, unless the US Holder is an exempt recipient or establishes an exemption. Compliance with the identification procedures described in the preceding section would establish an exemption from backup withholding for those Non-US Holders who are not exempt recipients. In addition, upon the sale of the Preferred Securities to (or through) a broker, the broker must withhold 31% of the entire purchase price, unless either (i) the broker determines that the seller is a corporation or other exempt recipient or (ii) the seller provides, in the required manner, certain identifying information and, in the case of a Non-US Holder, certifies that such seller is a Non-US Holder (and certain other conditions are met). Such a sale must also be reported by the broker to the IRS, unless either (i) the broker determines that the seller is an exempt recipient or (ii) the seller certifies its Non-U.S. status (and certain other conditions are met). Certification of the registered owner's Non-U.S. status would be made normally on an IRS Form W-8 under penalties of perjury, although in certain cases it may be possible to submit other documentary evidence. Final Withholding Regulations Recently promulgated Treasury regulations (the "Final Regulations"), effective for payments made after December 31, 1999, provide alternative methods for satisfying the certification requirements described above under "Non-US Holders" and "Backup Withholding." The Final Regulations also will require, in the case of Preferred Securities held by foreign partnerships, that (i) the certification described above be provided by the partners rather than the foreign partnership (unless the foreign partnership agrees to become a "withholding foreign partnership") and (ii) the partnership provides certain information, including a US taxpayer identification number. A look-through rule will apply in the case of tiered partnerships. Prospective investors are urged to consult their own tax advisors regarding the Final Regulations. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS. 54 UNDERWRITING Subject to the terms and conditions set forth in the underwriting agreement (the "Underwriting Agreement") among Motorola, the Trust and each of the underwriters named below (collectively, the "Underwriters"), the Trust has agreed to sell to each of the Underwriters named herein, and each of the Underwriters for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, PaineWebber Incorporated, Prudential Securities Incorporated and Salomon Smith Barney Inc. are acting as representatives (the "Representatives"), has severally agreed to purchase from the Trust, the respective number of Preferred Securities set forth below opposite its name. In the Underwriting Agreement, the several Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all of the Preferred Securities offered hereby if any of the Preferred Securities are purchased. In the event of default by an Underwriter, the Underwriting Agreement provides that, in certain circumstances, the purchase commitments of the nondefaulting Underwriters may be increased or the Underwriting Agreement may be terminated.
Number of Preferred Underwriter Securities ----------- ---------- Merrill Lynch, Pierce, Fenner & Smith Incorporated.......................................... A.G. Edwards & Sons, Inc....................................... Goldman, Sachs & Co............................................ Morgan Stanley & Co. Incorporated.............................. PaineWebber Incorporated....................................... Prudential Securities Incorporated............................. Salomon Smith Barney Inc....................................... ---------- Total..................................................... 20,000,000 ==========
The Underwriters propose initially to offer the Preferred Securities to the public at the public offering price set forth on the cover page of this prospectus, and to certain dealers at such price less a concession not in excess of $ per Preferred Security. The Underwriters may allow, and such dealers may reallow, a discount not in excess of $ per Preferred Security to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. In view of the fact that the proceeds of the sale of the Preferred Securities will be used by the Trust to purchase the Subordinated Debentures of Motorola, the Underwriting Agreement provides that Motorola will pay as compensation ("Underwriters' Compensation") to the Underwriters arranging the investment therein of such proceeds, an amount of $ per Preferred Security (or $ in the aggregate) for the accounts of the several Underwriters; provided that, such compensation for sales of 10,000 or more Preferred Securities to any single purchaser will be $ per Preferred Security. Therefore, to the extent of such sales, the actual amount of Underwriters' Compensation will be less than the aggregate amount specified in the preceding sentence. During a period of 30 days from the date of this prospectus, neither the Trust nor the Company will, without the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the Underwriters, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, any Preferred Securities, Subordinated Debentures or Trust Guarantee, any security convertible into or exchangeable into or exercisable for any of such securities or any securities substantially similar to any of such securities (except for the Preferred Securities, Subordinated Debentures and Trust Guarantee offered hereby). 55 Prior to this offering, there has been no public market for the Preferred Securities. The Preferred Securities have been approved for listing on the NYSE, subject to official notice of issuance. Trading of the Preferred Securities on the NYSE is expected to commence within a 30-day period after the initial delivery of the Preferred Securities. The Representatives have advised the Trust that they intend to make a market in the Preferred Securities prior to the commencement of trading on the NYSE. The Representatives have no obligation to make a market in the Preferred Securities, however, and may cease market making activities, if commenced, at any time. No assurance can be given as to the liquidity of the trading market for the Preferred Securities. In order to meet one of the requirements for listing the Preferred Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial holders. Until the distribution of the Preferred Securities is completed, the rules of the SEC may limit the ability of the Underwriters to bid for and purchase the Preferred Securities. As an exception to these rules, the Underwriters will be permitted to engage in certain transactions that stabilize the price of the Preferred Securities. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Preferred Securities. If the Underwriters create a short position in the Preferred Securities in connection with this offering, i.e., if they sell more Preferred Securities than are set forth on the cover page of this prospectus, the Representatives may reduce that short position by purchasing Preferred Securities in the open market. The Representatives also may impose a penalty bid on certain Underwriters and selling group members. This means that if the Representatives purchase Preferred Securities in the open market to reduce the Underwriters' short position or to stabilize the price of the Preferred Securities they may reclaim the amount of the selling concession from the Underwriters and selling group members who sold those Preferred Securities as part of this offering. In general, purchases of a security for the purpose of stabilization or to reduce a short position could cause the price of the security to be higher than it might be in the absence of such purchases. The imposition of a penalty bid might also have an effect on the price of a security to the extent that it were to discourage resales of the security. Neither the Company nor the Underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Preferred Securities. In addition, neither the Company nor the Underwriters make any representation that the Underwriters will engage in such transactions. Any such transactions, once commenced, may be discontinued at any time without notice. The Company and the Trust have agreed to indemnify the Underwriters against, or contribute to payments that the Underwriters may be required to make in respect of, certain liabilities, including liabilities under the Securities Act of 1933, as amended. From time to time, the Underwriters and certain of their affiliates have engaged, and may in the future engage, in transactions with, and perform services for, Motorola and its affiliates in the ordinary course of business. Motorola will pay all expenses associated with the offer and sale of the Preferred Securities. Motorola estimates that such expenses, excluding Underwriters' Compensation, will be approximately $550,000. 56 LEGAL MATTERS Certain matters of Delaware law relating to the validity of the Preferred Securities will be passed upon on behalf of the Trust by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Trust. The validity of the Subordinated Debentures, the Trust Guarantee and certain matters relating thereto, will be passed upon on behalf of the Company and the Trust by Carol H. Forsyte of the Company's Law Department. As of January 19, 1999, Ms. Forsyte owned approximately 160 shares of Common Stock and held options to purchase 10,600 shares of Common Stock, of which options to purchase 3,000 shares were currently exercisable. Certain legal matters will be passed upon for the Company and the Trust by Kirkland & Ellis (a partnership including professional corporations), Chicago, Illinois. Certain legal matters will be passed upon for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois. EXPERTS The consolidated financial statements and schedules of the Company and its consolidated subsidiaries as of December 31, 1997 and 1996 and for each of the years in the three-year period ended December 31, 1997 have been incorporated by reference in this prospectus and in the registration statement in reliance upon the reports of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in auditing and accounting. 57 INDEX OF DEFINED TERMS 1940 Act.................................................................... 7 Beneficial Owner............................................................ 33 Business Day................................................................ 26 Change in 1940 Act Law...................................................... 27 Code........................................................................ 50 Common Securities........................................................... 5 Company..................................................................... 5 Company Payment............................................................. 36 Compounded Interest......................................................... 39 covenant defeasance......................................................... 42 Declaration................................................................. 16 Declaration Event of Default................................................ 30 defeasance.................................................................. 42 Delaware Trustee............................................................ 5 Direct Participants......................................................... 33 DTC......................................................................... 9 DTC Services................................................................ 34 Exchange Act................................................................ 3 Extension Period............................................................ 25 Final Regulations........................................................... 54 First Union................................................................. 5 Form 10-K................................................................... 3 Global Security............................................................. 43 Guarantee Payments.......................................................... 45 Guarantee Trustee........................................................... 16 Harris...................................................................... 5 Indenture................................................................... 36 Indenture Event of Default.................................................. 30 Indenture Trustee........................................................... 5 Indirect Participants....................................................... 33 Industry.................................................................... 34 Interest Deduction Date..................................................... 39 Interest Payment Date....................................................... 38 Investment Company Event.................................................... 27 IRS......................................................................... 15 Liquidation................................................................. 29 Liquidation Distribution.................................................... 8 LYONs....................................................................... 8 Maturity Date............................................................... 39 Motorola.................................................................... 5 Non-US Holder............................................................... 50 NYSE........................................................................ 3 OID......................................................................... 6 Participants................................................................ 33 Preferred Securities........................................................ 5 Property Trustee............................................................ 5 Property Trustee Account.................................................... 16 Redemption Price............................................................ 7 Regular Trustees............................................................ 16 Regulations................................................................. 51 Representatives............................................................. 55 Scheduled Maturity Date..................................................... 39 SEC......................................................................... 3
58 Senior Indebtedness......................................................... 37 Special Event............................................................... 13 Sponsor..................................................................... 16 Subordinated Debentures..................................................... 5 Successor Securities........................................................ 32 Super Majority.............................................................. 30 Systems..................................................................... 34 Tax Event................................................................... 27 Trust....................................................................... 3 Trust Indenture Act......................................................... 16 Trust Guarantee............................................................. 7 Trust Securities............................................................ 5 Trustees.................................................................... 5 Underwriters................................................................ 55 Underwriters' Compensation.................................................. 55 Underwriting Agreement...................................................... 55 US Holder................................................................... 50 Withholding Agent........................................................... 53
59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 20,000,000 Preferred Securities Motorola Capital Trust I % Trust Originated Preferred SecuritiesSM ("TOPrSSM") Fully and Unconditionally Guaranteed by [MOTOROLA, INC. LOGO] ----------------- PROSPECTUS ----------------- Merrill Lynch & Co. A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. Morgan Stanley Dean Witter PaineWebber Incorporated Prudential Securities Incorporated Salomon Smith Barney , 1999 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an estimate, subject to future contingencies, of the expenses to be incurred by the Registrant in connection with the issuance and distribution of the securities being registered: Registration Fee........................................ $139,000 Legal Fees and Expenses................................. 100,000 Trustee Fees and Expenses............................... 23,000 Accounting Fees and Expenses............................ 30,000 Blue Sky Fees and Expenses.............................. 10,000 Printing Fees........................................... 100,000 Rating Agency Fees...................................... 37,000 Listing Fees............................................ 100,000 Miscellaneous........................................... 11,000 -------- Total............................................... $550,000 ========
- -------- * Estimated pursuant to instruction to Item 511 of Regulation S-K. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law contains detailed provisions for indemnification of directors and officers of Delaware corporations against expenses, judgments, fines and settlements in connection with litigation. The Registrant's Restated Certificate of Incorporation and its directors' and officers' liability insurance policy provide for indemnification of its directors and officers against certain liabilities. Under the Declaration, the Trust will agree to indemnify each of the Trustees and to hold each Trustee harmless against, any loss, damage, claims, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the Declaration, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Declaration. ITEM 16. EXHIBITS The following Exhibits are filed as part of this Registration Statement: **1.1 Form of Underwriting Agreement. 3.1 Restated Certificate of Incorporation, as amended, including Certificate of Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A (incorporated by reference to Exhibit 3(b)(i) to the Registrant's Quarterly Report on Form 10- Q for the quarter ended April 2, 1994 (File No. 1-7221)). 3.2 By-Laws of Motorola, Inc., as amended (incorporated by reference to Exhibit 3(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 27, 1998 (File No. 1-7221)). ***3.3 Certificate of Designations, Preferences and Rights of Junior Participating Preferred Stock, Series B. **4.1 Certificate of Trust of Motorola Capital Trust I. **4.2 Declaration of Trust of Motorola Capital Trust I.
II-1 *4.3 Form of Amended and Restated Declaration of Trust. *4.4 Form of Preferred Securities Guarantee Agreement. *4.5 Form of Preferred Security. *4.6 Form of % Subordinated Deferrable Interest Debenture. *4.7 Form of Subordinated Indenture. *4.8 Form of Supplemental Indenture. **4.9 Specimen 6 1/2% Debenture due November 15, 2028. *5.1 Opinion and Consent of Carol H. Forsyte, Esq. **5.2 Opinion and Consent of Richards, Layton & Finger, P.A. **8 Opinion and Consent of Kirkland & Ellis. ***12 Statement re: Computation of ratio of earnings to fixed charges. *23.1 Consent of Carol H. Forsyte (included as part of Exhibit 5.1). **23.2 Consent of Richards, Layton & Finger, P.A. (included as part of Exhibit 5.2). **23.3 Consent of Kirkland & Ellis (included as part of Exhibit 8). **23.4 Consent of KPMG LLP. 24 Powers of Attorney (included on signature page). **25 Statement of Eligibility of Harris Trust and Savings Bank, as Trustee, on Form T-1.
- -------- *To be filed by amendment. **Filed herewith. ***Previously Filed ITEM 17. UNDERTAKINGS (a) The Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act ("Act") in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Act. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) II-2 or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Schaumburg and the State of Illinois, on the 25th day of January, 1999. Motorola, Inc. * By: _______________________________ Carl F. Koenemann Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.
Signature Title Date --------- ----- ---- * Chief Executive Officer January 25, _________________________________ and Director (Principal 1999 Christopher B. Galvin Executive Officer) * Executive Vice President January 25, _________________________________ and Chief Financial 1999 Carl F. Koenemann Officer (Principal Financial Officer) * Corporate Vice President January 25, _________________________________ and Controller (Principal 1999 Anthony Knapp Accounting Officer) * Director January 25, _________________________________ 1999 Ronnie C. Chan * Director January 25, _________________________________ 1999 H. Laurance Fuller * Director January 25, _________________________________ 1999 Robert W. Galvin * Director January 25, _________________________________ 1999 Robert L. Growney * Director January 25, _________________________________ 1999 Anne P. Jones * Director January 25, _________________________________ 1999 Donald R. Jones * Director January 25, _________________________________ 1999 Judy C. Lewent
II-4
Signature Title Date --------- ----- ---- * Director January 25, _________________________________ 1999 Walter E. Massey * Director January 25, _________________________________ 1999 Thomas J. Murrin * Director January 25, _________________________________ 1999 Nicholas Negroponte * Director January 25, _________________________________ 1999 John E. Pepper, Jr. * Director January 25, _________________________________ 1999 Samuel C. Scott III * Director January 25, _________________________________ 1999 Gary L. Tooker * Director January 25, _________________________________ 1999 B. Kenneth West Director _________________________________ John A. White
/s/ Garth L. Milne *By: _______________________ Garth L. Milne as Attorney-In-Fact II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 has duly caused this Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Schaumburg and the State of Illinois, on the 25th day of January, 1999. Motorola Capital Trust I /s/ Garth L. Milne As Attorney-In-Fact By: _______________________________ Carl F. Koenemann Regular Trustee /s/ Garth L. Milne By: _______________________________ Garth L. Milne Regular Trustee and asAttorney- In-Fact II-6 EX-1.1 2 FORM OF UNDERWRITING AGREEMENT Exhibit 1.1 FORM OF MOTOROLA, INC. (a Delaware corporation) MOTOROLA CAPITAL TRUST I (a Delaware business trust) 20,000,000 Trust Preferred Securities Trust Originated Preferred Securities/SM/ ("TOPrS/SM/") (Liquidation Preference $25 per Preferred Security) UNDERWRITING AGREEMENT ---------------------- January __, 1999 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Motorola Capital Trust I (the "Trust"), a statutory business trust organized under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et seq.) and Motorola, Inc. (the "Company" and, together with the Trust, the "Offerors"), confirm their agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in Schedule A hereto (collectively, the "Underwriters", which term shall also include any underwriter - --------------- /SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co., Inc. 1 substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch and ___________ are acting as representative (in such capacity, the "Representatives") with respect to the issue and sale by the Offerors and the purchase by the Underwriters, acting severally and not jointly, of the respective number of the Trust's preferred securities (liquidation preference $25 per preferred security) representing preferred undivided beneficial interests in the assets of the Trust ("TOPrS" or the "Trust Preferred Securities") set forth in said Schedule A. The payment of periodic cash distributions with respect to the Trust Preferred Securities and payments on liquidation or redemption with respect to such Trust Preferred Securities will be each guaranteed by the Company on behalf of the Trust (the "Preferred Securities Guarantee"), in each case only out of funds held by the Trust, pursuant to the Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee Agreement"), to be entered into between the Company and a guarantee trustee (the "Guarantee Trustee"), and entitled to the benefits of certain backup undertakings described in the Prospectus (as defined below) with respect to the Company's agreement pursuant to the Indenture (as defined below) to pay all expenses relating to administration of the Trust (the "Undertakings"). The Trust Preferred Securities and the related Preferred Securities Guarantee are referred to herein as the "Offered Securities." The Offerors understand that the Underwriters propose to make a public offering of the Offered Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered. The entire proceeds from the sale of the Offered Securities will be combined with the entire proceeds from the sale by the Trust to the Company of its undivided common beneficial interests in the Trust's assets represented by common securities (the "Common Securities") and will be used by the Trust to purchase the unsecured junior subordinated deferrable interest debentures (the "Subordinated Debentures") of the Company issued by the Company to the Trust. The Trust Preferred Securities and the Common Securities for the Trust will be issued pursuant to an amended and restated Declaration of Trust of the Trust (the "Declaration"), among the Company, as Sponsor, _____________(the "Regular Trustees"), Harris Trust and Savings Bank, a ____________, as property trustee (the "Property Trustee"), and First Union Bank of Delaware, a Delaware corporation (the "Delaware Trustee" and, together with the Regular Trustees and the Property Trustee, the "Trustees"), and the holders from time to time of undivided beneficial interests in the assets of the Trust. The Subordinated 2 Debentures will be issued pursuant to an indenture (the "Indenture"), between the Company and Harris Trust and Savings Bank, as trustee (the "Debt Trustee"). The Offerors have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. _________) for the registration of up to a combination of $500,000,000 of (i) Trust Preferred Securities, (ii) Preferred Securities Guarantees, and (iii) Subordinated Debentures under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof under the 1933 Act. Such registration statement has been declared effective by the Commission and the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (as so amended, if applicable), including the information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") (the "Rule 430A Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434 Information"), is referred to herein as the "Registration Statement"; and the final prospectus relating to the offering of the Offered Securities, in the form first furnished to the Underwriters by the Company for use in connection with the offering of the Offered Securities, is referred to herein as the "Prospectus"; provided, however, that all references to the "Registration Statement" and the "Prospectus" shall also be deemed to include all documents incorporated therein by reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of this Agreement; provided, further, that if the Offerors file a registration statement with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then, after such filing, all references to the "Registration Statement" shall also be deemed to include the Rule 462(b) Registration Statement; and provided, further, that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations, then all references to the "Prospectus" shall also be deemed to include the final or preliminary prospectus and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as the case may be, in the form first furnished to the Underwriters by the Company in reliance upon Rule 434 of the 1933 Act Regulations, and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus" shall be deemed to refer to any prospectus used before the Registration Statement became effective and any prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434 Information or other information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations and was used after such effectiveness and prior to the execution and 3 delivery of this Agreement. For purposes of this Agreement, all references to the Registration Statement, Prospectus, Term Sheet or preliminary prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be, prior to the execution of this Agreement; and all references in this Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be, after the execution of this Agreement. SECTION 1. Representations and Warranties. (a) Each Offeror jointly and severally represents and warrants to each Underwriter as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof (each such date being hereinafter referred to as a "Representation Date") and agrees with each Underwriter as follows: (i) Each of the Offerors meets the requirements for use of Form S-3 under the 1933 Act. The Registration Statement (including any Rule 462(b) Registration Statement) has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. At the respective times the Registration Statement (including any Rule 462(b) Registration Statement) and any post-effective amendments thereto (including the filing of the Company's most recent Annual Report on Form 10-K with the Commission (the "Annual Report on Form 10-K")) became effective and at each Representation Date, the Registration 4 Statement (including any Rule 462(b) Registration Statement) and any amendments thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations") and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations. At the date of the Prospectus and at the Closing Time (as defined below), neither the Prospectus nor any amendments and supplements thereto included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter, or on behalf of any Underwriter by the Representatives, expressly for use in the Registration Statement or the Prospectus. If the Offerors elect to rely upon Rule 434 of the 1933 Act Regulations, the Offerors will comply with the requirements of Rule 434. (ii) The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together and with the other information in the Prospectus, at the time the Registration Statement and any amendments thereof became or become effective under the 1933 Act and at the Closing Time did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. (iii) The Company and its subsidiaries considered as a whole have not sustained since the date of the latest financial statements included or incorporated by reference in the Prospectus any material loss or interference with its 5 business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth, incorporated by reference or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated or incorporated therein, there has not been any change in the capital stock (other than upon exercise of outstanding stock options or upon conversion of convertible securities outstanding on the date of the most recent balance sheet included in the Prospectus or pursuant to the Company's employee stock ownership plan or pursuant to the Company's employee stock purchase plans or the Company's employee savings and profit sharing plan), any significant increase in the long-term debt of the Company and its subsidiaries taken as a whole, or any material adverse change, or any development which the Company has reasonable cause to believe will involve a prospective material adverse change, in or affecting the general affairs, management, consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries considered as a whole, or, other than the Company's regular quarterly dividend, any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (iv) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to conduct its business as described in the Prospectus with only such exceptions as are not material to the business of the Company and its subsidiaries considered as a whole. (v) The authorized capitalization is as set forth or incorporated by reference in the Prospectus and all of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable. (vi) The execution, delivery and performance of this Agreement, the Declaration, the Indenture, the Preferred Securities, the Common Securities, the Subordinated Debentures, the Preferred Securities Guarantee, and the Preferred Securities Guarantee Agreement, and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or a default under, any 6 material contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company is a party or by which the Company is bound; nor will such action result in a violation of the provisions of the Company's Restated Certificate of Incorporation or bylaws of the Company, as amended, or any applicable law, rule, regulation, judgment, order or administrative or court decree; and the Company has corporate power and authority to purchase, own and hold the Common Securities. (vii) Other than (a) as set forth, incorporated by reference, or contemplated in the Prospectus and (b) litigation incident to the kind of business conducted by the Company and its subsidiaries, which in the case of those items in (b) individually and in the aggregate is not material to the Company and its subsidiaries considered as a whole, there are no legal or governmental proceedings pending to which the Company and its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or its subsidiaries, the Company has reasonable cause to believe would individually or in the aggregate have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries considered as a whole; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (viii) No consent, approval or authorization of any court or governmental authority or agency is necessary in connection with the sale of the Offered Securities or the consummation of the other transactions contemplated by this Agreement, the Declaration, the Indenture or the Preferred Securities Guarantee Agreement, except as may be required under the 1933 Act or 1933 Act Regulations, the 1934 Act or 1934 Act Regulations, the 1939 Act or state securities laws. (ix) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act with the power and authority to own property and to conduct its business as described in the Registration Statement and Prospectus and to enter into and perform its obligations under this Agreement, the Preferred Securities, the Common Securities and the Declaration; the Trust is duly qualified to transact business as a foreign company and is in good standing in any other jurisdiction in which such qualification is necessary, except to the extent that the 7 failure to so qualify or be in good standing would not have a material adverse effect on the Trust; the Trust is not a party to or otherwise bound by any agreement other than those described in the Prospectus; the Trust is and will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation; and the Trust is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles. (x) The Common Securities have been duly authorized by the Declaration and, when issued and delivered by the Trust to the Company against payment therefor as described in the Registration Statement and Prospectus, will be validly issued and (subject to the terms of the Declaration) fully paid and non-assessable undivided beneficial interests in the assets of the Trust and will conform to all statements relating thereto contained in the Prospectus; the issuance of the Common Securities is not subject to preemptive or other similar rights; and at the Closing Time all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (xi) This Agreement has been duly authorized, executed and delivered by each of the Offerors. (xii) The Declaration has been duly authorized by the Company and, at the Closing Time, will have been duly executed and delivered by the Company and the Regular Trustees, and assuming due authorization, execution and delivery of the Declaration by the Property Trustee and the Delaware Trustee, the Declaration will, at the Closing Time, be a valid and binding obligation of the Company and the Regular Trustees, enforceable against the Company and the Regular Trustees in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity) (the "Bankruptcy Exceptions") and will conform in all material respects to all statements relating thereto in the Prospectus. (xiii) The Preferred Securities Guarantee Agreement has been duly authorized by the Company and, at the Closing Time will have been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery of the 8 Preferred Securities Guarantee Agreement by the Guarantee Trustee, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions, and the Preferred Security Guarantee and the Preferred Securities Guarantee Agreement will conform in all material respects to all statements relating thereto contained in the Prospectus. (xiv) The Trust Preferred Securities have been duly authorized by the Declaration and, when issued and delivered pursuant to this Agreement against payment of the consideration set forth in Section 2, will be validly issued and (subject to the terms of the Declaration) fully paid and non-assessable undivided beneficial interests in the Trust, will be entitled to the benefits of the Declaration and will conform to all statements relating thereto contained in the Prospectus and such description conforms to the provisions of the Declaration; the issuance of the Trust Preferred Securities is not subject to preemptive or other similar rights; and (subject to the terms of the Declaration) holders of Trust Preferred Securities will be entitled to the same limitation of personal liability under Delaware law as extended to stockholders of private corporations for profit. (xv) The Indenture has been duly authorized by the Company and, at the Closing Time will have been duly executed and delivered by the Company, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions; and the Indenture will conform in all material respects to all statements relating thereto contained in the Prospectus. (xvi) The Subordinated Debentures have been duly authorized by the Company and, at the Closing Time, will have been duly executed by the Company and, when authenticated in the manner provided for in the Indenture and delivered against payment therefor as described in the Prospectus, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions, will be in the form contemplated by, and entitled to the benefits of, the Indenture and will conform in all material respects to all statements relating thereto in the Prospectus. 9 (xvii) The Company's obligations under the Preferred Securities Guarantee are subordinate and junior in right of payment to all liabilities of the Company and are pari passu with the most senior preferred stock issued by the Company. (xviii) The Subordinated Debentures are subordinated and junior in right of payment to all "senior indebtedness" (as defined in the Indenture) of the Company. (xix) Each of the Regular Trustees is an employee of the Company and has been duly authorized by the Company to execute and deliver the Declaration; the Declaration has been duly executed and delivered by the Regular Trustees and is a valid and binding obligation of each Regular Trustee, enforceable against such Regular Trustee in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions. (xx) The Trust is not in violation of its Declaration or its certificate of trust as filed with the State of Delaware (the "Certificate of Trust"); the Trust is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Trust is a party or by which it may be bound, or to which any of the property or assets of the Trust is subject; and the execution, delivery and performance of this Agreement, the Declaration, the Preferred Securities, the Common Securities, the Indenture, the Subordinated Debentures, the Preferred Securities Guarantee Agreement and the Preferred Securities Guarantee and the consummation of the transactions contemplated herein and therein and compliance by the Offerors with their respective obligations hereunder and thereunder have been duly authorized by all necessary action (corporate or otherwise) on the part of the Trust and do not and will not result in any violation of the Declaration or Certificate of Trust and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust under (A) any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Trust is a party or by which it may be bound or to which any of its properties or assets may be subject, or (B) any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, or any regulatory body or administrative agency or other governmental body having 10 jurisdiction over the Trust or any of its respective properties or assets. (xxi) The Indenture, the Preferred Securities Guarantee Agreement and the Declaration have each been duly qualified under the 1939 Act. (xxii) None of the Offerors is, and upon the issuance and sale of the Offered Securities and the issuance of the Subordinated Debentures and the Common Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (xxiii) Each Offeror has complied and will comply with the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes, 1987, as amended, and all regulations promulgated thereunder relating to issuers doing business in Cuba. (b) Any certificate signed by any officer of the Company and delivered to the Representatives or counsel for the Underwriters in connection with the offering of the Offered Securities shall be deemed a representation and warranty by the Company as to the matters covered thereby to each Underwriter. SECTION 2. Sale and Delivery to the Underwriters; Closing. (a) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Offerors agree to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Offerors, at the price and on such terms set forth in Schedule B, the number of Offered Securities set forth in Schedule A opposite the name of such Underwriter. (b) Payment of the purchase price for, and delivery of, any Offered Securities to be purchased by the Underwriters shall be made at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois, or at such other place as shall be agreed upon by the Representatives and the Company, on the third business day (unless postponed in accordance with the provisions of Section 9) after the date hereof, unless the Offered Securities are priced after 4:30 p.m. New York time in which case such payment and delivery will be made on the fourth business day following the date hereof (unless postponed in accordance with the provisions of 11 Section 9), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date being referred to as a "Closing Time"). Payment shall be made to the Trust by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representatives for the respective accounts of the Underwriters of the Offered Securities to be purchased by them. It is understood that each Underwriter has authorized Merrill Lynch, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Offered Securities which it has severally agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Offered Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time but such payment shall not relieve such Underwriter from its obligations hereunder. As compensation to the Underwriters for their commitments hereunder and in view of the fact that the proceeds of the sale of the Trust Preferred Securities will ultimately be used to purchase the Subordinated Debentures of the Company, the Company hereby agrees to pay at Closing Time to Merrill Lynch, for the accounts of the several Underwriters, a commission per Trust Preferred Security set forth on Schedule B hereto. At the Closing Time, the Company will pay, or cause to be paid, the commission payable at such time to the Underwriters under this Section 2 by wire transfer of immediately available funds to a bank account designated by Merrill Lynch for the account of the Underwriters. (c) Certificates for the Offered Securities shall be in such denominations and registered in such names as the Representatives may request in writing at least one business day before the Closing Time. The certificates for the Offered Securities, which may be in temporary form, will be made available for examination and packaging by the Representatives in New York City not later than 10:00 a.m. (Eastern Time) on the last business day prior to the Closing Time. SECTION 3. Covenants. Each of the Offerors jointly and severally covenant with the Representatives and with each Underwriter as follows: (a) The Offerors, subject to Section 3(b), will comply with the requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and as applicable, and will notify the Representatives immediately, and confirm the notice in writing, of (i) the effectiveness of any post-effective 12 amendment to the Registration Statement or the filing of any supplement or amendment to the Prospectus, (ii) the receipt of any comments on the Registration Statement or the Prospectus from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Offered Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Offerors will promptly effect the filings necessary pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file the Prospectus. The Offerors will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Each Offeror will give the Representatives notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b) of the 1933 Act Regulations) or any amendment, supplement or revision to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object. (c) The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. (d) The Company will deliver to each of the Representatives two copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and, if applicable, documents incorporated by reference into the Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act) and will also deliver to the Representatives, from time to time during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, as many conformed copies of the Registration Statement as originally filed and of each amendment thereto (without exhibits) 13 as the Representatives may reasonably request. The Registration Statement and each amendment thereto furnished to the Underwriters will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter may reasonably request, and the Offerors hereby consent to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, prior to 1:00 p.m., New York City time, on the business day next succeeding the date of this Agreement and from time to time during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (f) The Offerors will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Offered Securities as contemplated in this Agreement and in the Registration Statement and the Prospectus. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Securities any event shall occur as a result of which it is necessary to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Company will forthwith amend or supplement the Prospectus (in form and substance satisfactory to your counsel) so that, as so amended or supplemented, the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time it is delivered to a purchaser, not misleading, and the Company will furnish to the Representatives a reasonable number of copies of such amendment or supplement. (g) The Offerors will endeavor, in cooperation with the Underwriters, to qualify the Offered Securities and the Subordinated Debentures for offering and sale under the applicable securities laws of such states and other jurisdictions as the Representatives may designate; provided, however, that the Offerors shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction 14 in which it is not so qualified. In each jurisdiction in which the Offered Securities have been so qualified, the Offerors will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for so long as may be required to complete the distribution of the Offered Securities. (h) The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. (i) Each Offeror will use or cause to be used the net proceeds received by it from the sale of the Offered Securities in the manner specified in the Prospectus under "Use of Proceeds". (j) The Company will use its best efforts to effect the listing of the Offered Securities, prior to the Closing Time, on the New York Stock Exchange, and to cause the Offered Securities to be registered under the 1934 Act. (k) During a period of ___ days from the date of the Prospectus, the Offerors and the Company's subsidiaries will not, without the prior written consent of Merrill Lynch, directly or indirectly, pledge, issue, sell, offer or contract to sell, grant or sell any option or contract for the sale or purchase of, or otherwise transfer or dispose of, any Offered Securities, any Subordinated Debentures, any securities substantially similar thereto, or any securities convertible into or exercisable or exchangeable for Offered Securities, Subordinated Debentures or any securities substantially similar thereto, or file any registration statement under the 1933 Act with respect to any of the foregoing. (l) So long as any Offered Securities are outstanding, the Trust will continue its existence in good standing as a business trust under the Delaware Act with power and authority to own property and conduct its business as described in the Prospectus and the Trust will remain duly qualified to transact business as a foreign corporation in good standing in each jurisdiction in which such qualification is necessary, except to the extent that the failure to so qualify would not, singly or in the aggregate, materially adversely affect the operations of the Trust. (m) The Trust will make generally available to its security holders and to the Representatives as soon as practicable, but not 15 later than 90 days after the period covered thereby, an earnings statement of the Company (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Trust's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. SECTION 4. Payment of Expenses. The Company will pay all expenses incident to the performance of the Offerors' obligations under this Agreement, including (i) the printing and filing of the Registration Statement as originally filed and of each amendment thereto, (ii) the copying of this Agreement, any agreement among Underwriters, the Indenture, the Declaration, the Preferred Securities, the Common Securities, the Subordinated Debentures, the Preferred Securities Guarantee Agreement and the Preferred Securities Guarantee and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Offered Securities, (iii) the preparation, issuance and delivery of the certificates for the Offered Securities to the Representatives, the Common Securities to the Company and the Subordinated Debentures to the Trust, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of such securities, (iv) the fees and disbursements of the Company's counsel and accountants, (v) the qualification of the Offered Securities and the Subordinated Debentures under securities laws in accordance with the provisions of Section 3(g), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky surveys, (vi) the printing and delivery to the Underwriters of copies of the Registration Statement as originally filed and of each amendment thereto, of the preliminary prospectus, of any Term Sheet and of the Prospectus and any amendments or supplements thereto, (vii) the printing and delivery to the Underwriters of copies of the Blue Sky surveys, (viii) the fees and expenses of the Property Trustee, the Delaware Trustee, the Guarantee Trustee and the Debt Trustee, including the fees and disbursements of their respective counsel, (ix) any fees payable in connection with the rating of the Offered Securities, (x) the fees and expenses incurred with respect to the listing of the Offered Securities on the New York Stock Exchange, (xi) the filing fees incident to the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Offered Securities, (xii) the cost of qualifying the Trust Preferred Securities with The Depository Trust Company, and (xiii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. Except as provided in this Section and in Sections 6 and 7, the Underwriters will pay all of their own costs 16 and expenses, including fees and disbursements of their counsel, stock transfer taxes on resale of any of the Offered Securities by them, and any advertising expenses which they may incur. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 (other than Section 5(j)) or Section 9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Offered Securities. SECTION 5. Conditions of Underwriters' Obligations. The obligations of the Underwriters to purchase and pay for the Offered Securities pursuant to this Agreement are subject to the accuracy of the representations and warranties of the Company and the Offerors contained in Section 1 hereof, to the performance by the Offerors of their covenants and other obligations hereunder, and to the following further conditions: (a) The Registration Statement, including any Rule 462(b) Registration Statement, has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or be pending or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel for the Underwriters. A prospectus containing the Rule 430A Information shall have been filed with the Commission in accordance with Rule 424(b)(or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information shall have been filed with the Commission in accordance with Rule 424(b)(7). (b) At Closing Time, the Representative shall have received: (i) The opinion, dated as of Closing Time, of Carol H. Forsyte, Senior Counsel, of the Law Department of the Company, or another attorney who is employed by the Company who is 17 acceptable to the Representatives (the "Company Counsel"), in form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, to the effect that: (1) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to conduct its business as described in the Prospectus. (2) The authorized capitalization of the Company is as set forth or incorporated by reference in the Prospectus and all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non- assessable. (3) This Agreement has been duly authorized, executed and delivered by the Company. (4) The Preferred Securities Guarantee Agreement has been duly authorized, executed and delivered by the Company and, assuming it is duly authorized, executed, and delivered by the Guarantee Trustee, is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions. (5) The Indenture has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution, and delivery thereof by the Debt Trustee, is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions. (6) The Declaration has been duly authorized, executed and delivered by the Company and duly executed and delivered by the Regular Trustees and constitutes a valid and binding obligation of each of the Company and the Trust, enforceable against the Company and the Trust in accordance with its terms, except to the extent that the enforcement thereof may be limited by the Bankruptcy Exceptions. 18 (7) The Subordinated Debentures are in the form established pursuant to the Indenture, have been duly authorized, executed and delivered by the Company and, when duly authenticated by the Debt Trustee in the manner provided for in the Indenture and delivered against payment therefor as provided in the Declaration, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits provided by the Indenture, except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions. (8) The Registration Statement (including any Rule 462(b) Registration Statement) has been declared effective under the 1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b). To the best of such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been initiated or threatened by the Commission. (9) At the time the Registration Statement (including any Rule 462(b) Registration Statement) became effective and at the Closing Time, the Registration Statement and the Prospectus (other than the financial statements and other financial data and supporting schedules included therein and in the documents incorporated by reference into the Prospectus, as to which no opinion need be rendered) complied as to form in all material respects with the applicable requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations thereunder and, if applicable, the Rule 434 Prospectus conforms to the requirements of Rule 434 of the 1933 Act Regulations in all material respects; the documents incorporated by reference into the Prospectus (other than the financial statements and other financial data and supporting schedules included therein, as to which no opinion need be rendered), when they were filed with the Commission, complied as to form in all material respects with the applicable requirements of the 1934 Act and the 1934 Act Regulations; and to the best of such counsel's knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in 19 the Prospectus or to be filed as exhibits to the Registration Statement other than those described or referred to therein or filed or incorporated by reference thereto and the descriptions thereof or references thereto are correct. (10) The information in the Prospectus under "Risk Factors," "Motorola Capital Trust I," "Description of the Preferred Securities," "Description of the Subordinated Debentures," "Description of the Trust Guarantee," "Effect of Obligations under the Subordinated Debentures and the Trust Guarantee" and the information contained in the Registration Statement pursuant to Item 15, to the extent that such information constitutes summaries of statutes, documents or legal proceedings, the Company's Restated Certificate of Incorporation or by-laws or the Declaration, has been reviewed by such counsel and is correct in all material respects. (11) The Common Securities, the Trust Preferred Securities, the Subordinated Debentures, the Preferred Securities Guarantee, the Declaration, the Indenture and the Preferred Securities Guarantee Agreement conform to the descriptions thereof contained in the Prospectus. (12) To the best of such counsel's knowledge, other than as set forth, incorporated by reference or contemplated in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject, other than litigation incident to the kind of business conducted by the Company and its subsidiaries, which litigation incident to the Company's business individually and in the aggregate is not material to the Company and its subsidiaries considered as a whole; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (13) No consent, approval, authorization, order, registration or qualification of any court or governmental authority or agency is required for the due authorization, execution or delivery by the Company of this Agreement or for the performance by the Company of the transactions contemplated by the Prospectus, this Agreement, the Indenture, the Declaration, the Preferred Securities, the Common Securities, the Subordinated 20 Debentures, the Preferred Securities Guarantee Agreement, and the Preferred Securities Guarantee, other than under the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the 1939 Act and the 1939 Act Regulations, which have already been made, obtained or rendered, as applicable, or state securities laws. (14) The execution and delivery of this Agreement, the Declaration, the Preferred Securities, the Common Securities, the Indenture, the Subordinated Debentures and the Preferred Securities Guarantee Agreement, the issuance and sale of the Preferred Securities Guarantee and the Subordinated Debentures, the compliance by the Company with all of the provisions of this Agreement, the Declaration, the Subordinated Debentures, the Indenture and the Preferred Securities Guarantee Agreement and the consummation of the transactions contemplated herein, therein and in the Prospectus do not and will not conflict with or constitute a breach of, or default under, (1) the Restated Certificate of Incorporation or by-laws of the Company; (2) any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument known to such counsel to which the Company is a party or by which the Company is bound; or (3) any applicable law, rule, regulation, judgment, order or administrative or court decree known to such counsel. (15) The Indenture, the Preferred Securities Guarantee Agreement and the Declaration have each been duly qualified under the 1939 Act. (16) Neither the Company nor the Trust is, nor upon the issuance and sale of the Preferred Securities and the issuance of the Subordinated Debentures and the Common Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will be, an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (17) Each of the Offerors meets the registrant requirements for use of Form S-3 under the 1933 Act Regulations. (18) To the best of such counsel's knowledge and information, all of the issued and outstanding Common 21 Securities are directly owned by the Company free and clear of any lien, encumbrance, equity or claim. Such opinion of Company Counsel shall additionally state that nothing has come to his or her attention that has caused him or her to believe that the Registration Statement (including any Rule 462(b) Registration Statement) or any post-effective amendment thereto (other than the financial statements, financial data and schedules included therein, as to which no belief need be expressed), at the time the Registration Statement (including any Rule 462(b) Registration Statement) or any post-effective amendment thereto (including the filing of the Company's Annual Report on Form 10-K with the Commission) became effective or at the Closing Time contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto (other than the financial statements, financial data and schedules included therein, as to which no belief need be expressed), at the time the Prospectus was issued, at the time any such amended or supplemented prospectus was issued or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such opinion shall be limited to the laws of the State of New York, the State of Illinois, the General Corporation Law of the State of Delaware and the federal law of the United States, and the rules and regulations thereunder. At the Closing Time, the Representatives shall also have received the opinion, dated as of the Closing Time, of Kirkland & Ellis, counsel for the Offerors, in form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, regarding such Federal tax, ERISA and other related matters of the type ordinarily included in similar transactions or reasonably requested by counsel for the Underwriters. (ii) The opinion, dated as of the Closing Time, of ________________, special Delaware counsel to the Offerors, in form and substance reasonably satisfactory to counsel for the Underwriters, to the effect that: (1) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have 22 been made. Under the Delaware Act and the Declaration, the Trust has the trust power and authority to own property and to conduct its business, all as described in the Prospectus, to execute and deliver and perform its obligations under this Agreement, the Trust Preferred Securities and the Common Securities and to purchase and hold the Subordinated Debentures. (2) The Common Securities have been duly authorized by the Declaration and are duly and validly issued undivided beneficial interests in the assets of the Trust and, under the Delaware Act and the Declaration, the issuance of the Common Securities is not subject to preemptive or other similar rights. (3) Under the Delaware Act, the certificate attached to the Declaration as Exhibit A-1 is an appropriate form of certificate to evidence ownership of the Trust Preferred Securities. The Trust Preferred Securities have been duly authorized by the Declaration and are duly and validly issued, and, subject to the qualifications set forth herein, fully paid and non-assessable undivided beneficial interests in the assets of the Trust. The holders of the Trust Preferred Securities will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; and, under the Delaware Act and the Declaration, the issuance of the Trust Preferred Securities is not subject to preemptive or other similar rights. Such counsel may note that the Trust Preferred Securities holders may be obligated, pursuant to the Declaration, to (a) provide indemnity and/or security in connection with and pay taxes or governmental charges arising from transfers of Trust Preferred Securities and the issuance of replacement Trust Preferred Securities, and (b) provide security and indemnity in connection with requests of or directions to the Property Trustee to exercise its rights and powers under the Declaration. (4) Under the Declaration and the Delaware Act, this Agreement has been duly authorized by all necessary trust action on the part of the Trust. (5) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental 23 authority or agency is necessary or required solely for the due authorization, execution or delivery by the Trust of this Agreement or for the performance by the Trust of the transactions contemplated under the Prospectus, this Agreement, the Declaration, the Preferred Securities and the Common Securities. (6) The issuance and sale by the Trust of the Trust Preferred Securities and the Common Securities, the purchase by the Trust of the Subordinated Debentures, the execution, delivery and performance by the Trust of this Agreement, the consummation by the Trust of the transactions contemplated hereby and thereby and compliance by the Trust with its obligations hereunder and thereunder do not violate (A) any of the provisions of the Certificate of Trust or the Declaration or (B) any applicable Delaware law or administrative regulation. (7) The Declaration constitutes a valid and binding obligation of the Company and the Trustees, and is enforceable against the Company and the Trustees, in accordance with its terms. (iii) The favorable opinion, dated as of Closing Time, of __________________________, counsel for the Property Trustee, the Delaware Trustee, the Debt Trustee and the Guarantee Trustee, in form and substance satisfactory to counsel for the Underwriters to the effect that: (1) ________________ is a national banking association with trust powers, duly organized, validly existing and in good standing under the laws of the United States with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Declaration and the Preferred Securities Guarantee Agreement. (2) The execution, delivery and performance by the Property Trustee of the Declaration and the execution, delivery and performance by the Guarantee Trustee of the Preferred Securities Guarantee Agreement have been duly authorized by all necessary corporate action on the part of the Property Trustee and the Guarantee Trustee, respectively. The Declaration and the Preferred Securities Guarantee Agreement have been duly executed and delivered by the Property Trustee and the Guarantee Trustee, respectively, and constitute the legal, valid and binding obligations of the Property Trustee and the 24 Guarantee Trustee, respectively, enforceable against the Property Trustee and the Guarantee Trustee, respectively, in accordance with their terms, except as enforcement thereof may be limited by the Bankruptcy Exceptions. (3) The execution, delivery and performance of the Declaration and the Preferred Securities Guarantee Agreement by the Property Trustee and the Guarantee Trustee, respectively, do not conflict with or constitute a breach of the Articles of Organization or Bylaws of the Property Trustee and the Guarantee Trustee, respectively. (4) No consent, approval or authorization of, or registration with or notice to, any federal banking authority is required for the execution, delivery or performance by the Property Trustee and the Guarantee Trustee of the Declaration and the Preferred Securities Guarantee Agreement. (5) The Statements of Eligibility on Forms T-1 with respect to each of the Property Trustee, the Debt Trustee, and the Guarantee Trustee filed with the Commission as part of the Registration Statement complied as to form in all material respects with the requirements of the 1939 Act and the 1939 Act Regulations. (6) The Declaration constitutes a valid and binding obligation of the Property Trustee and the Delaware Trustee and is enforceable against the Property Trustee and the Delaware Trustee in accordance with its terms, except to the extent that the enforcement thereof may be limited by the Bankruptcy Exceptions. (iv) The opinion, dated as of Closing Time, of Mayer, Brown & Platt, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, with respect to the matters set forth in (1) (insofar as it relates to the existence and good standing of the Company), (3) to (7) (it being understood that any opinion required with respect to the Trust Preferred Securities or the Common Securities, as the case may be, not being subject to preemptive or other similar rights of the securityholders shall be limited to such rights arising by operation of law or under the Declaration), (8), (9) (insofar as it relates as to compliance of the Registration Statement and the Prospectus as to form), (10) (solely as to the information in the Prospectus under "Description of the Preferred Securities," "Description of Subordinated Debentures," and "Description of the Trust Guarantee"), (11) 25 and the penultimate paragraph of subsection (b)(i) of this Section. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the State of Illinois, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (c) (i) The Company and its subsidiaries considered as a whole shall have not sustained since the date of the latest financial statements included or incorporated by reference in the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth, incorporated by reference or contemplated in the Prospectus, and (ii) since the respective dates as of which information is given in the Registration Statement and the Prospectus there shall not have been any change in the capital stock (other than upon exercise of outstanding stock options or upon conversion of convertible securities outstanding at the date of the most recent balance sheet included in the Prospectus or pursuant to the Company's employee stock ownership plan or pursuant to the Company's employee stock purchase plans or the Company's employee savings and profit sharing plan) or any significant increase in long- term debt of the Company and its subsidiaries considered as a whole or any change, or any development involving a prospective change, in or affecting the general affairs, management, consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries considered as a whole, otherwise than as set forth or incorporated by reference or contemplated in the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Offered Securities on the terms and in the manner contemplated in the Prospectus. (d) On or after the date of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act and (ii) no such organization shall have publicly announced that it has under 26 surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. (e) You shall have received a certificate of the Vice Chairman and Chief Executive Officer, the President or another senior officer acceptable to you of the Company and of the Chief Financial Officer, Controller, Treasurer or Assistant Treasurer of the Company, dated as of the Closing Time, to the effect that (i) the Company and its subsidiaries shall not have sustained any loss or interference with its business of the type specified in Section 5(c)(i) and there shall not have occurred any change of the type specified in Section 5(c)(ii), (ii) there shall not have occurred any downgrading of the type specified in Section 5(d), (iii) the applicable representations and warranties in Section 1 are true and correct with the same force and effect as though expressly made at and as of such Closing Time, (iv) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to such Closing Time, and (v) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (f) At the time of the execution of this Agreement, you shall have received from KPMG Peat Marwick a letter dated such date, in form and substance satisfactory to you, to the effect that (i) they are independent public accountants with respect to the Company and its subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion that the financial statements and supporting schedules included in or incorporated by reference into the Registration Statement or the Prospectus and covered by their opinions therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations; (iii) based upon limited procedures set forth in detail in such letter, nothing has come to their attention which causes them to believe that (A) the unaudited financial statements and supporting schedules of the Company and its subsidiaries included in or incorporated by reference into the Registration Statement or the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be, or are not presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in or incorporated by reference into the Registration Statement or the Prospectus or (B) at a specified date not more than three days prior to the date of this Agreement, there has been any change in the capital stock of the Company (other than 27 upon exercise of outstanding stock options or upon conversion of convertible securities outstanding on the date of the most recent balance sheet included in or incorporated by reference into the Prospectus or pursuant to the Company's employee stock ownership plan or pursuant to the Company's stock purchase plans or the Company's employee savings and profit sharing plan) or any increase in the consolidated long term debt of the Company and its subsidiaries or any decrease in consolidated net current assets or net assets as compared with the amounts shown in the most recent balance sheet included in or incorporated by reference into the Prospectus or, during the period from the date of the most recent financial statements included in or incorporated by reference into the Prospectus to a specified date not more than three days prior to the date of this Agreement, there were any decreases, as compared with the corresponding period in the preceding year, in consolidated net sales, net earnings or net earnings per share of the Company and its subsidiaries, except in all instances for changes, increases or decreases which the Registration Statement and the Prospectus disclose have occurred or may occur; and (iv) in addition to the examination referred to in their opinions and the limited procedures referred to in clause (iii) above, they have carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included in or incorporated by reference into the Registration Statement and Prospectus and which are specified by you, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Company and its subsidiaries identified in such letter. (g) At Closing Time, the Representatives shall have received from KPMG Peat Marwick a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (f) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time. (h) At Closing Time counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Offered Securities, as contemplated herein, and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Offerors in connection with the issuance and sale of the Offered Securities and the issuance of the Subordinated Debentures shall be reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters. 28 (i) At Closing Time, the Offered Securities shall have been approved for listing, subject only to official notice of issuance, on the New York Stock Exchange. (j) If the Registration Statement or an offering of Offered Securities is required to be and has been filed with the NASD for review, the NASD shall not have raised any objection that remains unresolved at Closing Time with respect to the fairness and reasonableness of the underwriting terms and arrangements. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Company at any time at or prior to Closing Time and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. Indemnification. (a) The Offerors agree jointly and severally to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be part of the Registration Statement, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based 29 upon any such untrue statement or omission or any such alleged untrue statement or omission; provided that any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including, subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by the Representatives), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement does not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and further provided that this indemnity agreement does not apply to any loss, liability, claim, damage or expense arising out of any untrue statement or omission or alleged untrue statement or omission made in a preliminary prospectus but eliminated or remedied in the Prospectus if a copy of the Prospectus (excluding documents incorporated therein by reference) was not delivered by you to the person asserting the claim arising from such untrue statement or omission or such alleged untrue statement or omission, at or prior to the time required by the 1933 Act. (b) Each Underwriter severally agrees to indemnify and hold harmless the Offerors, each of the Company's directors, the Trustees, each of the Offerors' officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the 30 Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Offerors and you shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and you, as incurred, in such proportions that you are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus bears to the initial public offering price appearing thereon and the Offerors are responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the 31 meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls you within the meaning of Section 15 of the 1933 Act shall have the same right to contribution as you, and each director of the Company, the Trustees, each officer of the Offerors who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Offerors. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto or thereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Offerors, and shall survive delivery of and payment for the Offered Securities. SECTION 9. Termination of Agreement. (a) Merrill Lynch may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time, if (i) the Company and its subsidiaries considered as a whole shall have sustained since the date of the latest financial statements included or incorporated by reference in the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth, incorporated by reference or contemplated in the Prospectus, or since the respective dates as of which information is given in the Registration Statement and the Prospectus there shall have been any change in the capital stock (other than upon exercise of outstanding stock options or upon conversion of convertible securities outstanding at the date of the most recent balance sheet included in the Prospectus or pursuant to the Company's employee stock ownership plan or pursuant to the Company's employee stock purchase plans or the Company's employee savings and profit sharing plan) or any significant increase in long- term debt of the Company and its subsidiaries considered as a whole or any change, or any development involving a prospective change, in or affecting the general affairs, management, consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries considered as a whole, otherwise than as set forth or incorporated by reference or contemplated in the Prospectus, the effect of which, in any such case described in this clause (i), is in your judgment so material 32 and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Offered Securities on the terms and in the manner contemplated in the Prospectus, or (ii) there has occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the reasonable judgment of Merrill Lynch, impracticable or inadvisable to market the Offered Securities or to enforce contracts for the sale of the Offered Securities, or (iii) a suspension or material limitation in trading in the Company's Common Stock, the Trust Preferred Securities or securities generally on the New York Stock Exchange, or (iv) a general moratorium on commercial banking activities in New York or Illinois has been declared by either Federal or state authorities. (b) If this Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time to purchase the Offered Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), then the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters reasonably acceptable to the Representatives, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then: (a) if the aggregate principal amount of Defaulted Securities does not exceed 10% of the aggregate principal amount of Offered Securities to be purchased on such date, the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the aggregate principal amount of Defaulted Securities exceeds 10% of the aggregate principal amount of Offered Securities 33 to be purchased on such date pursuant to this Agreement, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either the Representatives or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to Merrill Lynch at Merrill Lynch & Co., 5500 Sears Tower, Chicago, Illinois 60606, Attention: Robert Schmeideler; notices to the Company or the Trust shall be directed to it at: 1303 East Algonquin Road, Schaumburg, Illinois 60106, Attention: Treasurer. SECTION 12. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Offerors, and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Offerors and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the parties hereto and thereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. 34 SECTION 14. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 35 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Agreement, along with all counterparts, will become a binding agreement between the Underwriters and the Offerors in accordance with its terms. Very truly yours, MOTOROLA, INC. By: ----------------------------- Title: Authorized Officer MOTOROLA CAPITAL TRUST I By: Motorola, Inc. as Sponsor By: ----------------------- Title: Authorized Officer CONFIRMED AND ACCEPTED as of the date first above written: Merrill Lynch, Pierce, Fenner & Smith Incorporated By: ----------------------------- Title: Authorized Officer For themselves and as Representatives of the other Underwriters named in Schedule A hereto 36 SCHEDULE A Preferred Securities Commission -------------------- ---------- Merrill Lynch, Pierce Fenner & Smith Incorporated -------------------- ---------- A-1 SCHEDULE B The Trust Preferred Securities shall have the following terms: Title: ____ % Trust Originated Preferred Securities. Ratings: ___- by Standard & Poor's; ___ by Moody's Investment Services. Liquidation Preference: $25 per Trust Preferred Security. Distribution rate or formula: Annual rate of ____ % of the liquidation amount of $25 per Trust Preferred Security. Distribution payment dates: _______________________. Regular record dates: Distributions on the Trust Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which, as long as the Trust Preferred Securities remain in book-entry only form, will be one Business Day prior to the relevant payment dates, which payment dates correspond to the interest payment dates on the Subordinated Debentures. In the event the Trust Preferred Securities do not continue to remain in book-entry only form, the Regular Trustees will have the right to select relevant record dates which will be, subject to the requirements of any applicable exchange, at least one Business Day, but less than 60 Business Days, prior to the relevant payment dates. In the event that any date on which distributions are to be made on the Trust Preferred Securities is not a Business Day, then payment of the distributions payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. A "Business Day" means any day other than a day on which banking institutions in Chicago, Illinois or New York, New York are authorized or required by law to close. Stated maturity date: The Trust Preferred Securities do not have a stated maturity date, but they will be redeemed upon the stated maturity of the Subordinated Debentures. Redemption provisions: If the Subordinated Debentures are redeemed, the Trust must redeem Trust Securities on a pro rata basis having B-1 an aggregate liquidation amount equal to the aggregate principal amount of Subordinated Debentures so redeemed. Listing requirements: The Trust Preferred Securities will be listed on the New York Stock Exchange. Fixed or Variable Price Offering: Fixed Price Offering Purchase price per security: 100% of liquidation amount, plus accrued Distributions, if any, from January ___, 1999. Commissions payable to Underwriters: $____________ Form: Global Certificate QIU Issues: N/A B-2 The Subordinated Debentures shall have the following terms: Title: ____ % Junior Subordinated Deferrable Interest Debentures. Interest rate or formula: Each Subordinated Debenture will bear interest at the rate of ____ % per annum from the original date of issuance. Interest payment dates: _______________________. Regular record dates: Interest is payable to the person in whose name such Subordinated Debenture is registered, subject to certain exceptions, at the close of business on the Business Day preceding such interest payment date. If the Subordinated Debentures do not remain in book-entry only form, the Company has the right to select record dates which may not be less than fifteen days prior to each interest payment date. Stated maturity date: The Subordinated Debentures have a stated maturity date of _________________, which may be extended at any time by the Company to any date not later than _________________; provided, that at the time such election is made and at the time of extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Subordinated Debentures, and (iii) in the case of Subordinated Debentures held by the Trust, the Trust is not in arrears on payments of distributions on the Trust Preferred Securities and no deferred distributions are accumulated. Redemption provisions: The Company has the right to redeem the Subordinated Debentures, in whole or in part, from time to time, on or after _________________, or at any time in whole but not in part in certain circumstances upon the occurrence of a Tax Event as described under "Description of the Trust Preferred Securities - Tax Event Redemption" in the Prospectus dated January __, 1999, upon not less than 30 nor more 60 days' notice, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest, including Additional Interest, if any, to the redemption date. If a partial redemption of the Trust Preferred Securities resulting from a partial redemption of the Subordinated Debentures would result in the delisting of the Trust Preferred Securities, the Company may only redeem the Subordinated Debentures in whole. Listing requirements: If Subordinated Debentures are distributed to the holders of the Trust Preferred Securities, the Company shall use its best efforts to have the Subordinated Debentures listed on B-3 the New York Stock Exchange or on such other exchange as the Trust Preferred Securities are then listed. Fixed or Variable Price Offering: Fixed Price Offering Form: Global Note QIU Issues: N/A B-4 EX-4.1 3 CERTIFICATE OF TRUST OF MOTOROLA CAP TRUST I Exhibit 4.1 CERTIFICATE OF TRUST OF MOTOROLA CAPITAL TRUST I THIS Certificate of Trust of Motorola Capital Trust I (the "Trust") is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 Del. C (S) 3801 et seq.) (the "Act"). 1. Name. The name of the Trust is Motorola Capital Trust I. 2. Delaware Trustee. The name and business address of the trustee of the Trust in the State of Delaware are First Union Trust Company, National Association, 920 King Street, 1st Floor, Wilmington, Delaware 19801-7475, Attn: Corporate Trust Group. 3. Effective Date. This Certificate of Trust shall be effective on January 19, 1999. IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act. FIRST UNION TRUST COMPANY NATIONAL ASSOCIATION, as Trustee By: /s/ EDWARD L. TRUITT, JR. --------------------------- Name: EDWARD L. TRUITT, JR. Title: VICE PRESIDENT /s/ CARL F. KOENEMANN ------------------------------ CARL F. KOENEMANN, as Trustee /s/ GARTH L. MILNE ------------------------------ GARTH L. MILNE, as Trustee STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 08:30 AM 01/19/1999 991020519 - 2994024 RLF3-1088727-1 EX-4.2 4 DECLARATION OF TRUST OF MOTOROLA CAP TRUST I - ------------------------------------------------------------------------------- DECLARATION OF TRUST OF MOTOROLA CAPITAL TRUST I Dated as of January 19, 1999 - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS..........................................................1 SECTION 1.1 Definitions..................................................1 ARTICLE II ORGANIZATION........................................................3 SECTION 2.1 Name.........................................................3 SECTION 2.2 Office.......................................................4 SECTION 2.3 Purpose......................................................4 SECTION 2.4 Authority....................................................4 SECTION 2.5 Title to Property of the Trust...............................4 SECTION 2.6 Powers of the Trustee........................................4 SECTION 2.7 Filing of Certificate of Trust...............................5 SECTION 2.8 Duration of Trust............................................6 SECTION 2.9 Responsibilities of the Sponsor..............................6 SECTION 2.10 Declaration Binding on Securities Holders....................6 ARTICLE III TRUSTEES...........................................................6 SECTION 3.1 Trustees.....................................................6 SECTION 3.2 Regular Trustees.............................................7 SECTION 3.3 Delaware Trustee.............................................7 SECTION 3.4 Property Trustee.............................................8 SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration...8 ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS........................................................8 SECTION 4.1 Exculpation..................................................8 SECTION 4.2 Fiduciary Duty...............................................8 SECTION 4.3 Indemnification..............................................9 SECTION 4.4 Outside Businesses..........................................12 ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS..............................13 SECTION 5.1 Amendments..................................................13 SECTION 5.2 Termination of Trust........................................13 SECTION 5.3 Governing Law...............................................14 SECTION 5.4 Headings....................................................14 SECTION 5.5 Successors and Assigns......................................14 SECTION 5.6 Partial Enforceability......................................14 SECTION 5.7 Counterparts................................................14
DECLARATION OF TRUST OF MOTOROLA CAPITAL TRUST I DECLARATION OF TRUST ("Declaration") dated and effective as of January 19, 1999 by the undersigned Trustees (as defined in Section 1.1), Motorola, Inc., a Delaware corporation, as trust sponsor (in such capacity, the "Sponsor"), and the holders, from time to time, of undivided beneficial interests in the Trust to be issued pursuant to this Declaration; WHEREAS, the Trustees and the Sponsor desire to establish a trust (the "Trust") pursuant to the Business Trust Act (as defined in Section 1.1); WHEREAS, the sole purpose of the Trust shall be to issue and sell certain securities representing undivided beneficial interests in the assets of the Trust and to invest the proceeds thereof in certain Debentures of the Debenture Issuer (as those terms are hereinafter defined) and, except as otherwise limited herein, to engage in only those other activities necessary, appropriate, convenient or incidental thereto. NOW, THEREFORE, it being the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Act and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I DEFINITIONS SECTION 1.1 Definitions. Unless the context otherwise requires: (a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Declaration has the same meaning throughout. (c) all references to "the Declaration" or "this Declaration" are to this Declaration of Trust as modified, supplemented or amended from time to time; (d) all references in this Declaration to Articles and Sections are to Articles and Sections of this Declaration unless otherwise specified; and (e) a reference to the singular includes the plural and vice versa. 1 "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. "Business Day" means any day other than a day on which banking institutions in New York, New York are authorized or required by law to close. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or any successor legislation. "Commission" means the Securities and Exchange Commission. "Common Security" means a security representing a common undivided beneficial interest in the assets of the Trust with such terms as may be set out in any amendment to, or amendment and restatement of, this Declaration. "Company Indemnified Person" means (a) any Regular Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates. "Covered Person" means (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates and (b) any holder of Securities. "Debenture Issuer" means Motorola, Inc. in its capacity as the issuer of the Debentures under the Indenture. "Debentures" means the series of Debentures to be issued under the Indenture by the Debenture Issuer and acquired by the Trust. "Debenture Trustee" means Harris Trust and Savings Bank, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "Delaware Trustee" has the meaning set forth in Section 3.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time or any successor legislation. "Fiduciary Indemnified Person" has the meaning set forth in Section 4.3(b). "Holder" means the Person in whose name a certificate representing a Security is registered. 2 "Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person. "Indenture" means the indenture dated as of January __, 1999 entered into among Motorola, Inc. and Harris Trust and Savings Bank, as trustee and any indenture supplemental thereto pursuant to which the Debentures are to be issued. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Security" means a security representing a preferred undivided beneficial interest in the assets of the Trust with such terms as may be set out in any amendment to this Declaration. "Regular Trustee" has the meaning set forth in Section 3.1. "Securities" means the Common Securities and the Preferred Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Trust Company" shall mean First Union Trust Company, National Association or any successor Delaware Trustee in its individual capacity. "Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. ARTICLE II ORGANIZATION SECTION 2.1 Name. The Trust created by this Declaration is named "Motorola Capital Trust I." The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. 3 SECTION 2.2 Office. The address of the principal office of the Trust is c/o General Counsel, Motorola, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196. At any time, the Regular Trustees may designate another principal office. SECTION 2.3 Purpose. The exclusive purposes and functions of the Trust are (a) to issue and sell the Securities and use the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein, to engage in only those other activities necessary, appropriate, convenient or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust. SECTION 2.4 Authority. Subject to the limitations provided in this Declaration, the Regular Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust. In dealing with the Regular Trustees acting on behalf of the Trust, no person shall be required to inquire into the authority of the Regular Trustees to bind the Trust. Persons dealing with the Trust and entitled to rely conclusively on the power and authority of the Regular Trustees as set forth in this Declaration. SECTION 2.5 Title to Property of the Trust. Legal title to all assets of the Trust shall be vested in the Trust. SECTION 2.6 Powers of the Trustee. The Regular Trustees shall have the exclusive power and authority to cause the Trust to engage in the following activities: (a) to issue and sell the Preferred Securities and the Common Securities in accordance with this Declaration; provided, however, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities, and, provided further, that there shall be no interests in the Trust other than the Securities and the issuance of the Securities shall be limited to a one-time, simultaneous issuance of both Preferred Securities and Common Securities; 4 (b) in connection with the issue and sale of the Preferred Securities, at the direction of the Sponsor, to: (i) execute and file with the Commission a registration statement on Form S-3 prepared by the Sponsor, including any amendments thereto in relation to the Preferred Securities; (ii) execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary in order to qualify or register all or part of the Preferred Securities in any State in which the Sponsor has determined to qualify or register such Preferred Securities for sale; (iii) execute and file an application, prepared by the Sponsor, to The New York Stock Exchange or any other national stock exchange or the Nasdaq Stock Market's National Market for listing upon notice of issuance of any Preferred Securities; (iv) execute and file with the Commission a registration statement on Form 8-A, including any amendments thereto, prepared by the Sponsor relating to the registration of the Preferred Securities under Section 12(b) of the Exchange Act; and (v) execute and enter into an underwriting agreement and pricing agreement providing for the sale of the Preferred Securities; (c) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and provide for reasonable compensation for such services; (d) to incur expenses which are necessary, appropriate, convenient or incidental to carry out any of the purposes of this Declaration; and (e) to execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary, appropriate, convenient or incidental to the foregoing. SECTION 2.7 Filing of Certificate of Trust. On or after the date of execution of this Declaration, the Regular Trustees shall cause the filing of the Certificate of Trust for the Trust in the form attached hereto as Exhibit A with the Secretary of State of the State of Delaware. SECTION 2.8 Duration of Trust. The Trust, absent termination pursuant to the provisions of Section 5.2, shall have existence for fifty-five (55) years from the date hereof. SECTION 2.9 Responsibilities of the Sponsor. In connection with the issuance and sale of the Preferred Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: (a) to prepare for filing by the Trust with the Commission a registration statement on Form S-3 in relation to the Preferred Securities, including any amendments thereto; (b) to determine the States in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; (c) to prepare for filing by the Trust an application to The New York Stock Exchange or any other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of any Preferred Securities; (d) to prepare for filing by the Trust with the Commission a registration statement on Form 8-A relating to the registration of the class of Preferred Securities under Section 12(b) of the Exchange Act, including any amendments thereto; and (e) to negotiate the terms of an underwriting agreement and pricing agreement providing for the sale of the Preferred Securities. SECTION 2.10 Declaration Binding on Securities Holders. Every Person by virtue of having become a Holder of a Security or any interest therein in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration. ARTICLE III TRUSTEES SECTION 3.1 Trustees. The number of Trustees initially shall be three (3) and, upon appointment of the Property Trustee pursuant to Section 3.4, shall be four (4); thereafter the number of Trustees shall be such 6 number as shall be fixed from time to time by a written instrument signed by the Sponsor. The Sponsor is entitled to appoint or remove without cause any Trustee at any time; provided, however, that the number of Trustees shall in no event be less than two (2); provided, further, that one Trustee, in the case of a natural person, shall be a person who is a resident of the State of Delaware or that, if not a natural person, is an entity which has its principal place of business in the State of Delaware (in its Trustee capacity, the "Delaware Trustee"); provided, further, that there shall be at least one trustee who is an employee or officer of, or is affiliated with the Sponsor (a "Regular Trustee"). SECTION 3.2 Regular Trustees. The initial Regular Trustees shall be: Carl F. Koenemann and Garth L. Milne. (a) Except as expressly set forth in this Declaration, any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular Trustee. (b) Unless otherwise determined by the Regular Trustees, and except as otherwise required by the Business Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any documents which the Regular Trustees have the power and authority to cause the Trust to execute pursuant to Section 2.6; provided that, the registration statement referred to in Section 2.6(b)(i), including any amendments thereto, shall be signed by at least a majority of the Regular Trustees; and (c) A Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purposes of signing any documents which the Regular Trustees have power and authority to cause the Trust to execute pursuant to Section 2.6. SECTION 3.3 Delaware Trustee. The initial Delaware Trustee shall be: First Union Trust Company, National Association. Notwithstanding any other provision of this Declaration, the Delaware Trustee shall not be entitled to exercise any of the powers, nor shall the Delaware Trustee have any of the duties and responsibilities of, the Regular Trustees described in this Declaration, or any other duties and responsibilities except as expressly stated in this Section 3.3. The Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807(a) of the Business Trust Act. Notwithstanding anything in this Declaration to the contrary, neither the Trust Company nor the Delaware Trustee shall be liable for the acts, or omissions to act, of the Delaware Trustee, of the Trust, of the Sponsor or any of the Regular Trustees except to the Trust and the beneficial owners of the Trust for the gross negligence or willful misconduct of the Delaware Trustee. The Delaware Trustee may resign upon thirty (30) days written notice to the Sponsor. 7 SECTION 3.4 Property Trustee. Prior to the issuance of the Preferred Securities and Common Securities, the Sponsor shall appoint a trustee (the "Property Trustee") meeting the requirements of an eligible trustee of the Trust Indenture Act of 1939, as amended, by the execution of an amendment to, or an amendment and restatement of, this Declaration executed by the Regular Trustees, the Sponsor, the Property Trustee and the Delaware Trustee. SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration. The recitals contained in this Declaration shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration. ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS SECTION 4.1 Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions; and (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which distributions to holders of Securities might properly be paid. SECTION 4.2 Fiduciary Duty. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other 8 Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person; (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between Covered Persons; or (ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise; and (c) whenever in this Declaration an Indemnified Person is permitted or required to make a decision: (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. SECTION 4.3 Indemnification. (a) The Sponsor shall indemnify, to the fullest extent permitted by law, any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees), judgments, fines 9 and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Company Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (i) The Sponsor shall indemnify, to the fullest extent permitted by law, any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Company Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper. (ii) to the extent that a Company Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in defense of any claim, issue or matter therein, he shall be indemnified, to the fullest extent permitted by law, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (iii) Any indemnification under paragraphs (i) and (ii) of this Section 4.3(a) (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Company Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a majority 10 vote of a quorum consisting of such Regular Trustees who were not parties to such action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Common Security Holder of the Trust. (iv) Expenses (including attorneys' fees) incurred by a Company Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 4.3(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the Regular Trustees, counsel or the Common Security Holder at the time such determination is made, such Company Indemnified Person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Company Indemnified Person believed or had reasonable cause to be believe his conduct was unlawful. In no event shall any advance be made in instances where the Regular Trustees, independent legal counsel or the Common Security Holder reasonably determine that such person deliberately breached his duty to the Trust or its Common or Preferred Security Holders. (v) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 4.3(a) shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors of the Sponsor or Preferred Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 4.3(a) shall be deemed to be provided by a contract between the Sponsor and each Company Indemnified Person who serves in such capacity at any time while this Section 4.3(a) is in effect. Any repeal or modification of this Section 4.3(a) shall not affect any rights or obligations then existing. 11 (vi) The Sponsor or the Trust may purchase and maintain insurance on behalf of any person who is or was a Company Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 4.3(a). (vii) For purposes of this Section 4.3(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 4.3(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued. (viii) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 4.3(a) shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Company Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. (b) The Sponsor agrees to indemnify (i) the Trust Company and the Delaware Trustee, (ii) any Affiliate of the Delaware Trustee and (iii) any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Trust Company and the Delaware Trustee (each of the Persons in (i) through (iii) being referred to as a "Fiduciary Indemnified Person") for, and to defend and hold each Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder or the performance hereof or exercise of its rights hereunder, including, without limitation, the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its rights, powers or duties hereunder. The obligation to indemnify as set forth in this Section 4.3(b) shall survive the termination of this Declaration and the resignation of the Delaware Trustee. SECTION 4.4 Outside Businesses. Any Covered Person, the Sponsor, any Regular Trustee, any Trust Company and the Delaware Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such 12 independent ventures or the income or profits derived therefrom and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, any Regular Trustee, any Trust Company or the Delaware Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Sponsor, any Regular Trustee, any Trust Company and the Delaware Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, any Regular Trustee, any Trust Company and the Delaware Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for or may act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates. ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS SECTION 5.1 Amendments. At any time before the issue of any Securities, this Declaration may be amended by, and only by, a written instrument executed by all of the Regular Trustees and the Sponsor, provided, however, if the amendment affects the rights, powers, duties, obligation, benefits, privileges, protections, indemnities or immunities of the Trust Company or the Delaware Trustee, the amendment shall also be approved by the Trust Company and the Delaware Trustee. SECTION 5.2 Termination of Trust. (a) The Trust shall dissolve: (i) upon the bankruptcy of the Sponsor; (ii) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor or the revocation of the Sponsor's charter or of the Trust's certificate of trust; (iii) upon the entry of a decree of judicial dissolution of the Sponsor, or the Trust; and (iv) before the issue of any Securities, with the consent of all of the Regular Trustees and the Sponsor. (b) As soon as is practicable after the occurrence of an event referred to in Section 5.2(a), the Regular Trustees shall pay or make reasonable provision for the payment of all liabilities of the 13 Trust and execute and file a certificate of cancellation with the Secretary of State of the State of Delaware and the Trust shall terminate. SECTION 5.3 Governing Law. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. SECTION 5.4 Headings. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. SECTION 5.5 Successors and Assigns. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. SECTION 5.6 Partial Enforceability. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. SECTION 5.7 Counterparts. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 14 IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day and year first above written. MOTOROLA, INC., as Sponsor and Debenture Issuer By: /s/ Carl F. Koenemann ------------------------------- Name: Carl F. Koenemann Title: Senior Vice President and Chief Financial Officer FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Delaware Trustee By: /s/ Edward L. Truitt, Jr. ------------------------------- Name: Edward L. Truitt, Jr. Title: Vice President By: /s/ Carl F. Koenemann ------------------------------- Carl F. Koenemann, as Regular Trustee By: /s/ Garth L. Milne ------------------------------- Garth L. Milne, as Regular Trustee 15 EX-4.9 5 SPECIMEN OF 6 1/2% DEBENTURE DUE NOV. 15, 2028 Exhibit 4.9 SPECIMEN MOTOROLA, INC. 6 1/2% Debenture Due November 15, 2028 Number R-1 CUSIP NO.: 620076 AP 4 Unless and until this certificate is exchanged in whole or in part for Debentures in definitive registered form, this Debenture may not be transferred except as a whole by The Depository Trust Company, a New York corporation ("DTC" or the "Depositary"), to its nominee or by its nominee to DTC or another nominee of DTC or by DTC or any such nominee to a successor depository or a nominee of such successor depository. Any certificate issued in exchange herefor shall be registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment in respect hereof shall be made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC). MOTOROLA, INC., a Delaware corporation (the "Issuer", which term includes any successor corporation under the Senior Indenture hereafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, or at such other locations as the Issuer may from time to time designate, the principal sum of FOUR HUNDRED FORTY-FIVE MILLION DOLLARS on November 15, 2028, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semiannually on May 15 and November 15 of each year, commencing May 15, 1999, on the original principal amount hereof at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Debenture, from the May 15 or the November 15, as the case may be, next preceding the date of this Debenture to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Debenture, or unless no interest has been paid on the Debentures (as defined below) or duly provided for, in which case from November 23, 1998, until payment of the principal amount hereof has been made or duly provided for; provided, that payment of interest may be made at the option of the Issuer by check mailed by first class mail to the address of the person entitled thereto as such address shall appear on the Security register. Notwithstanding the foregoing, if the date hereof is after May 1 or November 1 as the case may be, and before the following May 15 or November 15, this Debenture shall bear interest from such May 15 or November 15; provided, that if the Issuer shall default in the payment of interest due on such May 15 or November 15, then this Debenture shall bear interest from the next preceding May 15 or November 15, to which interest has been paid or duly provided for or, if no interest has been paid on the Debentures or duly provided for, from November 23, 1998. The interest so payable on any May 15 or November 15 will, subject to certain exceptions provided in the Senior Indenture referred to on the reverse hereof, be paid to the person in whose name this Debenture (or one or more predecessor Debentures) is registered at the close of business on the May 1 or November 1 (whether or not a Business Day), as the case may be, next preceding such May 15 or November 15. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Reference is made to the further provisions of this Debenture set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Debenture shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by the Trustee under the Senior Indenture referred to on the reverse hereof by manual signature. IN WITNESS WHEREOF, Motorola, Inc. has caused this instrument to be signed by one of its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. MOTOROLA, INC. By: ----------------------- Its: ----------------------- ATTEST: - --------------------------- Its: ----------------------- TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Senior Indenture. HARRIS TRUST AND SAVINGS BANK, as Trustee By: ----------------------- Its: ----------------------- [REVERSE OF DEBENTURE] MOTOROLA, INC. 6 1/2% Debenture due November 15, 2028 This Debenture is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (hereinafter called the "Securities") of the series hereinafter specified, all issued or to be issued under and pursuant to a Senior Indenture dated as of May 1, 1995 (herein called the "Senior Indenture"), duly executed and delivered by the Issuer to Harris Trust and Savings Bank, as Trustee (herein called the "Trustee"), to which Senior Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any) and may otherwise vary as provided in the Senior Indenture. This Debenture is one of a series designated as the 6 1/2% Debentures due November 15, 2028 (the "Debentures") of the Issuer, limited in aggregate principal amount at maturity to $445,000,000. Except as otherwise provided in the Senior Indenture, this Debenture will be issued in global form only registered in the name of the Depositary or its nominee. This Debenture will not be issued in definitive form, except as otherwise provided in the Senior Indenture, and ownership of this Debenture shall be maintained in book-entry form by the Depositary for the accounts of participating organizations of the Depositary. In case an Event of Default with respect to the Debentures shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Senior Indenture. The Senior Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series issued under such Senior Indenture then Outstanding and affected, voting as one class, to add any provisions to, or change in any manner or eliminate any of the provisions of, such Senior Indenture or modify in any manner the rights of the Holders of the Securities of each series so affected; provided that the Issuer and the Trustee may not, without the consent of the Holder of each Security affected thereby, (i) extend the stated maturity of the principal of any Security, or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (including any amount in respect of original issue discount), premium, if any, or interest thereon is payable or reduce the amount of any original issue discount security payable upon acceleration or provable in bankruptcy or impair the right to institute suit for the enforcement of any payment on any Security when due or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under such Senior Indenture, the consent of the Holders of which is required for any such modification. It is also provided in the Senior Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, prior to any declaration accelerating the maturity of such Securities, the Holders of a majority in aggregate principal amount Outstanding of the Securities of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Securities) may on behalf of the Holders of all the Securities of such series (or all or certain series of the Securities, as the case may be) waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal or interest on any of the Securities. Any such consent or waiver by the Holder of this Debenture (unless revoked as provided in the Senior Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and any Debentures which may be issued in exchange or substitution hereof or on registration of transfer hereof, irrespective of whether or not any notation thereof is made upon this Debenture or such other Debentures. No reference herein to the Senior Indenture and no provision of this Debenture or of the Senior Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Debenture in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The Debentures are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, or at such other locations as the issuer may from time to time designate, and in the manner and subject to the limitations provided in the Senior Indenture, but without the payment of any service charge, Debentures may be exchanged for a like aggregate principal amount of Debentures of other authorized denominations. The Debentures shall be redeemable at the option of the Issuer, in whole at any time or in part from time to time (each a "Redemption Date"), at a redemption price equal to the greater of (i) 100% of their principal amount and (ii) the sum, as determined by the Independent Investment Banker, of the present values of the principal amount and the remaining scheduled payments of interest on the Debentures to be redeemed (exclusive of interest accrued to such Redemption Date), discounted from the scheduled payment dates to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points plus, in each case, accrued but unpaid interest thereon to the Redemption Date. Notwithstanding the foregoing, installments of interest on Debentures that are due and payable on an interest payment date falling on or prior to the relevant Redemption Date will be payable to the holders of such Debentures registered as such at the close of business on the relevant record date according to their terms and the provisions of the Senior Indenture. Notice of any redemption must be given at least 30 days but not more than 60 days before the Redemption Date to each holder of Debentures to be redeemed. If money sufficient to pay the redemption price of and accrued interest on the Debentures (or portion thereof) to be redeemed on the Redemption Date is deposited on or before the Redemption Date and the other conditions set 2 forth in the Senior Indenture are satisfied, then on and after such date, interest will cease to accrue on the Debentures called for redemption. "Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Debentures to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Debentures to be redeemed. "Comparable Treasury Price" means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "Independent Investment Banker" means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company. "Reference Treasury Dealer" means each of Merrill Lynch Government Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated together with their affiliates and their respective successors and any other primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer") selected by the Company in addition to, or in substitution for, any of such firms; provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company will substitute another Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date for the Debentures, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such Redemption Date. "Treasury Rate" means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated on the third business day preceding such Redemption Date using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Debentures are not entitled to any sinking fund. Upon due presentment for registration of transfer of this Debenture at the office or agency of the Issuer in the Borough of Manhattan, The City of New York, or at such other locations as the Issuer may from time to time designate, a new Debenture or Debentures of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject 3 to the limitations provided in the Senior Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Debenture (whether or not this Debenture shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the principal hereof and subject to the provisions on the face hereof, interest hereon, and for all other purposes, and none of the Issuer, the Trustee or any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Issuer in the Senior Indenture or any indenture supplemental thereto or in any Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration of the issue hereof. This Debenture shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. Terms used herein which are defined in the Senior Indenture shall have the respective meanings assigned thereto in the Senior Indenture. * * * * 4 FOR VALUE RECEIVED, the undesigned hereby sell(s), assign(s) and transfer(s) unto: - -------------------------------------------------------------------------------- (Please insert social security or other identifying number of assignee) - -------------------------------------------------------------------------------- (Please print or type name and address including zip code of assignee) the within Debenture and all rights thereunder, hereby irrevocably constituting and appointing such person attorney to transfer such Debenture on the books of the Issuer, with full power of substitution in the premises. Dated: Signed: -------------------- ---------------------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Debenture in every particular without alteration or enlargement or any change whatsoever. Signature Guarantee: 5 EX-5.2 6 OPINION & CONSENT OF RICHARDS LAYTON & FINGER Exhibit 5.2 [RICHARDS, LAYTON & FINGER, P.A. LETTERHEAD] January 25, 1999 Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Re: Motorola Capital Trust I ------------------------ Ladies and Gentlemen: We have acted as special Delaware counsel for Motorola, Inc., a Delaware corporation (the "Company") and Motorola Capital Trust I, a Delaware business trust (the "Trust") in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, as filed with the office of the Secretary of State of the State of Delaware (the "Secretary of State") on January 19, 1999; (b) The Declaration of Trust, dated as of January 19, 1999, among the Company and the trustees named therein; (c) The Registration Statement, (the "Registration Statement"), on Form S-3, including a preliminary prospectus with respect to the Trust (the "Prospectus"), relating to the Preferred Securities of the Trust representing preferred undivided beneficial interests in the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as filed by the Company and the Trust as set forth therein with the Securities and Exchange Commission; Motorola Capital Trust I January 25, 1999 Page 2 (d) The Amended and Restated Declaration of Trust to be entered into by the Company and the trustees of the Trust named therein (the "Declaration"), in the form attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated January 22, 1999, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Declaration. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Declaration constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Declaration and the Certificate of Trust will be in full force and effect and will not have been amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for such Preferred Security, in accordance with the Declaration and the Prospectus and (vii) that the Preferred Securities have been issued and sold to the Preferred Security Holders in accordance with the Declaration and the Prospectus. We have not participated in the preparation of the Registration Statement or the Prospectus and assume no responsibility for their contents. Motorola Capital Trust I January 25, 1999 Page 3 This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act. 2. The Preferred Securities of the Trust will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable beneficial interests in the assets of the Trust. 3. The Preferred Securities Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Securities Holders may be obligated to make payments as set forth in the Declaration. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. We hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. We also consent to Kirkland & Ellis' relying as to matters of Delaware law upon this opinion in connection with opinions to be rendered by them with respect to the Preferred Securities. Very truly yours, /s/ Richards, Layton & Finger, P.A. EAM/sek EX-8 7 OPINION & CONSENT OF KIRKLAND & ELLIS Exhibit 8 [Kirkland & Ellis] January 25, 1999 Motorola, Inc. Motorola Capital Trust I 1303 East Algonquin Road Schamburg, Illinois 60196 Re: Motorola, Inc.; Motorola Capital Trust I Registration Statement on Form S-3 (Registration No. 333-70827) Dear Ladies and Gentlemen: In connection with the preparation of the Registration Statement (as defined below) for the registration under the Securities Act of 1933, as amended (the "Act"), of 20,000,000 shares of Preferred Securities (the "Preferred Securities") of Motorola Capital Trust I, you have requested our opinion concerning certain statements set forth in the Form S-3 Registration Statement filed with the Securities and Exchange Commission under the Act (the "Registration Statement"). Based on the foregoing, we hereby confirm to you that the statements of law and legal conclusions set forth in the Registration Statement under the caption "United States Federal Income Taxation" regarding the tax consequences to such holders of the Preferred Securities represent, subject to the qualifications and limitations set forth therein, the opinion of Kirkland & Ellis, counsel to the Issuer and the Company (as such terms are defined in the Registration Statement). The opinions set forth herein are based on the applicable provisions of the Internal Revenue Code of 1986, as amended; the Treasury Regulations promulgated or proposed thereunder; current positions of the Internal Revenue Service (the "IRS") contained in published revenue rulings, revenue procedures and announcements; existing judicial decisions; and other applicable authorities. In conclusion, we should note that unlike a ruling from the IRS, opinions of counsel are not binding on the IRS. Hence, no assurance can be given that the opinion stated in this letter will not be successfully challenged by the IRS or rejected by a court. We express no opinion concerning any Federal income tax matter other than that discussed herein. Very truly yours, /s/ Kirkland & Ellis KIRKLAND & ELLIS EX-23.4 8 CONSENT OF KPMG LLP Exhibit 23.4 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Motorola, Inc.: We consent to incorporation by reference in the registration statement on Form S-3 of Motorola, Inc. of our reports dated January 12, 1998, relating to the consolidated balance sheets of Motorola, Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of earnings, stockholders' equity, and cash flows and related financial statement schedule for each of the years in the three-year period ended December 31, 1997, which reports appear in or are incorporated by reference in the annual report on Form 10-K of Motorola, Inc. for the year ended December 31, 1997. KPMG LLP Chicago, Illinois January 25, 1999 EX-25 9 STATEMENT OF ELIGIBILITY - HARRIS TRUST - FORM T-1 Exhibit 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 Statement of Eligibility Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) ______ HARRIS TRUST AND SAVINGS BANK (Name of Trustee) Illinois 36-1194448 (State of Incorporation) (I.R.S. Employer Identification No.) 111 West Monroe Street, Chicago, Illinois 60603 (Address of principal executive offices) Carolyn Potter, Harris Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois, 60606 312-461-2531 phone 312-461-3525 facsimile (Name, address and telephone number for agent for service) MOTOROLA, INC. MOTOROLA CAPITAL TRUST I (Obligor) Delaware 36-11158000 Delaware applied for (State of Incorporation) (I.R.S. Employer Identification No.) 1303 East Algonquin Road Schaumburg Illinois 60196 (Address of principal executive offices) Preferred Securities Deferrable Interest Junior Subordinated Debentures Guarantee (Title of indenture securities) 1. GENERAL INFORMATION. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Commissioner of Banks and Trust Companies, State of Illinois, Springfield, Illinois; Chicago Clearing House Association, 164 West Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Harris Trust and Savings Bank is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee, describe each such affiliation. The Obligor is not an affiliate of the Trustee. 3. through 15. NO RESPONSE NECESSARY 16. LIST OF EXHIBITS. 1. A copy of the articles of association of the Trustee as now in effect which includes the authority of the trustee to commence business and to exercise corporate trust powers. A copy of the Certificate of Merger dated April 1, 1972 between Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which constitutes the articles of association of the Trustee as now in effect and includes the authority of the Trustee to commence business and to exercise corporate trust powers was filed in connection with the Registration Statement of Louisville Gas and Electric Company, File No. 2-44295, and is incorporated herein by reference. 2. A copy of the existing by-laws of the Trustee. A copy of the existing by-laws of the Trustee was filed in connection with the Registration Statement of Commercial Federal Corporation, File No. 333-20711, and is incorporated herein by reference. 3. The consents of the Trustee required by Section 321(b) of the Act. (included as Exhibit A on page 2 of this statement) 4. A copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority. (included as Exhibit B on page 3 of this statement) 1 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the laws of the State of Illinois, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago, and State of Illinois, on the 20th day of January, 1999. HARRIS TRUST AND SAVINGS BANK /s/ J. Bartolini By: ____________________________ J. Bartolini Vice President EXHIBIT A The consents of the trustee required by Section 321(b) of the Act. Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that reports of examinations of said trustee by Federal and State authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. HARRIS TRUST AND SAVINGS BANK /s/ J. Bartolini By: ____________________________ J. Bartolini Vice President 2 EXHIBIT B Attached is a true and correct copy of the statement of condition of Harris Trust and Savings Bank as of September 30, 1998, as published in accordance with a call made by the State Banking Authority and by the Federal Reserve Bank of the Seventh Reserve District. [LOGO] HARRIS BANK Harris Trust and Savings Bank 111 West Monroe Street Chicago, Illinois 60603 of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of business on September 30, 1998, a state banking institution organized and operating under the banking laws of this State and a member of the Federal Reserve System. Published in accordance with a call made by the Commissioner of Banks and Trust Companies of the State of Illinois and by the Federal Reserve Bank of this District. Bank's Transit Number 71000288
THOUSANDS ASSETS OF DOLLARS Cash and balances due from depository institutions: Non-interest bearing balances and currency and coin............... $1,097,714 Interest bearing balances......................................... $213,712 Securities:.............................................................. a. Held-to-maturity securities........................................... $0 b. Available-for-sale securities......................................... $5,036,734 Federal funds sold and securities purchased under agreements to resell... $48,950 Loans and lease financing receivables: Loans and leases, net of unearned income.......................... $9,111,098 LESS: Allowance for loan and lease losses........................ $104,900 ---------- Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b).............................................. $9,006,198 Assets held in trading accounts.......................................... $202,008 Premises and fixed assets (including capitalized leases)................. $245,290 Other real estate owned.................................................. $365 Investments in unconsolidated subsidiaries and associated companies...... $41 Customer's liability to this bank on acceptances outstanding............. $34,997 Intangible assets........................................................ $260,477 Other assets............................................................. $1,148,163 ----------- TOTAL ASSETS $17,294,649 ===========
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LIABILITIES Deposits: In domestic offices........................................................................... $9,467,895 Non-interest bearing..................................................................... $2,787,471 Interest bearing......................................................................... $6,680,424 In foreign offices, Edge and Agreement subsidiaries, and IBF's................................ $1,268,759 Non-interest bearing..................................................................... $ 23,329 Interest bearing......................................................................... $1,245,430 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds purchased & securities sold under agreements to repurchase........................ $3,118,548 Trading Liabilities............................................................................. 110,858 Other borrowed money: a. With remaining maturity of one year or less.................................................. $1,202,050 b. With remaining maturity of more than one year................................................ $0 Bank's liability on acceptances executed and outstanding........................................ $34,997 Subordinated notes and debentures............................................................... $225,000 Other liabilities............................................................................... $530,224 ----------- TOTAL LIABILITIES $15,958,331 =========== EQUITY CAPITAL Common stock.................................................................................... $100,000 Surplus......................................................................................... $604,834 a. Undivided profits and capital reserves....................................................... $580,271 b. Net unrealized holding gains (losses) on available-for-sale securities....................... $51,213 ----------- TOTAL EQUITY CAPITAL $1,336,318 =========== Total liabilities, limited-life preferred stock, and equity capital............................. $17,294,649 ===========
I, Pamela Piarowski, Vice President of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. PAMELA PIAROWSKI 10/29/98 We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and, to the best of our knowledge and belief, has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and the Commissioner of Banks and Trust Companies of the State of Illinois and is true and correct. EDWARD W. LYMAN, ALAN G. McNALLY, CHARLES SHAW Directors. 4 -----END PRIVACY-ENHANCED MESSAGE-----