Item 1.01. Entry into a Material Definitive Agreement
On September 12, 2018, QUALCOMM Incorporated (Qualcomm) entered into accelerated stock buyback agreements (each, an ASR Agreement) with each of Bank of America, N.A., Citibank, N.A. and Morgan Stanley & Co. LLC (each, a Financial Institution, and together, the Financial Institutions) to repurchase an aggregate of $16 billion of Qualcomms common stock. The ASR Agreements are part of Qualcomms previously announced $30 billion stock repurchase program. Qualcomm is funding the share repurchases under the ASR Agreements with existing cash resources.
Under the terms of the ASR Agreements, Qualcomm will make payments in an aggregate amount of $16 billion to the Financial Institutions on September 14, 2018, and expects to receive on the same day initial deliveries of approximately 178,397,214 shares of Qualcomms common stock in the aggregate from the Financial Institutions. The final number of shares to be repurchased by Qualcomm will be based on the volume-weighted average stock price of Qualcomms common stock during the term of the ASR Agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreements. At settlement, under certain circumstances, one or more of the Financial Institutions may be required to deliver additional shares of common stock to Qualcomm, or under certain circumstances, Qualcomm may be required to deliver shares of common stock or to make a cash payment, at its election, to a Financial Institution. The final settlement under the ASR Agreements is scheduled to occur in September 2019, subject to earlier termination under certain limited circumstances, as set forth in the ASR Agreements.
Each of the ASR Agreements contains customary terms for these types of transactions, including, but not limited to, the mechanisms to determine the number of shares or the amount of cash that will be delivered at settlement, the required timing of delivery of the shares, the specific circumstances under which adjustments may be made to the transactions, the specific circumstances under which the transactions may be terminated prior to their scheduled maturities and various acknowledgements, representations and warranties made by Qualcomm and the applicable Financial Institution to one another.
From time to time, one or more of the Financial Institutions and/or their affiliates have directly and indirectly engaged, and may engage in the future, in investment and/or commercial banking transactions with Qualcomm for which such Financial Institution has received, or may receive, customary compensation, fees and expense reimbursement.
The foregoing description of the ASR Agreements does not purport to be complete and is qualified in its entirety by reference to the ASR Agreements, copies of which are attached as Exhibits 10.1, 10.2 and 10.3 and are incorporated herein by reference.
A copy of the press release announcing Qualcomms entry into the ASR Agreements is furnished herewith as Exhibit 99.1.
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