-----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,
Neie7BF1hcm0z6fFz/rSNFcyMvBgSa+Z7Amz3T/HODvhQYDTP7tXK1J2aTPAHSLC
O3XtOV11/yLPYICLW0wTBQ==
<SEC-DOCUMENT>0000950137-01-500523.txt : 20010402
<SEC-HEADER>0000950137-01-500523.hdr.sgml : 20010402
ACCESSION NUMBER: 0000950137-01-500523
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 10
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010330
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: 10-K
SEC ACT:
SEC FILE NUMBER: 001-07221
FILM NUMBER: 1587148
BUSINESS ADDRESS:
STREET 1: 1303 E ALGONQUIN RD
CITY: SCHAUMBURG
STATE: IL
ZIP: 60196
BUSINESS PHONE: 8475765000
MAIL ADDRESS:
STREET 1: 1303 EAST ALGONQUIN ROAD
CITY: SCHAUMBURG
STATE: IL
ZIP: 60196
FORMER COMPANY:
FORMER CONFORMED NAME: MOTOROLA DELAWARE INC
DATE OF NAME CHANGE: 19760414
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>c61260e10-k.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------
COMMISSION FILE NUMBER 1-7221
MOTOROLA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-1115800
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 EAST ALGONQUIN ROAD, SCHAUMBURG, ILLINOIS 60196
(Address of principal executive offices)
(847) 576-5000
(Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, $3 Par Value per Share New York Stock Exchange
Chicago Stock Exchange
Rights to Purchase Junior Participating New York Stock Exchange
Preferred Stock, Series B Chicago Stock Exchange
Liquid Yield Option Notes due 2009 New York Stock Exchange
Liquid Yield Option Notes due 2013 New York Stock Exchange
6.68% Trust Originated Preferred Securities New York Stock Exchange
(issued by Motorola Capital Trust I and
guaranteed by Motorola, Inc.)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting and non-voting common equity held
by non-affiliates of the registrant as of January 31, 2001 was approximately
$48.7 billion (based on closing sale price of $22.81 per share as reported for
the New York Stock Exchange-Composite Transactions).
The number of shares of the registrant's Common Stock, $3 par value per
share, outstanding as of January 31, 2001 was 2,192,725,028.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
DOCUMENT LOCATION IN FORM 10-K
-------- --------------------------
<S> <C>
Portions of Registrant's Proxy Statement for 2001 Annual Meeting of Stockholders Including Parts I, II, III and IV
Management's Discussion and Analysis and Consolidated Financial Statements
</TABLE>
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PART I.........................................................................................................1
ITEM 1. BUSINESS..............................................................................................1
General...................................................................................................1
Business Segments.........................................................................................1
Personal Communications Segment.......................................................................1
Global Telecom Solutions Segment......................................................................3
Commercial, Government and Industrial Systems Segment.................................................4
Broadband Communications Segment......................................................................5
Semiconductor Products Segment........................................................................7
Integrated Electronic Systems Segment.................................................................8
Other Products Segment................................................................................9
Other ....................................................................................................9
Financial Information About Segments..................................................................9
Customers.............................................................................................9
Backlog...............................................................................................9
Research and Development.............................................................................10
Patents and Trademarks...............................................................................10
Environmental Quality................................................................................10
Miscellaneous........................................................................................10
Financial Information About Foreign and Domestic Operations and Export Sales.........................11
Business Risk Factors....................................................................................11
ITEM 2. PROPERTIES...........................................................................................16
ITEM 3. LEGAL PROCEEDINGS....................................................................................17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................19
Executive Officers of the Registrant..........................................................................19
PART II.......................................................................................................21
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................21
ITEM 6. SELECTED FINANCIAL DATA..............................................................................21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................................................21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................21
PART III......................................................................................................22
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................................................22
ITEM 11. EXECUTIVE COMPENSATION..............................................................................22
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................22
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................22
PART IV.......................................................................................................23
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.....................................23
14(a)(1) Financial Statements...........................................................................23
14(a)(2) Financial Statement Schedule and Independent Auditors' Report..................................23
14(a)(3) Exhibits.......................................................................................23
</TABLE>
i
<PAGE> 3
PART I
Throughout this 10-K report we "incorporate by reference" certain
information in parts of other documents filed with the Securities and Exchange
Commission (the "SEC"). The SEC allows us to disclose important information by
referring to it in that manner. Please refer to such information.
"Motorola" (which may be referred to as "we", "us" or "our") means Motorola,
Inc. or Motorola, Inc. and its subsidiaries, as the context requires. "Motorola"
is a registered trademark of Motorola, Inc.
ITEM 1: BUSINESS
General
Motorola is a global leader in providing integrated communications solutions
and embedded electronic solutions. These include:
o Software-enhanced wireless telephone, two-way radio and messaging
products and systems, as well as networking and Internet-access
products, for consumers, network operators and commercial, government
and industrial customers.
o End-to-end systems for the delivery of interactive digital video, voice
and high-speed data solutions for broadband operators.
o Embedded semiconductor solutions for customers in the networking and
computing, transportation, wireless communications and digital
consumer/home networking markets.
o Embedded electronic systems for automotive, industrial, transportation,
navigation, communications and energy systems markets.
Motorola is a corporation organized under the laws of the State of Delaware
as the successor to an Illinois corporation organized in 1928. Motorola's
principal executive offices are located at 1303 East Algonquin Road, Schaumburg,
Illinois 60196 (telephone number: 847-576-5000).
Business Segments
PERSONAL COMMUNICATIONS SEGMENT
The Personal Communications Sector ("PCS" or the "segment") primarily
designs, manufactures, sells and services wireless subscriber equipment
including wireless telephones, iDEN(R) digital radio telephones, paging and
advanced messaging devices and personal two-way radios, with related software
and accessory products. Products are marketed worldwide through carriers,
distributors, dealers, retailers, and, in certain markets, through licensees.
During 2000, PCS initiated significant actions to realign its businesses and
improve its cost structure. These actions focused on product simplification and
restructuring of the supply chain. Product simplification actions resulted in
the discontinuation of multiple products, primarily analog and first-generation
digital telephones. Supply-chain actions resulted in (i) the downsizing of
several facilities, (ii) the sale of a factory in Dublin, Ireland and (iii)
initiating the exit from a factory in Boynton Beach, Florida, which is expected
to be completed in 2001. In addition, supply agreements and alliances were
formed with major outsourcing companies to improve the cost-competitiveness of
the business. In a continued effort to reduce costs in its wireless handset
business, PCS has announced additional business reorganization actions in 2001.
These actions, which are expected to result in employment reductions of 12,000
positions from December 2000 levels, will affect all aspects of the business,
across all geographies.
Generally, the segment carries reasonable product inventories in
distribution centers to meet customer delivery requirements. During 2001, the
segment experienced a significant inventory build-up because its supply-chain
strategy was based on an unfulfilled expectation of higher sales of wireless
phones. The segment expects inventory levels to decrease during 2001 as it
continues to improve its supply-chain management. Inventory management remains
an area of focus as PCS balances the need to maintain strategic inventory levels
to ensure competitive lead times with the risk of inventory obsolescence due to
rapidly changing technology and customer requirements.
PCS does not permit customers to return merchandise and does not grant
extended payment terms unless necessary to meet unique market conditions.
1
<PAGE> 4
The segment experiences intense competition in worldwide markets from
numerous global competitors, including some of the world's largest companies. In
particular, the segment has experienced significant competition in the market
for digital wireless products. Competitive factors in the market for the
segment's products include: technology offered; price; product performance,
quality, features and warranty; consumer design; delivery terms; the quality and
availability of service; company image and strength of brand; relationship with
key customers, and time-to-market.
The segment's backlog amounted to $2.1 billion at December 31, 2000 and $2.8
billion at December 31, 1999. The 2000 order backlog is believed to be generally
firm and 100% of that amount is expected to be shipped in 2001. The
forward-looking estimates of the firmness of such orders is subject to future
events which may cause the percentage of the 2000 backlog actually shipped to
change.
Radio frequencies are required to provide wireless services. The allocation
of frequencies is regulated in the United States and other countries throughout
the world and limited spectrum space is allocated to wireless services. The
growth of the wireless and personal communications industry may be affected if
adequate frequencies are not allocated or, alternatively, if new technologies
are not developed to better utilize the frequencies currently allocated for such
use. Industry growth may also be affected by the cost of new licenses required
to use frequencies. Typically, governments sell these licenses at auctions. Over
the last several years, the cost of these licenses has increased significantly,
particularly for frequencies used in connection with third-generation (3G)
wireless technology. The significant cost for licenses may slow the growth of
the industry if service providers do not purchase new licenses or delay
introducing new technology and upgrading their systems. The segment's results
could be adversely affected if this occurs.
Materials used in the segment's operations are generally second-sourced to
ensure a continuity of supply. Occasionally, shortages or extended delivery
periods have occurred in various component parts, the effects of which have
generally been industry-wide and short in duration. Shortages did occur in the
first half of 2000. These shortages are not expected to occur in 2001. Energy
necessary for the segment's manufacturing facilities consists of electricity,
natural gas and gasoline, all of which are currently in generally adequate
supply. The segment's facilities are highly automated and, therefore, require a
reliable source of electrical power. Labor is generally available in reasonable
proximity to the segment's manufacturing facilities. Difficulties in obtaining
any of the aforementioned items could affect the segment's results.
Patent protection is extremely important to the segment's operations. The
segment has an extensive portfolio of patents relating to its products,
technologies and manufacturing processes. Motorola licenses technologies related
to these patents and receives income from these licenses. Motorola is also
licensed to use certain patents owned by others. The protection of these
licenses is also important to the segment's operations. Reference is made to the
material under the heading "General" for information relating to patents and
trademarks, research and development activities and the seasonality and
volatility of business with respect to this segment.
PCS's headquarters are located in Libertyville, Illinois. Its major
facilities are located in Libertyville and Harvard, Illinois; Boynton Beach and
Plantation, Florida; Easter Inch, Scotland; Flensburg, Germany; Tianjin, China;
Penang, Malaysia; Singapore; Bangalore, India; Chihuahua, Mexico, and
Jaguariuna, Brazil. PCS also has interests in two Korean cellular handset design
and manufacturing firms, cellular joint ventures in Hangzhou and Shanghai,
China, and a manufacturing licensee in China. PCS also uses several original
equipment manufacturing ("OEM") contractors to support its worldwide
manufacturing needs. Additional engineering, software development and
administration offices are located in San Diego, California; Champaign,
Illinois; Ft. Worth, Texas; Tokyo, Japan; Beijing, China, and Seoul, Korea. As
described above, PCS sold its facility in Dublin, Ireland and is ceasing
manufacturing operations at its factory in Boynton Beach, Florida. The segment
has also announced that it expects to cease manufacturing operations at its
Harvard, Illinois facility and sell its Bangalore, India facility by mid-2001.
The Harvard facility will serve as a customer order fulfillment and new product
sourcing center.
2
<PAGE> 5
GLOBAL TELECOM SOLUTIONS SEGMENT
The Global Telecom Solutions Sector ("GTSS" or the "segment"), formerly
known as the Network Solutions Sector, primarily designs, manufactures, sells,
installs and services cellular and fixed digital wireless infrastructure
equipment. The satellite communications business, which was also included in
this segment for 1999 and prior, no longer contributes to the segment's results.
GTSS wireless infrastructure products include electronic exchanges (i.e.,
telephone switches), base site controllers and radio base stations for Code
Division Multiple Access (CDMA), Personal Digital Cellular (PDC), Global System
for Mobile Communications (GSM) and integrated digital enhanced network
(iDEN(R)) technologies. Products are marketed worldwide through a direct sales
force, licensees or agents.
The nature of GTSS's business is large, long-term contracts with major
operators. Therefore, the individual loss of any large customer could have a
material adverse affect on the segment's business. In addition, the financial
condition of the major operators and their level of capital spending is
important to the segment's business. Increasingly, network operators are
requiring suppliers, like GTSS, to provide or arrange for long-term financing in
connection with equipment purchases. Financing may cover all or a portion of the
purchase price, as well as working capital, and can be sizable. GTSS may also
assist customers in obtaining financing from banks or other sources. GTSS
expects that the need to provide this financing or arrange financing for its
customers will continue, and may become increasingly important.
For GTSS, payment terms are particular to individual contracts, some of
which provide for the holdback of certain residual amounts due to Motorola until
system acceptance by the customer. Consistent with industry practices, GTSS
permits returns under normal contract warranty terms. For large initial systems,
related revenue is deferred if the contract provides for a right of return.
Occasional shortages of required purchased components do occur; however, this is
not considered a pervasive issue.
The segment experiences intense competition in worldwide markets from
numerous competitors, ranging in size from some of the world's largest companies
to small, specialized firms. In particular, the segment has experienced
significant competition in the market for digital products. Competitive factors
in the market for the segment's products include: technology offered; price;
availability of vendor financing; product and system performance, product
features, quality, delivery, availability and warranty; the quality and
availability of service; company image; relationship with key customers, and
time-to-market.
The segment's backlog amounted to $2.1 billion at December 31, 2000 and $2.2
billion at December 31, 1999. The 2000 order backlog is believed to be generally
firm and 100% of that amount is expected to be shipped in 2001. The
forward-looking estimates of the firmness of such orders is subject to future
events which may cause the percentage of the 2000 backlog actually shipped to
change.
Radio frequencies are required to provide wireless services. The allocation
of frequencies is regulated in the United States and other countries throughout
the world, and limited spectrum space is allocated to wireless services. The
growth of the wireless and personal communications industry may be affected if
adequate frequencies are not allocated or, alternatively, if new technologies
are not developed to better utilize the frequencies currently allocated for such
use. Industry growth may also be affected by the cost of the new licenses
required to use frequencies. Typically, governments sell these licenses at
auctions. Over the last several years, the cost of these licenses has increased
significantly, particularly for frequencies used in connection with
third-generation (3G) technology. The significant cost for licenses may slow the
growth of the industry if service providers do not purchase new licenses or
delay introducing new technology and upgrading their systems. Such occurrences
might have an effect on the segment's results.
Materials used in the segment's operations are generally second-sourced to
ensure a continuity of supply. Occasional shortages in purchased components do
occur. Energy necessary for the segment's manufacturing facilities consists of
electricity, natural gas and gasoline, all of which are currently in generally
adequate supply. The segment's facilities are highly automated and, therefore,
require a reliable source of electrical power. Labor is generally available in
reasonable proximity to the segment's manufacturing facilities. Difficulties in
obtaining any of the aforementioned items could affect the segment's results.
Patent protection is extremely important to the segment's operations. The
segment has an extensive portfolio of patents relating to its products, systems,
technologies and manufacturing processes. Motorola is also licensed to use
3
<PAGE> 6
certain patents owned by others. The protection of these licenses is also
important to the segment's operations. Reference is made to the material under
the heading "General" for information relating to patents and trademarks,
research and development activities and the seasonality and volatility of
business with respect to this segment.
GTSS's headquarters are located in Arlington Heights, Illinois. Major design
centers include Arlington Heights and Schaumburg, Illinois; Chandler, Arizona;
Fort Worth, Texas; Cork, Ireland; Vancouver, British Columbia, and Swindon,
England. GTSS operates manufacturing facilities in Schaumburg, Illinois; Fort
Worth, Texas; Jaguariuna, Brazil; Hangzhou and Tianjin, China, and Swindon,
England. During 2000, GTSS decided to discontinue its wireless local loop and
broadband fixed wireless products and exit the SpectraPoint Wireless joint
venture with Cisco Systems, Inc.
COMMERCIAL, GOVERNMENT AND INDUSTRIAL SYSTEMS SEGMENT
The Commercial, Government and Industrial Systems Sector ("CGISS" or the
"segment") provides integrated information and communications solutions for
commercial, government and industrial customers worldwide. Its Radio Solutions
business primarily designs, manufactures, sells, installs and services analog
and digital two-way radio voice and data communications products and systems to
a wide range of public safety, government, utility, transportation and other
worldwide markets. The Integrated Information Solutions business provides
advanced government electronics and communications solutions primarily for
military and space applications. In recent years, CGISS has expanded its
portfolio and delivers comprehensive end-to-end solutions to public-safety and
large-enterprise customers through the application of converged information and
communications technologies. The business also provides platforms for smart card
products and systems, as well as advanced radio frequency identification (RFID)
technology offerings. CGISS also provides network management services for
two-way radio network customers.
The principal customers for two-way radio products and systems include:
public-safety agencies, such as police and fire; highway maintenance
departments; 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. These products are
also sold and leased to various federal agencies for a variety of uses.
The principal customers for government electronics and communications
solutions include various military and defense departments within the U.S. and
other governments and the National Aeronautics and Space Administration. The
emerging market for integrated information and communications technology
solutions includes public-safety and other municipal agencies and large
commercial enterprises.
Users of two-way radios are regulated by a variety of governmental and other
regulatory agencies throughout the world. In the United States, users of two-way
radios are licensed by the Federal Communication Commission ("FCC"), which has
broad authority to make rules and regulations and prescribe restrictions and
conditions to carry out the provisions of the Communications Act of 1934. The
FCC's authority includes, among other things, the power to classify radio
stations, prescribe the nature of the service to be rendered by each class of
station, assign frequencies to the various classes of stations and regulate the
kinds of equipment that may be used. Regulatory agencies in other countries have
similar types of authority. Motorola has developed products using trunking and
data communications technologies to enhance spectral efficiencies. The growth
and results of the two-way radio communications industry may be affected,
however, by the rules and regulations of the FCC or other regulatory agencies
relating to the allocation of frequencies for land mobile communications users,
especially in urban areas where such frequencies are heavily used. Consequently,
the segment's business and results could be affected by these rules and
regulations.
The products manufactured and marketed by CGISS are sold directly through
(i) its own distribution force, (ii) independent authorized distributors and
dealers, (iii) commercial mobile radio service operators and (iv) independent
commission sales representatives. The direct distribution force also provides
system engineering and installation and other technical and systems management
services to meet customers' particular needs. A customer may choose to install
and maintain the equipment with its own employees, or may obtain installation,
service and parts from a
4
<PAGE> 7
network of Motorola-authorized service stations (most of whom are also
authorized dealers) or from other non-Motorola service stations. Subscriber
units are sold directly and through indirect distribution channels.
Leasing and conditional sale arrangements are also made available to
customers. The majority of the leases and conditional sale contracts entered
into by CGISS are sold to several unaffiliated finance companies or banks on
terms, which, in most instances, provide recourse to Motorola with certain
limitations. In addition, a significant number of leases and conditional sale
contracts are sold to a Motorola finance subsidiary. In certain circumstances,
CGISS permits customers to return products in accordance with industry
practices.
CGISS's business includes providing custom products based on assembling
basic units into a large variety of models or combinations. This requires the
stocking of inventories and large varieties of piece parts and replacement
parts, as well as a variety of basic level assemblies in order to meet short
delivery requirements.
This segment experiences widespread, intense competition from numerous
competitors, ranging from some of the world's largest diversified companies to
foreign state-owned telecommunications companies to many small, specialized
firms. In addition, CGISS faces competition from numerous companies whose
principal manufacturing operations are located outside the United States, which
may serve to reduce their manufacturing costs and enhance their brand
recognition in their locale. Competitive factors for CGISS products, systems and
solutions include: price; technology offered; product performance, quality,
delivery and availability, and the quality and availability of service and
systems engineering, with no one factor being dominant. An additional factor is
the availability of vendor financing, as infrastructure customers continue to
look to equipment vendors as an additional source of financing.
This segment's backlog amounted to $2.3 billion at December 31, 2000 and
$2.0 billion at December 31, 1999. The 2000 backlog amount is believed to be
generally firm, and approximately 75% of that amount is expected to be shipped
during 2001. This forward-looking estimate of the firmness of such orders is
subject to future events, which may cause the percentage of the 2000 backlog
actually shipped to change.
Availability of the materials and components required by CGISS is relatively
dependable and certain, but normal fluctuations in market demand and supply
could cause temporary, selective shortages and affect results. Direct sourcing
of materials and components from foreign suppliers is becoming more extensive.
CGISS operates certain offshore subassembly plants, the loss of one or more of
which could constrain its production capabilities and affect results. Natural
gas, electricity and, to a lesser extent, oil are the primary sources of energy.
Current supplies of these forms of energy are generally considered to be
adequate for this segment's U.S. and foreign operations. However, difficulties
in obtaining any of the aforementioned items could affect the segment's results.
Patent protection is very important to the segment's business. Reference is
made to the material under the heading "General" for information relating to
patents and trademarks, research and development activities and volatility with
respect to this segment.
This segment's headquarters are located in Schaumburg, Illinois, with major
manufacturing/assembly facilities in Schaumburg, Illinois; Plantation, Florida;
Scottsdale, Arizona; Arad, Israel; Penang, Malaysia; Berlin, Germany; Tianjin,
China, and Jaguariuna, Brazil. CGISS sold the business operations at its Mount
Pleasant, Iowa facility in the first quarter of 2001.
BROADBAND COMMUNICATIONS SEGMENT
On January 5, 2000, Motorola and General Instrument Corporation completed
their previously announced merger. Following the merger, the Broadband
Communications Sector ("BCS" or the "segment") was formed. The segment designs,
manufactures and sells digital and analog systems and set-top terminals for
wired and wireless cable television networks; high speed data products,
including DOCSIS cable modems, as well as emerging Internet Protocol (IP)-based
telephony products; hybrid fiber/coaxial network transmission systems used by
cable television operators; digital satellite television systems for
programmers; direct-to-home (DTH) satellite networks and private networks for
business communications, and high-definition digital broadcast products for the
cable and broadcast industries.
The segment's products are marketed primarily to cable television operators,
satellite television programmers, and other communications providers worldwide.
Demand for the segment's products will depend primarily on
5
<PAGE> 8
capital spending by these communications providers for constructing, rebuilding
or upgrading their communications systems. The amount of capital spending, and
therefore, a majority of the segment's sales and profitability will be affected
by a variety of factors, including: general economic conditions; the continuing
trend of consolidation within the cable industry; the financial condition of
cable television system operators and alternative communications providers,
including their access to financing; technological developments; standardization
efforts that impact the deployment of new equipment, and new legislation and
regulations affecting the equipment sold by the segment.
There is a continuing trend of consolidation within the cable industry
worldwide, where a small number of operators own a majority of cable television
systems and account for a significant portion of the capital spending made by
cable television system operators. The loss of business from a significant
operator could have a material adverse effect on the segment's business. The
segment does not have any material long-term contracts with its customers.
The segment's communications equipment is sold primarily through sales
personnel employed by the segment who are skilled in the technology of these
systems.
The segment's products compete with those of a substantial number of
companies headquartered in the United States and throughout the world, and the
rapid technological changes occurring in the segment's markets are expected to
lead to the entry of new competitors. Competitive factors for BCS products,
systems and solutions include: technology offered; product and system
performance, features, quality, delivery and availability, and price. The
segment believes that it enjoys a strong competitive position because of its
large installed cable television equipment base, its strong relationships with
the major communications systems operators worldwide, its technological
leadership and its new product development capabilities.
The segment's backlog amounted to $1.0 billion at December 31, 2000 and $784
million at December 31, 1999. The 2000 order backlog is believed to be firm and
100% of that amount is expected to be shipped in 2001. The forward-looking
estimates of the firmness of such orders is subject to future events, which may
cause the percentage of the 2000 backlog actually shipped to change.
The sources of raw materials come primarily from large multinational
corporations supplying the electronics and telecommunications industries. In
general, the segment has access to several sources of supply for each component
in its major products; however the segment does source components that are
currently available only from single sources. The segment has in effect
inventory controls and other policies intended to minimize the effect of any
interruption in the supply of components. The segment currently sole sources
certain parts from Broadcom Corporation for its digital set top terminals and
DOCSIS cable modems. Any material disruption in supply from Broadcom for certain
products would have a material adverse impact on the segment's operations.
Electricity is the primary source of energy required for our foreign
manufacturing operations. These operations do not have significant risk relating
to the availability of this energy source; however, possible shortages in the
supply of electricity would affect the segment's operations.
The segment seeks to build upon its core enabling technologies, digital
compression, encryption and conditional access and control, in order to lead the
transition of the worldwide market for broadband communications networks. The
segment's policy is to protect its proprietary position by, among other methods,
filing U.S. and foreign patent applications to protect technology and
improvements that the segment considers important to the development of its
business. Although the segment's management believes that its patents provide a
competitive advantage, the segment will also rely on its proprietary knowledge
and ongoing technological innovation to develop and maintain its competitive
position, and will periodically seek to include its proprietary technologies in
certain patent pools that support the implementation of standards. The segment
participates as a founder of MPEG LA to allow for broad deployment of MPEG-2
compliant systems. The segment has also licensed its digital technology,
including DigiCipher(R) II/MPEG-2, to other equipment suppliers. The segment has
also entered into other license agreements, both as licensor and licensee,
covering certain products and processes with various companies. These license
agreements require the payment of certain royalties that are not expected to be
material to the segment's financial results.
BCS's headquarters are located in Horsham, Pennsylvania, with major research
and development offices in San Diego, California; Mansfield, Massachusetts, and
Arlington Heights, Illinois. BCS operates manufacturing facilities in Taipei,
Taiwan; Nogales, Mexico; Singapore; Bad Salzdetfurth and Nuremberg, Germany, and
Fort Worth, Texas. BCS has several sales offices throughout North America,
Europe, Latin America and the Asia Pacific regions.
6
<PAGE> 9
SEMICONDUCTOR PRODUCTS SEGMENT
The Semiconductor Products Sector ("SPS" or the "segment") designs, produces
and sells integrated semiconductor and software solutions for customers serving
the networking and computing, transportation, wireless communication and digital
consumer/home networking markets.
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 and automatic controls.
SPS sells its products worldwide to original equipment manufacturers
("OEMs") and a network of industrial distributors through its own sales force,
agents and distributors. Products manufactured by SPS are also supplied to other
operating units of Motorola. Other businesses of Motorola collectively
constitute the segment's largest customer and the volume of purchases by these
businesses has affected, and could continue to affect, SPS's results.
In general, merchandise sold to customers is warranted for the longer of (i)
the product warranty period of the distributor or (ii) three years. The segment
and its results are affected by the cyclical nature of the semiconductor
industry. Available capacity, cyclical customer demands, new product
introductions and aggressive pricing has and could continue to impact its
business and results. The segment's capacity for certain products has been
increased to meet current market demand. In addition, the segment supplements
its internal manufacturing capacity with joint venture manufacturing facilities
and purchases of products from outside vendors.
The semiconductor industry is subject to rapid changes in technology. This
requires a high level of capital spending and an extensive research, development
and design program to maintain state-of-the-art technology. Accordingly, SPS
maintains an extensive research and development program in advanced
semiconductor technology and a significant portion of Motorola's capital
expenditures have historically been, and are expected to continue to be, for
semiconductor facilities.
SPS experiences intense competition from numerous competitors ranging from
large companies offering a full range of products to small companies
specializing in certain segments of the market. The competitive environment also
is changing as a result of increased alliances between competitors. The segment
competes in many semiconductor markets, including the telecommunications,
personal computer/work station, industrial, transportation, consumer, computer
and distributor markets. Important factors in competition include: price;
technology offered; product features, quality, availability and warranty; the
quality and availability of service; time-to-market, and company image. The
ability to develop new products to meet customer requirements and to meet
customer delivery schedules are also competitive factors.
The segment's backlog amounted to $1.6 billion at December 31, 2000 and $1.7
billion at December 31, 1999. Orders may be and are placed by customers for
delivery up to 12 months in the future but, for purposes of calculating backlog,
only the next 13 weeks requirements are reported. In the semiconductor industry,
backlog quantities and shipment schedules under outstanding purchase orders are
frequently revised to reflect changes in customer needs. Binding agreements
calling for the sale of specific quantities at specific prices are, typically,
contractually subject to price or quantity revisions and are, as a matter of
industry practice, rarely formally enforced. Therefore, the segment believes
that most of its order backlog is cancelable. For these reasons, the amount of
backlog as of any particular date may not be an accurate indicator of future
results.
The segment is not currently experiencing any shortages in obtaining raw
materials. A significant portion of certain materials and parts used by SPS is
supplied from a single country. With respect to these and other materials, the
segment is constantly evaluating additional sources of supply to minimize the
risk of obtaining materials from only a few sources. Electricity, oil and
natural gas are used extensively in the segment's operations. All of these
energy sources are available in adequate quantities for current needs.
Electricity and oil are the primary energy sources for the segment's foreign
operations, and, presently, there are no shortages of these sources; although
the reliability of electrical power has been a problem from time to time at
certain facilities outside of the U.S. Difficulties in obtaining any of the
aforementioned items could affect SPS's results.
7
<PAGE> 10
Patent protection is very important to SPS's operations. In addition,
Motorola is licensed to use certain patents owned by others. The protection of
these licenses is also important to SPS's operations. Reference is made to the
material under the heading "General" for information relating to patents and
trademarks, research and development activities and seasonality of business with
respect to this industry segment.
The Semiconductor Products segment's headquarters are located in Austin,
Texas. Its major facilities are located in Austin, Texas; Chandler, Mesa and
Tempe, Arizona; Tianjin, China; Toulouse, France; Munich, Germany; Kwai Chung
and Tai Po, Hong Kong; Sendai and Tokyo, Japan; Tel Aviv, Israel; Kuala Lumpur,
Malaysia; Singapore, and East Kilbride and South Queensferry, Scotland. SPS is
consolidating its production network into fewer integrated "anchor" sites for
economies of scale and improved efficiency.
INTEGRATED ELECTRONIC SYSTEMS SEGMENT
The Integrated Electronic Systems Sector ("IESS" or the "segment") designs,
manufactures and sells automotive and industrial electronics systems and
solutions, portable energy storage products and systems, multi-function embedded
board and computer system products, and telematics products and solutions. The
segment is being reported as a separate segment for the first time in 2000. It
was previously part of the "Other Products" segment.
The Automotive and Industrial Electronics Group ("AIEG") uses its
high-quality application and engineering expertise to design and sell custom
electronic solutions for original equipment manufacturers ("OEMs"), including
foreign and domestic automobile manufacturers, heavy vehicle manufacturers, farm
equipment manufacturers and industrial customers.
The Energy Systems Group ("ESG") delivers complete portable energy system
solutions for many of today's leading brand-name mobile phones, notebooks, palm
computers, and other portable electronic products. A significant portion of ESG
sales is to other industry segments within Motorola, primarily the wireless
telephone business.
The Motorola Computer Group ("MCG") specializes in embedded computing
technology that is integrated by OEMs into a wide variety of products,
including: products and solutions utilized in telecommunications
infrastructures; CAT scanners and MRI medical systems; flight simulators, and
semiconductor manufacturing equipment.
The Telematics Communications Group ("TCG") provides automotive customers
with integrated wireless phones and a variety of wireless Internet systems,
including navigation and driver safety, and hands-free Internet access.
A significant part of the segment's business is dependent upon other
Motorola businesses, collectively, and three external customers. Each of these
key customers is served by more than one group within the segment, and with
multiple product offerings within the groups. The loss of a significant portion
of these customers' business could have a material adverse effect upon the
segment. The sale of the electronic ballast business, Motorola Lighting, Inc.,
was completed in the first quarter of 2000.
Demand for the products of AIEG and TCG is linked to automobile sales in the
United States and other countries. Demand for ESG products is substantially
linked to the sales of other industry segments within Motorola. Demand for MCG
products is linked to demands for manufacturing systems, imaging, and
telecommunications products in the United States and other countries. The
segment experiences competition from numerous global competitors, including
automobile manufacturers' internal or affiliated electronic control suppliers.
Competitive factors in the sale of IESS products include: price; product
quality, performance and delivery; supply integrity; quality reputation;
responsiveness, and design and manufacturing technology. An additional factor
for MCG products is the availability of software. In certain circumstances, IESS
permits customers to return products in accordance with industry practices.
The segment's backlog amounted to $407 million at December 31, 2000 and $356
million at December 31, 1999. The 2000 backlog for the segment is believed to be
generally firm, and approximately 100% of that amount is expected to be shipped
during 2001. This forward looking estimate of the firmness of such orders is
subject to future events that may cause the percentage of the 2000 backlog
actually shipped to change.
8
<PAGE> 11
All materials used by IESS in its operations have good availability at this
time. The segment uses electricity and gas in its operations, which are
currently adequate in supply. However, difficulties in obtaining any of the
aforementioned items could affect the results for IESS.
Patent protection is important to the segment's business. Reference is made
to the material under the heading "General" for information relating to patents
and trademarks and research and development activities with respect to this
segment.
The segment's headquarters are located in Northbrook, Illinois. It also has
major facilities located in Tempe, Arizona; Elk Grove, Illinois; Elma, New York;
Seguin, Texas; Tianjin, China; Angers, France, and Penang, Malaysia. The segment
sold its electronic ballast manufacturing facility in Lake Zurich, Illinois and
sold its facility in Dublin, Ireland. It is in the process of closing its
manufacturing facilities in Lawrenceville, Georgia; Harvard, Illinois, and
Stotfold, England.
OTHER PRODUCTS SEGMENT
The Other Products segment is comprised primarily of: (i) the Personal
Networks Group, which focuses on the development of servers, applications and
internet solutions; (ii) the Network Management Group, which holds and manages
investments in wireless network operators; (iii) other corporate programs, and
(iv) Next Level Communications, Inc., a publicly-traded subsidiary in which
Motorola has a controlling interest as a result of the merger with General
Instrument.
Other
Financial Information About Segments. The response to this section of Item 1
incorporates by reference Note 9, "Information by Segment and Geographic
Region," of the Notes to Consolidated Financial Statements contained in the
appendix to Motorola's Proxy Statement for the 2001 annual meeting of
stockholders.
Customers. Motorola is not dependent for a material part of its overall
business upon a single or a very few customers. Approximately 2.0% of Motorola's
total sales and revenues in 2000 were received from various branches and
agencies, including the armed services, of the U.S. Government. All contracts
with the U.S. Government are subject to cancellation at the convenience of the
Government.
Government contractors, including Motorola, are routinely subjected to
numerous audits and investigations, which may be either civil or criminal in
nature. The consequences of these audits and investigations may include
administrative action to suspend business dealings with the contractor and to
exclude it from receiving new business. In addition, Motorola, like other
contractors, is internally reviewing aspects of its government contracting
operations, and, where appropriate, taking corrective actions and making
voluntary disclosures to the Government. These audits and investigations could
adversely affect Motorola and its results.
Backlog. Motorola's aggregate backlog position, including the backlog
position of subsidiaries through which some of its business units operate, as of
the end of the last two fiscal years, was approximately as follows:
<TABLE>
<S> <C>
December 31, 2000................................................. $9.62 billion
December 31, 1999................................................. $9.92 billion
</TABLE>
Except as previously discussed in this Item 1, the orders supporting the
2000 backlog amounts shown in the foregoing table are believed to be generally
firm, and approximately 94% of orders on hand at December 31, 2000 are expected
to be shipped during 2001. However, this is a forward-looking estimate of the
amount expected to be shipped, and future events may cause the percentage
actually shipped to change.
Motorola recognizes revenue at the time of shipment, and accruals are
established for price protection, returns and cooperative marketing programs
with distributors. For long-term contracts, Motorola uses the
percentage-of-completion method to recognize revenues and costs. For contracts
involving new technologies, revenues and profits or parts thereof are deferred
until technological feasibility is established, customer acceptance is obtained
and other contract-specific terms have been completed.
9
<PAGE> 12
Research and Development. Motorola's business segments participate in very
competitive industries with constant changes in technology. Throughout its
history, Motorola has relied, and continues to rely, primarily on its research
and development programs for the development of new products, and on its
production engineering capabilities for the improvement of existing products.
Technical data and product application ideas are exchanged among Motorola's
business segments on a regular basis. Management believes, looking forward, that
Motorola's commitment to research and development programs, both to improve
existing products and services and to develop new products and services,
together with its utilization of state-of-the-art technology, should allow each
of its segments to remain competitive.
Research and development expenditures relating to new product development or
product improvement, other than customer-sponsored contracts, were approximately
$4.44 billion in 2000, $3.56 billion in 1999 and $3.12 billion in 1998. In
addition, research funded under customer-sponsored contracts amounted to
approximately $110 million in 2000, $218 million in 1999 and $516 million in
1998. Over the past three years, Motorola has increased its research and
development expenditures (particularly in the Global Telecom Solutions segment)
because it continues to believe that a strong commitment to research and
development is required for long-term growth. However, in the short-term,
Motorola expects research and development expenditures in 2001 to be lower than
in 2000.
Approximately 21,000 professional employees were engaged in such research
activities (including customer-sponsored contracts) during 2000.
Patents and Trademarks. As of December 31, 2000, Motorola owned
approximately 11,300 utility and design patents in the United States and 11,800
patents in foreign countries. These foreign patents are mostly counterparts of
Motorola's U.S. patents, but an increasing number result from research conducted
outside the United States and are originally filed in the country of origin.
During 2000, Motorola was granted 1,265 U.S. utility and design patents. Many of
the patents owned by Motorola are used in its operations or licensed for use by
others, and Motorola is licensed to use certain patents owned by others. In some
instances, certain of the patents licensed by Motorola to others have generated
meaningful amounts of income to Motorola.
Motorola has obtained registration of the "MOTOROLA" and "Stylized M Logo"
trademarks and has adopted and made application for the "INTELLIGENCE
EVERYWHERE" trademark throughout the world to designate its products and
services across all businesses of the company. Worldwide recognition of these
marks has resulted in their categorization as "famous" marks. These marks are
valuable corporate assets. Certain other trademarks and service marks of
Motorola are registered in relevant markets. Motorola's increasing focus on
marketing products directly to consumers is reflected in an increasing emphasis
on brand equity creation and protection. In the consumer brand arena, four
separate target categories have been designated by the ACCOMPLI(TM),
TALKABOUT(R), TIMEPORT(TM) and V.SERIES(TM) brands. Global registration and
support for these new brands is an ongoing priority. The DIGITAL DNA(TM) brand
remains a strong and highly visible presence in the semiconductor branding
strategy.
Environmental Quality. Motorola operations are from time to time the
subjects of investigations, conferences, discussions and negotiations with
various federal, state and local environmental agencies with respect to the
discharge or cleanup of hazardous waste and compliance by those operations with
environmental laws and regulations. The balance of the response to this section
of Item 1 incorporates by reference the information contained under the caption
"Environmental and Legal" in Note 8, "Commitments and Contingencies" of the
Notes to Consolidated Financial Statements contained in the appendix to
Motorola's Proxy Statement for the 2001 annual meeting of stockholders.
Miscellaneous. At December 31, 2000, there were approximately 147,000
employees of Motorola and its subsidiaries. The business of Motorola and its
industry segments has certain seasonal characteristics: the Semiconductor
Products segment has tended to have stronger, seasonally-adjusted sales in the
first half of the year; and sales of products, such as wireless telephones and
pagers, in consumer markets tend to increase in the fourth quarter. An increase
or decrease in large system orders in our infrastructure businesses could cause
volatility in orders, revenues and profits recognized in any particular period.
10
<PAGE> 13
Financial Information About Foreign and Domestic Operations and Export
Sales.
Domestic export sales to third parties were $1.91 billion, $2.58 billion and
$3.24 billion for the years ended December 31, 2000, 1999 and 1998,
respectively. Domestic export sales to affiliates and subsidiaries, which are
eliminated in consolidation, were $7.28 billion, $6.72 billion and $5.06 billion
for the years ended December 31, 2000, 1999 and 1998, respectively.
The remainder of the response to this section of Item 1 incorporates by
reference Note 8, "Commitments and Contingencies" of the Notes to Consolidated
Financial Statements and the "2000 Compared to 1999" and "1999 Compared to 1998"
sections of "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the appendix to Motorola's Proxy Statement
for the 2001 annual meeting of stockholders.
Business Risk Factors. Except for historical matters, the matters discussed
in this Form 10-K are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include, but are not limited to,
statements under the following headings: (i) "Personal Communications Segment,"
about planned exits from manufacturing facilities, expected employment
reductions, expected shipments during 2001, future inventory levels, the
allocation and regulation of frequencies, the impact of the significant cost for
3G licenses, component shortages, and the availability of supplies and labor;
(ii) "Global Telecom Solutions Segment," about the impact from the loss of key
customers, expected shipments during 2001, the need for increased vendor
financing, the allocation and regulation of frequencies, the impact of the
significant cost for 3G licenses, and the availability of supplies and labor;
(iii) "Commercial, Government and Industrial Systems Segment," about the
allocation and regulation of frequencies, expected shipments during 2001, and
the availability of supplies; (iv) "Broadband Communications Segment," about the
impact from the loss of key customers, expected shipments during 2001, and the
availability of supplies; (v) "Semiconductor Products Segment," about the impact
from the loss of key customers, the impact of available capacity, cyclical
customer demands, new product introductions and aggressive pricing, capital
expenditures, expected shipments during 2001, backlog and the availability of
supplies; (vi) "Integrated Electronic Systems Segment," about the impact from
the loss of key customers, expected shipments during 2001, and the availability
of supplies; (vii) "General," about expected shipments during 2001, seasonality
of business, large system orders and competitiveness through research and
development and utilization of technology; (viii) "Item 2: Properties," about
the completion of facilities currently being constructed and plans to sell or
shut down currently operating facilities; and (ix) "Item 3: Legal Proceedings,"
about the ultimate disposition of pending legal matters.
Motorola wishes to caution the reader that the following important business
risks and factors, and those business risks and factors described elsewhere in
this report or Motorola's other Securities and Exchange Commission filings,
could cause Motorola's actual results to differ materially from those stated in
the forward-looking statements.
Impact of the Slowing Economy
o The overall economy is in the midst of a sharp slowdown that
began in the latter stages of 2000. The length and severity of
this slowdown could have a significant impact on Motorola's
near-term financial results. The success of ongoing changes in
fiscal, monetary and regulatory policies worldwide will
influence the severity of this impact. If these changes do not
occur, or are not successful in spurring overall economic
recovery, Motorola's business will be negatively impacted as
Motorola's customers buy fewer products and services from
Motorola.
Uncertainty of Current Economic Conditions
o Current conditions in the domestic and global economies are
extremely uncertain. As a result, it is difficult to estimate
the level of growth for the economy as a whole. It is even
more difficult to estimate growth in various parts of the
economy, including the markets in which Motorola participates.
Because all components of Motorola's budgeting and forecasting
are dependent upon estimates of growth in the markets it
serves, the prevailing economic uncertainty renders estimates
of future income and expenditures even more difficult than
usual to make. The future direction of the overall domestic
and global economies will have a significant impact on
Motorola's overall performance.
11
<PAGE> 14
Impact of Cost-Reduction Efforts
o During the second half of 2000, Motorola implemented plans to
discontinue unprofitable product lines, exit unprofitable
businesses and consolidate manufacturing operations as part of
its overall strategic initiative to reduce costs and simplify
its product portfolio. The impact of these cost-reduction
efforts on Motorola's profitability will be influenced by:
o Motorola's ability to successfully complete its
ongoing efforts.
o The possibility that these efforts may not generate
the level of cost savings Motorola expects or enable
Motorola to effectively compete and return to
profitability.
Since these cost-reduction efforts involve many aspects of
Motorola's business, they could adversely impact productivity
to an extent Motorola does not anticipate. Even if Motorola
successfully completes its efforts and generates the
anticipated cost savings, there may be other factors that
adversely impact Motorola's profitability.
Increasing Cost of Licenses to Use Radio Frequencies
o Radio frequencies are required to provide wireless services.
The allocation of frequencies is regulated in the United
States and other countries throughout the world and limited
spectrum space is allocated to wireless services. The growth
of the wireless and personal communications industry may be
affected if adequate frequencies are not allocated or,
alternatively, if new technologies are not developed to better
utilize the frequencies currently allocated for such use.
Industry growth may also be affected by the cost of new
licenses required to use frequencies. Typically, governments
sell these licenses at auctions. Over the last several years,
the cost of these licenses has increased significantly,
particularly for frequencies used in connection with
third-generation (3G) technology. The significant cost for
licenses may slow the growth of the industry if service
providers do not purchase new licenses or delay introducing
new technology and upgrading their systems. Motorola's results
could be adversely affected if this occurs.
Component Shortages
o Motorola's ability to meet customer demands depends, in part,
on our ability to obtain timely and adequate delivery of parts
and components from our suppliers and internal manufacturing
capacity. We have experienced component shortages in the past,
including components for wireless telephones, that have
adversely affected our operations. Although we work closely
with our suppliers to avoid these types of shortages, there
can be no assurances that we will not continue to encounter
these problems in the future. A reduction or interruption in
component supply or a significant increase in the price of one
or more components could have a material adverse effect on
Motorola.
Financial Flexibility
o Motorola expects that from time to time outstanding commercial
paper balances may be replaced with short-or long-term
borrowings. Although Motorola believes that it can continue to
access the capital markets in 2001 on acceptable terms and
conditions, its flexibility with regard to long-term financing
activity could be limited by: (1) the significant amount of
long-term financing completed by Motorola in late 2000 and
early 2001, (2) Motorola's current level of short-term debt,
and (3) Motorola's credit ratings. In addition, many of the
factors that affect Motorola's ability to access the capital
markets, such as the liquidity of the overall capital markets
and the current state of the economy, are outside of
Motorola's control. There can be no assurances that Motorola
will continue to have access to the capital markets on
favorable terms.
Ability to Draw Under Credit Facilities
o Motorola views its existing one-year and five-year revolving
domestic credit agreements and multi-draw term loan agreement
as sources of available liquidity. These agreements contain
various conditions, covenants and representations with which
Motorola must be in compliance in order to borrow funds. There
can be no assurance that Motorola will be in compliance with
these conditions, covenants and representations at such time
as it may desire to borrow under these credit agreements or
renew them.
12
<PAGE> 15
Rapid Technological Change
o The markets for Motorola's products are characterized by
rapidly changing technologies, frequent new product
introductions, short product life cycles and evolving industry
standards. Motorola's success is expected to depend, in
substantial part, on the timely and successful introduction of
new products and upgrades of current products to comply with
emerging industry standards and to address competing
technological and product developments carried out by
Motorola's competitors. The development of new,
technologically advanced products is a complex and uncertain
process requiring high levels of innovation, as well as the
accurate anticipation of technological and market trends.
Strategic Acquisitions and the Integration of New Businesses
o In order to position itself to take advantage of growth
opportunities, Motorola has made, and may continue to make,
strategic acquisitions that involve significant risks and
uncertainties. These risks and uncertainties include: (1) the
difficulty in integrating newly-acquired businesses and
operations in an efficient and effective manner, (2) the
challenges in achieving strategic objectives, cost savings and
other benefits expected from acquisitions, (3) the risk that
Motorola's markets do not evolve as anticipated and that the
technologies acquired do not prove to be those needed to be
successful in those markets, (4) the potential loss of key
employees of the acquired businesses, (5) the risk of
diverting the attention of senior management from the
operations of Motorola, and (6) the risks of entering new
markets in which Motorola has limited experience.
Strategic Alliances
o Motorola's success is, in part, dependent upon its ability to
effectively partner with other industry leaders to meet
customer product and service requirements, particularly in its
communications businesses.
Fluctuations in the Fair Values of Portfolio Investments
o Motorola maintains portfolio holdings of various issuers and
types. These securities are generally classified as
available-for-sale and, consequently, are recorded on the
balance sheet at fair value. Part of this portfolio includes
minority equity investments in several publicly-traded
companies. Since the majority of these securities represent
investments in technology companies, the fair market values of
these securities are subject to significant price volatility
and, in general, suffered a decline in market value during
2000 that has continued in 2001. In addition, the realizable
value of these securities is subject to market and other
conditions. Motorola has also invested in numerous privately
held companies, many of which can still be considered in the
startup or developmental stages. These investments are
inherently risky as the market for the technologies or
products they have under development are typically in the
early stages and may never materialize. Motorola could lose
its entire investment in these companies.
Recruitment and Retention of Employees
o Competition for technical personnel in high-technology
industries is intense. Motorola believes that its future
success depends in large part on its continued ability to
hire, assimilate and retain qualified engineers and highly
skilled personnel needed to compete in its extremely
competitive markets and develop successful new products. To
date, Motorola is no assurance that it will continue to be
successful in the future.
13
<PAGE> 16
Changes in Government Policy or Economic Conditions
o Motorola's results may be affected by changes in trade,
monetary and fiscal policies, laws and regulations, or other
activities of U.S. and non-U.S. governments, agencies and
similar organizations. Motorola's results may also be affected
by social and economic conditions, which impact Motorola's
operations, including in emerging markets in Asia and Latin
America.
Uncertainties of the Internet
o There are currently very few laws or regulations that apply
directly to access to, or commerce on, the Internet. Motorola
could be adversely affected by any such regulation in any
country where it operates. The adoption of such measures could
decrease demand for Motorola's products and at the same time
increase the cost of selling such products.
Outcome of Litigation; Protection of Patents
o Motorola's results may be affected by the outcome of pending
and future litigation and the protection and validity of
patents and other intellectual property rights. Patent and
other intellectual property rights of Motorola are important
competitive tools and many generate income under license
agreements. There can be no assurances as to the favorable
outcome of litigation or that intellectual property rights
will not be challenged, invalidated or circumvented in one or
more countries.
Development of New Products and Technologies
o The risks related to Motorola's significant investment in
developing and introducing new products, such as: (1) advanced
digital wireless telephones, (2) CDMA and other technologies
for third-generation (3G) wireless networks, (3) products for
transmission of telephony and high-speed data over hybrid
fiber coaxial cable systems, (4) integrated digital radios,
and (5) advanced semiconductor products. These risks include:
(i) difficulties and delays in the development, production,
testing and marketing of products, (ii) customer acceptance of
products, particularly as Motorola's focus on the consumer
market increases, (iii) the development of industry standards,
(iv) the significant amount of resources Motorola must devote
to the development of new technology, and (v) the ability to
differentiate its products and compete with other companies in
the same markets.
Transition to Newer Digital Technologies
o Motorola's success, in part, will be affected by the ability
of its wireless telephone business to continue its transition
to newer digital technologies and successfully compete in that
business and retain or gain market share. Motorola faces
intense competition in these markets from both established
companies and new entrants. Product life cycles can be short
and new products are expensive to develop and bring to market.
Risks Related to the Iridium(R) System
o Motorola's results could be adversely affected by unexpected
liabilities or expenses, including unfavorable outcomes to any
currently pending or future litigation, related to the Iridium
project.
14
<PAGE> 17
Demand for Customer Financing
o The competitive environment in which Motorola operates
requires Motorola and many of its principal competitors to
provide significant amounts of medium-term and long-term
customer financing. Customer financing arrangements may
include all or a portion of the purchase price for Motorola's
products and services, as well as working capital. Motorola
may also assist customers in obtaining financing from banks
and other sources. The success of Motorola, particularly its
infrastructure businesses, may be dependent, in part, upon the
ability of Motorola to provide customer financing on
competitive terms.
Customer Credit Risk
o While Motorola has generally been able to place a portion of
its customer financings with third-party lenders, a portion of
these financings are supported directly by Motorola. There can
be higher risks associated with some of these financings,
particularly when provided to start-up operations such as
local network providers, to customers in developing countries,
or to customers in specific financing-intensive areas of the
industry (such as 3G wireless operators which are in the early
stages of development). Should customers fail to meet their
obligations, losses could be incurred and such losses could
have an adverse effect on Motorola. Motorola has various
programs in place to monitor and mitigate customer credit
risk, however, there can be no assurance that such measures
will reduce Motorola's exposure to its customers' credit risk.
Risks from Large System Contracts
o Motorola is exposed to risks related to the trend towards
increasingly large system contracts for infrastructure
equipment and the resulting reliance on large customers. These
include: (1) the technological risks of such contracts,
especially when the contracts involve new technology, and (2)
the financial risks to Motorola under these contracts,
including the estimates inherent in projecting costs
associated with large contracts.
Growth in the Cable Industry
o The cable industry is a major customer of Motorola's Broadband
Communications Segment. The ability of that segment to
continue its growth is dependent, in part, on continued growth
in the cable industry and that industry's ability to compete
with other entertainment providers.
Impact of Consolidations in the Telecommunications and Cable Industries
o The telecommunications and cable industries have experienced
significant consolidation of industry participants and this
trend is expected to continue. Motorola and one or more of its
competitors may each supply products to the companies that
have merged or will merge. This consolidation could result in
delays in purchasing decisions by the merged companies and/or
Motorola playing a lesser role in the supply of communications
products to the merged companies.
Recovery from Semiconductor Market Recession
o Motorola's results will be impacted by the current recession
in the semiconductor market and Motorola's participation in
any recovery. The semiconductor business has restructured
itself to participate in some of the semiconductor markets
with the best growth potential. There can be no assurances
that this strategy will be successful.
15
<PAGE> 18
Ability to Compete in Semiconductor Market
o Motorola's success in dependent, in part, on the ability of
Motorola's semiconductor business to compete in the highly
competitive semiconductor market. Factors that could adversely
affect Motorola's ability to compete include: production
inefficiencies and higher costs related to underutilized
facilities, including both wholly-owned and joint venture
facilities; shortage of manufacturing capacity for some
products; competitive factors, such as rival chip
architectures, mix of products, acceptance of new products and
price pressures; risk of inventory obsolescence due to shifts
in market demand; the continued growth of embedded
technologies and systems and Motorola's ability to compete in
that market; and the effect of orders from Motorola's
equipment businesses.
Success and Impact of Increased Use of Foundry Manufacturing Capacity
o The ability of Motorola's semiconductor business to increase
its utilization of foundry manufacturing capacity and the
impact of such efforts on capital expenditures, production
costs and ability to satisfy delivery requirements.
Additional Risk Factors Included In Proxy Statement
Certain portions of Motorola's Proxy Statement for the 2001 annual meeting
of stockholders with Management's Discussion and Analysis and Consolidated
Financial Statements are incorporated by reference into this Form 10-K. There
are additional important factors included therein, including those on pages
[F-29 through F-33] of the appendix to Motorola's Proxy Statement for the 2001
annual meeting of stockholders.
(R) Reg. U.S. Patent & Trademark Office.
MOTOROLA, Stylized M Logo, iDEN, ACCOMPLI, TALKABOUT, TIMEPORT, V.SERIES,
DIGITAL DNA and INTELLIGENCE EVERYWHERE are trademarks or registered trademarks
of Motorola, Inc.
Iridium(R) is a registered trademark and service mark of Iridium LLC.
ITEM 2: PROPERTIES
Motorola's principal executive offices are located at 1303 East Algonquin
Road, Schaumburg, Illinois 60196. Its other major facilities in the United
States are located in Arlington Heights, Elk Grove, Harvard, Libertyville,
Northbrook and Schaumburg, Illinois; Elma, New York; Chandler, Scottsdale, Mesa
and Tempe, Arizona; Boynton Beach and Plantation, Florida; Horsham,
Pennsylvania; Austin, Ft. Worth and Seguin, Texas; Mansfield, Massachusetts, and
San Diego, California. Motorola also operates manufacturing facilities and sales
offices in many other countries. (See "Item 1: Business" for information
regarding the location of the principal manufacturing facilities for each
industry segment.) Motorola owns 95 facilities (manufacturing, sales, service
and office), 57 of which are located in North America and 38 of which are
located in other countries. Motorola leases 571 such facilities, 359 of which
are located in North America and 212 of which are located in other countries.
Through acquisitions and mergers with various businesses throughout 2000,
Motorola acquired 61 additional sites, which are included in the preceding
totals. In 2000, development of sites located in Deer Park, Illinois, and
Markham, Ontario were begun. Construction and occupancy of a PCS design center
in Champaign, Illinois was accomplished in 2000.
Motorola generally considers the productive capacity of the plants operated
by each of its industry segments adequate and sufficient for the requirements of
each business group.
As part of Motorola's overall strategy to reduce operating costs and
improve the financial performance of the corporation, a number of businesses and
facilities have either been sold or are currently for sale. Manufacturing
facilities in Lake Zurich, Illinois and San Jose, Costa Rica, as well as two
start-up facilities in Jaguariuna, Brazil, were sold during 2000. Motorola's
Dublin, Ireland facility and the business operations at its Mt. Pleasant, Iowa
facility have been sold in 2001 in connection with outsourcing of a portion of
Motorola's manufacturing operations.
16
<PAGE> 19
Facilities in Irvine, California and South Queensferry, Scotland are currently
up for sale and the Bangalore, India facility is expected to be sold by
mid-2001. Motorola is in the process of closing manufacturing facilities in
Lawrenceville, Georgia and Stotfold, England and is ceasing manufacturing
operations at its facilities in Boynton Beach, Florida and Harvard, Illinois.
The Harvard facility will serve as a customer order fulfillment and new product
sourcing center.
The extent of utilization of such manufacturing facilities varies from plant
to plant and from time to time during the year.
ITEM 3: LEGAL PROCEEDINGS
Motorola is currently a named defendant in seven cases arising out of
alleged groundwater, soil and air pollution in Phoenix and Scottsdale, Arizona.
McIntire et al. v. Motorola remains pending in the U.S. District Court for the
District of Arizona, while Baker et al. v. Motorola et al., Lofgren et al. v.
Motorola et al., Bentancourt et al. v. Motorola et al., Ford et al. v. Motorola
et al., Wilkins et al. v. Motorola et al. and Dawson et al. v. Motorola, et al.
are pending in the Arizona Superior Court, Maricopa County. The McIntire
lawsuit, filed on December 20, 1991, involves approximately 920 plaintiffs who
allege that the operations of Motorola at several facilities in Phoenix and
Scottsdale, Arizona have caused property damage and health problems by
contaminating the soil, groundwater and air in the area surrounding those
facilities. The Baker lawsuit, filed on February 11, 1992, is a class action,
involving six representative individual named plaintiffs, alleging that Motorola
and a number of other defendants contaminated the soil, air and groundwater in
the Phoenix/Scottsdale area, diminishing property values and exposing members of
the class to possible adverse health effects. On August 24, 1994, the Baker
court certified two classes, a property damage class and a medical monitoring
class. Motorola is now the sole remaining defendant in the property claims in
Scottsdale and East Phoenix. On January 22, 2001, the jury trial began in the
Scottsdale case (relating to property claims in South Scottsdale), and is
expected to continue until May 2001.
The Lofgren, Bentancourt, Ford, Wilkins and Dawson lawsuits, filed on April
6, 1993, July 16, 1993, June 10, 1994, July 19, 1995 and August 7, 1997,
respectively, were consolidated. The consolidated cases involved more than 200
plaintiffs, alleging that Motorola and a number of other defendants contaminated
the soil, air and groundwater in the Phoenix/Scottsdale area, causing health
problems. On June 1, 1998, the Lofgren court ruled inadmissible proffered
testimony from each of the plaintiffs' medical causation experts and granted
summary judgment on those personal injury claims in favor of Motorola and the
other remaining defendants. An appeal is expected after the court formally
enters final judgment.
All seven pending lawsuits described above seek compensatory and punitive
damages. The McIntire complaint includes personal injury and property damage
claims and seeks injunctive relief. The Baker complaint seeks damages for
medical monitoring and alleges claims for property, business and economic loss
and seeks declaratory and injunctive relief. The consolidated Lofgren cases
involve claims for personal injury.
Motorola and several of its officers and directors are named defendants in a
consolidated class action, Kaufman, et al. v Motorola, Inc., et al., for alleged
violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC
Rule 10b-5. The case was filed on May 19, 1995 and is pending in the U.S.
District Court for the Northern District of Illinois. Plaintiffs claim that
Motorola and the individual defendants inflated the price of Motorola stock by
failing to timely disclose a buildup of cellular phone inventory with its
distributors. The parties have reached a settlement agreement and expect to have
the case formally dismissed with prejudice.
Motorola has been a defendant in several cases arising out of its
manufacture and sale of portable cellular telephones. Jerald P. Busse, et al. v.
Motorola, Inc. et al., filed on October 26, 1995 in the Circuit Court of Cook
County, Illinois, Chancery Division, is a purported class action alleging that
defendants have failed to adequately warn consumers of the alleged dangers of
cellular telephones and challenging ongoing safety studies as invasions of
privacy. In July 2000, the Court ruled that the case was appropriate for class
certification. Plaintiffs' class notice was published in February 2001. Kane, et
al., v. Motorola, Inc., et al., filed on December 13, 1993 in the Circuit Court
of Cook County, Illinois, alleges that plaintiffs' brain cancer was caused or
aggravated by a prototype communication device. On May 11, 2000, the Court
entered summary judgment in Motorola's favor holding that there was no evidence
to support plaintiffs' theory of causation. On July 24, 2000, plaintiffs filed a
notice of appeal
17
<PAGE> 20
of the summary judgment decision and other orders entered by the trial judge.
Medica et al., v. Motorola, Inc., et al., filed September 7, 1999, alleges that
use of a Motorola cellular phone caused plaintiff Phil Medica's malignant brain
tumor. On August 1, 2000, Christopher and Frances Newman filed a suit captioned
Newman et al., v. Motorola, Inc., et al., against Motorola and several other
defendants in the Circuit Court for Baltimore City, Maryland, alleging that
Christopher Newman's cellular phone usage caused his brain cancer. The
defendants removed the case to Federal District Court. The plaintiffs have
amended their complaint several times and have a motion for leave to file a
third amended complaint pending. On May 26, 2000, a purported class action suit,
Naquin, et al., v. Nokia Mobile Phones, et al., was commenced against Motorola
and several other cellular phone manufacturers and carriers in the Civil
District Court for the Parish of Orleans, State of Louisiana, claiming that the
failure to incorporate a remote headset into cellular phones rendered the phones
defective. The defendants have removed the case to Federal District Court.
Silber, et al. v. Motorola, Inc., et al., filed on August 1, 1995 in the
Supreme Court of The State of New York, County of Suffolk, which was transferred
from the County of New York, is an action wherein it is alleged that a traffic
accident was caused by the use of a cellular phone. On April 27, 1999, Motorola
obtained summary judgment on plaintiffs' claims. In February 2001, the Court of
Appeals of the State of New York denied the petition for leave to appeal thereby
terminating all avenues for relief.
Motorola has been named as one of several defendants in putative class
action securities lawsuits pending in the District of Columbia arising out of
alleged misrepresentations or omissions regarding the Iridium satellite
communications business. On March 15, 2001, the federal district court judge
consolidated the various securities cases under Freeland v. Iridium World
Communications, Inc., et al., originally filed on April 22, 1999, and appointed
lead plaintiffs and lead plaintiffs' counsel.
Motorola is also a defendant in two lawsuits relating to Iridium filed by
The Chase Manhattan Bank. The Chase Manhattan Bank v. Motorola was filed in New
York state court on June 9, 2000. In that lawsuit, plaintiff alleges that
Motorola breached its commitment to provide a $300 million loan guarantee
relating to Iridium's debt and seeks payment of the disputed guarantee. Also, on
June 9, 2000, Chase filed a lawsuit in the District of Delaware against Motorola
and seventeen other parties captioned The Chase Manhattan Bank v. Iridium Africa
Corp., et al. In that lawsuit, Chase alleges that Motorola and other investors
in Iridium LLC are obligated to pay Chase certain amounts allegedly due under
the Iridium LLC Agreement as a Reserve Capital Call.
A committee of unsecured creditors of Iridium has, over objections by
Motorola and Iridium, been granted leave by the bankruptcy court to file a
complaint on Iridium's behalf against Motorola. Although to date no complaint
has been filed by this committee, in March 2001, the Bankruptcy Court approved a
settlement between the committee and Iridium's secured creditors that allows for
the creation of a litigation fund to be used in pursuit of such proposed claims
against Motorola.
The information contained under the caption "Environmental and Legal" in
Note 8, "Commitments and Contingencies," of the Notes to Consolidated Financial
Statements contained in the appendix to Motorola's Proxy Statement for the 2001
annual meeting of stockholders is incorporated herein by reference.
Motorola is a defendant in various other suits, claims and investigations
which arise in the normal course of business. In the opinion of management, the
ultimate disposition of these matters, including those matters described above
in this Item 3, will not have a material adverse effect on the consolidated
financial position, liquidity or results of operations of Motorola.
18
<PAGE> 21
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Following are the persons who were the executive officers of Motorola as of
February 28, 2001, their ages as of January 1, 2001, their current titles and
positions they have held during the last five years:
Christopher B. Galvin; age 50; Chairman of the Board and Chief Executive Officer
since June 1999; Chief Executive Officer from January 1997 to June 1999;
President and Chief Operating Officer from December 1993 to January 1997.
Robert W. Galvin; age 78; Chairman of the Executive Committee of the Board since
January 1990.
Robert L. Growney; age 58; President and Chief Operating Officer since January
1997; Executive Vice President and President and General Manager, Messaging,
Information and Media Sector from January 1994 to January 1997.
Keith J. Bane; age 61; Executive Vice President and President, Global Strategy
and Corporate Development since August 1999; Executive Vice President and
President, Americas Region from March 1997 to August 1999; Executive Vice
President and Chief Corporate Staff Officer from February 1995 to March 1997.
Robert L. Barnett; age 60; Executive Vice President and President, Commercial,
Government and Industrial Systems Sector since July 1998; Executive Vice
President and President, Land Mobile Products Sector from March 1997 to July
1998; Senior Vice President and President, Land Mobile Products Sector from
March 1996 to March 1997; Corporate Vice President and General Manager, iDEN
Group, Land Mobile Products Sector from May 1995 to March 1996.
Edward Breen; age 44; Executive Vice President and President, Networks Sector
since January 2001; Executive Vice President and President, Broadband
Communications Sector from January 2000 to January 2001; Chairman of the Board,
President and Chief Executive Officer of General Instrument Corporation from
December 1997 to January 2000; President, Broadband Networks Group of General
Instrument Corporation from February 1996 to October 1997.
Glenn A. Gienko; age 48; Executive Vice President and Motorola Director of Human
Resources since May 1996; Senior Vice President and Director of Human Resources
from June 1995 to May 1996.
Joseph M. Guglielmi; age 59; Executive Vice President and President, Global
Customer Solutions Operations since January 2001; Executive Vice President and
President, Integrated Electronics Systems Sector ("IESS") from December 1998 to
January 2001; Senior Vice President and President, IESS from October 1998 to
December 1998; Senior Vice President and Office of the President, IESS from
August 1998 to October 1998; Corporate Vice President and Office of the
President, IESS from July 1998 to August 1998; Corporate Vice President and
General Manager, Motorola Computer Group from September 1995 to July 1998;
Chairman and Chief Executive Officer of Taligent, Inc., a software development
company, from March 1992 to August 1995; Corporate Vice President, International
Business Machines from April 1987 to February 1992.
Bo Hedfors; age 56; Executive Vice President and President, Global Telecom
Solutions Sector since February 1999; Senior Vice President and President,
Network Solutions Sector ("NSS") from December 1998 to February 1999; Corporate
Vice President and President, NSS from September 1998 to December 1998;
President and Chief Executive Officer of Ericsson Inc., the U.S. subsidiary of
Telefon AB LM Ericsson, from 1994 to August 1998.
Carl F. Koenemann; age 62; Executive Vice President and Chief Financial Officer
since December 1991.
Ferdinand C. Kuznik; age 59; Executive Vice President and President, Motorola
Europe, Middle East and Africa since July 1999; Executive Vice President and
President, Personal Communications Sector, Communications Enterprise from July
1998 to July 1999; Executive Vice President and President, Cellular Subscriber
Sector from August 1997 to July 1998; Senior Vice President and General Manager,
Radio Network Solutions Group, Land Mobile Products Sector from 1994 to August
1997.
19
<PAGE> 22
A. Peter Lawson; age 54; Executive Vice President, General Counsel and Secretary
since May 1998; Senior Vice President, General Counsel and Secretary from
November 1996 to May 1998; Senior Vice President and General Counsel from March
1996 to November 1996; Senior Vice President and Assistant General Counsel from
November 1994 to March 1996.
Thomas J. Lynch; age 46; Executive Vice President and President, Integrated
Electronic Systems Sector since January 2001; Chairman and Acting Chief
Executive Officer of Aerocast.com, Inc. (a Motorola majority-owned joint
venture), since January 2000; Senior Vice President and General Manager,
Satellite & Broadcast Network Systems, Broadband Communications Sector from
February 2000 to January 2001; Senior Vice President and General Manager,
Satellite & Broadcast Network Systems, General Instrument Corporation from May
1998 to February 2000; Vice President and General Manager, Transmission Network
Systems, General Instrument Corporation from August 1995 to May 1998.
Dennis A. Roberson; age 52; Senior Vice President and Chief Technology Office
since February 1999; Corporate Vice President and Chief Technology Officer from
August 1998 to February 1999; Vice President and Chief Technology Officer from
April 1998 to August 1998; Senior Vice President and Chief Technical Officer of
NCR Corporation from January 1997 to April 1998; Vice President, Computer
Products and Systems of AT&T from May 1994 to January 1997.
David E. Robinson; age 41; Executive Vice President and President, Broadband
Communications Sector since January 2001; Senior Vice President and General
Manager, Digital Network Systems, Broadband Communications Sector from January
2000 to January 2001; Senior Vice President and General Manager, Digital Network
Systems, General Instrument Corporation from April 1998 to January 2000; Vice
President and General Manager, Digital Network Systems, General Instrument
Corporation (and its predecessor) from November 1995 to April 1998.
Fred (Theodore) A. Shlapak; age 57; Executive Vice President and President,
Semiconductor Products Sector ("SPS") since September 2000; Senior Vice
President and Assistant to the President, SPS from December 1998 to September
2000; Senior Vice President and General Manager, SPS Wireless Subscriber Systems
Group from June 1997 to December 1998; Senior Vice President and General
Manager, SPS Communications and Consumer Technologies Group from May 1996 to
June 1997.
C. D. Tam; age 56; Executive Vice President and President, Asia Pacific Region
since January 1, 1999; Senior Vice President and General Manager of the
Transportation Systems Group, Semiconductor Products Sector from January 1997 to
December 1998; Senior Vice President and General Manager, Asia Pacific
Semiconductor Group, Semiconductor Products Sector from January 1991 to December
1996.
Mike S. Zafirovski; age 47; Executive Vice President and President, Personal
Communications Sector since June 2000; President and Chief Executive Officer of
GE Lighting, General Electric Company from July 1999 to May 2000; President of
GE Lighting, Europe, Middle East and Africa, General Electric Company from April
1996 to June 1999.
The above executive officers will serve as officers of Motorola until the
regular meeting of the Board of Directors in May 2001 or until their respective
successors shall have been elected. Christopher B. Galvin is a son of Robert W.
Galvin. There is no family relationship between any of the other executive
officers listed above.
20
<PAGE> 23
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Motorola's common stock is listed on the New York, Chicago, London and Tokyo
Stock Exchanges. The remainder of the response to this Item incorporates by
reference Note 13, "Quarterly and Other Financial Data" of Notes to Consolidated
Financial Statements contained on page F-63 in the appendix to Motorola's Proxy
Statement for the 2001 annual meeting of stockholders.
During 2000, Motorola issued an aggregate of 11,493,243 shares of common
stock (for an aggregate sales price of approximately $95 million) to 7 holders
of warrants issued by General Instrument corporation ("GI") prior to the merger
of Motorola and GI, which consummated on January 5, 2000. Warrants issued by GI
for an aggregate of an additional 35,570,082 shares of Motorola common stock
remained outstanding as of December 31, 2000. Motorola has filed a Registration
Statement on Form S-3 (File No. 333-36320) covering the resale of all such
shares of common stock by the holders thereof. The issuances of these shares to
the warrant holders were deemed exempt from registration under the Securities
Act of 1933, as amended, by virtue of Section 4(2) thereof, as transactions not
involving a public offering.
ITEM 6: SELECTED FINANCIAL DATA
The response to this Item incorporates by reference the information under
the caption "Five Year Financial Summary" contained on page F-64 in the appendix
to Motorola's Proxy Statement for the 2001 annual meeting of stockholders.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The response to this Item incorporates by reference the information under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages F-1 through F-33 in the appendix to
Motorola's Proxy Statement for the 2001 annual meeting of stockholders.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item incorporates by reference the information under
the captions "Management's Responsibility For Financial Statements,"
"Independent Auditors' Report," "Consolidated Statements of Operations,"
"Consolidated Balance Sheets," "Consolidated Statements of Stockholders'
Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated
Financial Statements," and "Five-Year Financial Summary" of Motorola's
Consolidated Financial Statements contained on pages F-35 through F-64 in the
appendix to Motorola's Proxy Statement for the 2001 annual meeting of
stockholders.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
21
<PAGE> 24
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this Item required by Item 401 of Regulation S-K, with
respect to directors, incorporates by reference the information under the
caption "Nominees" on pages 2 through 4 of Motorola's Proxy Statement for the
2001 annual meeting of stockholders and, with respect to executive officers, is
contained in Part I hereof under the caption "Executive Officers of the
Registrant". The response to this Item required by Item 405 of Regulation S-K
incorporates by reference the information under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" on page 19 of Motorola's Proxy
Statement for the 2001 annual meeting of stockholders.
ITEM 11: EXECUTIVE COMPENSATION
The response to this Item incorporates by reference the information under
the caption "Director Compensation and Related Transactions" on pages 6 and 7 of
Motorola's Proxy Statement for the 2001 annual meeting of stockholders and
"Summary Compensation Table," "Stock Option Grants in 2000," "Aggregated Option
Exercises in 2000 and 2000 Year-End Option Values," "Long-Term Incentive Plans -
Awards in 2000," "Retirement Plans," and "Termination of Employment and Change
in Control Arrangements; Consulting Arrangement with Retiring Executive Officer"
on pages 10 through 13 of Motorola's Proxy Statement for the 2001 annual meeting
of stockholders.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this Item incorporates by reference the information under
the caption "Ownership of Securities" on pages 8 and 9 of Motorola's Proxy
Statement for the 2001 annual meeting of stockholders.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to this Item incorporates by reference the relevant information
under the caption "Director Compensation and Related Transactions" on pages 6
and 7 of Motorola's Proxy Statement for the 2001 annual meeting of stockholders.
22
<PAGE> 25
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See Part II, Item 8 hereof.
2. Financial Statement Schedule and Auditors' Report
<TABLE>
<CAPTION>
Title Schedule
<S> <C>
Valuation and Qualifying Accounts......................................................II
All schedules omitted are inapplicable or the information required is
shown in the Consolidated Financial Statements or notes thereto. The
auditors' report of KPMG LLP with respect to the Financial Statement
Schedule is located at page 20.
</TABLE>
3. Exhibits
Exhibits required to be attached by Item 601 of Regulation S-K are
listed in the Exhibit Index attached hereto, which is incorporated
herein by this reference. Following is a list of management contracts
and compensatory plans and arrangements required to be filed as
exhibits to this form by Item 14(c) hereof:
Motorola Performance Excellence Equals Rewards Plan ("PE=R")
Motorola Long Range Incentive Plan of 1994
Motorola Long Range Incentive Plan of 2000
Share Option Plan of 1982
Share Option Plan of 1991
Share Option Plan of 1996
Motorola Elected Officers Supplementary Retirement Plan
Executive Health Plan
Accidental Death and Dismemberment Insurance for PE=R Participants
Arrangement for Directors' Fees
Deferred Compensation Plan
Motorola Non-Employee Directors Stock Plan
Officers' Group Life Insurance Policy
Form of Termination Agreement
Policy Protecting Salary and Medical Benefits
Insurance Policy for Non-Employee Directors
Motorola Incentive Plan of 1998
Consultant Agreement with Gary L. Tooker
Consultant Agreement with Frederick T. Tucker
Motorola Omnibus Incentive Plan of 2000
Form of Motorola, Inc. Award Document - Terms and Conditions Related to
Employee Nonqualified Stock Options
(b) Reports on Form 8-K.
On November 7, 2000, Motorola filed an amendment on Form 8-K/A to a
Form 8-K dated March 23, 2000.
(c) Exhibits:
See Item 14(a)3 above.
23
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Motorola, Inc.
Under date of January 10, 2001, except as to Note 4, which is as of January
31, 2001, we reported on the consolidated balance sheets of Motorola, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 2000, as contained in the 2000
proxy statement to stockholders. These consolidated financial statements and our
report thereon are incorporated by reference in the annual report on Form 10-K
for the year ended December 31, 2000. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
financial statement schedule as listed in Part IV, Item 14(a)2. The financial
statement schedule is the responsibility of Motorola's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Chicago, Illinois
January 10, 2001, except as to Note 4,
which is as of January 31, 2001
24
<PAGE> 27
SCHEDULE II
MOTOROLA, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 2000
(IN MILLIONS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
Additions
---------------------------
Balance at Charged to Charged Balance at
beginning costs & to other end of
of period expenses accounts(6) Deductions period
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
2000
Reorganization of Businesses .......... $ 40 $1,483 $ -- $1,249(1) $ 274
Allowance for Doubtful Accounts ....... $ 295 $ 87 $ -- $ 139(2) $ 243
Allowance for Losses on Commercial
Receivables .......................... $ 292 $ 113 $ (128) $ 44 $ 233
Product and Service Warranties ........ $ 379 $ 265 $ -- $ 276(3) $ 368
Customer Reserves ..................... $ 410 $ 324 $ -- $ 472(4) $ 262
Iridium Reserves ...................... $1,955 $ -- $ -- $1,426(5) $ 529
1999
Reorganization of Businesses .......... $ 666 $ -- $ (232) $ 394(1) $ 40
Allowance for Doubtful Accounts ....... $ 224 $ 200 $ -- $ 129(2) $ 295
Allowance for Losses on Commercial
Receivables .......................... $ 167 $ 125 $ -- $ -- $ 292
Product and Service Warranties ........ $ 382 $ 282 $ -- $ 285(3) $ 379
Customer Reserves ..................... $ 422 $ 500 $ -- $ 512(4) $ 410
Iridium Reserves ...................... $ 649 $2,069 $ -- $ 763(5) $1,955
1998
Reorganization of Businesses .......... $ 159 $1,980 $ (22) $1,451(1) $ 666
Allowance for Doubtful Accounts ....... $ 177 $ 140 $ -- $ 93(2) $ 224
Allowance for Losses on Commercial
Receivables .......................... $ -- $ 167 $ -- $ -- $ 167
Product and Service Warranties ........ $ 379 $ 267 $ -- $ 264(3) $ 382
Customer Reserves ..................... $ 602 $ 306 $ -- $ 486(4) $ 422
Iridium Reserves ...................... $ 554 $ 95 $ -- $ -- $ 649
------ ------ ------ ------ ------
</TABLE>
(1) Reversal into income
(2) Accrual usage
25
<PAGE> 28
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Motorola, Inc.
We consent to incorporation by reference in the registration statements on
Form S-8 (Nos. 33-59285, 333-03681, 333-12817, 333-51847, 333-65941, 333-82681,
333-94547, 333-88735, 333-36309, 333-37114 and 333-53120) of Motorola, Inc. of
our reports dated January 10, 2001, except as to Note 4, which is as of January
31, 2001, with respect to the consolidated balance sheets of Motorola, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows and the related
financial statement schedule for each of the years in the three-year period
ended December 31, 2000, 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, 2000.
KPMG LLP
Chicago, Illinois
March 30, 2001
26
<PAGE> 29
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, MOTOROLA, INC. HAS DULY CAUSED THIS AMENDED REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
MOTOROLA, INC.
By: /s/ Christopher B. Galvin
--------------------------------
Christopher B. Galvin
Chairman of the Board and
Chief Executive Officer
March 9, 2001
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
AMENDED REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF
MOTOROLA, INC. AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Christopher B. Galvin Chairman of the Board and 3/9/01
- ----------------------------- Chief Executive Officer
Christopher B. Galvin (Principal Executive Officer)
/s/ Carl F. Koenemann Executive Vice President 3/9/01
- ----------------------------- and Chief Financial Officer
Carl F. Koenemann (Principal Financial Officer)
/s/ Anthony M. Knapp Senior Vice President 3/9/01
- ----------------------------- and Controller
Anthony M. Knapp Principal Accounting Officer)
/s/ Francesco Caio Director 3/9/01
- -----------------------------
Francesco Caio
/s/ Ronnie C. Chan Director 3/9/01
- -----------------------------
Ronnie C. Chan
/s/ H. Laurance Fuller Director 3/9/01
- -----------------------------
H. Laurance Fuller
/s/ Robert W. Galvin Director 3/9/01
- -----------------------------
Robert W. Galvin
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert L. Growney Director 3/9/01
- --------------------------
Robert L. Growney
/s/ Anne P. Jones Director 3/9/01
- --------------------------
Anne P. Jones
/s/ Judy C. Lewent Director 3/9/01
- --------------------------
Judy C. Lewent
/s/ Dr. Walter E. Massey Director 3/9/01
- --------------------------
Dr. Walter E. Massey
/s/ Nicholas Negroponte Director 3/9/01
- --------------------------
Nicholas Negroponte
/s/ John E. Pepper, Jr. Director 3/9/01
- --------------------------
John E. Pepper, Jr.
/s/ Samuel C. Scott III Director 3/9/01
- --------------------------
Samuel C. Scott III
/s/ Gary L. Tooker Director 3/9/01
- --------------------------
Gary L. Tooker
/s/ B. Kenneth West Director 3/9/01
- --------------------------
B. Kenneth West
/s/ Dr. John A. White Director 3/9/01
- --------------------------
Dr. John A. White
</TABLE>
28
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of Motorola, Inc., as
amended through May 3, 2000 (incorporated by reference to
Exhibit 3(i)(b) to Motorola's Quarterly Report on Form 10-Q
for the fiscal quarter ended April 1, 2000).
3.2 Certificate of Designations, Preferences and Rights of Junior
Participating Preferred Stock, Series B (incorporated by
reference to Exhibit 3.3 to Motorola's Registration Statement
on Form S-3 dated January 20, 1999 (Registration No.
333-70827)).
*3.3 By-Laws of Motorola, Inc., as amended through March 9, 2001.
4.1 Rights Agreement dated November 5, 1998 between Motorola,
Inc., and Harris Trust and Savings Bank, as Rights Agent
(incorporated by reference to Exhibit 1.1 to Amendment No. 1
to Motorola's Registration Statement on Form 8-A/A dated March
16, 1999).
4.2(a) Senior Indenture, dated as of May 1, 1995, between Harris
Trust and Savings Bank and Motorola, Inc. (incorporated by
reference to Exhibit 4(d) of the Registrant's Registration
Statement on Form S-3 dated September 25, 1995 (File No.
33-62911)).
*4.2(b) Instrument of Resignation, Appointment and Acceptance, dated
as of January 22, 2001, among Motorola, Inc., Bank One Trust
Company, N.A. and BNY Midwest Trust Company (as successor in
interest to Harris Trust and Savings Bank).
Instruments defining the rights of holders of long-term debt
of the registrant and of all subsidiaries for which
consolidated or unconsolidated financial statements are
required to be filed are being omitted pursuant to paragraph
(4)(iii)(A) of Item 601 of Regulation S-K. Registrant agrees
to furnish a copy of any such instrument to the Commission
upon request.
*10.1 Motorola Performance Excellence Equals Rewards ("PE=R"), as
amended, effective on January 1, 2000.
10.2(a) Motorola Long Range Incentive Plan of 1994, as amended through
February 4, 1998 (incorporated by reference to Exhibit 10.2 to
Motorola's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 27, 1998).
10.2(b) Motorola Long Range Incentive Plan of 2000 (incorporated by
reference to Exhibit 10.2 to Motorola's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 2000).
10.3 Share Option Plan of 1982, as amended through March 24, 1992
(incorporated by reference to Exhibit 10.3 to Motorola's
Annual Report on Form 10-K for the fiscal year ended December
31, 1990, Exhibit 10.2(a) to Motorola's Annual Report on Form
10-K for the fiscal year ended December 31, 1991 and Exhibit
10.3 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992).
10.4 Share Option Plan of 1991, as amended through August 7, 1995
(incorporated by reference to Exhibit 10.4 to Motorola's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 and Exhibit 10.4 to Motorola's Report on Form 10-K
for the fiscal year ended December 31, 1995).
10.5 Resolutions Amending Sections 8 and 10(2) of the Share Option
Plan of 1982, and Resolutions Amending Sections 7 and 9(b) of
the Share Option Plan of 1991, effective August 15, 1996
(incorporated by reference to Exhibit 10.5 to Motorola's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996).
10.6 Share Option Plan of 1996, as amended through May 7, 1997
(incorporated by reference to Exhibit 10 to Motorola's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 28, 1997).
*10.7 Motorola Elected Officers Supplementary Retirement Plan, as
amended through May 1, 2000.
10.8 Executive Health Plan (incorporated by reference to Exhibit
10.8 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).
10.9 Accidental death and dismemberment insurance for PE=R
participants (incorporated by reference to Exhibit
</TABLE>
29
<PAGE> 32
<TABLE>
<S> <C>
10.7 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990).
10.10 Arrangement for directors' fees and retirement plan for
non-employee directors (description incorporated by reference
from pages 6 and 7 of Motorola's Proxy Statement for the 2001
annual meeting of stockholders).
*10.11 Motorola Management Deferred Compensation Plan, effective as
of January 1, 2001.
10.12 Motorola Non-Employee Directors Stock Plan, as amended and
restated on February 4, 1998 (incorporated by reference to
Exhibit 10.12 to Motorola's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 27, 1998).
10.13 Officers' Group Life Insurance Policy (incorporated by
reference to Exhibit 10.10 to Motorola's Annual Report on Form
10-K for the fiscal year ended December 31, 1990).
10.14 Form of Termination Agreement in respect of a change in
control (incorporated by reference to Exhibit 10.15 to
Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989).
10.15 Policy protecting salary and medical benefits of employees in
the event of an unsolicited change in control (incorporated by
reference to Exhibit 10.16 to Motorola's Annual Report on Form
10-K for the fiscal year ended December 31, 1990).
10.16 Insurance policy covering non-employee Directors (incorporated
by reference to the description on pages 6 and 7 of Motorola's
Proxy Statement for the 2001 annual meeting of stockholders
and to Exhibit 10.16 to Motorola's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989).
10.17 Motorola Incentive Plan of 1998, as amended through May 2,
2000 (incorporated by reference to Exhibit 10.1 to Motorola's
Quarterly Report on Form 10-Q for the fiscal quarter ended
July 1, 2000).
10.18 Consultant Agreement dated September 30, 1999 between
Motorola, Inc. and Gary L. Tooker (incorporated by reference
to Exhibit 10 to Motorola's Quarterly Report on Form 10-Q for
the fiscal quarter ended October 2, 1999).
*10.19 Consultant Agreement dated February 15, 2001 between Motorola,
Inc. and Frederick T. Tucker.
10.20 Agreement and Plan of Merger dated September 14, 1999 between
Motorola, Inc., Lucerne Acquisition Corp. and General
Instrument Corporation (incorporated by reference to Exhibit
2.1 to Amendment No. 2 to Motorola's Registration Statement on
Form S-4 dated November 29, 1999).
10.21(a) Motorola Omnibus Incentive Plan of 2000, as amended through
June 2, 2000 (incorporated by reference to Exhibit 10.1 to
Motorola's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2000).
*10.21(b) Form of Motorola, Inc. Award Document - Terms and Conditions
Related to Employee Nonqualified Stock Options, as of March
2001, relating to the Motorola Omnibus Incentive Plan of 2000.
*12 Statement regarding Computation of Ratio of Earnings to Fixed
Charges.
*21 Subsidiaries of Motorola.
23 Consent of KPMG LLP. See page 21 of the Annual Report on Form
10-K of which this Exhibit Index is a part.
</TABLE>
- ----------
* Filed herewith
30
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.3
<SEQUENCE>2
<FILENAME>c61260ex3-3.txt
<DESCRIPTION>BY-LAWS OF MOTOROLA, INC.
<TEXT>
<PAGE> 1
Exhibit 3.3 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA, INC.
BYLAWS
(as amended through March 9, 2001)
ARTICLE I
Offices and Corporate Seal
The registered office of the Corporation required by the Delaware
General Corporation Law shall be 1209 Orange Street, Wilmington, Delaware,
19801, and the address of the registered office may be changed from time to time
by the Board of Directors.
The principal business office of the Corporation shall be located in
the Village of Schaumburg, County of Cook, State of Illinois. The Corporation
may have such other offices, either within or without the State of Illinois, as
the Board of Directors may designate or as the business of the Corporation may
require from time to time.
The registered office of the Corporation required by the Illinois
Business Corporation Act may be, but need not be, the same as its place of
business in the State of Illinois, and the address of the registered office may
be changed from time to time by the Board of Directors.
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal".
ARTICLE II
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by, or under the direction of, its Board of Directors.
<PAGE> 2
Section 2. Number, Tenure and Qualifications. The number of directors
of the Corporation shall be sixteen (16), or such other number fixed from time
to time by the Board of Directors. Each director shall hold office until his
successor shall have been elected and qualified, or until his earlier death or
resignation.
Section 3. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled for the remainder of the unexpired term by the affirmative vote of a
majority of the directors then in office although less than a quorum.
Section 4. Compensation. Directors who also are employees of the
Corporation shall not receive any additional compensation for services on the
Board of Directors. By resolution of the Board of Directors, a fixed sum may be
allowed directors who are not employees of the Corporation for attendance at
each regular or special meeting of the Board of Directors or any committee of
the Board of Directors, and by resolution of the Board of Directors an
additional fixed fee may be allowed directors who are not employees of the
Corporation in consideration of other services and continuous interest and study
of the affairs of the Corporation. Travel and other expenses actually incurred
may be allowed all directors for attendance at each regular or special meeting
of the Board of Directors or at any meeting of a committee of the Board of
Directors or in connection with their other services to the Corporation. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 5. Committees of Directors. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees. Each committee shall consist of one or more of the directors of the
Corporation, as selected by the Board of Directors, and the Board of Directors
shall also designate a chairman of each committee and the members of each
committee shall designate a person to act as secretary of the committee to keep
the minutes of, and serve the notices for, all meetings of the committee and
perform such other duties as the committee may direct. Such person may, but need
not be a member of the committee. Any such committee, to the extent provided in
a resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
-2-
<PAGE> 3
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power and authority of the Board of Directors in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation under Section 251 or 252 of the Delaware General
Corporation Law, recommending to the shareholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the shareholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation, and, unless the
resolution expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware General Corporation Law. Each committee of the Board of Directors may
establish its own rules of procedure. Except as otherwise specified in a
resolution designating a committee, one-third of the members of a committee
shall be necessary to constitute a quorum of that committee for the transaction
of business and the act of a majority of committee members present at a meeting
at which a quorum is present shall be the act of the committee.
Section 6. Validity of Contracts. No contract or other transaction
entered into by the Corporation shall be affected by the fact that a director or
officer of the Corporation is in any way interested in or connected with any
party to such contract or transaction, or himself is a party to such contract or
transaction, even though in the case of a director the vote of the director
having such interest or connection shall have been necessary to obligate the
Corporation upon such contract or transaction; provided, however, that in any
such case (i) the material facts of such interest are known or disclosed to the
directors or shareholders and the contract or transaction is authorized or
approved in good faith by the shareholders or by the Board of Directors or a
committee thereof through the affirmative vote of a majority of the
disinterested directors (even though not a quorum), or (ii) the contract or
transaction is fair to the Corporation as of the time it is authorized, approved
or ratified by the shareholders, or by the Board of Directors, or by a committee
thereof.
-3-
<PAGE> 4
ARTICLE III
Shareholders' Meetings
Section 1. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal business office of the
Corporation in the State of Illinois.
Section 2. Annual Meetings. The annual meeting of the shareholders
shall be held on the first Tuesday in the month of May in each year, at the hour
of 5:00 o'clock P.M., or at such other day and hour as may be fixed by or under
the authority of the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday in the state
where the meeting is to be held, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for the annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as is convenient.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chairman of the Board or by the Board of Directors.
Section 4. Voting - Quorum. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of any
class or classes are enlarged, limited or denied by the Certificate of
Incorporation or in the manner therein provided. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, except that directors shall
be elected by a plurality of the votes of the shares represented at the meeting
and entitled to vote on the election of directors, except as otherwise required
by Delaware law, the Certificate of Incorporation, or these Bylaws. No matter
shall be considered at a meeting of
-4-
<PAGE> 5
shareholders except upon a motion duly made and seconded. If less than a
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 5. Adjournment of Meetings. If less than a majority of the
outstanding shares are represented at a meeting of the shareholders, a majority
of the shares so represented may adjourn the meeting from time to time without
further notice. The chairman of a meeting of the shareholders may adjourn the
meeting from time to time without further notice, whether or not less than a
majority of the outstanding shares are represented at the meeting. No notice of
the time and place of adjourned meetings need be given except as required by
law. In no event shall the public announcement of an adjournment of any meeting
of the shareholders commence a new time period for the giving of shareholder
notice of nominations or proposals for other business as described in Section 13
of Article III. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 6. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing or submitted by electronic transmission by the
shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid
after three years from the date of its execution, unless otherwise provided in
the proxy.
Section 7. Notice of Meetings. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
days (twenty days if the shareholders are to approve a merger or consolidation
or a sale, lease or exchange of all or substantially all the Corporation's
assets) nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, or
the Secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. The notice provisions of
Article IX, Section 1 of these Bylaws shall apply to notices given under this
Section 7.
-5-
<PAGE> 6
Section 8. Postponement of Meetings. Any previously scheduled meeting
of the shareholders may be postponed by resolution of the Board of Directors
upon public notice given prior to the time previously scheduled for such meeting
of the shareholders. In no event shall the public announcement of a postponement
of any previously scheduled meeting of the shareholders commence a new time
period for the giving of shareholder notice of nominations or proposals for
other business as described in Section 13 of Article III.
Section 9. Cancellation of Meetings. Any special meeting of the
shareholders may be canceled by resolution of the Board of Directors upon public
notice given prior to the time previously scheduled for such meeting of the
shareholders.
Section 10. Voting Lists. The officer or agent having charge of the
stock ledger of the Corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each; which list, for a period
of ten days prior to such meeting, shall be kept at the place where the meeting
is to be held, or at another place within the city where the meeting is to be
held, which other place shall be specified in the notice of meeting and the list
shall be subject to inspection by any shareholder for any purpose germane to the
meeting, at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock ledger shall be prima facie evidence as to who are the
shareholders entitled to examine such list or ledger or to vote at any meeting
of shareholders.
Section 11. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors of the Corporation may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than sixty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is
-6-
<PAGE> 7
fixed for the determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the close of business on the date next preceding the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this Section, such determination shall apply to any adjournment
thereof; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 12. Voting of Shares by Certain Holders. Neither treasury
shares nor shares of the Corporation held by another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall be
entitled to vote or to be counted for quorum purposes. Nothing in this paragraph
shall be construed as limiting the right of the Corporation to vote its own
stock held by it in a fiduciary capacity.
Shares standing in the name of another corporation, domestic or
foreign, may be voted in the name of such corporation by any officer thereof or
pursuant to any proxy executed in the name of such corporation by any officer of
such corporation in the absence of express written notice filed with the
Secretary that such officer has no authority to vote such shares.
Shares held by an administrator, executor, guardian, conservator,
trustee in bankruptcy, receiver or assignee for creditors may be voted by him,
either in person or by proxy, without a transfer of such shares into his name.
Shares standing in the name of a fiduciary may be voted by him, either in person
or by proxy.
A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer by the pledgor on the books of the Corporation the
pledgor has expressly empowered the pledgee to vote thereon, in which case only
the pledgee, or his proxy, may represent such stock and vote thereon.
Section 13. Advance Notice of Shareholder Nominations and Proposals for
other Business. Nominations of persons for election to the Board of Directors
and the proposal of business to be transacted by the shareholders may be made at
an annual or
-7-
<PAGE> 8
special meeting of the shareholders only (a) pursuant to the Corporation's
notice with respect to such meeting, (b) by or at the direction of the Board of
Directors or (c) by any shareholder of the Corporation who was a shareholder of
record on the record date set with respect to such meeting (as provided for in
Section 11 of Article III), who is entitled to vote at the meeting and who has
complied with the notice procedures set forth in this Section 13. For
nominations or proposals for other business to be properly brought before an
annual or special meeting by a shareholder pursuant to clause (c) above, the
shareholder must give timely notice thereof in writing to the Secretary of the
Corporation and such business must be a proper matter for shareholder action
under the Delaware General Corporation Law and a proper matter for consideration
at such meeting under the Certificate of Incorporation and these Bylaws. For
such notice to be timely, it must be delivered to the Secretary at the principal
business office of the Corporation not earlier than the 120th day prior to the
date of such meeting and (a) in the case of an annual meeting of shareholders,
at least 45 days before the date on which the Corporation first mailed its proxy
materials for the prior year's annual meeting of shareholders and (b) in the
case of a special meeting, not later than the close of business on the later of
(i) the 60th day prior to the date of such meeting or (ii) the 10th day
following the day on which public announcement of the date of such meeting is
first made. If such shareholder notice relates to a proposal by such shareholder
to nominate one or more persons for election or re-election as a director, it
shall set forth all information relating to each such person that is required to
be disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (including, if and to the
extent so required, such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected). If such
shareholder notice relates to any other business that the shareholder proposes
to bring before the meeting, it shall set forth a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such shareholder and the beneficial owner,
if any, on whose behalf the proposal is made. Each such notice shall also set
forth as to the shareholder giving the notice and the beneficial owner, if any,
on whose behalf the
-8-
<PAGE> 9
nomination or proposal is made (i) the name and address of such shareholder, as
they appear on the Corporation's books, and of such beneficial owner and (ii)
the class and number of shares of capital stock of the Corporation which are
owned beneficially and of record by such shareholder and such beneficial owner.
Persons nominated by shareholders to serve as directors of the Corporation who
have not been nominated in accordance with this Section 13 shall not be eligible
to serve as directors. Only such business shall be conducted at an annual or
special meeting of shareholders as shall have been brought before the meeting in
accordance with this Section 13. The chairman of the meeting shall determine
whether a nomination or any business proposed to be transacted by the
shareholders has been properly brought before the meeting and, if any proposed
nomination or business has not been properly brought before the meeting, the
chairman shall declare that such proposed business or nomination shall not be
presented for shareholder action at the meeting. For purposes of this Section
13, "public announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or a comparable national news
service. Notwithstanding any provision in this Section 13 to the contrary,
requests for inclusion of proposals in the Corporation's proxy statement made
pursuant to Rule 14a-8 under the Exchange Act shall be deemed to have been
delivered in a timely manner if delivered in accordance with such Rule.
Notwithstanding compliance with the requirements of this Section 13, the
chairman presiding at any meeting of the shareholders may, in his sole
discretion, refuse to allow a shareholder or shareholder representative to
present any proposal which the Corporation would not be required to include in a
proxy statement under any rule promulgated by the Securities and Exchange
Commission.
ARTICLE IV
Board of Directors' Meetings
Section 1. Annual Meetings. An annual meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of shareholders.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board or any two
directors. The
-9-
<PAGE> 10
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Delaware, as the place
for holding any special meeting of the Board of Directors called by them.
Section 3. Notice. Except as set forth in the next sentence, notice of
any special meeting shall be given at least 24 hours prior to the meeting by
written notice delivered or given personally (including by phone) or by mail or
telegram or other written communication to each director at his business address
or residence. If, however, the meeting is called by or at the request of the
Chairman of the Board and if the Chairman of the Board decides that unusual and
urgent business is to be transacted at the meeting (which decision shall be
conclusively demonstrated by his giving notice of the meeting less than 24 hours
prior to the meeting), then at least 2 hours' prior notice shall be given. If
notice is given by telegram or courier, such notice shall be deemed to be given
when the telegram is delivered to the telegraph company or courier company and
any personal notice shall be deemed given when given. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting and objects thereat to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 4. Quorum. One-third of the number of directors fixed by, or
pursuant to, Section 2 of Article II shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such one-third is present at a meeting, a majority of the directors present
may adjourn the meeting from time to time without further notice.
Section 5. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 6. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent is entered in the minutes of the meeting or unless he files his
written dissent to such action with the
-10-
<PAGE> 11
person acting as the secretary of the meeting before the adjournment thereof or
forwards such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
Section 7. Action by Directors Without a Meeting. Any action required
to be taken at a meeting of directors, or at a meeting of a committee of
directors, or any other action which may be taken at a meeting, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the directors or members of the committee thereof
entitled to vote with respect to the subject matter thereof and filed with the
minutes of proceedings of the Board of Directors or committee and such consent
shall have the same force and effect as a unanimous vote.
Section 8. Participation in a Meeting by Telephone. Members of the
Board of Directors or any committee of directors may participate in a meeting of
such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participating in a meeting pursuant to this
Section 8 shall constitute presence in person at such meeting.
ARTICLE V
Officers and Chairman of the Board
Section 1. Elected Officers. As determined by the Board of Directors,
the elected officers of the Company shall include a Chairman of the Board, a
Chief Executive Officer (the Chairman of the Board and the Chief Executive
Officer may be one person), a President and Chief Operating Officer, one or more
Vice Presidents, a Chief Financial Officer, a Treasurer, a Secretary and a
Controller, each of whom shall be elected by the Board of Directors. The Board
of Directors may elect such other officers as may be necessary, including one or
more Vice Chairmen of the Board, one or more other Officers of the Board and a
Chairman of the Executive Committee. The elected officers of the Company shall
be elected annually by the Board of Directors and shall have such powers and
duties as generally pertain to their respective offices,
-11-
<PAGE> 12
subject to these Bylaws. Any two or more offices may be held by the same person.
Each elected officer shall hold office until his successor shall have been duly
elected or until his death or until he shall resign or shall have been removed.
Any officer elected by the Board of Directors serves at the pleasure of the
Board of Directors and may be removed by the Board of Directors for any reason.
Any elected officer other than the Chief Executive Officer, the President and
Chief Operating Officer, the Chief Financial Officer, the Treasurer, the
Secretary or the Controller may be removed by the Chairman of the Board for any
reason.
Section 2. The Chairman of the Board of Directors. The Board of
Directors shall annually elect one of its own members to be the Chairman of the
Board of Directors ("Chairman of the Board"). The Chairman of the Board shall
preside at all meetings of the Board of Directors and the shareholders, and may
at any time call any meeting of the Board of Directors. He may also at his
discretion call or attend any meeting of any committee of the Board of
Directors, whether or not a member of such committee. The Chairman of the Board
may designate one or more other directors to exercise the functions and to have
the authority of the Chairman of the Board during the absence or disability of
the Chairman of the Board and prior to any action by the Board of Directors to
fill any vacancy. Absent any such election, a Vice Chairman of the Board shall
assume the duties of the Chairman of the Board. The Board of Directors may
remove or replace the Chairman of the Board at any time.
Section 3. The Vice Chairman of the Board of Directors. The Vice
Chairman of the Board of Directors ("Vice Chairman of the Board"), shall
perform such duties as may be prescribed by the Board of Directors or the
Chairman of the Board, from time to time. If there are two or more Vice
Chairmen of the Board, they shall preside at meetings as prescribed by the
Board of Directors or Chairman of the Board from time to time.
Section 4. The Chief Executive Officer. The Chief Executive Officer
("CEO") shall be the senior executive officer of the Company and shall in
general supervise and control all the business and affairs of the Company. He
shall direct the policy of the Company, including the appointment and removal of
all officers and employees of the Company for whose election or appointment no
other provision is made in these Bylaws
-12-
<PAGE> 13
or by the Board of Directors and shall perform all other duties appropriate to
the office or as may be prescribed by the Board of Directors by resolution from
time to time. He may delegate powers to any other officer of the Company.
Section 5. The President and Chief Operating Officer. The President and
Chief Operating Officer shall have such duties as may be prescribed by the Board
of Directors by resolution from time to time. Prior to any action by the Board
of Directors, in the absence or disability of the CEO, the President and Chief
Operating Officer shall exercise the functions of the CEO and shall have the
authority of the CEO.
Section 6. Vice Presidents. A Vice President may be designated as an
Executive Vice President, a Senior Vice President, a Corporate Vice President or
such other designation as may be determined by the Board of Directors. Vice
Presidents shall have such duties as may be prescribed by the Board of Directors
by resolution from time to time.
Section 7. The Secretary. The Secretary shall give notice of, and keep
the minutes of, all meetings of the Board of Directors and the shareholders. He
shall in general perform all of the duties which are incident to the office of
secretary of a company, subject at all times to the direction and control of the
Board of Directors, and shall have such other duties as may be prescribed by the
Board of Directors by resolution from time to time.
The Secretary may appoint one or more Assistant Secretaries, each of
whom shall have the power to affix and attest the corporate seal of the Company,
and to attest to the execution of documents on behalf of the Company and perform
such duties as may be assigned by the Secretary.
Section 8. The Chief Financial Officer. The Chief Financial Officer
shall be the senior financial officer of the Company and shall have such duties
as may be prescribed by the Board of Directors by resolution from time to time.
Section 9. The Treasurer. The Treasurer shall have the custody of all
of the funds and securities of the Company and shall have such duties as may be
prescribed by the Board of Directors by resolution from time to time. The
Treasurer may appoint
-13-
<PAGE> 14
one or more Assistant Treasurers to perform such duties as may be assigned by
the Treasurer.
Section 10. The Controller. The Controller shall be the Chief
Accounting Officer of the Company and shall have such duties as may be
prescribed by the Board of Directors by resolution from time to time.
Section 11. Statutory Duties. Each respective officer shall discharge
any and all duties pertaining to his respective office, which is imposed on such
officer by the provisions of any present or future statute of the State of
Delaware.
Section 12. Delegation of Duties. In case of the absence of any officer
of the Company, the Chairman of the Board or the Board of Directors may
delegate, for the time being, the duties of such officer to any other officer or
to any director.
ARTICLE VI
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the CEO or President, and by the
Treasurer or the Secretary. Any or all of the signatures on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
stock ledger of the Corporation.
Section 2. Transfer of Certificate. Transfer of shares of the
Corporation shall be made only upon the records of the Transfer Agent appointed
for this purpose, by the owner in person or by the legal representative of such
owner and, upon such transfer being made, the old certificates shall be
surrendered to the Transfer Agent who shall
-14-
<PAGE> 15
cancel the same and thereupon issue a new certificate or certificates therefor.
Whenever a transfer is made for collateral security, and not absolutely, the
fact shall be so expressed in the recording of the transfer.
Section 3. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent and registrar of transfers and thereafter may require
all stock certificates to bear the signature of such transfer agent and such
registrar of transfers. The signature of either the transfer agent or the
registrar, but not both, may be a facsimile.
Section 4. Registered Holder. The Corporation shall be entitled to
treat the registered holder of any shares as the absolute owner thereof and,
accordingly, shall not be bound to recognize any equitable or other claim
thereto, or interest therein, on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
statutes of the State of Delaware.
Section 5. Rules of Transfer. The Board of Directors also shall have
the power and authority to make all such rules and regulations as they may deem
expedient concerning the issue, transfer and registration of the certificates
for the shares of the Corporation.
Section 6. Lost Certificates. Any person claiming a certificate for
shares of this Corporation to be lost or destroyed, shall make affidavit of the
fact and lodge the same with the Secretary of the Corporation, accompanied by a
signed application for a new certificate. Such person shall give to the
Corporation, to the extent deemed necessary by the Secretary or Treasurer, a
bond of indemnity with one or more sureties satisfactory to the Secretary, and
in an amount which, in his judgment, shall be sufficient to save the Corporation
from loss, and thereupon the proper officer or officers may cause to be issued a
new certificate of like tenor with the one alleged to be lost or destroyed. But
the Secretary may recommend to the Board of Directors that it refuse the
issuance of such new certificate in the event that the applicable provisions of
the Uniform Commercial Code are not met.
-15-
<PAGE> 16
ARTICLE VII
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize, by these
Bylaws or any resolution, any officer or officers, agent or agents, to enter
into any contract or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by these Bylaws or a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents, of the Corporation and in such manner as shall from time to time be
determined by these Bylaws or a resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VIII
Books and Records
Section 1. Location. Complete books and records of account together
with minutes of the proceedings of the meetings of the shareholders and Board of
Directors shall be kept. A record of shareholders, giving the names and
addresses of all shareholders, and the number and class of the shares held by
each, shall be kept by the Corporation at its registered office or principal
place of business in the State of Illinois or at the office of a Transfer Agent
or Registrar.
-16-
<PAGE> 17
ARTICLE IX
Notices
Section 1. Manner of Notice. Whenever, under the provisions of the
Certificate of Incorporation or of the Bylaws of the Corporation or of the
statutes of the State of Delaware, notice is required to be given to a
shareholder, to a director or to an officer, it shall not be construed to mean
personal notice, unless expressly stated so to be. And any notice so required
(other than notice by publication) may be given in writing by depositing the
same in the United States mail, postage prepaid, directed to the shareholder,
director or officer, at his, or her, address as the same appears on the records
of the Corporation, and the time when the same is mailed shall be deemed the
time of the giving of such notice. Any such notices required to be given to
shareholders may also be given in the form of electronic transmission consented
to by the shareholder. Such notice shall be deemed to be given: (1) if by
facsimile, when directed to a number at which the shareholder has consented to
receive notice; (2) if by electronic mail, when directed to an electronic mail
address at which the shareholder has consented to receive notice; (3) if by
posting on an electronic network together with separate notice to the
shareholder of specific posting, upon the later of such posting and the giving
of the separate notice, and (4) if by any other form of electronic transmission,
when directed by the shareholder.
Section 2. Waiver of Notice. Any shareholder, director or officer may,
in writing or electronic transmission, waive the giving and the mailing of any
notice required to be given or mailed either by and under the statutes of the
State of Delaware or by and under the Bylaws.
ARTICLE X
Fiscal Year
Section 1. Fiscal Year. The fiscal year of the Corporation shall begin
on the 1st day of January and terminate on the 31st day of December.
-17-
<PAGE> 18
ARTICLE XI
Emergency Bylaws
The Emergency Bylaws provided in this Article XI shall be operative
upon (a) the declaration of a civil defense emergency by the President of the
United States or by concurrent resolution of the Congress of the United States
pursuant to Title 50, Appendix, Section 2291 of the United States Code, or any
amendment thereof, or (b) upon a proclamation of a civil defense emergency by
the Governor of the State of Illinois which relates to an attack or imminent
attack on the United States or any of its possessions. Such Emergency Bylaws, or
any amendments to these Bylaws adopted during such emergency, shall cease to be
effective and shall be suspended upon any proclamation by the President of the
United States, or the passage by the Congress of a concurrent resolution, or any
declaration by the Governor of Illinois that such civil defense emergency no
longer exists.
Section 1. Board of Directors' Meetings. During any such emergency, any
meeting of the Board of Directors may be called by any officer of the
Corporation or by any director. Notice shall be given by such person or by any
officer of the Corporation. The notice shall specify the place of the meeting,
which shall be at the head office of the Corporation at the time if feasible,
and otherwise, any other place specified in the notice. The notice shall also
specify the time of the meeting. Notice may be given only to such of the
directors as it may be feasible to reach at the time and by such means as may be
feasible at the time, including publication or radio. If given by mail,
messenger, telephone, or telegram, the notice shall be addressed to the director
at his residence or business address, or such other place as the person giving
the notice shall deem most suitable. Notice shall be similarly given, to the
extent feasible in the judgment of the person giving the notice, to the other
directors. Notice shall be given at least two days before the meeting, if
feasible in the judgment of the person giving the notice, and otherwise on any
shorter time he may deem necessary.
Section 2. Change of Head Office. The Board of Directors, during any
such emergency may, effective in the emergency, change the head office or
designate several alternative head offices, or regional offices or authorize the
officers to do so.
-18-
<PAGE> 19
ARTICLE XII
Director Emeritus
Section 1. Director Emeritus. The Board of Directors may at any time
and from time to time award to former members of the Board of Directors in
recognition of their past distinguished service and contribution rendered to the
Corporation the honorary title "Director Emeritus." The award of this title
shall not constitute an election or appointment to the Board of Directors, nor
to any office of the Corporation, nor the bestowal of any duties,
responsibilities or privileges associated therewith; and accordingly no
"Director Emeritus" shall be deemed a "Director" as that term is used in these
Bylaws. The title "Director Emeritus" shall carry no compensation, and holders
thereof shall not attend any meetings of the Board of Directors or committees of
the Board of Directors, except by written invitation, nor shall they be
specially privy to any confidential information arising from such meeting.
ARTICLE XIII
Amendment of Bylaws
Section 1. Amendment of Bylaws. These Bylaws may be altered, amended or
repealed and new Bylaws may be adopted at any meeting of the Board of Directors
by a majority vote of the directors present at the meeting.
-19-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2(B)
<SEQUENCE>3
<FILENAME>c61260ex4-2b.txt
<DESCRIPTION>INSTRUMENT OF RESIGNATION, APPOINTMENT & ACCEPTANC
<TEXT>
<PAGE> 1
Exhibit 4.2(b) to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE, dated as of
January 22, 2001 (this "Instrument") among Motorola, Inc., a corporation duly
organized and existing under the laws of the State of Delaware, having its
principal office at 1303 East Algonquin Road, Schaumburg, Illinois 60196 (the
"Company"), Bank One Trust Company, N.A., a national banking association duly
organized and existing under the laws of the United States, having its principal
Corporate Trust Office at 1 Bank One Plaza, Chicago, Illinois 60670 ("Bank One"
or "Successor Trustee"), and BNY Midwest Trust Company (as successor trustee to
Harris Trust and Savings Bank), a banking corporation duly organized and
existing under the laws of the State of New York, having its principal office at
111 West Monroe Street, Chicago, Illinois 60603 (the "Resigning Trustee").
WHEREAS:
A. The Company issued the securities described below (collectively, the
"Securities"):
5.80% Notes due October 15, 2008 of which $325,000,000 is outstanding;
7.625% Notes due November 15, 2010 of which $1,200,000,000 is outstanding;
7.5% Debentures due May 15, 2025 of which $400,000,000 is outstanding;
6.5% Debentures due September 1, 2025 of which $400,000,000 is outstanding;
5.22% Debentures due October 1, 2097 of which $300,000,000 is outstanding; and
6.5% Debentures due November 15, 2028 of which $445,000,000 is outstanding;
under the Indenture dated as of May 1, 1995 between the Company and the
Resigning Trustee (the "Indenture");
B. The Company appointed the Resigning Trustee as the paying agent (the
"Paying Agent") and the Security Registrar (the "Security Registrar") under the
Indenture;
<PAGE> 2
C. The Indenture provides that the Resigning Trustee may at any time
resign as Trustee, Paying Agent and Security Registrar by giving written notice
thereof to the Company;
D. The Resigning Trustee represents that it has given the Company
written notice of its resignation as Trustee, Paying Agent and Security
Registrar, a true copy of which is annexed hereto marked Exhibit A;
E. The Indenture further provides that, if the Trustee shall resign,
the Company shall promptly appoint a successor Trustee;
F. The Company by resolutions of a committee authorized by its Board of
Directors, a true copy of which is annexed to a Certificate of its Secretary or
Assistant Secretary annexed hereto and marked Exhibit B, accepted the
resignation of BNY Midwest Trust Company as Trustee, Paying Agent and Security
Registrar and appointed Bank One, as successor Trustee, Paying Agent and
Security Registrar;
G. The Indenture provides that the successor Trustee shall execute,
acknowledge and deliver to the Company and the Resigning Trustee an instrument
accepting such appointment and thereupon the resignation of the Resigning
Trustee shall become effective and Bank One, as such successor Trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of the Trustee;
H. The Indenture further provides that no successor Trustee shall
accept appointment as such unless at the time it is qualified and eligible under
the Indenture and the Trust Indenture Act of 1939 and the rules and regulations
promulgated thereunder (the "Trust Indenture Act");
I. Bank One is qualified, eligible and willing to accept such
appointment as successor Trustee; and
-2-
<PAGE> 3
J. The Indenture further provides the Company shall mail notice of
appointment of a successor Trustee, Paying Agent and Security Registrar to
Holders of the Securities; and the Company, simultaneously with the execution
and delivery of this Instrument, has caused the notice required pursuant to the
Indenture, a form of which is annexed hereto and marked Exhibit C, to be mailed
to the Holders of the Securities as therein required.
NOW, THEREFORE, THIS INSTRUMENT WITNESSETH: that for and in
consideration of the premises and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby
covenanted, declared, decreed and agreed by the Company, Bank One and the
Resigning Trustee as follows:
1. The resignation of BNY Midwest Trust Company as Trustee, Paying
Agent and Security Registrar and its discharge from the trust created by the
Indenture shall be effective as of the date hereof upon the execution and
delivery of this Instrument by all the parties hereto.
2. The Company, in the exercise of the authority vested in it by the
Indenture, hereby appoints Bank One as successor Trustee, Paying Agent and
Security Registrar with all rights, powers, trusts, duties and obligations under
the Indenture, each such appointment to be effective as of the date hereof upon
the execution and delivery of this Instrument by all the parties hereto.
3. Bank One hereby represents that it is qualified and eligible under
the provisions of the Indenture and the Trust Indenture Act to be appointed
successor Trustee, Paying Agent and Security Registrar and hereby accepts its
appointment as successor Trustee, Paying Agent and Security Registrar effective
as of the date hereof upon the execution and delivery of this Instrument by all
parties hereto, and hereby assumes the rights, powers, trusts, duties and
obligations of the Trustee, Paying Agent and Security Registrar under the
Indenture, subject to all terms and provisions therein contained.
-3-
<PAGE> 4
4. The Resigning Trustee hereby grants, gives, bargains, sells,
remises, releases, conveys, confirms, assigns, transfers and sets over to Bank
One as such successor Trustee, Paying Agent and Security Registrar and its
successors and assigns all rights, title and interest of the Resigning Trustee,
as Trustee, Paying Agent and Security Registrar in and to the trust estate and
all rights, powers and trusts, under the Indenture; and the Resigning Trustee as
Trustee, Paying Agent and Security Registrar does hereby agree to pay over,
assign and promptly deliver to Bank One as such successor Trustee, Paying Agent
and Security Registrar any and all money, if any, and property, if held by the
Resigning Trustee, as Trustee, Paying Agent and Security Registrar and the
Company for the purpose of more fully and certainly vesting in and confirming to
Bank One as such successor Trustee, Paying Agent and Security Registrar said
estate, properties, rights, powers and, at the request of Bank One, joins in the
execution hereof.
5. The Resigning Trustee hereby represents and warrants to the
Successor Trustee that:
(a) No "Event of Default" (as defined in the Indenture) and no
event which, after notice or lapse of time or both, would
become an Event of Default, has occurred and is continuing
under the Indenture;
(b) No covenant or condition contained in the Indenture has been
waived by the Resigning Trustee or by the Holders of the
percentage in aggregate principal amount of the Securities
required by the Indenture to effect any such waiver;
(c) There is no action, suit, or proceeding pending or threatened
against the Resigning Trustee before any court or governmental
authority arising out of any action or omission by the
Resigning Trustee as Trustee;
(d) The Resigning Trustee has furnished, or as promptly as
practicable will furnish, to the Successor Trustee originals
of all documents relating to the trust created
-4-
<PAGE> 5
by the Indenture and all information in its possession
relating to the administration and status thereof and will
furnish to the successor Trustee any of such documents or
information the Successor Trustee may select, provided that
the Successor Trustee will make available to the Resigning
Trustee as promptly as practicable following the request of
the Resigning Trustee any such original documents which the
Resigning Trustee may need to defend against any action, suit,
or proceeding against the Resigning Trustee as Trustee or
which the Resigning Trustee may need for any other proper
purpose;
(e) The Resigning Trustee has not delegated to any other party any
of its duties as Trustee, Security Registrar, or Paying Agent,
and has not appointed any Authenticating Agent; and (f)
(f) The Resigning Trustee has lawfully and fully discharged its
duties as Trustee.
6. The Company hereby represents and warrants to the Successor Trustee
that:
(a) It is a duly incorporated and existing corporation in good
standing under the laws of the State of Delaware and has full
power and authority to execute and deliver this Instrument;
(b) This Instrument has been duly and validly authorized,
executed, and delivered by the Company and constitutes a
legal, valid, and binding obligation of the Company;
(c) The Securities have been duly registered under the Securities
Act of 1933, as amended, and such registration has become
effective;
(d) The Indenture complies with the Trust Indenture Act and has
been duly qualified thereunder and is a legal, valid, and
binding obligation of the Company;
-5-
<PAGE> 6
(e) The Company has performed or fulfilled each covenant,
agreement, and condition on its part to be performed or
fulfilled under the Indenture;
(f) There is no "Event of Default" and no event which, after
notice or lapse of time or both, would become an Event of
Default under the Indenture;
(g) The Company has not appointed any Security Registrar or Paying
Agent other than the Resigning Trustee; and
(h) The Company will continue to perform its obligations under the
Indenture.
7. Notwithstanding the resignation of the Resigning Trustee as Trustee
under the Indenture, the Company shall remain obligated under the Indenture to
compensate, reimburse and indemnify the Resigning Trustee in connection with its
trusteeship under the Indenture.
8. For all purposes of this Instrument, except as otherwise expressly
provided or unless the context otherwise requires, all capitalized terms used
and not defined herein that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
9. This Instrument may be executed in any number of counterparts, each
of which shall be an original but such counterparts shall together constitute
but one and the same instrument.
10. This Instrument shall be governed by and construed in accordance
with the laws of the State of Illinois.
[signature pages follow]
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to
be duly executed and their respective seals to be affixed hereunto and duty
attested all as of the day and year first above written.
MOTOROLA, INC.
By: /s/ Garth L. Milne
--------------------------------
[Corporate Seal] Title: Senior Vice President
and Treasurer
ATTEST:
/s/ Jeffrey A. Brown
------------------------------------
Assistant Secretary
BANK ONE TRUST COMPANY, N.A.
as Successor Trustee
By: /s/ Leland Hansen
---------------------------------
[Corporate Seal] Title: Assistant Vice President
ATTEST:
/s/ Joseph Morand
------------------------------------
-7-
<PAGE> 8
BNY MIDWEST TRUST COMPANY
as Resigning Trustee
By: /s/ Carolyn Potter
--------------------------------
Title: Assistant Vice President
[Corporate Seal]
ATTEST:
/s/ D.G. Donovan
-------------------------------------
Title: Assistant Secretary
-8-
<PAGE> 9
EXHIBIT A
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Attention: Secretary
Gentlemen:
NOTICE IS HEREBY GIVEN THAT, pursuant to Section 610 of the Indenture, dated as
of May 1, 1995 (the "Indenture"), between Motorola, Inc. and BNY Midwest Trust
Company (as successor to Harris Trust and Savings Bank), as Trustee, BNY Midwest
Trust Company hereby resigns as Trustee, Paying Agent and Security Registrar
under the Indenture, each such resignation is to be effective upon the
appointment, pursuant to Section 610 of the Indenture, of a successor Trustee
and the acceptance of such appointment by such successor Trustee, pursuant to
Section 611 of the Indenture.
Very truly yours,
BNY Midwest Trust Company
By
---------------------------
Title
------------------------
-9-
<PAGE> 10
EXHIBIT B
CERTIFICATE OF SECRETARY
I, ______________, do hereby certify that I am the duly appointed,
qualified and acting Secretary or Assistant Secretary of Motorola, Inc., a
Delaware corporation; I further certify that the resolution attached hereto as
Exhibit B-1 and incorporated herein by this reference, is a true and correct
copy of resolutions duly adopted by a committee authorized by the Board of
Directors of said corporation as of January ____, 2001; and I further certify
that said resolutions remain in full force and effect as of the date of this
certificate.
Dated this __ day of January, 2001
------------------------
Title:
-10-
<PAGE> 11
EXHIBIT B.1
RESOLVED, that the resignation of BNY Midwest Trust Company (as
successor to Harris Trust and Savings Bank), as Trustee, Paying Agent and
Security Registrar under an Indenture dated as of May 1, 1995 (the "Indenture")
between the Company, and BNY Midwest Trust Company (as successor to Harris Trust
and Savings Bank) in connection with the issuance of the Company's:
5.80% Notes due October 15, 2008
7.625% Notes due November 15,
7.5% Debentures due May 15, 2025
6.5% Debentures due September 1, 2025
5.22% Debentures due October 1, 2097
6.5% Debentures due November 15, 2028
is hereby accepted and Bank One Trust Company, N.A., a national banking
association, is hereby appointed as successor Trustee, Paying Agent and Security
Registrar under said Indenture; and
FURTHER RESOLVED, that any officer of the Company is hereby authorized
to enter into such agreements as may be necessary to effectuate such appointment
of Bank One Trust Company, N.A.
-11-
<PAGE> 12
EXHIBIT C
Notice to Holders of:
MOTOROLA, INC.
5.80% Notes due October 15, 2008
7.625% Notes due November 15, 2010
7.5% Debentures due May 15, 2025
6.5% Debentures due September 1, 2025
5.22% Debentures due October 1, 2097
6.5% Debentures due November 15, 2028
Motorola, Inc. hereby notifies you of the resignation of BNY Midwest Trust
Company (as successor to Harris Trust and Savings Bank), as Trustee, Paying
Agent and Security Registrar under the Indenture dated as of May 1, 1995 (the
"Indenture"), pursuant to which your Securities were issued and are outstanding.
Motorola, Inc. has appointed Bank One Trust Company, N.A., whose Corporate Trust
Office is located at 1 Bank One Plaza, Chicago, Illinois 60670, as successor
Trustee, Paying Agent and Security Registrar under the Indenture, which
appointment has been accepted and became effective as of January __, 2001
MOTOROLA, INC.
By:
-----------------------------
Title:
--------------------------
BANK ONE TRUST COMPANY, N.A.
By:
-----------------------------
Title:
--------------------------
-12-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>c61260ex10-1.txt
<DESCRIPTION>MOTOROLA PERFORMANCE EXCELLENCE EQUAL REWARDS
<TEXT>
<PAGE> 1
Exhibit 10.1 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA PERFORMANCE EXCELLENCE = REWARDS PLAN (PE=R)
ELIGIBILITY
Select executives and key employees who are integral to the long-term success of
Motorola are eligible to participate in the Motorola Performance Excellence =
Reward Plan (PE=R). Generally, participants will be in grades E14 and above.
PARTICIPATION
Actual participation, from among the eligible group of employees, will be made
on an annual basis at the selection of your immediate supervisor.
Here is an overview of the Plan:
INCENTIVE TARGETS
<TABLE>
<S> <C>
Below EXB (E15s and below): 30%
EXB: 45%
EXE with annual base salary up to US$310K (elected officers): 65%
EXE with annual base salary of US$310K+ (elected officers): 75%
EXV (executive vice presidents): 75% or 85%
</TABLE>
KEY METRICS
<TABLE>
<CAPTION>
PES SCORE* % OF TARGET
------------------ -----------
<S> <C>
Less than 1.5 Less than 50%**
1.5 50%
2.0 100%
3.0 140%
4.0 200%
-----------------------------------------------
* PES score may be adjusted up or down by the
CEO based on the degree of difficulty
relative to other businesses or functions
** CEO discretion
</TABLE>
1
<PAGE> 2
SITUATIONS AFFECTING PE=R
>> CHANGE IN EMPLOYMENT
o No participant who terminates employment prior to the payment
of an award will receive an unpaid award for the previous year
or a pro rata award for the current year.
>> CHANGE IN CONTROL
If Motorola undergoes a Change in Control (as defined in the Omnibus
Incentive Plan of 2000):
o Award payments will be made for the previous fiscal year. If
actual individual award amounts have not already been
determined, the awards shall be based on the individual's
target award percentage and actual salary on the date of
Change in Control.
o Pro rata award payments will be made for the current fiscal
year based on the individual's target award percentage, actual
salary on the date of Change in Control, and the number of
completed months, as of the effective date of the Change in
Control.
o Awards will be paid in cash as soon as administratively
practicable following the effective date of the Change in
Control but in no event more than 30 days following a Change
in Control.
o These provisions may not be modified or terminated following a
Change in Control.
NONTRANSFERABILITY
Rights under the PE=R may not be sold, transferred, pledged, assigned, or
otherwise alternated or hypothecated.
RESERVATION AND RETAINMENT OF COMPANY RIGHTS
o All awards (other than those upon a Change in Control) are at
the discretion of the Compensation Committee.
o The selection of any employee for participation in PE=R will
not give that participant any right to be retained in the
employ of the Company.
o The right and power of the Company to terminate the employment
of any participant is specifically reserved.
o A participant in PE=R will not have any right to or interest
in any awards unless and until all terms, conditions, and
provisions of PE=R that affect that person have been fulfilled
as specified herein.
o No employee will at any time have a right to be selected for
participation in PE=R for any fiscal year, despite having been
selected for participation in a previous fiscal year.
GOVERNANCE
The Board of Directors or the Compensation Committee (with the assistance of the
Chief Executive Officer of the Company) is authorized to administer, construe,
and make all determinations necessary or appropriate to the administration of
the PE=R, all of which will be binding upon the participant.
AMENDMENT, MODIFICATION, AND TERMINATION
The Board of Directors or the Compensation Committee may amend, modify, or
terminate PE=R.
2
<PAGE> 3
MISCELLANEOUS PROVISIONS
o The Company will have the right to require participants to
remit to the Company an amount sufficient to satisfy federal,
state, and local withholding tax requirements, or to deduct
from any or all payments under the PE=R amounts sufficient to
satisfy all withholding tax requirements.
o All obligations of the Company under the PE=R with respect to
payout of awards, and the corresponding rights granted
thereunder, will be binding on any successor to the Company,
whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or other
acquisition of all or substantially all of the business and/or
assets of the Company.
o In the event that any provision of the PE=R will be held
illegal or invalid for any reason, the illegality or
invalidity will not affect the remaining parts of the plan,
and the PE=R will be construed and enforced as if the illegal
or invalid provision had not been included.
o No participant will have any interest whatsoever in any
specific asset of the Company. To the extent that any person
acquires a right to receive payments under the PE=R, such
right will be no greater than the right of any unsecured
general creditor of the Company.
o To the extent not preempted by federal law, the PE=R, and all
agreements hereunder, will be construed in accordance with and
governed by the laws of the state of Illinois without giving
effect to the principles of conflicts of laws.
3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>5
<FILENAME>c61260ex10-7.txt
<DESCRIPTION>MOTOROLA ELECTED OFFICERS SUPPLEMENTARY RET. PLAN
<TEXT>
<PAGE> 1
Exhibit 10.7 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
AS AMENDED May 1, 2000
Motorola, Inc. (the "Company") heretofore established the Elected
Officers Supplementary Retirement Plan (the "Plan"). Effective November 9, 1988,
the Board of Directors of the Company approved extensive amendments to the Plan.
This document sets forth the Plan as amended on November 9, 1988 and includes
all additional amendments through May 1, 2000. The Plan and the Trust created to
fund the Company's obligations under the Plan are not intended to be qualified
under Sections 401(a) and 501(a) of the Internal Revenue Code.
Section 1. Definitions. Where the following words and phrases appear in
this Plan, they shall have the respective meanings set forth below, unless the
context clearly indicates to the contrary:
1.1 ACTUARIAL (OR ACTUARIALLY) EQUIVALENT: Equality in value of the
aggregate amounts expected to be received under different forms of payment, and
except as provided below, based on the actuarial assumptions, tables and
interest rates which are adopted by the Committee from time to time for this
purpose and are set forth in Appendix A hereto.
1.2 AFFILIATED EMPLOYER: Any corporation which is a member of a
controlled group of corporations (as defined in Section 414 (b) of the Internal
Revenue Code) which includes the Company.
1.3 ANNUITY STARTING DATE: As defined in Section 8.1 hereof.
1.4 AVERAGE MEIP AWARD: As defined in Section 6 hereof.
1.5 BOARD OF DIRECTORS: The Board of Directors of the Company, and
shall also mean any committee of the Board of Directors which has been delegated
authority to exercise the powers and authority of the Board of Directors with
respect to the Plan.
1.6 CHANGE IN CONTROL: A change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") whether or not the Company is then subject to such reporting requirement;
provided that, without limitation, such a change in control shall be deemed to
have occurred if (A) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13-d3 under the Exchange Act), directly or indirectly, of
securities
<PAGE> 2
of the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities (other than the Company, any employee
benefit plan of the Company, any "person" who is a natural person and who was
shown as the "beneficial owner", directly or indirectly, of securities of the
Company representing more than 5% of the combined voting power of the Company's
securities in the Company's Proxy Statement dated earlier than, but closest to,
the Effective Date; and, for purposes of the Plan, no change in control shall be
deemed to have occurred as a result of the "beneficial ownership," or changes
therein, of the Company's securities by any of the foregoing), (B) there shall
be consummated (i) any consolidation or merger of the Company in which the
Company is not the surviving or continuing corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities or
other property, other than a merger of the Company, in which the holders of the
Company's Common Stock immediately prior to the merger have (directly or
indirectly) at least an 80% ownership interest in the outstanding Common Stock
of the surviving corporation immediately after the merger, or (ii) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, (C)
the stockholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company, or (D) as the result of, or in connection with,
any cash tender offer, exchange offer, merger or other business combination,
sale of assets, proxy or consent solicitation (other than by the Board),
contested election or substantial stock accumulation (a "Control Transaction"),
the members of the Board immediately prior to the first public announcement
relating to such Control Transaction shall thereafter cease to constitute a
majority of the Board.
1.7 COMMITTEE: The persons appointed pursuant to Section 12 to assist
the Company in the administration of the Plan in accordance with said Section.
1.8 COMPANY: Motorola, Inc., a corporation organized and existing under
the laws of the State of Delaware or its successor or successors.
1.9 DISABILITY; DISABLED: The Committee shall determine, in its
reasonable discretion, whether any Participant has a Disability or is Disabled.
1.10 EARLY RETIREMENT DATE: The first day of the calendar month
coincident with or immediately following the Participant's 60th birthday.
1.11 EARLY RETIREMENT AGE: The Participant's 60th birthday.
2
<PAGE> 3
1.12 EFFECTIVE DATE: November 9, 1988, the date on which the provisions
of this Plan as amended on November 9, 1988 become effective.
1.13 ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.14 ERISA EXCESS FORMULA: As defined in Section 6 hereof.
1.15 HOUR OF SERVICE:
(a) each hour for which an employee is paid, or entitled to payment,
for the performance of duties for the Company. These hours will be
credited to the employee for the computation period in which the duties
are performed;
(b) each hour for which an employee is paid, or entitled to payment, by
the Company on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence. No
more than 501 Hours of Service will be credited under this paragraph
for a single computation period (whether or not the period of time
during which no duties are performed occurs in a single computation
period). Hours under this paragraph will be calculated and credited
pursuant to section 2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company. The same Hours
of Service will not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These hours will
be credited to the employee for the computation period or periods to
which the award or agreement pertains rather than the computation
period in which the award, agreement, or payment is made. Solely for
purposes of determining whether a One Year Break in Service for vesting
purposes has occurred in a computation period, an employee who is
absent from work for maternity or paternity reasons shall receive
credit for the Hours of Service which would otherwise have been
credited to such employee but for such absence, or in any case in which
such hours cannot be determined, 8 hours of service per day of such
absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the employee, (2) by reason of a birth of a child of the
employee, (3) by reason of the placement of a child with the employee
in connection with the adoption of such child by such employee, or (4)
for purposes of caring for such child
3
<PAGE> 4
for a period beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph shall be credited
(1) in the computation period in which the absence begins if the
crediting is necessary to prevent a One Year Break in Service in that
period, or (2) in all other cases, in the following computation period.
The total Hours of Service Required to be credited for maternity or
paternity reasons shall not exceed 501 hours. As used in this
definition, the term Company includes all Affiliated Employers.
1.16 NORMAL FORMULA: As defined in Section 6 hereof.
1.17 NORMAL RETIREMENT AGE: The Participant's 65th birthday.
1.18 NORMAL RETIREMENT DATE: A Participant's Normal Retirement Date is
the first day of the calendar month coincident with or immediately following the
Participant's 65th birthday.
1.19 OFFICER: An officer of the Company elected by the Board of
Directors.
1.20 ONE YEAR BREAK IN SERVICE: An employee shall incur a One Year
Break in Service if in any computation period, as described in the definition of
a Year of Service, he does not complete more than five hundred (500) Hours of
Service. In the case of an employee who is absent from work for maternity or
paternity reasons, as described in Section 1.15, Hours of Service shall be
credited to such employee in accordance with Section 1.15.
1.21 PBGC: Pension Benefit Guaranty Corporation, a body corporate
within the Department of Labor established under the provisions of Title IV of
ERISA.
1.22 PARTICIPANT: An Officer participating in the Plan in accordance
with the provisions of Section 3.
1.23 PENSION PLAN: The Motorola, Inc. Pension Plan.
1.24 PLAN: Motorola Elected Officers Supplementary Retirement Plan, the
plan set forth herein, as amended from time to time.
1.25 PLAN YEAR: The 12-month period commencing on January 1 and ending
on December 31.
1.26 QUALIFIED JOINT AND SURVIVOR ANNUITY: As defined in Section 8.1
hereof.
1.27 QUALIFIED PRE-RETIREMENT ANNUITY: As defined in Section 8.2
hereof.
4
<PAGE> 5
1.28 RETIREMENT BENEFIT: As defined in Section 6 hereof.
1.29 SALARY: The amount paid to an Officer by the Company as annual
basic compensation, excluding awards under the Motorola Executive Incentive Plan
and Long Range Incentive Program, moving expense reimbursements, the imputed
fair market value of a Company provided automobile or excess group-term life
insurance coverage and similar imputed income items.
1.30 SCRP: The Motorola Supplementary Contributory Retirement Plan.
1.31 SERVICE CREDIT: As defined in Section 6 hereof.
1.32 SUBSIDIARY: Any corporation more than fifty percent (50%) of the
outstanding voting stock of which (other than directors' qualifying shares) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.
1.33 SURVIVOR ANNUITY STARTING DATE: As defined in Section 8.2 hereof.
1.34 TRUST: Any trust established for receiving, holding, investing and
disposing of the Trust Fund and for implementing and carrying out the provisions
of the Plan.
1.35 TRUSTEE: The person or entity named as trustee herein or in any
separate Trust forming part of this Plan, and any successors.
1.36 TRUST AGREEMENT: As defined in Section 14.1 hereof.
1.37 TRUST FUND: The Plan assets held by the Trustee under the Trust.
1.38 YEAR OF SERVICE: A twelve (12) consecutive month period
(computation period) during which period the employee has completed at least one
thousand (1,000) Hours of Service. The computation period of an employee shall
begin with the date he commences employment with the Company and additional
computation periods shall begin on each succeeding anniversary of the date the
employee commences employment with the Company. In the event an employee's
employment with the Company is terminated and such employee has a One Year Break
in Service following the termination of his employment, and if such employee is
later reemployed by the Company, the computation period shall begin with the
date such employee is reemployed by the Company, and additional computation
periods shall begin on each succeeding anniversary of the date the employee was
reemployed by the Company. All Years of Service (both pre-break and post-break)
will be counted for vesting purposes and for calculating the
5
<PAGE> 6
Retirement Benefit under the Normal Formula. Years of Service with any
Affiliated Employer shall be counted as Years of Service with the Company.
Section 2. Construction. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary. The
words "hereof," "herein," "hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire Plan, not to any particular provision
or Section. Section headings are included for convenience of reference and are
not intended to add to, or subtract from, the terms of the Plan.
Section 3. Participation. Each Officer who is age 55 or older on the
Effective Date shall become a Participant in the Plan, as amended, on the
Effective Date. After the Effective Date, an Officer shall become a Participant
in the Plan upon the earlier of (i) his designation as a Participant by the
Committee at any age under age 55, (ii) attaining age 55, (iii) his election as
an Officer if age 55 or older at that time, (iv) a Change in Control or (v) his
Disability; provided, however, that there shall be no new Participants in the
Plan after December 31, 1999. A Participant whose right to a Retirement Benefit
was not vested on December 31, 1999, shall no longer participate in the Plan
upon the Participant's acceptance of the offer to exchange his or her's interest
in the Plan for other consideration from Motorola.
Section 4. Vesting. A Participant's right to a Retirement Benefit shall
be vested and nonforfeitable as follows:
(a) For a Participant who has not attained age 60, when he has
completed at least five Years of Service;
(b) For a Participant who is age 60 or older but who has not attained
age 65, when he has completed at least two Years of Service;
(c) Upon attainment of age 65 (Normal Retirement Age) regardless of his
Years of Service;
(d) Upon a Change in Control of the Company regardless of the
Participant's age or number of Years of Service;
(e) At the time he becomes Disabled regardless of the Participant's age
or number of Years of Service.
Section 5. Eligibility for Retirement Benefits. To be eligible for a
Retirement Benefit under the Plan, a Participant must also be a participant in
the Pension Plan if eligible for participation, or the pension plan of a
Subsidiary if the Subsidiary has a pension plan and the Participant is eligible
to participate in it, and he must meet the other eligibility
6
<PAGE> 7
requirements stated herein. A Participant who is vested and who retires on or
after age 60 shall be eligible to receive an unreduced Retirement Benefit upon
retirement. A Participant who retires at any age because of Disability shall be
eligible to receive an unreduced Retirement Benefit upon retirement. A
Participant whose employment with the Company terminates at any age because of a
Change in Control shall be eligible to receive an unreduced Retirement Benefit
upon retirement at or after age 55. A Participant who is vested and ceases to be
an Officer or ceases to be employed by the Company for any reason (other than
Disability or a Change in Control) before he has attained age 57 shall be
eligible to receive a deferred unreduced Retirement Benefit upon retirement at
or after age 60 or, subject to the condition stated hereinbelow, a deferred
Actuarially reduced Retirement Benefit determined as provided in this Section 5
upon retirement at or after age 57. A Participant who is vested and who retires
at or after age 57 but prior to age 60 shall, subject to the condition stated
hereinbelow, be eligible to receive an Actuarially reduced Retirement Benefit
upon retirement determined as follows:
(a) With respect to the lump sum payment option, the lump sum amount to
be paid to the Participant will be equal to the cost to purchase (from an
insurance company selected by the Company) a deferred annuity for the
Participant at retirement which would provide the full Retirement Benefit with
payments commencing at age 60.
(b) With respect to the lifetime income payments option, such payments
will be determined by the amount of lifetime income which could be provided by
purchasing an annuity with the lump sum amount determined in (a) above. The
other optional forms of payment under the Plan will also be available to the
Participant on an actuarially reduced basis.
Notwithstanding the foregoing, as a condition to the availability of a
Retirement Benefit at or after age 57 but prior to age 60, the Participant shall
enter into an agreement not to compete with the Company.
Section 6. Determination of Amount of Retirement Benefit. A benefit for
each Participant shall be calculated under the Normal Formula. A benefit for
each Participant who participates in the Pension Plan shall also be calculated
under the ERISA Excess Formula. The formula which produces the greater benefit
will be the applicable formula for Participants who participate in the Pension
Plan. The benefit so calculated for each Participant, whether determined under
the Normal Formula or the ERISA Excess Formula, shall be reduced by the amount
(computed on a life annuity basis) payable to such Participant under the Pension
Plan (but not including SCRP payments), the pension plan of any Subsidiary, the
Company's Long Term Disability Plan, and the disability plan of any Subsidiary,
whichever plan or plans is or are at the time applicable to such Participant.
The result so
7
<PAGE> 8
obtained shall be the Participant's "Retirement Benefit", provided, however,
that the Retirement Benefit payable annually to any Participant shall not exceed
seventy percent (70%) of his Salary as of the date immediately prior to
retirement.
Normal Formula. The monthly benefit under the Normal Formula expressed
as lifetime income shall be calculated as follows: One-Twelfth (1/12) times the
sum of (i) Salary as of the date immediately prior to retirement (or as of such
earlier date as may be mutually agreed upon by the Company and the Officer
affected) or in the case of a deferred vested Retirement Benefit, as of the date
of the Participant's termination of employment plus (ii) the five year Average
MEIP Award paid to the Officer under the Motorola Executive Incentive Plan times
forty percent (40%) plus an additional percentage ("Service Credit") equal to
one-fourth (1/4) of one percent (1%) for each Year of Service of the Officer in
excess of ten (10) Years of Service, subject to the following maximums:
<TABLE>
<CAPTION>
Age At Age At
Retirement Maximum Retirement Maximum
---------- ------- ---------- -------
<S> <C> <C> <C>
55 42.50% 61 44.00%
56 42.75% 62 44.25%
57 43.00% 63 44.50%
58 43.25% 64 44.75%
59 43.50% 65 & over 45.00%
60 43.75%
</TABLE>
If the Service Credit determined as above is less than the Early Service Credit
calculated under the Plan as it existed prior to the Effective Date for any
Participant, the Early Service Credit shall be used for such Participant in lieu
of the Service Credit determined as above.
"Average MEIP Award" shall mean and shall be calculated as follows:
(i) For each of the eight full calendar years prior to retirement, each
year's MEIP award is calculated as a percentage of that year's actual
earnings from Salary.
(ii) The five calendar years which produce the highest percentages are
then determined.
(iii) The average of the percentages for those five years is then
determined.
(iv) The average of the percentages so determined is then applied to
the Officer's Salary at retirement (or at such earlier date as may be
mutually agreed upon by the Company and the Officer affected) to
determine the Average MEIP Award amount for purposes of this Plan.
8
<PAGE> 9
Following is an example of the calculation:
<TABLE>
<CAPTION>
Actual MEIP Award as %
Earnings from MEIP of Actual Earnings
Year Salary Award from Salary
- ---- ------------- -------- -------------------
<S> <C> <C> <C>
1 $ 190,000 $57,000 30.0%*
2 180,000 36,000 20.0%*
3 170,000 30,600 18.0%*
4 160,000 20,800 13.0%
5 150,000 48,000 32.0%*
6 140,000 -0- 0
7 130,000 28,600 22.0%*
8 110,000 17,600 16.0%
* Average MEIP rate for five years which 24.4%
produces the highest percentage
</TABLE>
Final Salary = $200,000
Average MEIP Award (24.4% of $200,000 final Salary) = $48,800
Payments made under the Long Range Incentive Program shall not be taken
into account in determining the Average MEIP Award.
ERISA Excess Formula. The monthly benefit under the ERISA Excess
Formula expressed as lifetime income shall be calculated in the same manner as
the Normal Retirement Benefit is calculated under Section 6.1(b) of the Pension
Plan. The benefit calculated under this formula shall not be subject to the
limitations of Sections 401(a)(17) and 415 of the Internal Revenue Code.
Notwithstanding the method prescribed above for calculating Average
MEIP Award, if, under extraordinary circumstances which are in the interest of
the Company, as determined by the Company (acting through the Board of Directors
or any committee thereof to whom authority has been delegated) in its sole
discretion, an Officer extends his or her employment beyond his or her planned
retirement date at the request of the Company, the Company may, with the consent
of the Officer affected, calculate the Officer's Average MEIP Award by using the
MEIP awards for the calendar years that would have been used if the Officer had
retired on the date originally planned.
Section 7. Payment of Retirement Benefits. A Participant's Retirement
Benefit shall be paid in monthly installments commencing as follows: (i) in the
case of a vested Participant who retires prior to or on or after his Early
Retirement Age, on the first day of the month coinciding with or immediately
following the date of his retirement, (ii) in the case of a Participant who
retires before his Early Retirement Age because of Disability, on the first day
of the month coinciding with or
9
<PAGE> 10
immediately following the date of Disability, and (iii) in the case of a
Participant who has a deferred vested Retirement Benefit, on the first day of
the month selected by the Participant after he has attained his Early Retirement
Age, or if a Change in Control has occurred, after he has attained age 55 rather
than his Early Retirement Age. Such payments shall continue on the first day of
each succeeding month until the benefit terminates as provided in the Plan for
the type of benefit being paid to the Participant. Unless the Participant elects
otherwise, in writing, payment of benefits under the Plan will begin not later
than the 60th day after the latest of the close of the Plan Year in which:
(1) the Participant attains Normal Retirement Age;
(2) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
(3) the Participant terminates his service with the Company.
7.1 FACILITY OF PAYMENT: If, in the Committee's judgment, any person to
whom benefits are payable hereunder is under a legal disability or unable to
care for his affairs because of illness, accident, or other incapacity, any
payment due (unless prior claim therefor shall have been made by a duly
qualified guardian, committee, or other legal representative) may be paid to his
spouse, parent, brother or sister, or any other person as the Committee may
determine. Any such payment shall be a payment for the account of such person
and shall, to the extent thereof, be a complete discharge of any liability under
the Plan to such person.
Section 8. Qualified Joint and Survivor Annuity and Qualified
Pre-Retirement Survivor Annuity.
8.1 QUALIFIED JOINT AND SURVIVOR ANNUITY.
(a) Unless otherwise elected as provided below, a Participant who is
married on the Annuity Starting Date and who does not die before the
Annuity Starting Date shall receive the value of his benefit in the
form of a Qualified Joint and Survivor Annuity. An unmarried
Participant shall receive the value of his benefit in the form of a
life annuity. Such unmarried Participant, however, may elect in writing
to waive the life annuity. The election must comply with the provisions
of this Section as if it were an election to waive the joint and
survivor annuity by a married Participant, but without the spousal
consent requirement. The joint and survivor annuity and the life
annuity form of distribution shall be the Actuarial Equivalent of the
benefits due the Participant.
10
<PAGE> 11
(b) Any election to waive the Qualified Joint and Survivor Annuity must
be made by the Participant in writing during the election period, must
be consented to in writing by the Participant's spouse and must
indicate that the Participant alone is to receive the benefit or
designate a specific beneficiary or beneficiaries, including any class
of beneficiaries or a contingent beneficiary and a form of benefit
payment which may not be changed (except back to a Qualified Joint and
Survivor Annuity) without spousal consent, unless the consent of the
spouse expressly permits designations by the Participant without any
requirement of further consent by the spouse. Such spouse's consent
shall be irrevocable and must acknowledge the effect of such election
and be witnessed by a Plan representative or a notary public. A consent
that permits designations by the Participant without any requirement of
further consent by such spouse must acknowledge that the spouse has the
right to limit consent to a specific beneficiary and a specific form of
benefit, where applicable and that the spouse voluntarily elects to
relinquish either or both of such rights. Such consent shall not be
required if it is established to the satisfaction of the Committee that
the required consent cannot be obtained because there is no spouse, the
spouse cannot be located, or other circumstances that may be prescribed
by Treasury regulations. The election made by the Participant and
consented to by his spouse may be revoked by the Participant in writing
without the consent of the spouse at any time during the election
period. The number of revocations shall not be limited. Any new
election must comply with the requirements of this paragraph. A former
spouse's waiver shall not be binding on a new spouse.
(c) The election period to waive the joint and survivor annuity and to
revoke an election shall be the ninety (90) day period ending on the
Annuity Starting Date.
(d) "Annuity Starting Date" means the first day of the first period for
which an amount is paid as an annuity, or, in the case of a Retirement
Benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitles the Participant to such
Retirement Benefit.
(e) "Qualified Joint and Survivor Annuity" means a reduced annuity for
the life of the Participant with a survivor annuity for the life of the
spouse which is either 50 percent (50%), 75 percent (75%) or 100
percent (100%) (as selected by the Participant, and if no selection is
made, it will be 50%) of the amount of the annuity which is payable
during the joint lives of the Participant and the spouse and which is
the Actuarial Equivalent of the normal form of benefit.
11
<PAGE> 12
(f) With regard to the election, the Committee shall provide the
Participant no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date (and consistent with Treasury
regulations), a written explanation of:
(i) the terms and conditions of the Qualified Joint and
Survivor Annuity,
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor Annuity,
(iii) the right of the Participant's spouse to consent to any
election to waive the Qualified Joint and Survivor Annuity,
(iv) the right of the Participant to revoke such election, and
the effect of such revocation, and
(v) the relative values of the various optional forms of
benefit under the Plan.
(g) The distribution of a benefit in the form of a Qualified Joint and
Survivor Annuity shall not require the consent of the Participant's
spouse if such distribution commences prior to the later of his Normal
Retirement Age or age 62.
8.2 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. In the case of a vested
Participant who dies before the Annuity Starting Date, whether or not separated
from service with the Company at the time of death, and who has a surviving
spouse, a Qualified Pre-Retirement Survivor Annuity shall be paid to the
surviving spouse of such Participant. This form of benefit may not be waived nor
may another beneficiary be selected. Under this form of benefit, the
Participant's surviving spouse will receive a lifetime annuity payable in
monthly installments equal to fifty percent (50%) of the Retirement Benefit
calculated for the deceased Participant as of the date immediately prior to his
death. For purposes of this Section 8.2, a surviving spouse will begin to
receive payments on the fist day of the month immediately following the date of
the Participant's death unless such surviving spouse elects a later date. A
surviving spouse's benefit will be paid in a lump sum upon such spouse's written
request made prior to the date benefit payments begin. The date on which a
surviving spouse begins to receive payments as an annuity or receive a lump sum
payment under this Section 8.2 shall be referred to as the "Survivor Annuity
Starting Date".
8.3 NON-QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. In addition to the
Qualified Pre-Retirement Survivor Annuity provided for in Section 8.2 hereof, in
the case of a vested
12
<PAGE> 13
Participant who dies before his of her Annuity Starting Date, whether or not
separated from service with the Company at the time of death, and who has a
surviving spouse, a Non-Qualified Pre-Retirement Survivor Annuity shall be paid
to the surviving spouse of such Participant. This form of benefit may not be
waived nor may another beneficiary be selected. Under this form of benefit, the
Participant's surviving spouse will receive a lifetime annuity payable in
monthly installments equal to fifty percent (50%) of the Retirement Benefit
calculated for the deceased Participant as of the date immediately prior to his
of her death. For purposes of this Section 8.3, a surviving spouse will begin to
receive payments on the first day of the month immediately following the date of
the Participant's death unless such surviving spouse elects a later date. A
surviving spouse's benefit will be paid in a lump sum upon such spouse's written
request made prior to the date benefit payments begin. The date on which a
surviving spouse begins to receive payments as an annuity or receive a lump sum
payment under this Section 8.3 shall be referred to as the "Survivor Annuity
Starting Date."
Section 9. Optional Methods of Payment. If a married Participant has
duly waived the Qualified Joint and Survivor Annuity form of benefit or if an
unmarried Participant has duly waived the life annuity form of benefit in
accordance with the requirements of Section 8.1, upon the written request of
such a Participant filed with the Committee before the Annuity Starting Date in
accordance with the rules governing such requests, the Committee shall provide
for him an optional form of Retirement Benefit, in one of the forms set forth
below, which shall be the Actuarial Equivalent of the Retirement Benefit to
which he would be otherwise entitled hereunder except that no optional form
shall be granted which would reduce the value of the Participant's Retirement
Benefit payable to him personally by more than fifty percent (50%):
(i) a lump sum payment;
(ii) in the case of a married Participant, in the form of a life
annuity; or
(iii) a life-ten years certain form as set forth in Section 6.7 (b) of
the Pension Plan.
Section 10. Limitations on Benefits. All rights and benefits, including
elections, provided to a Participant in the Plan shall be subject to the rights
afforded to any alternate payee under a qualified domestic relations order as
those terms are defined in Section 206 (d) of ERISA.
Section 11. Nonalienation of Benefits. No benefit which shall be
payable out of the Trust Fund to any person (including a Participant or his
beneficiary), or any other amount or asset set aside or purchased under Section
13 to fund a Participant's Retirement Benefit, shall be subject in any manner to
13
<PAGE> 14
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall in any
manner be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to attachment
or legal process for or against such person, and the same shall not be
recognized by the Trustee, except to such extent as may be required by law. This
provision shall also apply to the creation, assignment or recognition of a right
to a benefit payable with respect to a Participant pursuant to a domestic
relations order as defined in Section 206(d) of ERISA unless such order is
determined to be a qualified domestic relations order as defined in Section
206(d) of ERISA; provided, however, a domestic relations order entered prior to
January 1, 1985 may, in the discretion of the Officers Plan Committee or its
delegate, be treated as a Qualified Domestic Relations Order, even though the
order does not satisfy the requirement of Section 206(d) of ERISA. The Committee
shall establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under such qualified
orders.
Section 12. Administration.
12.1 OFFICERS PLAN COMMITTEE: The Board of Directors shall appoint a
committee to be known as the Officers Plan Committee to administer the Plan. The
Committee shall be the Named Fiduciary for purposes of Section 402(a) of the
Act. The Committee shall consist of one or more persons appointed by the Board
of Directors, and each member shall serve until his resignation or removal or
until his successor is appointed. Each member may, but need not, be a director,
officer or employee of the Company. A member of the Committee may resign by
delivering his written resignation to the Board of Directors. Any member of the
Committee may be removed, with or without cause, by the Board of Directors.
12.2 POWERS AND DUTIES OF THE COMMITTEE: The Committee shall carry out
the duties assigned to it under the Plan and shall administer the Plan in
accordance with its terms. The Committee shall have all powers as may be
necessary to carry out its duties under the Plan, including, but not by way of
limitation, the following: to construe and interpret the provisions of the Plan;
to decide any disputes which may arise under the Plan; to decide all questions
that shall arise under the Plan, including questions as to the eligibility to
become Participants, and the amount, manner and time of payment of any benefits
under the Plan; to decide questions submitted by the Trustee on all matters
necessary for it to properly discharge its duties, powers and obligations; to
employ or appoint legal counsel, accountants, actuaries, consultants or any
person to
14
<PAGE> 15
assist in the administration of the Plan and any other agents it deems
advisable. The Committee shall also have the power to allocate and delegate
fiduciary responsibilities. The Committee shall have the power and authority to
direct the investment of the Trust Fund, and in connection with such power, may
delegate in writing authority to manage assets of the Trust Fund to one or more
investment managers. The Committee may adopt from time to time written
investment policies and guidelines which shall govern the manner in which the
assets of the Trust Fund are to be invested, which policies and guidelines shall
be followed by the investment managers. With respect to Retirement Benefits
funded under Section 13.1(b) or (c) hereof, the Committee shall have the
discretion to appoint such agents as are necessary to act on its behalf and
shall have the authority to direct the investment of amount held to fund such
Retirement Benefits.
12.3 MEETINGS OF THE COMMITTEE: The Committee shall act by a majority
of its members at the time in office, and such action may be taken either by a
vote at a meeting or in writing without a meeting. The Committee may authorize
any person or persons, who may but need not be a member or members of the
Committee, to execute any document or documents on behalf of the Committee, in
which event the Committee shall notify the Trustee in writing of such action and
the name or names of such person or persons so designated. The Trustee
thereafter may accept and rely upon any document executed by such person or
persons as representing action by the Committee until the Committee shall file
with the Trustee a written revocation of such designation.
12.4 ADOPTION OF RULES BY THE COMMITTEE: The Committee may adopt such
rules as it deems necessary, desirable or appropriate. All rules and decisions
of the Committee shall be uniformly and consistently applied to all Participants
in similar circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished by a Participant
or beneficiary, the Company, the legal counsel of the Company, or the Trustee.
12.5 INSTRUCTIONS TO TRUSTEE: The Committee shall advise the Trustee in
writing with respect to all benefits which become payable under the terms of the
Plan and shall direct the Trustee to pay such benefits from the Trust Fund.
12.6 REPORTS AND RECORDS: The Committee shall keep a record of all its
proceedings and acts and shall keep all such books of account, records, and
other data as may be necessary for the proper administration of the Plan. The
Committee shall file or cause to be filed all such annual reports, financial and
other statements as may be required by any federal or state statute, agency or
authority within the time prescribed by the law or regulations for filing said
documents. The Committee shall furnish such reports, statements and other
documents to Participants and Beneficiaries of the Plan as may be required by
15
<PAGE> 16
any federal or state statute or regulation within the time prescribed for
furnishing such documents.
12.7 INSPECTION OF RECORDS OF THE COMMITTEE: The Committee's records
and books of account shall be open to inspection at all reasonable times by the
Company or the Board of Directors, or both, or any person designated from time
to time by the Company or Board of Directors.
12.8 INDEMNIFICATION: The Company shall indemnify each member of the
Committee, and the directors, officers and employees of the Company involved in
the operation and administration of the Plan against any and all claims, losses,
damages, expenses and liabilities arising from any action or failure to act,
except when the same is determined by the Board of Directors to be due to gross
negligence or willful misconduct of such member.
12.9 CLAIMS PROCEDURE: The Committee shall make all determinations as
to the right of any person to a benefit. Any denial by the Committee of the
claim for benefits under the Plan by a Participant or beneficiary shall be
stated in writing by the Committee and delivered or mailed to the Participant or
beneficiary. Such notice shall set forth the specific reasons for the denial,
written in a manner that may be understood without legal or actuarial counsel.
In addition, the Committee shall afford a reasonable opportunity to any
Participant or beneficiary whose claim for benefits has been denied for a review
of the decision denying the claim.
Section 13. Funding of Retirement Benefits.
13.1 DISCRETION OF COMMITTEE ON FORM OF FUNDING: The Plan is intended
to be a funded plan for purposes of ERISA, and is intended to be a permanent as
distinguished from a temporary program. Provided that the minimum funding
standards of ERISA are met, the Committee shall have the discretion to fund the
payment of each Participant's vested Retirement Benefit through one or more of
the following:
(a) making contributions on such Participant's behalf to the Trust;
(b) purchasing a commercial annuity contract or contracts and, to the
extent the Committee deems advisable, transferring the annuity contract
or contracts to such Participant; or
(c) implementing any other funding method which the Committee, in its
sole discretion, shall consider appropriate.
16
<PAGE> 17
The Committee's decision to use one method for funding one
Participant's Retirement Benefit shall not in any way limit the Committee's
discretion to use any other method for funding another Participant's Retirement
Benefit. Similarly, the Committee's decision to use one method for funding a
portion of a particular Participant's Retirement Benefit shall not limit the
Committee's discretion with respect to the funding of the remainder of such
Participant's Retirement Benefit. Moreover, the Committee shall have the
discretion to change, to the extent practicable, the method for funding any
Participant's Retirement Benefit. If at any time a Participant's Retirement
Benefit is funded through one or more methods which do not require the use of
the Trust, all references herein to the Trust, the Trust Fund and the Trustee
shall, with respect to such Participant, be disregarded.
13.2 EARLY DISTRIBUTION: Under Section 13.1, the Committee may select a
method of funding that provides for distributions to be made to a Participant or
beneficiary before the Annuity Starting Date or the Survivor Annuity Starting
Date, as the case may be; provided, however, that to the extent ERISA requires
the consent of the Participant, his spouse, a beneficiary, or any combination
thereof, to any such distribution, no distribution shall be made unless such
consent or consents have been given.
13.3 EMPLOYEE CONTRIBUTIONS: Under Section 13.1, the Committee may
select a method of funding that permits Participants to make contributions to
fund Retirement Benefits.
13.4 PAYMENTS FOR TAXES: To the extent that the Committee's funding of
a Participant's Retirement Benefit pursuant to Section 13.1 results in adverse
foreign (non-United States), federal, state or local tax consequences to such
Participant which would not have resulted if such Participant's Retirement
Benefit had not been funded, the Committee may, in its discretion, authorize the
payment to such Participant, either by the Company or out of the Trust Fund, of
an amount sufficient to indemnify such Participant against some or all of such
adverse tax consequences.
13.5 OVERFUNDING OF BENEFITS: The funding of Retirement Benefits under
Section 13.1 is intended solely to allow the Committee to establish a fund from
which the Company's liability to pay Retirement Benefits to Participants may be
satisfied, and not to increase in any way the Retirement Benefit to which a
Participant is entitled. Accordingly, to the extent the Committee funds a
Participant's Retirement Benefit pursuant to Section 13.1 based on certain
assumptions, but the actual payments resulting from such funding would exceed
such Participant's Retirement Benefit as determined under Section 6, the
Committee may, in its discretion, reallocate the excess among other Participants
who are presently covered by the Plan or who may be so covered in the future.
The Company shall have no right, title or interest in or to amounts or assets
used to fund
17
<PAGE> 18
Retirement Benefits, and no part of any such amounts or assets shall revert to
the Company except that any amounts or assets remaining, because of
overpayments, after satisfaction of all liabilities of the Plan with regard to
Participants may revert to the Company. Any amounts or assets contributed to
fund Retirement Benefits under a mistake of fact shall be returned to the
Company, to the extent practicable, upon request within one (1) year after such
funding.
13.6 UNDERFUNDED BENEFITS: The Committee's funding of some or all of a
Participant's Retirement Benefit under Section 13.1 shall not reduce the
Company's liability to provide to a Participant the Retirement Benefit to which
he is entitled under Section 6; provided, however, that if as a result of the
funding method adopted by the Committee any Participant or his beneficiary (i)
receives any distribution of cash from the Trust or any other entity prior to
the Annuity Starting Date or the Survivor Annuity Starting Date, as the case may
be, and (ii) fails to recontribute the after-tax amount of such distribution (as
defined in the following sentence) in order to fund a portion of such
Participant's Retirement Benefit, then the Committee may reduce such
Participant's Retirement Benefit by the sum of such after-tax amounts not
recontributed and the investment income the Trust would have earned thereon. For
purposes of this Section 13.6, the after-tax amount of a distribution shall be
the amount of such distribution reduced by the amount of any federal, state and
local taxes incurred by the Participant because of such distribution; provided,
however, that no such reduction will be made to the extent that the Participant
receives a payment from the Company indemnifying him for such taxes.
Section 14. Trust Fund.
14.1 TRUST AGREEMENT: As a part of the Plan, the Company may enter into
a Trust Agreement under which the Trustee would receive contributions of the
Company to the Trust Fund. The provisions of and benefits under the Plan are
subject to the terms and provisions of such Trust Agreement.
14.2 CONTRIBUTIONS TO THE TRUST FUND: Subject to Section 13.4 hereof,
no contribution shall be required from any Participant. An individual account
will be established in the Trust Fund for each Participant whose Retirement
Benefit is funded, in whole or in part, through the Trust.
Section 15. Benefits of Retired Officers and Spouses of Deceased
Officers.
15.1 FUNDING OF BENEFITS: The benefits payable to Officers who retired
prior to the Effective Date shall continue to be paid by the Company under the
Plan provisions as they existed prior to the Effective Date; provided, however,
that on or before December 31, 1988, the Retirement Benefit of each
18
<PAGE> 19
retired Officer shall be funded through the Trust; and, provided further, that
effective January 1, 1989, the Retirement Benefit of each retired Officer will
be recalculated under the formulas set forth in Section 6 of the Plan. Each
retired Officer will be given the right to elect, within a time period to be set
by the Committee, payment of the recalculated Retirement Benefit in a lump sum
or in the form of a Qualified Joint and Survivor Annuity or one of the optional
methods of payment specified in Section 9 of the Plan. If a retired Officer
elects to receive payment other than in a lump sum, the Committee will direct
the Trustee to purchase an annuity contract from the Trust Fund to fund the
benefit. The benefit currently being paid to a spouse of a deceased Officer
shall remain the same except that (i) on or before December 31, 1988 the benefit
payable to each such spouse shall be funded through the Trust and (ii) each such
spouse shall, within a reasonable time period to be set by the Committee, be
allowed to elect to receive a lump sum payment from the Trust or to continue to
receive installment payments. If a surviving spouse elects to continue to
receive installment payments, the Committee will direct the Trustee to purchase
an annuity contract from the Trust Fund to fund the benefit.
15.2 UNDERFUNDING OF BENEFITS: The Committee's funding of some or all
of a retired Officer's or surviving spouse's benefit under Section 15.1 shall
not reduce the Company's liability to provide such retired Officer or surviving
spouse with the benefit to which he otherwise is entitled.
15.3 PAYMENT FOR TAXES: To the extent the funding of a retired
Officer's or surviving spouse's benefit (either through the funding of the Trust
or the purchase of an annuity) results in adverse federal, state, or local tax
consequences to such retired Officer or surviving spouse which would not have
resulted if such retired Officer's or surviving spouse's benefit had not been
funded, the Committee may, in its discretion, authorize the payment to such
retired Officer or surviving spouse, either by the Company or out of the Trust
Fund, of an amount sufficient to indemnify such retired Officer or surviving
spouse against some or all of such adverse tax consequences.
Section 16. Merger or Consolidation of Plan; Transfer of Assets. In the
event of any merger or consolidation of the Plan with another retirement or
pension plan, or in the event of any transfer of assets or liabilities from the
Plan to another retirement or pension plan, provision shall be made so that each
Participant in the Plan on the date thereof (if the Plan then terminated), would
receive a benefit immediately after the merger, consolidation or transfer which
is equal to or greater than the benefit he would have been entitled to receive
immediately prior to the merger, consolidation or transfer (if the Plan had then
terminated).
19
<PAGE> 20
Section 17. Amendments. The Board of Directors shall have the right at
any time to amend the Plan, the Trust Agreement and any other document entered
into as a result of a funding method adopted by the Committee under Section 13.1
hereof. However, no such amendment shall authorize or permit any part of the
Trust Fund or any other asset purchased or amount set aside to fund
Participants' Retirement Benefits (other than such part as is required to pay
administration expenses) to be used for or diverted to purposes other than for
the exclusive benefit of the Participants, either current or future, or their
beneficiaries or estates. No such amendment shall cause any reduction in the
vested accrued benefit of any Participant. The Company further reserves the
right to discontinue or suspend the payment of contributions to any fund held
under the Trust Agreement or under any other funding method adopted under
Section 13.1 hereof.
Section 18. Termination. The Board of Directors shall have the right to
terminate the Plan at any time. Upon termination the amount credited to the
account of each Participant shall become fully vested and shall not thereafter
be subject to forfeiture. Upon termination of the Plan, the Company, by written
notice to the Trustee, may direct either:
(i) continuation of the Trust and the distribution of benefits at such
time and in such manner as though the Plan had not been terminated; or
(ii) complete distribution of the assets in the Trust Fund to the
Participants in a manner consistent with the Plan. In such case, the
Trustee shall distribute to each Participant in the Plan and to each
retired Participant, the amount then credited to his account in the
Trust Fund, subject to provision for expenses of administration or
liquidation.
The balance, if any, of the assets due to erroneous actuarial computation held
by the Trust Fund after such distribution shall be returned to the Company, but
only after satisfaction of all liabilities with respect to Participants and
Retirement Benefits under the Plan.
Section 19. Miscellaneous.
19.1 NO ENLARGEMENT OF RIGHTS: The Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Officer, or to be consideration for, or an
inducement to, or condition of, the employment of any Officer. Nothing contained
in the Plan shall be deemed to give any Officer the right to be retained in the
employment of the Company or to interfere with the right of the Company to
discharge any Officer at any time regardless of the effect which such discharge
shall have upon him as a Participant of the Plan. No Officer, prior to his
20
<PAGE> 21
retirement under conditions of eligibility for retirement benefits or prior to
his acquiring vested rights, shall have any right or interest in or to any
portion of any funds arising from Company contributions under the Plan, and no
person shall have any right to Retirement Benefits, except to the extent
provided in the Plan.
19.2 NOTICE OF ADDRESS: Each person entitled to benefits under the Plan
must file with the Committee, in writing, his post Office address and each
change of post office address. Any communication, statement, or notice addressed
to such a person at his latest post office address as filed with the Committee
will be binding upon such person for all purposes of the Plan, and neither the
Trustee nor the Company shall be obliged to search for or ascertain the
whereabouts of any such person.
19.3 DATA: All persons entitled to benefits under the Plan must furnish
to the Committee or Trustee such documents, evidence, or information as the
Committee or Trustee considers necessary or desirable for the purpose of
administering the Plan, or to protect the Committee or Trustee, and it shall be
a condition of the Plan that each such person must furnish promptly true and
complete data, evidence, or information and sign such documents as the Committee
or Trustee may require before any benefits become payable under the Plan. In the
event that any data so furnished is found by the Company to be incorrect, any
payments thereafter due shall be adjusted on an actuarial basis to correct for
any previous overpayments or underpayments, as the case may be. After such
adjustment is made, all future payments shall be based on the corrected data.
19.4 GOVERNING LAW: The Plan shall be governed by and construed in
accordance with ERISA and the laws of the State of Illinois to the extent not
preempted by ERISA.
21
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>6
<FILENAME>c61260ex10-11.txt
<DESCRIPTION>DEFERRED COMPENSATION PLAN
<TEXT>
<PAGE> 1
Exhibit 10.11 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA MANAGEMENT DEFERRED COMPENSATION PLAN
(EFFECTIVE AS OF JANUARY 1, 2001)
1. PLAN NAME AND DEFINITIONS
1.1 Plan Name.
This plan is the Motorola Management Deferred Compensation
Plan ("the Plan").
1.2 Definitions.
(a) "Additional Compensation" shall mean bonuses and all other
cash compensation designated by the Administrative Committee as Deferrable
Compensation.
(b) "Administrative Committee" shall mean the committee
appointed by the Compensation Committee of the Board to administer the Plan.
(c) "Base Salary" shall mean a Participant's annual base
salary, excluding bonuses, commissions, incentives and all other remunerations
for services rendered to Company and prior to reduction for any salary
contributions to a plan established pursuant to Section 125 of the Code or
qualified pursuant to Section 401(k) of the Code.
(d) "Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, personal representative or other fiduciary, last
designated in writing by a Participant in accordance with procedures established
by the Administrative Committee to receive the benefits specified hereunder in
the event of the Participant's death. No beneficiary designation shall become
effective until it is filed with the Administrative Committee. Any designation
shall be revocable at any time through a written instrument filed by the
Participant with the Administrative Committee with or without the consent of the
previous Beneficiary. No designation of a Beneficiary other than the
Participant's spouse shall be valid unless consented to in writing by such
spouse. If there is no such designation, or if there is no surviving designated
Beneficiary, then the Participant's surviving spouse shall be the Beneficiary.
If there is no surviving spouse to receive any benefits payable in accordance
with the preceding sentence, the duly appointed and currently acting personal
representative of the Participant's estate (which shall include either the
Participant's probate estate or living trust) shall be the Beneficiary. In any
case where there is no such personal representative of the Participant's estate
duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Administrative Committee
determines is reasonably necessary to allow such personal representative to be
appointed, but not to exceed 180 days after the Participant's death), then
Beneficiary shall mean the person or persons who can verify by affidavit or
court order to the satisfaction of the Administrative Committee that they are
legally entitled to receive the benefits specified hereunder. In the event any
amount is payable under the Plan to a minor, payment shall not be made to the
minor, but instead shall be paid (a) to that person's living parent(s) to act as
custodian, (b) if that person's parents are then divorced, and one parent is the
sole custodial
<PAGE> 2
parent, to such custodial parent, or (c) if no parent of that person is then
living, to a custodian selected by the Administrative Committee to hold the
funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect
in the jurisdiction in which the minor resides. If no parent is living and the
Administrative Committee decides not to select another custodian to hold the
funds for the minor, then payment shall be made to the duly appointed and
currently acting guardian of the estate for the minor or, if no guardian of the
estate for the minor is duly appointed and currently acting within 60 days after
the date the amount becomes payable, payment shall be deposited with the court
having jurisdiction over the estate of the minor. Payment by the Company
pursuant to any unrevoked Beneficiary designation or to the Participant's estate
if no such designation exists, of all benefits owed hereunder shall terminate
any and all liability of the Company.
(e) "Board of Directors" or "Board" shall mean the Board of
Directors of Motorola.
(f) "Board Fees" shall mean any fees paid to a Board member in
connection with his service on the Board.
(g) "Change in Control" means a Change in Control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Exchange Act whether or not Motorola is
then subject to such reporting requirement; provided that, without limitation,
such a Change in Control shall be deemed to have occurred if (a) any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Motorola representing
20% or more of the combined voting power of Motorola's then outstanding
securities (other than Motorola or any employee benefit plan of Motorola; and,
for purposes of the Plan, no Change in Control shall be deemed to have occurred
as a result of the "beneficial ownership," or changes therein, of Motorola's
securities by either of the foregoing), (b) there shall be consummated (i) any
consolidation or merger of Motorola in which Motorola is not the surviving or
continuing corporation or pursuant to which shares of common stock would be
converted into or exchanged for cash, securities or other property, other than a
merger of Motorola in which the holders of common stock immediately prior to the
merger have, directly or indirectly, at least a 65% ownership interest in the
outstanding common stock of the surviving corporation immediately after the
merger, or (ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of Motorola other than any such transaction with entities in which the holders
of Motorola Common Stock, directly or indirectly, have at least a 65% ownership
interest, (c) the stockholders of Motorola approve any plan or proposal for the
liquidation or dissolution of Motorola, or (d) as the result of, or in
connection with, any cash tender offer, exchange offer, merger or other business
combination, sale of assets, proxy or consent solicitation (other than by the
Board), contested election or substantial stock accumulation (a "Control
Transaction"), the members of the Board immediately prior to the first public
announcement relating to such Control Transaction shall thereafter cease to
constitute a majority of the Board.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2
<PAGE> 3
(i) "Company" shall mean Motorola, Inc. and any Subsidiary
designated by the Administrative Committee.
(j) "Compensation" shall be Base Salary and Additional
Compensation.
(k) "Deferral Account" shall mean the bookkeeping account or
accounts maintained by the Administrative Committee pursuant to Section 3.1 for
each Participant pursuant to Section 3.1 that are credited with amounts equal to
(1) the Participant's Deferred Compensation and (2) earnings and losses under
Section 2.2.
(l) "Deferrable Compensation" shall mean the Compensation and
Board Fees designated by the Administrative Committee as eligible to be deferred
in any Plan Year pursuant to Section 2.1(a).
(m) "Deferral Form" shall mean the form or forms required to
be completed and delivered to the Administrative Committee or its designee for
participation in the Plan for a Plan Year.
(n) "Deferred Compensation" shall mean the Compensation or
Director Fees actually deferred by a Participant on the Deferral Form for a Plan
Year.
(o) "Director" shall mean a member of the Board.
(p) "Disability" shall mean an entitlement to long-term
disability benefits under the Motorola Disability Income Plan, as amended, and
any successor plans.
(q) "Distributable Amount" shall mean the balance in the
Participant's Deferral Account.
(r) "Early Distribution" shall mean an election by Participant
in accordance with Section 4.3 to receive a withdrawal of amounts from his or
her Deferral Account prior to the time at which such Participant would otherwise
be entitled to such amounts.
(s) "Eligible Employee" shall be employees selected by the
Administrative Committee or its delegates.
(t) "Fund" or "Funds" shall mean one or more of the investment
funds selected by the Administrative Committee.
(u) "Hardship Distribution" shall mean a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of his or her Dependent (as defined in Section
152(a) of the Code), loss of a Participant's property due to casualty, or other
similar or extraordinary and unforseeable circumstance arising as a result of
events beyond the control of the Participant. The circumstances that would
constitute an unforseeable emergency will depend upon the facts of each case,
but, in any event, a Hardship Distribution may not be made to the extent that
such hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Participant's
3
<PAGE> 4
assets, to the extent the liquidation of assets would not itself cause a severe
financial hardship, or (iii) by cessation of deferrals under this Plan.
(v) "In-Service Withdrawal Date" shall mean the distribution
date elected on the Deferral Form by the Participant for withdrawal of Deferred
Compensation for a specific Plan Year while still employed or in service of the
Company, and earnings and losses attributable thereto.
(w) "Interest Rate" shall mean, for each Fund, an amount equal
to the net gain or loss on the assets of such Fund during each month.
(x) "Motorola" shall mean Motorola, Inc., a Delaware
corporation.
(y) "Participant" shall mean any Eligible Employee and any
member of the Board who becomes a Participant in this Plan by completing the
Deferral Form.
(z) "Plan" shall be the Motorola Management Deferred
Compensation Plan, as amended.
(aa) "Plan Year" shall be January 1 to December 31.
(bb) "Regular Enrollment Period" shall mean the period
designated by the Administrative Committee for enrollment for a Plan Year.
(cc) "Retirement" shall mean a Participant's retirement from
Motorola or a Subsidiary at or after age 55.
(dd) "Subsidiary" shall mean an entity of which Motorola owns
directly or indirectly at least 50% and which is consolidated for financial
reporting purposes.
(ee) "Trust" shall mean the Motorola Management Deferred
Compensation Plan Trust.
(ff) "Trustee" shall mean the trustee of the Trust.
(gg) "Withdrawal Date" shall have the meaning set forth in
Section 4.1.
2. DEFERRAL ELECTIONS
2.1 Elections to Defer Compensation.
(a) Deferrals. To the extent authorized by the Administrative
Committee, a Participant may elect to defer for a Plan Year the following:
(i) in the case of employees of the Company, taxable
Compensation earned in a Plan Year and paid to a Participant by the
Company; and
(ii) in the case of Directors, Board Fees paid by the
Company and earned in a Plan Year;
4
<PAGE> 5
provided, however, that a Participant who is an employee of the Company may
defer in any calendar year only that portion of the Participant's Deferrable
Compensation that exceeds the amount necessary to satisfy Social Security Tax
(including Medicare), income tax and employee benefit plan withholding
requirements as determined in the sole and absolute discretion of the
Administrative Committee. The Deferral Form will set forth what the
Administrative Committee has authorized as Deferrable Compensation.
(b) Election and Duration of Compensation Deferral Election.
Each Eligible Employee and Director may elect to defer Deferrable Compensation
for a Plan Year in the time period set by the Administrative Committee and all
elections are irrevocable for that Plan Year. Each Eligible Employee and
Director must complete a new Deferral Form for each Plan Year. All elections to
defer must be filed during the Regular Enrollment Period for the applicable Plan
Year which election shall be effective on the first day of the next following
Plan Year. In the case of an employee who becomes an Eligible Employee or a new
Director. After the start of a Regular Enrollment Period, such Eligible Employee
or Director shall have 30 days from the date he or she has become an Eligible
Employee or Director and has been notified of their participation in the Plan to
make an election to defer Deferrable Compensation. Such election shall be for
the remainder of the Plan Year.
2.2 Investment Elections.
(a) Each Participant shall designate, on the Deferral Form or
other form provided by the Administrative Committee, the Funds in which the
Participant's Deferral Account will be deemed to be invested for purposes of
determining the amount of earnings or losses to be credited or debited to that
Deferral Account. In making the designation, the Participant may specify that
all or any multiple of his Deferral Account be deemed to be invested in one or
more Funds listed on the Deferral Form in the manner set forth on the Deferral
Form. A Participant may change investment designations by filing a new election
with the Administrative Committee by a date specified by the Administrative
Committee. If a Participant fails to designate a Fund for all or a portion of
the Participant's Deferral Account, he or she shall be deemed to have elected
the Money Market type of investment fund.
(b) The Administrative Committee may select from time to time,
in its sole and absolute discretion, new commercially available investments to
replace then existing Funds. Once the Administrative Committee has provided
Participants with information on the replacement Funds, a Participant must
re-designate his Funds and the Interest Rate for the new Funds will be used in
accordance with procedures established by the Administrative Committee at the
time of re-designation. If a Participant fails to re-designate a Fund for all or
a portion of the Participant's Deferral Account, he or she shall be deemed to
have elected the Money Market type of investment fund.
(c) Although the Participant may designate the Funds to be
used to determine the amount of earnings or losses with respect to the
Participant's Deferral Account, the Administrative Committee shall not be bound
to invest any amounts in a Participant's Deferral Account in the designated
Funds. The Funds are to be used only for purposes of crediting or debiting the
Deferral Account with deemed earning or losses thereon, and such crediting or
debiting shall not be considered or construed in any manner as an actual
investment in any such fund.
5
<PAGE> 6
3. DEFERRAL ACCOUNTS AND TRUST FUNDING
3.1 Deferral Accounts.
Each Plan Year, the Administrative Committee shall establish
and maintain a separate Deferral Account for each Participant. The
Administrative Committee may establish more than one Deferral Account for each
Participant for each Plan Year for different types of income deferred. Each
Participant's Deferral Account may be further divided into separate subaccounts
("investment fund subaccounts"), each of which corresponds to a Fund elected by
the Participant. A Participant's Deferral Account shall be credited as follows:
(a) On the fifth business day after amounts are withheld and
deferred from a Participant's Deferrable Compensation, the investment fund
subaccounts of the Participant's Deferral Account shall be credited with an
amount equal to the portion of Deferred Compensation deferred and deemed to be
invested in a certain Fund in accordance with the designation.
(b) Each business day, each investment fund subaccount of a
Participant's Deferral Account shall be credited with earnings or losses in an
amount equal to that determined by multiplying (i) the sum of the balance
credited to such investment fund subaccount as of the prior day plus
contributions credited that day to the investment fund subaccount by (ii) the
Interest Rate for the corresponding Fund pursuant to Section 2.2.
(c) In the event that a Participant elects for any portion of
a given Plan Year's Deferred Compensation to have an In-Service Withdrawal Date,
all such amounts shall be accounted for in a manner which allows separate
accounting for that portion of Deferred Compensation and earnings and losses
associated with such Plan Year's Deferred Compensation.
3.2 Trust Funding.
The Company has created a Trust with the Trustee. The Company
shall cause the Trust to be funded each year with an amount equal to the amount
deferred by each Participant.
Although the principal of the Trust and any earnings thereon
shall be held separate and apart from other funds of the Company and shall be
used exclusively for the uses and purposes of Participants and Beneficiaries as
set forth therein, neither the Participants nor their Beneficiaries shall have
any preferred claim on, or any beneficial ownership in, any assets of the Trust
prior to the time such assets are paid to the Participants or Beneficiaries as
benefits and all rights created under this Plan and the Trust shall be unsecured
contractual rights of Participants and Beneficiaries against the Company. Any
assets held in the Trust will be subject to the claims of the Company's general
creditors under federal and state law in the event of insolvency as defined in
Section Six of the Trust.
6
<PAGE> 7
Except as specifically provided in the Trust, the assets of
the Plan and Trust shall never inure to the benefit of the Company and the same
shall be held for the exclusive purpose of providing benefits to Participants
and their Beneficiaries.
4. DISTRIBUTIONS
4.1 Distribution of Deferred Compensation per the Deferral Form
Elections. A Participant must elect the timing of the distribution of
Distributable Amounts from his Deferral Account on the Deferral Form
("Withdrawal Dates"). If a Participant fails to designate Withdrawal Dates, the
Participant will be deemed to have elected the default election established by
the Administrative Committee for the applicable Plan Year. Participants may
elect an In-Service Withdrawal Date or Withdrawal Dates following Retirement.
All distributions will be cash payments. Notwithstanding any elected Withdrawal
Dates, Distributable Amounts are subject to Section 4.2 below.
(a) Distribution with an In-Service Withdrawal Date. In the
case of a Participant who has elected an In-Service Withdrawal Date (a
distribution while still employed or in the service of the Company), such
Participant shall receive his Distributable Amount as designated on his Deferral
Form; provided that no payment may be made earlier than two years from the last
day of the Plan Year for which the deferral was made; provided, further that, if
a Participant has an aggregate balance in all of his Deferral Accounts under the
Plan of less than $50,000 (or such other amount determined by the Administrative
Committee) at the time of the In-Service Withdrawal Date, the distribution will
be in the form of a single lump-sum payment.
(b) Distribution with a Withdrawal Date following Retirement.
In the case of a Participant who has elected a Withdrawal Date following
Retirement, such Participant shall receive his Distributable Amount as
designated on his Deferral Form; provided, however, if a Participant has an
aggregate balance in all of his Deferral Accounts under the Plan of less than
$50,000 (or such other amount determined by the Administrative Committee) during
the next calendar quarter following written notice to the Administrative
Committee of the Participant's termination.
(c) Revising a Withdrawal Date. A Participant may extend a
Withdrawal Date for a Deferral Account up to two times with respect to any Plan
Year's Deferral Account, provided such change occurs at least one year before a
scheduled Withdrawal Date and in the case of an In-Service Withdrawal Date, is
for a period of not less than two years after the end of the Plan Year of the
deferral.
(d) Section 162(m) Matters. Notwithstanding anything to the
contrary in this Plan whether express or implied, the Administrative Committee
may, in its sole discretion, defer payment of all or any portion of the
Distributable Amount otherwise payable hereunder to any Participant who is
considered a "covered employee" to the extent any such payment would not be
deductible by the Company by reason of Section 162(m) of the Code. For these
purposes, the term "covered employee" shall mean the Chief Executive Officer and
the next four highest paid officers of the Company as determined for purposes of
Code Section 162(m) and the regulations thereunder. In the event of a deferral
of payment by reason of this Section 4.1(d), any such deferred amounts shall be
paid to the Participant at the earliest date or dates such amounts can be paid
without creating or increasing a limitation on deductibility of compensation
under Code
7
<PAGE> 8
Section 162(m). Any amounts deferred under this Section 4.1(d) shall be credited
to the Participant's Deferral Account and shall be subject to all of the terms
and condition of this Plan until paid to the Participant.
4.2 Events Impacting Distribution of Deferred Compensation.
Notwithstanding any previously selected Withdrawal Dates, the following events
may alter the timing of the Distribution from a Participant's Deferral Account:
(a) Distribution due to Death. If a Participant dies while
employed by the Company or serving as a Director or while receiving a
distribution, all amounts in the Participant's Deferral Accounts will be
distributed in a single lump-sum payment to his Beneficiaries during the next
calendar quarter following written notice to the Administrative Committee of the
Participant's death.
(b) Disability. If a Participant's employment is terminated
because of Disability, and he has an aggregate balance in all of his Deferral
Accounts under the Plan of least $50,000 (or such amount determined by the
Administrative Committee) at the time of termination, the Participant's
previously selected Withdrawal Dates will remain; provided, however, if he has
an aggregate balance in all of his Deferral Accounts under the Plan of less than
$50,000 (or such other amount determined by the Administrative Committee), the
Participant's Deferral Accounts will be distributed in a single lump-sum payment
during the next calendar quarter following written notice to the Administrative
Committee of the Participant's termination.
(c) Distribution due to Termination for Serious Misconduct. If
a Participant's employment or service is terminated because of serious
misconduct, all amounts in the Participant's Deferral Accounts will be
distributed in a single lump-sum payment within 30 days of the end of the month
that the Administrative Committee receives written notice of the Participant's
termination. Serious misconduct means any misconduct identified as a ground for
termination in the Motorola Code of Business Conduct, or the human resources
policies or other written policies or procedures.
(d) Change in Employment due to a Divestiture. If a
Participant accepts employment with another company in direct connection with
the sale, lease, outsourcing arrangement or other type of asset transfer or
transfers of any facility or any portion of a discrete organizational unit of
the Company or a Subsidiary (a "Divestiture"), and he has an aggregate balance
in all of his Deferral Accounts under the Plan of at least $50,000 (or such
other amount determined by the Administrative Committee) at the time of the
Divestiture, the Participant's previously selected Withdrawal Dates will remain
in effect for that Deferral Account; provided, however, if he has an aggregate
balance in all of his Deferral Accounts under the Plan of less than $50,000 (or
such other amount determined by the Administrative Committee), the Participant's
Deferral Account will be distributed in a single lump-sum payment during the
next calendar quarter following written notice to the Administrative Committee
of the Participant's termination.
(e) Distribution due to Termination of Employment or Service
by the Company other than for Death, Disability, Serious Misconduct or a
Divestiture. If a Participant's employment is terminated by the Company other
than for death, Disability, serious misconduct or a Divestiture, and he has an
aggregate balance in all of his Deferral Accounts of at least
8
<PAGE> 9
$50,000 (or other such amount determined by the Administrative Committee) at the
time of the Divesture, the Participant's previously selected Withdrawal Dates
will remain. If the Participant has an aggregate balance in all of his Deferral
Accounts under the Plan of less than $50,000 (or other such amount determined by
the Administrative Committee), the Participant's Deferral Accounts will be
distributed in a single lump-sum payment during the next calendar quarter
following written notice to the Administrative Committee of the Participant's
termination.
(f) Change in Control. If there is a Change in Control of
Motorola, all Participants' Deferral Accounts will be distributed in a single
lump-sum payment within 30 days of the consummation of the transaction.
(g) Termination of Employment or Service for any other Reason
than Described Above. If a Participant's employment or service is terminated for
any other reason than described above, all amounts in the Participant's Deferral
Accounts will be distributed in a single lump-sum payment during the next
calendar quarter following written notice to that the Administrative Committee
of the Participant's termination.
4.3 Early Non-Scheduled Distributions.
A Participant shall be permitted to elect an Early
Distribution from his or her Deferral Account prior to any previously selected
Withdrawal Date, subject to the following restrictions:
(a) The election to take an Early Distribution shall be made
by filing a form provided by and filed with the Administrative Committee prior
to the end of any calendar month.
(b) The amount of the Early Distribution shall equal up to 90%
of his Deferral Account balance.
(c) The amount described in subsection (b) above shall be paid
in a single lump sum as soon as practicable after the end of the calendar month
in which the Early Distribution election is made.
(d) If a Participant requests an Early Distribution of his
entire Deferral Account, the remaining balance of his Deferral Account (10% of
the Deferral Account) shall be permanently forfeited and the Company shall have
no obligation to the Participant or his Beneficiary with respect to such
forfeited amount. If a Participant receives an Early Distribution of less than
his entire Deferral Account, such Participant shall forfeit 10% of the gross
amount to be distributed from the Participant's Deferral Account and the Company
shall have no obligation to the Participant or his or her Beneficiary with
respect to such forfeited amount.
(e) If a Participant receives an Early Distribution of either
all or a part of his Deferral Account, the Participant will be ineligible to
participate in the Plan for the balance of the Plan Year and the following Plan
Year. All distributions shall be made on a pro rata basis from among a
Participant's Deferral Accounts.
9
<PAGE> 10
4.4 Hardship Distribution.
A Participant shall be permitted to elect a Hardship
Distribution from his or her Deferral Accounts prior to the Withdrawal Date,
subject to the following restrictions:
(a) The election to take a Hardship Distribution shall be made
by filing a form provided by and filed with the Administrative Committee prior
to the end of any calendar month.
(b) The Administrative Committee shall have made a
determination that the requested distribution constitutes a Hardship
Distribution.
(c) The amount determined by the Administrative Committee as a
Hardship Distribution shall be paid in a single cash lump sum as soon as
practicable after the end of the calendar month in which the Hardship
Distribution election is made and approved by the Administrative Committee.
(d) If a Participant receives a Hardship Distribution, the
Participant will be ineligible to participate in the Plan for the balance of the
Plan Year and the following Plan Year.
4.5 Credit or Debit of Earnings or Losses.
Unless otherwise provided, a Participant's Deferral Account
will continue to be credited or debited with earnings or losses thereon pursuant
to Section 3.1 until all amounts in a Deferral Account are distributed.
4.6 Inability to Locate Participant.
In the event that the Administrative Committee is unable to
locate a Participant or Beneficiary within two years following a Withdrawal
Date, the amount allocated to the Participant's Deferral Account shall be
forfeited. If, after such forfeiture, the Participant or Beneficiary later
claims such benefit, such benefit shall be reinstated without interest or
earnings.
5. ADMINISTRATION
5.1 Administrative Committee.
An Administrative Committee shall be appointed by, and serve
at the pleasure of, the Compensation Committee of the Board of Directors (the
"Compensation Committee"). The number of members comprising the Administrative
Committee shall be determined by the Compensation Committee, which may from time
to time vary the number of members. The Compensation Committee may remove any
member at anytime at its discretion. The Compensation Committee shall fill
vacancies in the membership of the Administrative Committee.
5.2 Administrative Committee Action.
The Administrative Committee shall act at meetings by
affirmative vote of a majority of the members of the Administrative Committee.
The Administrative Committee may
10
<PAGE> 11
also take action without a written consent signed by a majority of members of
the Administrative Committee. The Administrative Committee may delegate its
authority.
5.3 Powers and Duties of the Administrative Committee.
(a) The Administrative Committee, on behalf of the
Participants and their Beneficiaries, shall enforce the Plan in accordance with
its terms, shall be charged with the general administration of the Plan, and
shall have all powers necessary to accomplish its purposes, including, but not
by way of limitation, the following:
(1) To select the Funds;
(2) To construe and interpret the terms and provisions of
this Plan;
(3) To compute and certify to the amount and kind of
benefits payable to Participants and their Beneficiaries;
(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and
the filing or provision of all reports and statements to Participants,
Beneficiaries or governmental agencies as shall be required by law;
(6) To make and publish such rules for the regulation of
the Plan and procedures for the administration of the Plan as are not
inconsistent with the terms hereof;
(7) To appoint a Plan administrator or any other agent,
and to delegate to them such powers and duties in connection with the
administration of the Plan as the Administrative Committee may from time to time
prescribe;
(8) To take all actions necessary for the administration
of the Plan, including determining whether to hold or discontinue the Policies;
and
(9) To delegate its powers and duties.
5.4 Construction and Interpretation.
The Committee shall have full discretion to construe and
interpret the terms and provisions of this Plan, which interpretations or
construction shall be final and binding on all parties, including but not
limited to the Company and any Participant or Beneficiary. The Administrative
Committee shall administer such terms and provisions in a uniform and
nondiscriminatory manner and in full accordance with any and all laws applicable
to the Plan.
5.5 Information.
To enable the Administrative Committee to perform its
functions, the Company shall supply full and timely information to the
Administrative Committee on all matters relating
11
<PAGE> 12
to the Compensation of all Participants, their death or other events which cause
termination of their participation in this Plan, and such other pertinent facts
as the Administrative Committee may require.
5.6 Compensation, Expenses and Indemnity.
(a) The members of the Administrative Committee shall serve
without compensation for their services hereunder.
(b) To the extent permitted by Delaware law and the Company's
amended Certificate of Incorporation, the Company shall indemnify and hold
harmless the Administrative Committee and each member thereof, the Compensation
Committee, the Board of Directors and any delegate of the Administrative
Committee who is an employee of the Company against any and all expenses,
liabilities and claims, including legal fees to defend against such liabilities
and claims arising out of their discharge in good faith of responsibilities
under or incident to the Plan, other than expenses and liabilities arising out
of willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Company or
provided by the Company.
5.7 Account Statements.
Under procedures established by the Administrative Committee,
a Participant shall receive a statement with respect to such Participant's
Accounts on a quarterly basis.
5.8 Disputes.
(a) Claim.
A person who believes that he or she is being denied a benefit
to which he or she is entitled under this Plan (hereinafter referred to as
"Claimant") must file a written request for such benefit with the Administrative
Committee and the Secretary of the Company, setting forth his or her claim.
(b) Claim Decision.
Upon receipt of a claim, the Company shall advise the Claimant
that a reply will be forthcoming within 90 days and shall, in fact, deliver such
reply within such period. The Company may, however, extend the reply period for
an additional 90 days for special circumstances.
If the claim is denied in whole or in part, the Company shall
inform the Claimant in writing, setting forth: (A) the specified reason or
reasons for such denial; (B) the specific reference to pertinent provisions of
this Plan or the rules related to the Plan on which such denial is based; (C) a
description of any additional material or information necessary for the Claimant
to perfect his or her claim and an explanation of why such material or such
information is necessary; (D) appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review; and (E) the time
limits for requesting a review under subsection (c).
12
<PAGE> 13
(c) Request For Review.
Within 60 days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Administrative Committee review the determination of the Company. Such request
must be addressed to the Secretary of the Company, at its then principal place
of business. The Claimant or his or her duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Administrative Committee. If the Claimant does
not request a review within such 60-day period, he or she shall be barred and
estopped from challenging the Company's determination.
(d) Review of Decision.
Within 60 days after the Administrative Committee's receipt of
a request for review, after considering all materials presented by the Claimant,
the Administrative Committee will inform the Participant in writing, in a manner
calculated to be understood by the Claimant, the decision setting forth the
specific reasons for the decision containing specific references to the
pertinent provisions of this Plan on which the decision is based. If special
circumstances require that the 60 day time period be extended, the
Administrative Committee will so notify the Claimant and will render the
decision as soon as possible, but no later than 120 days after receipt of the
request for review.
6. MISCELLANEOUS
6.1 Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or interest in any
specific property or assets of the Company. No assets of the Company shall be
held in any way as collateral security for the fulfilling of the obligations of
the Company under this Plan. Any and all of the Company's assets shall be, and
remain, the general unpledged, unrestricted assets of the Company. In the event
the Company, in its sole discretion, decides to invest in any of the Funds,
Participants and Beneficiaries shall have no rights in or to such investments.
The Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors. It is the intention of the Company that this Plan be unfunded
for purposes of the Code and for purposes of Title 1 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
6.2 Restriction Against Assignment.
The Company shall pay all amounts payable hereunder only to
the person or persons designated by the Plan and not to any other person or
corporation. No part of a Participant's Accounts shall be liable for the debts,
contracts, or engagements of any Participant, his or her Beneficiary, or
successors in interest, nor shall a Participant's Accounts be subject to
execution by levy, attachment, or garnishment or by any other legal or equitable
proceeding, nor shall any such person have any right to alienate, anticipate,
sell, transfer, commute, pledge,
13
<PAGE> 14
encumber, or assign any benefits or payments hereunder in any manner whatsoever.
If any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, commute, assign, pledge,
encumber or charge any distribution or payment from the Plan, voluntarily or
involuntarily, the Administrative Committee, in its discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit of such
Participant, Beneficiary or successor in interest in such manner as the
Administrative Committee shall direct.
6.3 Withholding.
There shall be deducted from each payment made under the Plan
or any other Deferred Compensation payable to the Participant (or Beneficiary)
all taxes that are required to be withheld by the Company in respect to such
payment or this Plan. The Company shall have the right to reduce any payment (or
compensation) by the amount of cash sufficient to provide the amount of said
taxes. Each participant agrees the Company shall have such rights to withhold
such taxes.
6.4 Effective Date.
The effective date of the Plan is January 1, 2001.
6.5 Amendment, Modification, Suspension or Termination.
The Board, the Compensation Committee or the Administrative
Committee may amend, modify, suspend or terminate the Plan in whole or in part,
except that no amendment, modification, suspension or termination shall have any
retroactive effect to reduce any amounts allocated to a Participant's Accounts.
In the event that this Plan is terminated, the amounts allocated to a
Participant's Accounts shall be distributed to the Participant or, in the event
of his or her death, his or her Beneficiary in a lump sum within 30 days
following the date of termination.
6.6 Governing Law.
This Plan shall be construed, governed and administered in
accordance with the laws of the State of Delaware, except when preempted by
federal law.
6.7 Receipt or Release.
Any payment to a Participant or the Participant's Beneficiary
in accordance with the provisions of the Plan shall, to the extent thereof, be
in full satisfaction of all claims against the Administrative Committee, the
Compensation Committee, the Board and the Company. The Administrative Committee
may require such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.
6.8 Payments on Behalf of Persons Under Incapacity.
In the event that any amount becomes payable under the Plan to
a person who, in the sole judgment of the Compensation Committee or the
Administrative Committee, is considered by reason of physical or mental
condition to be unable to give a valid receipt
14
<PAGE> 15
therefore, the Compensation Committee or the Administrative Committee may direct
that such payment be made to any person found by the Compensation Committee or
the Administrative Committee, in its sole judgment, to have assumed the care of
such person. Any payment made pursuant to such determination shall constitute a
full release and discharge of the Compensation Committee or the Administrative
Committee and the Company.
6.9 Limitation of Rights and Employment Relationship
Neither the establishment of the Plan and Trust nor any
modification thereof, nor the creating of any fund or account, nor the payment
of any benefits shall be construed as giving to any Participant, or Beneficiary
or other person any legal or equitable right against the Company or the trustee
of the Trust except as provided in the Plan and Trust; and in no event shall the
terms of employment of any Employee or Participant be modified or in any way be
affected by the provisions of the Plan and Trust.
6.10 Headings.
Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.
15
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>7
<FILENAME>c61260ex10-19.txt
<DESCRIPTION>CONSULTANT AGREEMENT
<TEXT>
<PAGE> 1
Exhibit 10.19 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
CONSULTANT AGREEMENT
This Consultant Agreement is effective beginning February 15, 2001
("Agreement") between Motorola, Inc., for itself, its subsidiaries and
affiliates and anyone acting for it ("Motorola") and Fred Tucker, an individual,
for yourself, your spouse, heirs, and anyone acting for you or for your estate
("You"). In exchange for each party's promises, you and Motorola agree as
follows:
1. SERVICES. You will perform the services at the compensation rates set forth
on Exhibit A, with direction from Chris Galvin, or the person he designates.
Motorola can perform these services itself or to select others to perform them
for any reason. You will perform all services under this Agreement as an
independent contractor and not as an employee or agent of Motorola. You are
solely responsible to pay or withhold your own taxes (including without
limitation income, social security and unemployment taxes), provide any workers
compensation or any other insurance for yourself, and to fulfill all obligations
relating to those activities. This arrangement is not a joint venture,
partnership or formal business organization of any kind. You cannot make
commitments of any kind on behalf of Motorola without prior Motorola consent,
and vice versa.
2. TERM AND TERMINATION. The term of this Agreement is from February 15, 2001
through December 31, 2001. You or Motorola may terminate this Agreement for any
reason after thirty (30) days written notice. Should you or Motorola commit a
serious breach of the Agreement, or if you or Motorola cannot perform your
respective commitments under the Agreement because of insolvency, the other
party may terminate the Agreement immediately. Your promises in Paragraphs 4,
11, 13, 16 and 17 will remain in force even after termination of the Agreement,
as will any other provisions where the parties intended a commitment to last
beyond the term of the Agreement. All other obligations will cease on the
termination date.
3. PRIOR AGREEMENTS WITH MOTOROLA/MOTOROLA BENEFITS. Because you are a former
employee of Motorola, certain agreements you signed during your employment,
e.g., Stock Option Agreements (containing non-competition provisions), and
agreements for the protection of Motorola's confidential and proprietary
information, continue in force, even though you and Motorola have also entered
into this Agreement. You will not earn any new service credit under the various
Motorola compensation and benefit plans (the "Motorola Plans") during the term
of this Agreement and no fees you earn under this Agreement will count as
compensation under any of the Motorola Plans.
4. GENERAL RELEASE. You release Motorola from any and all legal claims to date
arising from your employment or your separation from employment with Motorola,
whether or not you currently know about them or are presently asserting them.
The claims you are releasing include, but are not limited to, breach of
contract; wrongful termination, defamation, or other common law matters; or
claims of discrimination based on race, sex, age (Age Discrimination in
Employment Act), race, religion, national origin, disability or any other
legally protected status. You are not releasing any rights to benefits under the
Motorola Plans that vested or accrued prior to your retirement, nor are you
waiving any other claims or rights which cannot be waived by law, including the
right to file an administrative charge of discrimination.
5. COOPERATION/INDEMNIFICATION. For as long as reasonably necessary, you agree
to cooperate fully with Motorola in any investigation, negotiation, litigation
or other action arising out of situations in which you were involved or knew
about during your employment. Motorola will indemnify you for judgments,
penalties, settlements and reasonable defense costs for any actual or threatened
investigation, negotiation, litigation or other action arising from your
Motorola employment to the full extent elected officers may be indemnified under
Motorola's Certificate of Incorporation, as it may be restated or amended from
time to time.
6. NO SOLICITATION. You agree that for two years from the date you retired from
Motorola, you will not recruit, solicit, induce or cause, allow, permit aid or
encourage others to recruit, solicit or induce, any Motorola employee to
terminate his/her employment with Motorola and/or to seek employment with any
other employer.
<PAGE> 2
7. OBLIGATION TO INFORM MOTOROLA. You agree to immediately inform Motorola of
(i) the identity of any new employment, start-up business or self-employment
after your Motorola retirement date (ii) your title, and (iii) your duties and
responsibilities. You will provide additional information when reasonably
requested by Motorola to determine if you are complying with this Agreement. You
authorize Motorola to give a copy of this Agreement to your new employer, or
other entity or business you are associated with.
8. PROTECTION OF MOTOROLA'S BUSINESS. You will not use your knowledge of
Motorola's business for the benefit of any other person or entity or divulge
Motorola's confidential information (as defined below). In good faith, you will
protect Motorola's good will.
9. INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION. You agree to all of the
following provisions for the protection of Motorola's intellectual property. In
this Agreement, the term, "invention," includes innovations and ideas, reflected
in any form, and the term, "confidential information," means all business,
financial, scientific, technological and legal information or data, and trade
secrets, in any form, regardless of how you learned it, that relates directly or
indirectly to Motorola's past, present or future business, and that is not
available to the general public. Confidential information includes information
or data listed in footnote 1.
a. You will not disclose to or use in any work performed for Motorola
any confidential information belonging to others, unless Motorola is
otherwise entitled to learn or use it.
b. Except as required to perform services under this Agreement, you
will not use, publish or otherwise disclose to others any confidential
information of Motorola or its customers or suppliers, and will take
all reasonable precautions to prevent improper disclosure.
c. When your work for Motorola ends, you will promptly deliver to the
designated Motorola representative all Motorola-related documents and
other records, and all other Motorola property and materials.
d. All services you perform and all work you prepare which is eligible
for copyright protection in any country shall be deemed work made for
hire and become the sole intellectual property of Motorola. If deemed
not to be a work made for hire, you assign all right, title and
interest in the copyright (including extensions and renewals) in such
work to Motorola. At Motorola's expense, but without additional
compensation to you, you will provide Motorola all the assistance it
reasonably requests to establish, preserve and enforce its copyright in
such work. You waive all moral rights relating to the work, including
without limitation rights of identification of authorship, and rights
of approval, restriction or limitation on use or subsequent
modifications.
e. You assign to Motorola, as its exclusive property, your entire
right, title and interest in all of those inventions you (with or
without others) developed or conceived during and after your work for
Motorola, if they: (a) are made with, in whole or in part, Motorola's
equipment, supplies, facilities, trade secrets, or confidential
information; or (b) relate to Motorola's business or to Motorola's
actual or demonstrably anticipated research or development; or (c)
result from any work you performed for Motorola.
f. You will make and maintain written records of all inventions
referred to above and will promptly submit those records and make
supplemental disclosures to Motorola.
g. At Motorola's request and expense, you will do everything necessary,
even after the term of this Agreement, to help Motorola or its nominees
obtain patents, copyrights and legal protection for inventions in any
country.
h. All inventions, confidential information, notes, drawings, designs,
memoranda, computer programs or other data prepared or produced in the
performance of your work for Motorola shall be the sole property of
Motorola, and shall not be disclosed to anyone outside of Motorola.
i. Neither party shall have the right under this Agreement to use the
name, trademarks or trade names of the other without prior written
approval.
j. You may disclose information that is not confidential information,
provided that you give Motorola reasonable advance written notice of
your intent to do so, so that Motorola has the chance to object before
you disclose information Motorola reasonably believes to be protected.
Page 2
<PAGE> 3
10. RECORDS, REPORTS AND INFORMATION. You agree to give Motorola reports about
the services you perform under this Agreement, in the form, and with the content
and timing specified by Motorola.
11. CONFLICT OF INTEREST/CODE OF BUSINESS CONDUCT. Legal and ethical business
conduct is a priority for Motorola, as reflected in the Code of Business Conduct
("COBC") that applies to Motorola employees. Even though you will provide
services under this Agreement as an independent contractor, you agree to abide
by the COBC. Failure to comply with the COBC is grounds for Motorola to
terminate this Agreement immediately.
12. FORCE MAJEURE. Under this Agreement, "force majeure" means an occurrence
beyond the reasonable control of the party affected (e.g., government actions,
natural disasters, wars, accidents, or strikes) which prevents or delays that
party from performing its obligations under this Agreement. To be excused from
performing obligations under the Agreement because of force majeure, the party
claiming force majeure must promptly inform the other party in writing at the
beginning and end of the period of force majeure.
13. COMPLIANCE WITH LAWS AND PROCEDURES. You will comply independently and in
all respects with all applicable foreign, federal, state and local laws,
ordinances, rules, regulations and orders, including those for public health or
environmental protection, equal employment opportunity, and affirmative action.
You will indemnify Motorola and hold it harmless if you violate this promise.
14. PROPERTY. You are responsible to care for all property Motorola provides you
without charge, even though Motorola is the sole owner of the property. You will
pay for all property lost, damaged or destroyed by you.
15. SECURITY. You will comply with all applicable Motorola security regulations.
16. USE OF MOTOROLA COMPUTER RESOURCES. You will comply with Motorola's policy
SOP E-62 regarding appropriate use of computer resources. A copy is attached as
Exhibit B.
17. MISCELLANEOUS.
a. You agree that you are signing this Agreement knowingly and
voluntarily, without coercion, threats or extra promises.
b. You or Motorola may insist on strict performance of any provision of
this Agreement, even though either you or Motorola may not have
insisted on strict performance of that same provision at an earlier
time in the same or similar circumstances.
c. You may not sell, transfer or assign any interests or rights under
this Agreement (by operation of law or otherwise). You may not delegate
your duties or responsibilities under this Agreement to any person,
business or entity. An attempt to do anything prohibited by this
paragraph is automatically void.
d. If Motorola pays any claim you have against it under this Agreement,
that payment may be recouped and/or set off against any present or
future claims that Motorola may have against you.
e. The terms of this Agreement are confidential and you promise not to
disclose any of its terms to any third party except your immediate
family and your financial and legal counsel.
f. You and Motorola will attempt to settle any claim or controversy
through good faith negotiation and with mutual cooperation. You and
Motorola will settle any disputes involving this Agreement (other than
disputes involving intellectual property) through mediation or other
form of alternate dispute resolution. However, Motorola may resort to
judicial proceedings if it deems interim relief from a court is
necessary to prevent serious and irreparable injury.
g. All communications to be transmitted from either party to the other
party under this Agreement must be in writing and must be hand
delivered (and deemed received upon receipt), or sent by facsimile or
courier (and deemed received upon receipt or rejection by the
addressee), addressed as follows or to any new address which has been
communicated in writing: if to Motorola: Motorola, Inc., 1303 East
Algonquin Road, Schaumburg, IL 60196, Fax No. (847) 576-6301, Attn: A.
Peter Lawson, General Counsel.
Page 3
<PAGE> 4
h. If any provision(s) of this Agreement is/are held to be
unenforceable, this Agreement shall be interpreted as if the
unenforceable provision(s) are not part of the Agreement; you and
Motorola will negotiate in good faith to replace the unenforceable
provision.
i. This Agreement will be construed according to the internal laws, but
not the laws of conflicts, applicable to agreements made in Illinois,
USA.
j. You agree that you have had sufficient time (at least 21 days) to
consider this Agreement and were advised to consult with an attorney,
if desired, before signing below. This Agreement will become effective
seven calendar days after you sign it, during which time you can revoke
it, by delivering a signed revocation letter within the seven-day
period to A. Peter Lawson, Executive Vice President and General
Counsel, Motorola, Inc., 1303 E. Algonquin Rd., 11th Floor, Schaumburg,
IL 60196.
k. Except where otherwise specified, this Agreement and Exhibits, is
the final, complete and exclusive expression of the agreement between
you and Motorola. Except where otherwise specified, this Agreement
supersedes and nullifies all prior and concurrent communications and
purchase orders, invoices, acknowledgements and agreements that may
have been made in connection with the same subject matter, even if
signed by you and Motorola. Any alterations to this Agreement must be
in writing, signed by both parties.
IN WITNESS WHEREOF, the parties have signed this Agreement.
FRED TUCKER MOTOROLA, INC.
/s/ Frederick T. Tucker /s/ Christopher B. Galvin
--------------------------------- ----------------------------------
(Not to be signed before your By: Christopher B. Galvin
Motorola retirement date) Chairman of the Board and Chief
Executive Officer
February 16, 2001 February 16, 2001
--------------------------------- ----------------------------------
(Date) (Date)
Page 4
<PAGE> 5
EXHIBIT A
CONSULTING SERVICES/CONSULTING FEES SUBJECT TO THIS AGREEMENT
Services
You shall perform consulting services as directed by Chris Galvin, Motorola
Chairman and Chief Executive Officer, or his designee. These may include, but
are not limited to, executive coaching, teaching at the Motorola Vice President
Institute, and representing Motorola at the CART races, and other like events.
You agree to be accessible within 48 hours of any request to perform services
under this Agreement. You agree to work a minimum of 40 days during the term of
this Agreement.
Fees and Expenses
Motorola will pay you a retainer as follows:
<TABLE>
<S> <C>
February 15, 2001: $25,000
April 15, 2001: $50,000
July 15, 2001: $50,000
October 15, 2001: $50,000
</TABLE>
Motorola will reimburse all your necessary and actual travel expenses, including
first class airfare, incurred in performing duties under this Agreement,
provided that Motorola receives an itemized list of all expenses incurred,
including the receipts therefor, which are to be reimbursed.
Motorola also agrees to provide the following at Motorola's expense:
o Use of the corporate aircraft, where appropriate;
o The services of Corporate Security, as needed and approved by
Chris Galvin or his designee;
o Part-time administrative services;
o Part-time IT services; and
o Continued use of your Motorola financial planning advisor
through December 31, 2001.
Motorola will pay no costs greater than those in this Exhibit A without its
prior written consent.
Page 5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21(B)
<SEQUENCE>8
<FILENAME>c61260ex10-21b.txt
<DESCRIPTION>FORM OF MOTOROLA, INC. AWARD DOCUMENT
<TEXT>
<PAGE> 1
Exhibit 10.21(b) to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
FORM OF
MOTOROLA, INC.
AWARD DOCUMENT
Terms and Conditions Related to Employee Nonqualified Stock Options
- --------------------------------------------------------------------------------
Recipient: Date of Expiration:
-------------------- ------------------
Commerce ID#: Number of Options:
-------------------- ------------------
Date of Grant: Exercise Price:
-------------------- ------------------
- --------------------------------------------------------------------------------
Motorola, Inc. ("Motorola") is pleased to grant you options to purchase shares
of Motorola's common stock under the Motorola Omnibus Incentive Plan of 2000
(the "Plan"). The number of options ("Options") awarded to you and the Exercise
Price per Option, which is the Fair Market Value on the Date of Grant, are
stated above. Each Option entitles you to purchase one share of Motorola's
common stock on the terms described below and in the Plan.
- --------------------------------------------------------------------------------
VESTING AND EXERCISABILITY
You cannot exercise the Options until they have vested.
Regular Vesting - The Options will vest in accordance with the following
schedule (subject to the other terms hereof):
<TABLE>
<CAPTION>
Percent Date
------- ----
<S> <C>
25% _____ ____, 200__
25% _____ ____, 200__
25% _____ ____, 200__
25% _____ ____, 200__
</TABLE>
Special Vesting - You may be subject to the Special Vesting Dates described
below if your employment or service with Motorola or a Subsidiary (as defined
below) terminates.
Exercisability - You may exercise Options at any time after they vest and before
they expire as described below.
EXPIRATION
All Options expire on the earlier of (1) the tenth anniversary of the Date of
Grant as stated above or (2) any of the Special Expiration Dates described
below. Once an Option expires, you no longer have the right to exercise it.
SPECIAL VESTING DATES AND SPECIAL EXPIRATION DATES
There are events that cause your Options to vest sooner than the schedule
discussed above or to expire sooner than the tenth anniversary of the Date of
Grant. Those events are as follows:
Retirement - If your employment or service with Motorola or a Subsidiary is
ended because of your Retirement, Options that were granted at least one year
prior to your Retirement that are not vested will automatically become fully
vested upon your Retirement. Any remaining unvested Options will be forfeited.
All your vested Options will then expire on the earlier of the third anniversary
of ending your employment or service because of your Retirement or the Date of
Expiration stated above. Retirement means your retirement from Motorola or a
Subsidiary as follows:
(i) Retiring at or after age 55 with 20 years of service;
(ii) Retiring at or after age 60 with 10 years of service;
(iii) Retiring at or after age 65, without regard to years of
service.
Disability - If your employment or service with Motorola or a Subsidiary is
terminated because of your Total and Permanent Disability (as defined
1
<PAGE> 2
below), Options that are not vested will automatically become fully vested upon
your termination of employment or service. All your Options will then expire on
the earlier of the third anniversary of your termination of employment or
service because of your Total and Permanent Disability or the Date of Expiration
stated above. Until that time, the Options will be exercisable by you or your
guardian or legal representative.
Death - If your employment or service with Motorola or a Subsidiary is
terminated because of your death, Options that are not vested will automatically
become fully vested upon your death. All your Options will then expire on the
earlier of the third anniversary of your death or the Date of Expiration stated
above. Until that time, with written proof of death and inheritance, the Options
will be exercisable by your legal representative, legatees or distributees.
Change In Control - If there is a Change In Control of Motorola (as defined in
the Plan), all the unvested Options will automatically become fully vested as
described in the Plan. If Motorola or a Subsidiary terminates your employment or
service other than for Serious Misconduct within two years of consummation of a
Change In Control, all of your vested Options will be exercisable until the Date
of Expiration.
Termination of Employment or Service Because of Serious Misconduct - If Motorola
or a Subsidiary terminates your employment or service because of Serious
Misconduct (as defined below) all of your Options (vested and unvested) expire
upon your termination.
Change in Employment in Connection with a Divestiture - If you accept employment
with another company in direct connection with the sale, lease, outsourcing
arrangement or any other type of asset transfer or transfers of any portion of a
facility or any portion of a discrete organizational unit of Motorola or a
Subsidiary (a "Divestiture"), all of your unvested Options will automatically
expire upon termination in direct connection with a Divestiture and your vested
Options will expire 12 months after such Divestiture or such shorter period
remaining until expiration as set forth above.
Termination of Employment or Service by Motorola or a Subsidiary Other than for
Serious Misconduct or a Divestiture- If Motorola or a Subsidiary on its
initiative, terminates your employment or service other than for Serious
Misconduct or a Divestiture, all of your unvested Options will automatically
expire upon termination and your vested Options will expire twelve months after
your termination of employment or such shorter period remaining until expiration
as set forth above.
Termination of Employment or Service for any Other Reason than Described Above -
If your employment or service with Motorola or a Subsidiary terminates for any
reason other than that described above, including voluntary resignation of your
employment or service, all of your Options (vested and unvested) will
automatically expire on the date of termination.
LEAVE OF ABSENCE/TEMPORARY LAYOFF
If you take a Leave of Absence from Motorola or a Subsidiary that your employer
has approved in writing in accordance with your employer's Leave of Absence
Policy and which does not constitute a termination of employment as determined
by Motorola, or you are placed on Temporary Layoff (as defined below) by
Motorola or a Subsidiary the following will apply:
Vesting of Options - Options will continue to vest in accordance with the
vesting schedule set forth above.
Exercising Options - You may exercise Options that are vested or that vest
during the leave of absence or layoff.
Effect of Termination of Employment or Service - If your employment or service
is terminated during the Leave of Absence or Temporary Layoff, the treatment of
your Options will be determined as described under "Special Vesting Dates and
Special Expiration Dates" above.
OTHER TERMS
Method of Exercising - You must follow the procedures for exercising options
established by Motorola from time to time. At the time of exercise, you must pay
the Exercise Price for all of the Options being exercised and any taxes that are
required to be withheld by Motorola or a Subsidiary in connection with the
exercise. Options may not be exercised for less than 50 shares unless the number
of shares represented by the Option is less than 50 shares, in which case the
Option must be exercised for the remaining amount.
Transferability - Unless the Committee provides, Options are not transferable
other than by will or the laws of descent and distribution.
2
<PAGE> 3
Tax Withholding - Motorola or a Subsidiary is entitled to withhold an amount
equal to the required minimum statutory withholding taxes for the respective tax
jurisdictions attributable to any share of common stock deliverable in
connection with the exercise of the Options. Employee may satisfy any
withholding obligation in whole or in part by electing to have Motorola retain
Option shares having a Fair Market Value on the date of exercise equal to the
minimum amount required to be withheld.
DEFINITION OF TERMS
If a term is used but not defined, it has the meaning given such term in the
Plan.
"Fair Market Value" is the closing price for a share of Motorola common stock on
the last trading day before the grant. The official source for the closing price
is the New York Stock Exchange Composite Transaction as reported in the Wall
Street Journal, Midwest edition.
"Serious Misconduct" means any misconduct identified as a ground for termination
in the Motorola Code of Business Conduct, or the human resources policies, or
other written policies or procedures.
"Subsidiary" means an entity of which Motorola owns directly or indirectly at
least 50% and that Motorola consolidates for financial reporting purposes.
"Total and Permanent Disability" means for (x) U.S. employees, entitlement to
long-term disability benefits under the Motorola Disability Income Plan, as
amended and any successor plan and (y) non-U.S. employees, as established by
applicable Motorola policy or as required by local regulations.
"Temporary Layoff" means a layoff or redundancy that is communicated as being
for a period of up to twelve months and as including a right to recall under
defined circumstances.
CONSENT TO TRANSFER PERSONAL DATA
By accepting this award, you voluntarily acknowledge and consent to the
collection, use, processing and transfer of personal data as described in this
paragraph. You are not obliged to consent to such collection, use, processing
and transfer of personal data. However, failure to provide the consent may
affect your ability to participate in the Plan. Motorola, its Subsidiaries and
your employer hold certain personal information about you, that may include your
name, home address and telephone number, date of birth, social security number
or other employee identification number, salary, nationality, job title, any
shares of stock held in Motorola, or details of all options or any other
entitlement to shares of stock awarded, canceled, purchased, vested, unvested or
outstanding in your favor, for the purpose of managing and administering the
Plan ("Data"). Motorola and/or its Subsidiaries will transfer Data amongst
themselves as necessary for the purpose of implementation, administration and
management of your participation in the Plan, and Motorola and/or any of its
Subsidiaries may each further transfer Data to any third parties assisting
Motorola in the implementation, administration and management of the Plan. These
recipients may be located throughout the world, such as the United States. You
authorize them to receive, possess, use, retain and transfer the Data, in
electronic or other form, for the purposes of implementing, administering and
managing your participation in the Plan, including any requisite transfer of
such Data as may be required for the administration of the Plan and/or the
subsequent holding of shares of stock on your behalf to a broker or other third
party with whom you may elect to deposit any shares of stock acquired pursuant
to the Plan. You may, at any time, review Data, require any necessary amendments
to it or withdraw the consents herein in writing by contacting Motorola;
however, withdrawing your consent may affect your ability to participate in the
Plan.
ACKNOWLEDGEMENT OF DISCRETIONARY NATURE OF THE PLAN; NO VESTED RIGHTS
You acknowledge and agree that the Plan is discretionary in nature and limited
in duration, and may be amended, cancelled, or terminated by Motorola or a
Subsidiary, in its sole discretion, at any time. The grant of awards under the
Plan is a one-time benefit and does not create any contractual or other right to
receive an award in the future. Future grants, if any, will be at the sole
discretion of Motorola, including, but not limited to, the timing of any grant,
the amount of the award, vesting provisions, and the exercise price.
AGREEMENT FOLLOWING TERMINATION OF EMPLOYMENT
As a further condition of accepting the Options, you acknowledge and agree that
for a period of two years following your termination of employment or service,
you will not recruit, solicit or induce, or cause, allow, permit or aid others
to recruit, solicit or induce, or to communicate in support of Motorola or a
Subsidiary to terminate his/her employment with Motorola or a
3
<PAGE> 4
Subsidiary and/or to seek employment with your new or prospective employer, or
any other company.
You agree that upon termination of employment with Motorola or a Subsidiary, you
will immediately inform Motorola of (i) the identity of your new employer (or
the nature of any start-up business or self-employment), (ii) your new title,
and (iii) your job duties and responsibilities. You hereby authorize Motorola or
a Subsidiary to provide a copy of this Award Document to your new employer. You
further agree to provide information to Motorola or a Subsidiary as may from
time to time be requested in order to determine your compliance with the terms
hereof.
ACCEPTANCE OF TERMS AND CONDITIONS
By accepting the Options, you agree to be bound by these terms and conditions,
the Plan and any and all rules and regulations established by Motorola in
connection with awards issued under the Plan.
OTHER INFORMATION ABOUT YOUR OPTIONS AND THE PLAN
You can find other information about options and the Plan on the Motorola
website http://hr2.mot.com/stockadmin. If you do not have access to the website,
please complete the order form included with these Terms and Conditions to
receive the information.
4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>9
<FILENAME>c61260ex12.txt
<DESCRIPTION>STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS
<TEXT>
<PAGE> 1
Exhibit 12 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA, INC.
FIXED CHARGES RATIO
Q4 2000
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
(In Millions) 2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Pretax income (loss)(1) $ 2,328 $ 1,434 $(1,230) $ 1,814 $ 1,626
Capitalized interest $ (18) $ 0 $ 0 $ 0 $ 0
Fixed charges
(as calculated below) $ 806 $ 169 $ 460 $ 342 $ 388
------- ------- ------- ------- -------
Earnings (2) $ 3,116 $ 1,603 $ (770) $ 2,156 $ 2,014
======= ======= ======= ======= =======
FIXED CHARGES:
Interest expense $ 680 $ 399 (3) $ 348 $ 234 $ 290
Rent expense interest
factor $ 126 $ 169 $ 112 $ 108 $ 98
------- ------- ------- ------- -------
Total fixed charges (2) $ 806 $ 169 $ 460 $ 342 $ 388
======= ======= ======= ======= =======
RATIO OF EARNINGS TO
FIXED CHARGES 3.9 3.5 -- (4) 6.3 5.2
======= ======= ======= ======= =======
</TABLE>
(1) After adjustments required by Item 503 (d) of SEC Regulation S-K.
(2) As defined in Item 503 (d) of SEC Regulation S-K.
(3) The Company was a guarantor of Iridium's $750 million guaranteed credit
agreement. On November 15, 1999, the Company satisfied its guarantee
obligations under this agreement by paying approximately $743 million
to the banks providing loans under the agreement. Included with this
payment was approximately $3 million in interest charges which have
been aggregated in the 1999 total interest expense used for the
calculation of total fixed charges.
(4) Earnings were inadequate for the year ended December 31, 1998, by $1.2
billion to cover fixed charges.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>10
<FILENAME>c61260ex21.txt
<DESCRIPTION>SUBSIDIARIES
<TEXT>
<PAGE> 1
Exhibit 21 to Motorola, Inc.'s Form 10-K
for the year ended December 31, 2000
MOTOROLA, INC.
LISTING OF MAJOR SUBSIDIARIES
12/31/2000
<TABLE>
<S> <C>
Motorola do Brasil LTDA. Brazil
Motorola Industrial Ltda. Brazil
Clinical Micro Sensors, Inc. California
Motorola Canada Limited Canada
Motorola (China) Electronics Ltd. China
Motorola (China) Investment Ltd. China
C-Port Corporation Delaware
General Instrument Corporation Delaware
Motorola Credit Corporation Delaware
Motorola de Puerto Rico, Inc. Delaware
Motorola Electronica de Puerto Rico, Inc. Delaware
Motorola International Development Corporation Delaware
Next Level Communications, Inc. Delaware
Motorola Limited England
Motorola Semiconducteurs S.A. France
Motorola G.m.b.H. Germany
Motorola Asia Limited Hong Kong
Motorola Semiconductor Hong Kong Limited Hong Kong
Motorola Communications Israel Limited Israel
Motorola Israel Limited Israel
Motorola Israel NW Israel
Motorola South - Israel Limited Israel
Pelephone Communications Ltd. Israel
Motorola Japan Limited Japan
Motorola Electronics and Communications, Inc. Korea
Motorola Malaysia Sdn. Bhd. Malaysia
Motorola Technology Sdn. Bhd. Malaysia
Baja Celular Mexicana, S.A. de C.V. ("Baja Celular") Mexico
Celular de Telefonia S.A. de C.V. Mexico
Motorola de Mexico, S.A. Mexico
Motorola Asia Treasury Pte. Ltd Singapore
Motorola Electronics Pte. Limited Singapore
Motorola Electronics Taiwan, Limited Taiwan
Motorola B.V. The Netherlands
Motorola Foreign Sales Corporation Virgin Islands
</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----