þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 |
|
For the fiscal year ended December 31, 2007 | ||
or | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 |
|
For the transition period from to |
DELAWARE
|
36-1115800 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
Title of Each Class
|
Name of Each Exchange on Which
Registered
|
|
Common Stock, $3 Par Value per Share
|
New York Stock Exchange
Chicago Stock Exchange |
Item 1: | Business |
| The Mobile Devices business designs, manufactures, sells and services wireless handsets with integrated software and accessory products, and licenses intellectual property. | |
| The Home and Networks Mobility business designs, manufactures, sells, installs and services: (i) digital video, Internet Protocol (IP) video and broadcast network interactive set-tops (digital entertainment devices), end-to-end video delivery solutions, broadband access infrastructure systems, and associated data and voice customer premise equipment (broadband gateways) to cable television and telecom service providers, and (ii) wireless access systems (wireless networks), including cellular infrastructure systems and wireless broadband systems, to wireless service providers. | |
| The Enterprise Mobility Solutions business designs, manufactures, sells, installs and services analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets, including government and public safety agencies, as well as retail, utility, transportation, manufacturing, healthcare and other commercial customers. |
December 31, 2007
|
$ | 5.5 billion | ||
December 31, 2006
|
$ | 6.6 billion |
| Motorola, Inc. Restated Certificate of Incorporation | |
| Motorola, Inc. Amended and Restated Bylaws | |
| Motorola, Inc. Board Governance Guidelines | |
| Motorola, Inc. Director Independence Guidelines | |
| Principles of Conduct for Members of the Motorola, Inc. Board of Directors | |
| Motorola Code of Business Conduct, which is applicable to all Motorola employees, including the principal executive officer, the principal financial officer and the controller (principal accounting officer) | |
| Audit and Legal Committee Charter | |
| Compensation and Leadership Committee Charter | |
| Governance and Nominating Committee Charter |
Item 1A: | Risk Factors |
Item 1B: | Unresolved Staff Comments |
Item 2: | Properties |
Item 3: | Legal Proceedings |
Item 4: | Submission of Matters to a Vote of Security Holders |
(d) Maximum Number
|
||||||||||||||||
(c) Total Number
|
(or Approximate Dollar
|
|||||||||||||||
of Shares Purchased
|
Value) of Shares that
|
|||||||||||||||
(a) Total Number
|
(b) Average Price
|
as Part of Publicly
|
May Yet Be Purchased
|
|||||||||||||
of Shares
|
Paid per
|
Announced Plans
|
Under the Plans or
|
|||||||||||||
Period | Purchased (1)(2) | Share (1)(3) | or Programs (2) | Programs (2) | ||||||||||||
9/30/07 to 10/26/07
|
2,972,951 | $ | 18.84 | 2,964,225 | $ | 4,267,375,081 | ||||||||||
10/27/07 to 11/23/07
|
5,709,917 | $ | 17.23 | 5,706,600 | $ | 4,169,061,854 | ||||||||||
11/24/07 to 12/31/07
|
25,064,045 | $ | 16.04 | 25,064,045 | $ | 3,767,061,887 | ||||||||||
Total
|
33,746,913 | $ | 16.49 | 33,734,870 | ||||||||||||
(1) | In addition to purchases under the 2006 Stock Repurchase Program (as defined below), included in this column are transactions under the Companys equity compensation plans involving the delivery to the Company of 12,043 shares of Motorola common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock granted to Company employees. | |
(2) | Through actions taken on July 24, 2006 and March 21, 2007, the Board of Directors has authorized the Company to repurchase an aggregate amount of up to $7.5 billion of its outstanding shares of common stock over a period ending in June 2009, subject to market conditions (the 2006 Stock Repurchase Program). | |
(3) | Average price paid per share of common stock repurchased under the 2006 Stock Repurchase Program is execution price, excluding commissions paid to brokers. |
Item 6: | Selected Financial Data |
Years Ended December 31 | ||||||||||||||||||||
(Dollars in millions, except as noted) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Operating Results
|
||||||||||||||||||||
Net sales
|
$ | 36,622 | $ | 42,847 | $ | 35,310 | $ | 29,680 | $ | 21,718 | ||||||||||
Costs of sales
|
26,670 | 30,120 | 23,881 | 19,715 | 14,567 | |||||||||||||||
Gross margin
|
9,952 | 12,727 | 11,429 | 9,965 | 7,151 | |||||||||||||||
Selling, general and administrative expenses
|
5,092 | 4,504 | 3,628 | 3,508 | 3,084 | |||||||||||||||
Research and development expenditures
|
4,429 | 4,106 | 3,600 | 3,316 | 2,849 | |||||||||||||||
Other charges (income)
|
984 | 25 | (404 | ) | 149 | 77 | ||||||||||||||
Operating earnings (loss)
|
(553 | ) | 4,092 | 4,605 | 2,992 | 1,141 | ||||||||||||||
Other income (expense):
|
||||||||||||||||||||
Interest income (expense), net
|
91 | 326 | 71 | (200 | ) | (296 | ) | |||||||||||||
Gains on sales of investments and businesses, net
|
50 | 41 | 1,845 | 460 | 540 | |||||||||||||||
Other
|
22 | 151 | (109 | ) | (140 | ) | (141 | ) | ||||||||||||
Total other income
|
163 | 518 | 1,807 | 120 | 103 | |||||||||||||||
Earnings (loss) from continuing operations before income taxes
|
(390 | ) | 4,610 | 6,412 | 3,112 | 1,244 | ||||||||||||||
Income tax expense (benefit)
|
(285 | ) | 1,349 | 1,893 | 1,013 | 403 | ||||||||||||||
Earnings (loss) from continuing operations
|
(105 | ) | 3,261 | 4,519 | 2,099 | 841 | ||||||||||||||
Earnings (loss) from discontinued operations, net of tax
|
56 | 400 | 59 | (567 | ) | 52 | ||||||||||||||
Net earnings (loss)
|
$ | (49 | ) | $ | 3,661 | $ | 4,578 | $ | 1,532 | $ | 893 | |||||||||
Per Share Data (in dollars)
|
||||||||||||||||||||
Diluted earnings (loss) from continuing operations per common
share
|
$ | (0.05 | ) | $ | 1.30 | $ | 1.79 | $ | 0.87 | $ | 0.36 | |||||||||
Diluted earnings (loss) per common share
|
(0.02 | ) | 1.46 | 1.81 | 0.64 | 0.38 | ||||||||||||||
Diluted weighted average common shares outstanding (in millions)
|
2,312.7 | 2,504.2 | 2,527.0 | 2,472.0 | 2,351.2 | |||||||||||||||
Dividends paid per share
|
$ | 0.20 | $ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.16 | ||||||||||
Balance Sheet
|
||||||||||||||||||||
Total assets
|
$ | 34,812 | $ | 38,593 | $ | 35,802 | $ | 30,922 | $ | 31,999 | ||||||||||
Long-term debt and redeemable preferred securities
|
3,991 | 2,704 | 3,806 | 4,581 | 6,007 | |||||||||||||||
Total debt and redeemable preferred securities
|
4,323 | 4,397 | 4,254 | 5,298 | 6,876 | |||||||||||||||
Total stockholders equity
|
15,447 | 17,142 | 16,673 | 13,331 | 12,689 | |||||||||||||||
Other Data
|
||||||||||||||||||||
Capital expenditures
|
$ | 527 | $ | 649 | $ | 548 | $ | 405 | $ | 309 | ||||||||||
% of sales
|
1.4 | % | 1.5 | % | 1.6 | % | 1.4 | % | 1.4 | % | ||||||||||
Research and development expenditures
|
$ | 4,429 | $ | 4,106 | $ | 3,600 | $ | 3,316 | $ | 2,849 | ||||||||||
% of sales
|
12.1 | % | 9.6 | % | 10.2 | % | 11.2 | % | 13.1 | % | ||||||||||
Year-end employment (in thousands)*
|
66 | 66 | 69 | 68 | 88 | |||||||||||||||
* | Employment decrease in 2004 primarily reflects the impact of the spin-off of Freescale Semiconductor. |
| The Mobile Devices segment designs, manufactures, sells and services wireless handsets with integrated software and accessory products, and licenses intellectual property. The segments net sales in 2007 were $19.0 billion, representing 52% of the Companys consolidated net sales. | |
| The Home and Networks Mobility segment designs, manufactures, sells, installs and services: (i) digital video, Internet Protocol (IP) video and broadcast network interactive set-tops (digital entertainment devices), end-to-end video delivery solutions, broadband access infrastructure systems, and associated data and voice customer premise equipment (broadband gateways) to cable television and telecom service providers (collectively, referred to as the home business), and (ii) wireless access systems (wireless networks), including cellular infrastructure systems and wireless broadband systems, to wireless service providers. The segments net sales in 2007 were $10.0 billion, representing 27% of the Companys consolidated net sales. | |
| The Enterprise Mobility Solutions segment designs, manufactures, sells, installs and services analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets, including government and public safety agencies (which, together with all sales for distributors of two-way communication products, are referred to as the government and public safety market), as well as retail, utility, transportation, manufacturing, healthcare and other commercial customers (which, collectively, are referred to as the commercial enterprise market). The segments net sales in 2007 were $7.7 billion, representing 21% of the Companys consolidated net sales. |
| Net Sales were $36.6 Billion: Our net sales were $36.6 billion in 2007, down 15% compared to net sales of $42.8 billion in 2006. Net sales decreased 33% in the Mobile Devices segment, increased 9% in the Home and Networks Mobility segment and increased 43% in the Enterprise Mobility Solutions segment. | |
| Operating Loss of $553 Million: We incurred an operating loss of $553 million in 2007, compared to operating earnings of $4.1 billion in 2006. Operating margin was (1.5)% of net sales in 2007, compared to 9.6% of net sales in 2006. | |
| Loss from Continuing Operations of $105 Million, or $0.05 per Share: We incurred a loss from continuing operations of $105 million, or $0.05 per diluted common share, in 2007, compared to earnings from continuing operations of $3.3 billion, or $1.30 per diluted common share, in 2006. | |
| Operating Cash Flow of $785 Million: We generated operating cash flow of $785 million in 2007, compared to operating cash flow of $3.5 billion in 2006. | |
| 171.2 Million Shares of Motorola Common Stock Repurchased for $3.0 Billion: During 2007, the Company repurchased 171.2 million of its common shares for an aggregate cost of $3.0 billion. Since the inception of its first-ever share repurchase program in May 2005, the Company has repurchased 384.6 million of its common shares for an aggregate cost of $7.7 billion. |
| In Our Mobile Devices Business: Net sales were $19.0 billion in 2007, a decrease of 33% compared to net sales of $28.4 billion in 2006. The business incurred an operating loss of $1.2 billion in 2007, compared to operating earnings of $2.7 billion in 2006. The business had lower net sales in all regions. The decrease in net sales was primarily driven by: (i) a 27% decrease in unit shipments, (ii) a 9% decrease in average selling price (ASP), and (iii) decreased revenue from intellectual property and technology licensing. The operating loss was primarily due to a decrease in gross margin, driven by: (i) a 9% decrease in ASP, (ii) decreased income from intellectual property and technology licensing, (iii) a 27% decrease in unit shipments, and (iv) a $277 million charge for a legal settlement with Freescale Semiconductor, partially offset by savings from supply chain cost-reduction initiatives. Our global handset market share for the full year 2007 was approximately 14%, a decrease of approximately 8 percentage points versus full year 2006. | |
| In Our Home and Networks Mobility Business: Net sales were $10.0 billion in 2007, an increase of 9% compared to net sales of $9.2 billion in 2006. Operating earnings were $709 million, a decrease of 10% compared to operating earnings of $787 million in 2006. The business had higher net sales in all regions. The increase in net sales reflected higher net sales in the home business, partially offset by lower net sales of wireless networks. The decrease in operating earnings was primarily due to a decrease in gross margin driven by: (i) lower net sales of iDEN infrastructure equipment, and (ii) continued competitive pricing pressure in the market for GSM infrastructure equipment, partially offset by increased net sales of digital entertainment devices. | |
| In Our Enterprise Mobility Solutions Business: Net sales were $7.7 billion in 2007, an increase of 43% compared to net sales of $5.4 billion in 2006. Operating earnings were $1.2 billion, an increase of 27% compared to operating earnings of $958 million in 2006. The increase in net sales reflects higher net sales in all regions and was primarily driven by sales from the Symbol business acquired in January 2007, as well as higher net sales in the government and public safety market due to strong demand in North America. The increase in operating earnings was primarily due to an increase in gross margin in both: (i) the commercial enterprise market, driven by net sales from the Symbol business, and (ii) the government and public safety market, driven by strong net sales in North America, partially offset by: (i) an inventory-related charge in connection with the acquisition of Symbol, and (ii) increases in SG&A and R&D expenses, primarily due to expenses of recently acquired businesses. |
| In Our Mobile Devices Business: The Mobile Devices business faced significant challenges in 2007. While overall market demand remained strong during the year, demand for Motorolas wireless handsets slowed substantially. As a result, Mobile Devices net sales were down 33% compared to 2006 and the business incurred an operating loss of $1.2 billion. |
In Our Home and Networks Mobility Business: The Home and Networks Mobility business remained the worlds leading provider of digital entertainment devices. Motorola shipped over 15 million digital entertainment devices during the year, with nearly one-third of these shipments being HD/DVR capable. In 2007, Motorola shipped over 11 million modems and achieved the milestone of shipping its 50 millionth cable/voice modem. Sales in the home business grew by 27% in the year, and included significant business growth outside of the United States. |
In our Enterprise Mobility Solutions Business: In 2007, the Enterprise Mobility Solutions business delivered solid results in a number of markets, largely due to the acquisition of Symbol Technologies, Inc. in January 2007, and strong government and public safety sales in North America. The business continued to maintain a leading market share position in a highly competitive market and also showed strong growth outside of the United States. |
Years Ended December 31 | ||||||||||||||||||||||||
(Dollars in millions, except
per share
|
% of
|
% of
|
% of
|
|||||||||||||||||||||
amounts) | 2007 | sales | 2006 | sales | 2005 | sales | ||||||||||||||||||
Net sales
|
$ | 36,622 | $ | 42,847 | $ | 35,310 | ||||||||||||||||||
Costs of sales
|
26,670 | 72.8 | % | 30,120 | 70.3 | % | 23,881 | 67.6 | % | |||||||||||||||
Gross margin
|
9,952 | 27.2 | % | 12,727 | 29.7 | % | 11,429 | 32.4 | % | |||||||||||||||
Selling, general and administrative expenses
|
5,092 | 13.9 | % | 4,504 | 10.5 | % | 3,628 | 10.3 | % | |||||||||||||||
Research and development expenditures
|
4,429 | 12.1 | % | 4,106 | 9.5 | % | 3,600 | 10.2 | % | |||||||||||||||
Other charges (income)
|
984 | 2.7 | % | 25 | 0.1 | % | (404 | ) | (1.1 | )% | ||||||||||||||
Operating earnings (loss)
|
(553 | ) | (1.5 | )% | 4,092 | 9.6 | % | 4,605 | 13.0 | % | ||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||
Interest income, net
|
91 | 0.2 | % | 326 | 0.8 | % | 71 | 0.2 | % | |||||||||||||||
Gains on sales of investments and businesses, net
|
50 | 0.1 | % | 41 | 0.1 | % | 1,845 | 5.3 | % | |||||||||||||||
Other
|
22 | 0.1 | % | 151 | 0.3 | % | (109 | ) | (0.3 | )% | ||||||||||||||
Earnings (loss) from continuing operations before income taxes
|
(390 | ) | (1.1 | )% | 4,610 | 10.8 | % | 6,412 | 18.2 | % | ||||||||||||||
Income tax expense (benefit)
|
(285 | ) | (0.8 | )% | 1,349 | 3.2 | % | 1,893 | 5.4 | % | ||||||||||||||
Earnings (loss) from continuing operations
|
(105 | ) | (0.3 | )% | 3,261 | 7.6 | % | 4,519 | 12.8 | % | ||||||||||||||
Earnings from discontinued operations, net of tax
|
56 | 0.2 | % | 400 | 0.9 | % | 59 | 0.2 | % | |||||||||||||||
Net earnings (loss)
|
$ | (49 | ) | (0.1 | )% | $ | 3,661 | 8.5 | % | $ | 4,578 | 13.0 | % | |||||||||||
Earnings (loss) per diluted common share:
|
||||||||||||||||||||||||
Continuing operations
|
$ | (0.05 | ) | $ | 1.30 | $ | 1.79 | |||||||||||||||||
Discontinued operations
|
0.03 | 0.16 | 0.02 | |||||||||||||||||||||
$ | (0.02 | ) | $ | 1.46 | $ | 1.81 | ||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||
United States
|
51 | % | 44 | % | 47 | % | ||||||
Europe
|
13 | % | 15 | % | 19 | % | ||||||
Latin America
|
12 | % | 10 | % | 10 | % | ||||||
Asia, excluding China
|
9 | % | 11 | % | 9 | % | ||||||
China
|
7 | % | 11 | % | 8 | % | ||||||
Other Markets
|
8 | % | 9 | % | 7 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
Year Ended December 31, | 2007 | |||
Mobile Devices
|
$ | 229 | ||
Home and Networks Mobility
|
71 | |||
Enterprise Mobility Solutions
|
30 | |||
330 | ||||
General Corporate
|
64 | |||
$ | 394 | |||
Accruals at
|
2007
|
2007
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2007
(1)(2)
|
Amount
|
December 31,
|
||||||||||||||||
2007 | Charges | Adjustments | Used | 2007 | ||||||||||||||||
Exit costslease terminations
|
$ | 54 | $ | 19 | $ | 2 | $ | (33 | ) | $ | 42 | |||||||||
Employee separation costs
|
104 | 401 | (64 | ) | (248 | ) | 193 | |||||||||||||
$ | 158 | $ | 420 | $ | (62 | ) | $ | (281 | ) | $ | 235 | |||||||||
(1) | Includes translation adjustments. | |
(2) | Includes $6 million of accruals established through purchase accounting for businesses acquired, covering exit costs and separation costs for approximately 200 employees. |
Year Ended December 31, | 2006 | |||
Mobile Devices
|
$ | (1 | ) | |
Home and Networks Mobility
|
124 | |||
Enterprise Mobility Solutions
|
83 | |||
206 | ||||
General Corporate
|
7 | |||
$ | 213 | |||
Accruals at
|
2006
|
2006
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2006
(1)
|
Amount
|
December 31,
|
||||||||||||||||
2006 | Charges | Adjustments | Used | 2006 | ||||||||||||||||
Exit costslease terminations
|
$ | 50 | $ | 30 | $ | (7 | ) | $ | (19 | ) | $ | 54 | ||||||||
Employee separation costs
|
53 | 191 | (16 | ) | (124 | ) | 104 | |||||||||||||
$ | 103 | $ | 221 | $ | (23 | ) | $ | (143 | ) | $ | 158 | |||||||||
(1) | Includes translation adjustments. |
Year Ended December 31, | 2005 | |||
Mobile Devices
|
$ | 27 | ||
Home and Networks Mobility
|
7 | |||
Enterprise Mobility Solutions
|
49 | |||
83 | ||||
General Corporate
|
8 | |||
$ | 91 | |||
Accruals at
|
2005
|
2005
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2005
(1)
|
Amount
|
December 31,
|
||||||||||||||||
2005 | Charges | Adjustments | Used | 2005 | ||||||||||||||||
Exit costslease terminations
|
$ | 73 | $ | 5 | $ | (7 | ) | $ | (21 | ) | $ | 50 | ||||||||
Employee separation costs
|
41 | 86 | (14 | ) | (60 | ) | 53 | |||||||||||||
$ | 114 | $ | 91 | $ | (21 | ) | $ | (81 | ) | $ | 103 | |||||||||
(1) | Includes translation adjustments. |
Name of
|
||||||
Rating
|
Long-Term Debt | Commercial Paper | ||||
Agency | Rating | Rating | Date and Last Actions Taken | |||
Fitch
|
BBB | F-2 |
February 1, 2008
(placed all debt
on rating watch negative)
January 24, 2008 (downgraded long-term debt to BBB (negative outlook) from BBB+ (negative outlook)) |
|||
Moodys
|
Baa1 | P-2 | January 24, 2008 (placed long-term debt on review for possible downgrade) | |||
S&P
|
BBB | A-2 | January 25, 2008 (downgraded long-term debt to BBB (credit watch negative) from A- (negative outlook); placed A-2 commercial paper on credit watch negative) | |||
Payments Due by Period (1) | ||||||||||||||||||||||||||||||||
Uncertain
|
||||||||||||||||||||||||||||||||
(in millions) | Total | 2008 | 2009 | 2010 | 2011 | 2012 | Timeframe | Thereafter | ||||||||||||||||||||||||
Long-Term Debt Obligations
|
$ | 4,221 | $ | 198 | $ | 4 | $ | 534 | $ | 607 | $ | 409 | $ | | $ | 2,469 | ||||||||||||||||
Purchase Obligations
|
2,153 | 1,160 | 418 | 30 | 18 | 4 | | 523 | ||||||||||||||||||||||||
Lease Obligations
|
1,419 | 355 | 268 | 253 | 169 | 162 | | 212 | ||||||||||||||||||||||||
Tax Obligations
|
1,400 | 40 | | | | | 1,360 | | ||||||||||||||||||||||||
Total Contractual Obligations
|
$ | 9,193 | $ | 1,753 | $ | 690 | $ | 817 | $ | 794 | $ | 575 | $ | 1,360 | $ | 3,204 | ||||||||||||||||
(1) | Amounts included represent firm, non-cancelable commitments. |
Years Ended December 31 | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2007 | 2006 | 2005 | 20072006 | 20062005 | |||||||||||||||
Segment net sales
|
$ | 18,988 | $ | 28,383 | $ | 21,459 | (33 | )% | 32 | % | ||||||||||
Operating earnings (loss)
|
(1,201 | ) | 2,690 | 2,192 | *** | 23 | % | |||||||||||||
*** | Percentage change is not meaningful. |
Years Ended December 31 | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2007 | 2006 | 2005 | 20072006 | 20062005 | |||||||||||||||
Segment net sales
|
$ | 10,014 | $ | 9,164 | $ | 9,037 | 9 | % | 1 | % | ||||||||||
Operating earnings
|
709 | 787 | 1,232 | (10 | ) % | (36 | )% | |||||||||||||
Years Ended December 31 | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2007 | 2006 | 2005 | 20072006 | 20062005 | |||||||||||||||
Segment net sales
|
$ | 7,729 | $ | 5,400 | $ | 5,038 | 43 | % | 7 | % | ||||||||||
Operating earnings
|
1,213 | 958 | 860 | 27 | % | 11 | % | |||||||||||||
December 31 | 2007 | 2006 | ||||||
Finished goods
|
$ | 1,737 | $ | 1,796 | ||||
Work-in-process
and production materials
|
1,470 | 1,782 | ||||||
3,207 | 3,578 | |||||||
Less inventory reserves
|
(371 | ) | (416 | ) | ||||
$ | 2,836 | $ | 3,162 | |||||
December 31 | 2007 | 2006 | ||||||
Sigma Fund
|
$ | 5,242 | $ | 12,204 | ||||
Investments
|
837 | 895 | ||||||
Property, plant and equipment
|
2,480 | 2,267 | ||||||
Intangible assets
|
1,260 | 354 | ||||||
Goodwill
|
4,499 | 1,706 | ||||||
$ | 14,318 | $ | 17,426 | |||||
December 31, | ||||||||
Buy (Sell) | 2007 | 2006 | ||||||
Chinese Renminbi
|
$ | (1,292 | ) | $ | (1,195 | ) | ||
Brazilian Real
|
(377 | ) | (466 | ) | ||||
Taiwan Dollar
|
112 | 87 | ||||||
Japanese Yen
|
384 | 143 | ||||||
British Pound
|
396 | 252 | ||||||
Notional Amount
|
||||||
Hedged
|
Underlying Debt
|
|||||
Date Executed | (in millions) | Instrument | ||||
October 2007
|
$ | 400 | 5.375% notes due 2012 | |||
October 2007
|
400 | 6.0% notes due 2017 | ||||
September 2003
|
457 | 7.625% debentures due 2010 | ||||
September 2003
|
600 | 8.0% notes due 2011 | ||||
May 2003
|
114 | 6.5% notes due 2008 | ||||
May 2003
|
84 | 5.8% debentures due 2008 | ||||
May 2003
|
69 | 7.625% debentures due 2010 | ||||
$ | 2,124 | |||||
Item 8: | Financial Statements and Supplementary Data |
Years Ended December 31 | ||||||||||||
(In millions, except per share amounts) | 2007 | 2006 | 2005 | |||||||||
Net sales
|
$ | 36,622 | $ | 42,847 | $ | 35,310 | ||||||
Costs of sales
|
26,670 | 30,120 | 23,881 | |||||||||
Gross margin
|
9,952 | 12,727 | 11,429 | |||||||||
Selling, general and administrative expenses
|
5,092 | 4,504 | 3,628 | |||||||||
Research and development expenditures
|
4,429 | 4,106 | 3,600 | |||||||||
Other charges (income)
|
984 | 25 | (404 | ) | ||||||||
Operating earnings (loss)
|
(553 | ) | 4,092 | 4,605 | ||||||||
Other income (expense):
|
||||||||||||
Interest income, net
|
91 | 326 | 71 | |||||||||
Gains on sales of investments and businesses, net
|
50 | 41 | 1,845 | |||||||||
Other
|
22 | 151 | (109 | ) | ||||||||
Total other income (expense)
|
163 | 518 | 1,807 | |||||||||
Earnings (loss) from continuing operations before income taxes
|
(390 | ) | 4,610 | 6,412 | ||||||||
Income tax expense (benefit)
|
(285 | ) | 1,349 | 1,893 | ||||||||
Earnings (loss) from continuing operations
|
(105 | ) | 3,261 | 4,519 | ||||||||
Earnings from discontinued operations, net of tax
|
56 | 400 | 59 | |||||||||
Net earnings (loss)
|
$ | (49 | ) | $ | 3,661 | $ | 4,578 | |||||
Earnings (loss) per common share:
|
||||||||||||
Basic:
|
||||||||||||
Continuing operations
|
$ | (0.05 | ) | $ | 1.33 | $ | 1.83 | |||||
Discontinued operations
|
0.03 | 0.17 | 0.02 | |||||||||
$ | (0.02 | ) | $ | 1.50 | $ | 1.85 | ||||||
Diluted:
|
||||||||||||
Continuing operations
|
$ | (0.05 | ) | $ | 1.30 | $ | 1.79 | |||||
Discontinued operations
|
0.03 | 0.16 | 0.02 | |||||||||
$ | (0.02 | ) | $ | 1.46 | $ | 1.81 | ||||||
Weighted average common shares outstanding:
|
||||||||||||
Basic
|
2,312.7 | 2,446.3 | 2,471.3 | |||||||||
Diluted
|
2,312.7 | 2,504.2 | 2,527.0 | |||||||||
Dividends paid per share
|
$ | 0.20 | $ | 0.18 | $ | 0.16 | ||||||
Non-Owner Changes To Equity | ||||||||||||||||||||||||||||||||
Fair Value
|
||||||||||||||||||||||||||||||||
Common
|
Adjustment
|
Foreign
|
||||||||||||||||||||||||||||||
Stock and
|
To Available
|
Currency
|
Retirement
|
|||||||||||||||||||||||||||||
Additional
|
For Sale
|
Translation
|
Benefits
|
Other
|
||||||||||||||||||||||||||||
Paid-In
|
Securities,
|
Adjustments,
|
Adjustments,
|
Items,
|
Retained
|
Comprehensive
|
||||||||||||||||||||||||||
(In millions, except per share amounts) | Shares | Capital | Net of Tax | Net of Tax | Net of Tax | Net of Tax | Earnings | Earnings (Loss) | ||||||||||||||||||||||||
Balances at January 1, 2005
|
2,447.8 | $ | 11,664 | $ | 1,417 | $ | (139 | ) | $ | (1,061 | ) | $ | (272 | ) | $ | 1,722 | ||||||||||||||||
Net earnings
|
4,578 | $ | 4,578 | |||||||||||||||||||||||||||||
Net unrealized losses on securities (net of tax of $812)
|
(1,320 | ) | (1,320 | ) | ||||||||||||||||||||||||||||
Foreign currency translation adjustments (net of tax of $29)
|
(114 | ) | (114 | ) | ||||||||||||||||||||||||||||
Retirement benefits adjustments (net of tax of $66)
|
(208 | ) | (208 | ) | ||||||||||||||||||||||||||||
Issuance of common stock and stock options exercised (including
tax benefits of $210)
|
96.6 | 1,409 | ||||||||||||||||||||||||||||||
Share repurchase program
|
(41.7 | ) | (874 | ) | ||||||||||||||||||||||||||||
Net gain on derivative instruments (net of tax of $154)
|
274 | 274 | ||||||||||||||||||||||||||||||
Dividends declared ($0.16 per share)
|
(403 | ) | ||||||||||||||||||||||||||||||
Balances at December 31, 2005
|
2,502.7 | 12,199 | 97 | (253 | ) | (1,269 | ) | 2 | 5,897 | $ | 3,210 | |||||||||||||||||||||
Net earnings
|
3,661 | $ | 3,661 | |||||||||||||||||||||||||||||
Net unrealized losses on securities (net of tax of $37)
|
(60 | ) | (60 | ) | ||||||||||||||||||||||||||||
Foreign currency translation adjustments (net of tax of $1)
|
127 | 127 | ||||||||||||||||||||||||||||||
Retirement benefits adjustments (net of tax of $150)
|
(308 | ) | 206 | |||||||||||||||||||||||||||||
Issuance of common stock and stock options exercised
|
68.1 | 916 | ||||||||||||||||||||||||||||||
Share repurchase program
|
(171.7 | ) | (3,826 | ) | ||||||||||||||||||||||||||||
Excess tax benefits from share-based compensation
|
165 | |||||||||||||||||||||||||||||||
Stock option and employee stock purchase plan expense
|
252 | |||||||||||||||||||||||||||||||
Net gain on derivative instruments (net of tax of $6)
|
14 | 14 | ||||||||||||||||||||||||||||||
Dividends declared ($0.19 per share)
|
(472 | ) | ||||||||||||||||||||||||||||||
Balances at December 31, 2006
|
2,399.1 | 9,706 | 37 | (126 | ) | (1,577 | ) | 16 | 9,086 | $ | 3,948 | |||||||||||||||||||||
Cumulative effect FIN 48
|
93 | 27 | ||||||||||||||||||||||||||||||
Effect of Non-U.S. pension plan measurement date change
|
(17 | ) | ||||||||||||||||||||||||||||||
Balances at January 1, 2007
|
2,399.1 | 9,799 | 37 | (126 | ) | (1,577 | ) | 16 | 9,096 | |||||||||||||||||||||||
Net loss
|
(49 | ) | $ | (49 | ) | |||||||||||||||||||||||||||
Net unrealized losses on securities (net of tax of $58)
|
(96 | ) | (96 | ) | ||||||||||||||||||||||||||||
Foreign currency translation adjustments (net of tax of $3)
|
142 | 142 | ||||||||||||||||||||||||||||||
Amortization of retirement benefits adjustments (net of tax of
$39)
|
62 | 62 | ||||||||||||||||||||||||||||||
Retirement benefits adjustments (net of tax of $328)
|
852 | 852 | ||||||||||||||||||||||||||||||
Issuance of common stock and stock options exercised
|
36.1 | 484 | ||||||||||||||||||||||||||||||
Share repurchase program
|
(171.2 | ) | (3,035 | ) | ||||||||||||||||||||||||||||
Excess tax benefits from share-based compensation
|
50 | |||||||||||||||||||||||||||||||
Stock option and employee stock purchase plan expense
|
276 | |||||||||||||||||||||||||||||||
Net loss on derivative instruments (net of tax of $6)
|
(16 | ) | (16 | ) | ||||||||||||||||||||||||||||
Dividends declared ($0.20 per share)
|
(468 | ) | ||||||||||||||||||||||||||||||
Balances at December 31, 2007
|
2,264.0 | $ | 7,574 | $ | (59 | ) | $ | 16 | $ | (663 | ) | $ | | $ | 8,579 | $ | 895 | |||||||||||||||
Years Ended December 31 | ||||||||||||
(In millions) | 2007 | 2006 | 2005 | |||||||||
Operating
|
||||||||||||
Net earnings (loss)
|
$ | (49 | ) | $ | 3,661 | $ | 4,578 | |||||
Less: Earnings from discontinued operations
|
56 | 400 | 59 | |||||||||
Earnings (loss) from continuing operations
|
(105 | ) | 3,261 | 4,519 | ||||||||
Adjustments to reconcile earnings (loss) from continuing
operations to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
903 | 558 | 540 | |||||||||
Non-cash other charges
|
213 | 49 | 106 | |||||||||
Share-based compensation expense
|
315 | 276 | 14 | |||||||||
Gains on sales of investments and businesses, net
|
(50 | ) | (41 | ) | (1,845 | ) | ||||||
Deferred income taxes
|
(747 | ) | 838 | 1,000 | ||||||||
Change in assets and liabilities, net of effects of acquisitions
and dispositions:
|
||||||||||||
Accounts receivable
|
2,538 | (1,775 | ) | (1,303 | ) | |||||||
Inventories
|
556 | (718 | ) | (19 | ) | |||||||
Other current assets
|
(705 | ) | (388 | ) | (721 | ) | ||||||
Accounts payable and accrued liabilities
|
(2,303 | ) | 1,654 | 2,405 | ||||||||
Other assets and liabilities
|
170 | (215 | ) | (388 | ) | |||||||
Net cash provided by operating activities from continuing
operations
|
785 | 3,499 | 4,308 | |||||||||
Investing
|
||||||||||||
Acquisitions and investments, net
|
(4,568 | ) | (1,068 | ) | (312 | ) | ||||||
Proceeds from sale of investments and businesses
|
411 | 2,001 | 1,538 | |||||||||
Capital expenditures
|
(527 | ) | (649 | ) | (548 | ) | ||||||
Proceeds from sale of property, plant and equipment
|
166 | 85 | 103 | |||||||||
Proceeds from sales (purchases) of Sigma Fund investments, net
|
6,889 | (1,337 | ) | (3,157 | ) | |||||||
Proceeds from sales (purchases) of short-term investments
|
8 | (476 | ) | 8 | ||||||||
Net cash provided by (used for) investing activities from
continuing operations
|
2,379 | (1,444 | ) | (2,368 | ) | |||||||
Financing
|
||||||||||||
Net proceeds from (repayment of) commercial paper and short-term
borrowings
|
(242 | ) | 66 | 11 | ||||||||
Repayment of debt
|
(1,386 | ) | (18 | ) | (1,132 | ) | ||||||
Net proceeds from issuance of debt
|
1,415 | | | |||||||||
Issuance of common stock
|
440 | 918 | 1,199 | |||||||||
Purchase of common stock
|
(3,035 | ) | (3,826 | ) | (874 | ) | ||||||
Excess tax benefits from share-based compensation
|
50 | 165 | | |||||||||
Payment of dividends
|
(468 | ) | (443 | ) | (394 | ) | ||||||
Distribution from (to) discontinued operations
|
(75 | ) | (23 | ) | 283 | |||||||
Net cash used for financing activities from continuing operations
|
(3,301 | ) | (3,161 | ) | (907 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
from continuing operations
|
73 | 148 | (105 | ) | ||||||||
Discontinued Operations
|
||||||||||||
Net cash provided by (used for) operating activities from
discontinued operations
|
(75 | ) | (16 | ) | 297 | |||||||
Net cash used for investing activities from discontinued
operations
|
| (13 | ) | (16 | ) | |||||||
Net cash provided by (used for) financing activities from
discontinued operations
|
75 | 23 | (283 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents
from discontinued operations
|
| 6 | 2 | |||||||||
Net cash provided by (used for) discontinued operations
|
| | | |||||||||
Net increase (decrease) in cash and cash equivalents
|
(64 | ) | (958 | ) | 928 | |||||||
Cash and cash equivalents, beginning of year
|
2,816 | 3,774 | 2,846 | |||||||||
Cash and cash equivalents, end of year
|
$ | 2,752 | $ | 2,816 | $ | 3,774 | ||||||
Cash Flow Information
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest, net
|
$ | 312 | $ | 322 | $ | 318 | ||||||
Income taxes, net of refunds
|
440 | 463 | 703 | |||||||||
1. | Summary of Significant Accounting Policies |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Net sales (including sales to other Motorola businesses of
$0 million and $3 million for the years ended
December 31, 2006 and 2005, respectively)
|
$ | | $ | 860 | $ | 1,581 | ||||||
Operating earnings
|
10 | 87 | 118 | |||||||||
Gains on sales of investments and businesses, net
|
| 399 | 16 | |||||||||
Earnings before income taxes
|
10 | 482 | 135 | |||||||||
Income tax expense (benefit)
|
(46 | ) | 82 | 76 | ||||||||
Earnings from discontinued operations, net of tax
|
56 | 400 | 59 | |||||||||
3. | Other Financial Data |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Other charges (income):
|
||||||||||||
Intangibles amortization
|
$ | 369 | $ | 100 | $ | 67 | ||||||
Reorganization of businesses
|
290 | 172 | 54 | |||||||||
Legal settlements and related insurance matters
|
140 | 50 | | |||||||||
In-process research and development charges
|
96 | 33 | 2 | |||||||||
Asset impairments
|
89 | | | |||||||||
Charitable contribution to Motorola Foundation
|
| 88 | | |||||||||
Settlements and collections related to Telsim
|
| (418 | ) | (515 | ) | |||||||
Other
|
| | (12 | ) | ||||||||
$ | 984 | $ | 25 | $ | (404 | ) | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Interest income (expense), net:
|
||||||||||||
Interest income
|
$ | 456 | $ | 661 | $ | 396 | ||||||
Interest expense
|
(365 | ) | (335 | ) | (325 | ) | ||||||
$ | 91 | $ | 326 | $ | 71 | |||||||
Other:
|
||||||||||||
Foreign currency gain (loss)
|
$ | 97 | $ | 60 | $ | (38 | ) | |||||
Investment impairments
|
(62 | ) | (27 | ) | (25 | ) | ||||||
Gain on Sprint Nextel derivatives
|
| 99 | 51 | |||||||||
Debt retirement
|
| | (137 | ) | ||||||||
Repayment of previously-reserved Iridium loan
|
| | 30 | |||||||||
Other
|
(13 | ) | 19 | 10 | ||||||||
$ | 22 | $ | 151 | $ | (109 | ) | ||||||
Continuing Operations | Net Earnings (Loss) | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Basic earnings (loss) per common share:
|
||||||||||||||||||||||||
Earnings (loss)
|
$ | (105 | ) | $ | 3,261 | $ | 4,519 | $ | (49 | ) | $ | 3,661 | $ | 4,578 | ||||||||||
Weighted average common shares outstanding
|
2,312.7 | 2,446.3 | 2,471.3 | 2,312.7 | 2,446.3 | 2,471.3 | ||||||||||||||||||
Per share amount
|
$ | (0.05 | ) | $ | 1.33 | $ | 1.83 | $ | (0.02 | ) | $ | 1.50 | $ | 1.85 | ||||||||||
Diluted earnings (loss) per common share:
|
||||||||||||||||||||||||
Earnings (loss)
|
$ | (105 | ) | $ | 3,261 | $ | 4,519 | $ | (49 | ) | $ | 3,661 | $ | 4,578 | ||||||||||
Weighted average common shares outstanding
|
2,312.7 | 2,446.3 | 2,471.3 | 2,312.7 | 2,446.3 | 2,471.3 | ||||||||||||||||||
Add effect of dilutive securities:
|
||||||||||||||||||||||||
Employee share-based awards
|
| 57.9 | 55.7 | | 57.9 | 55.7 | ||||||||||||||||||
Diluted weighted average common shares outstanding
|
2,312.7 | 2,504.2 | 2,527.0 | 2,312.7 | 2,504.2 | 2,527.0 | ||||||||||||||||||
Per share amount
|
$ | (0.05 | ) | $ | 1.30 | $ | 1.79 | $ | (0.02 | ) | $ | 1.46 | $ | 1.81 | ||||||||||
2007 | ||||||||||||||||||||||||
Fair Value | Less | |||||||||||||||||||||||
Sigma
|
Short-term
|
Unrealized
|
Unrealized
|
Cost
|
||||||||||||||||||||
Years Ended December 31 | Fund | Investments | Investments | Gains | Losses | Basis | ||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
Cash
|
$ | 16 | $ | | $ | | $ | | $ | | $ | 16 | ||||||||||||
Certificates of deposit
|
156 | 509 | | | | 665 | ||||||||||||||||||
Commercial paper
|
1,282 | | | | | 1,282 | ||||||||||||||||||
Government and agencies
|
25 | 19 | | | | 44 | ||||||||||||||||||
Corporate bonds
|
3,125 | 1 | | 1 | (48 | ) | 3,173 | |||||||||||||||||
Asset-backed securities
|
420 | | | | (5 | ) | 425 | |||||||||||||||||
Mortgage-backed securities
|
209 | | | | (5 | ) | 214 | |||||||||||||||||
Common stock and equivalents
|
| | 333 | 40 | (79 | ) | 372 | |||||||||||||||||
Other
|
9 | 83 | | | | 92 | ||||||||||||||||||
5,242 | 612 | 333 | 41 | (137 | ) | 6,283 | ||||||||||||||||||
Other securities, at cost
|
| | 414 | | | 414 | ||||||||||||||||||
Equity method investments
|
| | 90 | | | 90 | ||||||||||||||||||
$ | 5,242 | $ | 612 | $ | 837 | $ | 41 | $ | (137 | ) | $ | 6,787 | ||||||||||||
2006 | ||||||||||||||||||||||||
Fair Value | Less | |||||||||||||||||||||||
Sigma
|
Short-term
|
Unrealized
|
Unrealized
|
Cost
|
||||||||||||||||||||
Years Ended December 31 | Fund | Investments | Investments | Gains | Losses | Basis | ||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
Commercial paper
|
$ | 4,461 | $ | | $ | | $ | | $ | | $ | 4,461 | ||||||||||||
Certificates of deposit
|
| 574 | | | | 574 | ||||||||||||||||||
Bank obligation notes
|
392 | | | | | 392 | ||||||||||||||||||
Government and agencies
|
330 | 20 | | | | 350 | ||||||||||||||||||
Short-term corporate obligation
|
40 | | | | | 40 | ||||||||||||||||||
Corporate bonds
|
5,791 | 2 | | | | 5,793 | ||||||||||||||||||
Asset-backed securities
|
860 | | | | | 860 | ||||||||||||||||||
Mortgage-backed securities
|
285 | | | | | 285 | ||||||||||||||||||
Common stock and equivalents
|
| | 130 | 68 | (8 | ) | 70 | |||||||||||||||||
Other
|
45 | 24 | | | | 69 | ||||||||||||||||||
12,204 | 620 | 130 | 68 | (8 | ) | 12,894 | ||||||||||||||||||
Other securities, at cost
|
| | 676 | | | 676 | ||||||||||||||||||
Equity method investments
|
| | 89 | | | 89 | ||||||||||||||||||
$ | 12,204 | $ | 620 | $ | 895 | $ | 68 | $ | (8 | ) | $ | 13,659 | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Gains on sales of investments
|
$ | 17 | $ | 41 | $ | 1,848 | ||||||
Gains (loss) on sales of businesses
|
33 | | (3 | ) | ||||||||
$ | 50 | $ | 41 | $ | 1,845 | |||||||
December 31 | 2007 | 2006 | ||||||
Accounts receivable
|
$ | 5,508 | $ | 7,587 | ||||
Less allowance for doubtful accounts
|
(184 | ) | (78 | ) | ||||
$ | 5,324 | $ | 7,509 | |||||
December 31 | 2007 | 2006 | ||||||
Finished goods
|
$ | 1,737 | $ | 1,796 | ||||
Work-in-process
and production materials
|
1,470 | 1,782 | ||||||
3,207 | 3,578 | |||||||
Less inventory reserves
|
(371 | ) | (416 | ) | ||||
$ | 2,836 | $ | 3,162 | |||||
December 31 | 2007 | 2006 | ||||||
Costs and earnings in excess of billings
|
$ | 995 | $ | 505 | ||||
Contractor receivables
|
960 | 1,349 | ||||||
Contract related deferred costs
|
763 | 369 | ||||||
Other
|
847 | 710 | ||||||
$ | 3,565 | $ | 2,933 | |||||
December 31 | 2007 | 2006 | ||||||
Land
|
$ | 134 | $ | 129 | ||||
Building
|
1,934 | 1,705 | ||||||
Machinery and equipment
|
5,745 | 5,885 | ||||||
7,813 | 7,719 | |||||||
Less accumulated depreciation
|
(5,333 | ) | (5,452 | ) | ||||
$ | 2,480 | $ | 2,267 | |||||
December 31 | 2007 | 2006 | ||||||
Intangible assets, net of accumulated amortization of $819 and
$536
|
$ | 1,260 | $ | 354 | ||||
Royalty license arrangements
|
364 | 439 | ||||||
Contract related deferred costs
|
180 | 200 | ||||||
Long-term finance receivables, net of allowances of $5 and $10
|
68 | 145 | ||||||
Other
|
448 | 287 | ||||||
$ | 2,320 | $ | 1,425 | |||||
December 31 | 2007 | 2006 | ||||||
Deferred revenue
|
$ | 1,235 | $ | 730 | ||||
Customer reserves
|
972 | 1,305 | ||||||
Contractor payables
|
875 | 1,481 | ||||||
Compensation
|
772 | 777 | ||||||
Customer downpayments
|
509 | 532 | ||||||
Warranty reserves
|
416 | 530 | ||||||
Tax liabilities
|
234 | 444 | ||||||
Other
|
2,988 | 2,877 | ||||||
$ | 8,001 | $ | 8,676 | |||||
December 31 | 2007 | 2006 | ||||||
Defined benefit plans
|
$ | 562 | $ | 1,882 | ||||
Unrecognized tax benefits
|
933 | | ||||||
Deferred revenue
|
393 | 273 | ||||||
Royalty license arrangement
|
282 | 300 | ||||||
Postretirement health care benefit plan
|
144 | 214 | ||||||
Other
|
560 | 653 | ||||||
$ | 2,874 | $ | 3,322 | |||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Gross unrealized gains (losses) on securities, net of tax
|
$ | (102 | ) | $ | 31 | $ | (204 | ) | ||||
Less: Realized gains (losses), net of tax
|
(6 | ) | 91 | 1,116 | ||||||||
Net unrealized losses on securities, net of tax
|
$ | (96 | ) | $ | (60 | ) | $ | (1,320 | ) | |||
4. | Debt and Credit Facilities |
December 31 | 2007 | 2006 | ||||||
7.6% notes due 2007
|
$ | | $ | 118 | ||||
4.608% senior notes due 2007
|
| 1,205 | ||||||
6.5% notes due 2008
|
114 | 114 | ||||||
5.8% notes due 2008
|
84 | 84 | ||||||
7.625% notes due 2010
|
527 | 525 | ||||||
8.0% notes due 2011
|
599 | 599 | ||||||
5.375% senior notes due 2012
|
400 | | ||||||
6.0% senior notes due 2017
|
399 | | ||||||
6.5% debentures due 2025
|
397 | 397 | ||||||
7.5% debentures due 2025
|
398 | 398 | ||||||
6.5% debentures due 2028
|
297 | 297 | ||||||
6.625% senior notes due 2037
|
596 | | ||||||
5.22% debentures due 2097
|
195 | 194 | ||||||
Other long-term debt
|
145 | 141 | ||||||
4,151 | 4,072 | |||||||
Fair value adjustment
|
38 | (28 | ) | |||||
Less: current portion
|
(198 | ) | (1,340 | ) | ||||
Long-term debt
|
$ | 3,991 | $ | 2,704 | ||||
December 31 | 2007 | 2006 | ||||||
Notes to banks
|
$ | 134 | $ | 71 | ||||
Commercial paper
|
| 300 | ||||||
134 | 371 | |||||||
Add: current portion
|
198 | 1,340 | ||||||
Fair value adjustment
|
| (18) | ||||||
Notes payable and current portion of long-term debt
|
$ | 332 | $ | 1,693 | ||||
Weighted average interest rates on short-term borrowings
throughout the year
|
||||||||
Commercial paper
|
5.3% | 5.1% | ||||||
Other short-term debt
|
4.6% | 5.8% | ||||||
5. | Risk Management |
December 31, | ||||||||
Buy (Sell) | 2007 | 2006 | ||||||
Chinese Renminbi
|
$ | (1,292 | ) | $ | (1,195 | ) | ||
Brazilian Real
|
(377 | ) | (466 | ) | ||||
Taiwan Dollar
|
112 | 87 | ||||||
Japanese Yen
|
384 | 143 | ||||||
British Pound
|
396 | 252 | ||||||
Notional Amount
|
||||||
Hedged
|
||||||
Date Executed | (In Millions) | Underlying Debt Instrument | ||||
October 2007
|
$ | 400 | 5.375% notes due 2012 | |||
October 2007
|
400 | 6.0% notes due 2017 | ||||
September 2003
|
457 | 7.625% debentures due 2010 | ||||
September 2003
|
600 | 8.0% notes due 2011 | ||||
May 2003
|
114 | 6.5% notes due 2008 | ||||
May 2003
|
84 | 5.8% debentures due 2008 | ||||
May 2003
|
69 | 7.625% debentures due 2010 | ||||
$ | 2,124 | |||||
2007 | 2006 | 2005 | ||||||||||
Balance at January 1
|
$ | 16 | $ | 2 | $ | (272 | ) | |||||
Increase (decrease) in fair value
|
(6 | ) | 75 | 28 | ||||||||
Reclassifications to earnings
|
(10 | ) | (61 | ) | 246 | |||||||
Balance at December 31
|
$ | | $ | 16 | $ | 2 | ||||||
6. | Income Taxes |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
United States
|
$ | (2,540 | ) | $ | 1,034 | $ | 3,232 | |||||
Other nations
|
2,150 | 3,576 | 3,180 | |||||||||
$ | (390 | ) | $ | 4,610 | $ | 6,412 | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
United States
|
$ | 40 | $ | 10 | $ | 240 | ||||||
Other nations
|
402 | 488 | 638 | |||||||||
States (U.S.)
|
20 | 13 | 15 | |||||||||
Current income tax expense
|
462 | 511 | 893 | |||||||||
United States
|
(633 | ) | 892 | 891 | ||||||||
Other nations
|
(50 | ) | (147 | ) | (42 | ) | ||||||
States (U.S.)
|
(64 | ) | 93 | 151 | ||||||||
Deferred income tax expense (benefit)
|
(747 | ) | 838 | 1,000 | ||||||||
Total income tax expense (benefit)
|
$ | (285 | ) | $ | 1,349 | $ | 1,893 | |||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Income tax expense (benefit) at statutory rate
|
$ | (137 | ) | $ | 1,613 | $ | 2,244 | |||||
Taxes on
non-U.S.
earnings
|
(206 | ) | (449 | ) | (460 | ) | ||||||
State income taxes
|
(28 | ) | 77 | 121 | ||||||||
Tax benefit on qualifying repatriations
|
| (68 | ) | (265 | ) | |||||||
Tax on undistributed
non-U.S.
earnings
|
72 | 194 | 202 | |||||||||
Research credits
|
(46 | ) | (34 | ) | (23 | ) | ||||||
Foreign export sales and section 199 deduction
|
| (22 | ) | (13 | ) | |||||||
Non-deductible acquisition charges
|
34 | 4 | 2 | |||||||||
Taxes on sale of businesses
|
15 | | (81 | ) | ||||||||
Other provisions
|
119 | 247 | 233 | |||||||||
Charitable contributions
|
| (28 | ) | | ||||||||
Valuation allowance
|
(97 | ) | (187 | ) | (88 | ) | ||||||
Other
|
(11 | ) | 2 | 21 | ||||||||
$ | (285 | ) | $ | 1,349 | $ | 1,893 | ||||||
December 31 | 2007 | 2006 | ||||||
Inventory
|
$ | 162 | $ | 163 | ||||
Accrued liabilities and allowances
|
551 | 380 | ||||||
Employee benefits
|
408 | 915 | ||||||
Capitalized items
|
621 | 915 | ||||||
Tax basis differences on investments
|
105 | 110 | ||||||
Depreciation tax basis differences on fixed assets
|
33 | 89 | ||||||
Undistributed
non-U.S.
earnings
|
(397 | ) | (329 | ) | ||||
Tax carryforwards
|
2,553 | 1,515 | ||||||
Available-for-sale securities
|
35 | (23 | ) | |||||
Business reorganization
|
78 | 38 | ||||||
Warranty and customer reserves
|
334 | 398 | ||||||
Deferred revenue and costs
|
205 | 224 | ||||||
Valuation allowances
|
(515 | ) | (740 | ) | ||||
Deferred charges
|
44 | 46 | ||||||
Other
|
95 | (728 | ) | |||||
$ | 4,312 | $ | 2,973 | |||||
Gross
|
Tax
|
Expiration
|
||||||||
Tax Loss | Effected | Period | ||||||||
United States:
|
||||||||||
U.S. tax losses
|
$ | 1,422 | $ | 498 | 2019-2027 | |||||
Foreign tax credits
|
n/a | 814 | 2013-2017 | |||||||
General business credits
|
n/a | 523 | 2018-2027 | |||||||
Minimum tax credits
|
n/a | 107 | Unlimited | |||||||
Capital losses
|
36 | 13 | 2011 | |||||||
State tax losses
|
3,367 | 102 | 2008-2027 | |||||||
State tax credits
|
n/a | 54 | 2009-2024 | |||||||
Non-U.S.
Subsidiaries:
|
||||||||||
United Kingdom tax losses
|
572 | 160 | Unlimited | |||||||
Germany tax losses
|
374 | 108 | Unlimited | |||||||
Brazil hedge losses
|
66 | 22 | Unlimited | |||||||
Turkey tax losses
|
105 | 21 | 2012 | |||||||
Israel tax losses
|
75 | 20 | Unlimited | |||||||
Korea tax losses
|
45 | 12 | 2008 | |||||||
Other subsidiaries tax losses
|
51 | 14 | Various | |||||||
Spain tax credits
|
n/a | 32 | 2014-2021 | |||||||
Other subsidiaries tax credits
|
n/a | 53 | Unlimited | |||||||
$ | 2,553 | |||||||||
(1) | Includes acquisitions. |
Jurisdiction:
|
||||
United
States
(1)
|
19962007 | |||
Brazil
|
20032007 | |||
China
|
19982007 | |||
France
|
20042007 | |||
Germany
(1)
|
20022007 | |||
India
|
19952007 | |||
Israel
|
20042007 | |||
Japan
|
20022007 | |||
Malaysia
|
19972007 | |||
Singapore
|
19982007 | |||
United Kingdom
|
19982007 | |||
(1) | Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
7. | Retirement Benefits |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Service cost
|
$ | 133 | $ | 150 | $ | 142 | ||||||
Interest cost
|
311 | 309 | 280 | |||||||||
Expected return on plan assets
|
(350 | ) | (329 | ) | (315 | ) | ||||||
Amortization of:
|
||||||||||||
Unrecognized net loss
|
107 | 115 | 75 | |||||||||
Unrecognized prior service cost
|
(27 | ) | (5 | ) | (5 | ) | ||||||
Net periodic pension cost
|
$ | 174 | $ | 240 | $ | 177 | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Service cost
|
$ | 4 | $ | 5 | $ | 10 | ||||||
Interest cost
|
7 | 8 | 9 | |||||||||
Expected return on plan assets
|
(3 | ) | (4 | ) | (3 | ) | ||||||
Amortization of:
|
||||||||||||
Unrecognized net loss
|
4 | 5 | 5 | |||||||||
Unrecognized prior service cost
|
(1 | ) | | 1 | ||||||||
Settlement/curtailment loss
|
6 | 4 | 12 | |||||||||
Net periodic pension cost
|
$ | 17 | $ | 18 | $ | 34 | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Service cost
|
$ | 45 | $ | 40 | $ | 44 | ||||||
Interest cost
|
90 | 67 | 67 | |||||||||
Expected return on plan assets
|
(76 | ) | (54 | ) | (52 | ) | ||||||
Amortization of unrecognized net loss
|
14 | 17 | 14 | |||||||||
Net periodic pension cost
|
$ | 73 | $ | 70 | $ | 73 | ||||||
2007 | 2006 | |||||||||||||||||||||||
Officers
|
Officers
|
|||||||||||||||||||||||
and
|
Non
|
and
|
Non
|
|||||||||||||||||||||
Regular | MSPP | U.S. | Regular | MSPP | U.S. | |||||||||||||||||||
Change in benefit obligation:
|
||||||||||||||||||||||||
Benefit obligation at January 1
|
$ | 5,481 | $ | 137 | $ | 1,798 | $ | 5,175 | $ | 160 | $ | 1,520 | ||||||||||||
Service cost
|
133 | 4 | 55 | 150 | 5 | 40 | ||||||||||||||||||
Interest cost
|
311 | 7 | 111 | 309 | 8 | 67 | ||||||||||||||||||
Plan amendments
|
(268 | ) | (3 | ) | 1 | | | | ||||||||||||||||
Settlement/curtailment
|
| | (16 | ) | | | | |||||||||||||||||
Actuarial (gain) loss
|
(561 | ) | (7 | ) | (287 | ) | 76 | (13 | ) | (10 | ) | |||||||||||||
Foreign exchange valuation adjustment
|
| | 49 | | | 195 | ||||||||||||||||||
Employee contributions
|
| | 14 | | | 12 | ||||||||||||||||||
Tax payments
|
| (1 | ) | | | (3 | ) | | ||||||||||||||||
Benefit payments
|
(217 | ) | (19 | ) | (36 | ) | (229 | ) | (20 | ) | (26 | ) | ||||||||||||
Benefit obligation at December 31
|
4,879 | 118 | 1,689 | 5,481 | 137 | 1,798 | ||||||||||||||||||
Change in plan assets:
|
||||||||||||||||||||||||
Fair value at January 1
|
4,285 | 78 | 1,178 | 3,736 | 92 | 896 | ||||||||||||||||||
Return on plan assets
|
336 | 4 | 98 | 508 | 3 | 55 | ||||||||||||||||||
Company contributions
|
270 | 4 | 135 | 270 | 6 | 122 | ||||||||||||||||||
Employee contributions
|
| | 14 | | | 12 | ||||||||||||||||||
Foreign exchange valuation adjustment
|
| | 14 | | | 119 | ||||||||||||||||||
Tax payments from plan assets
|
| (1 | ) | | | (3 | ) | | ||||||||||||||||
Benefit payments from plan assets
|
(217 | ) | (19 | ) | (36 | ) | (229 | ) | (20 | ) | (26 | ) | ||||||||||||
Fair value at December 31
|
4,674 | 66 | 1,403 | 4,285 | 78 | 1,178 | ||||||||||||||||||
Funded status of the plan
|
(205 | ) | (52 | ) | (286 | ) | (1,196 | ) | (59 | ) | (620 | ) | ||||||||||||
Unrecognized net loss
|
954 | 43 | 168 | 1,612 | 53 | 469 | ||||||||||||||||||
Unrecognized prior service cost
|
(263 | ) | (5 | ) | 4 | (25 | ) | (2 | ) | 4 | ||||||||||||||
Prepaid (accrued) pension cost
|
$ | 486 | $ | (14 | ) | $ | (114 | ) | $ | 391 | $ | (8 | ) | $ | (147 | ) | ||||||||
Components of prepaid (accrued) pension cost:
|
||||||||||||||||||||||||
Prepaid benefit cost
|
$ | | $ | | $ | 19 | $ | | $ | | $ | 13 | ||||||||||||
Current benefit liability
|
| | | | (3 | ) | (3 | ) | ||||||||||||||||
Non-current benefit liability
|
(205 | ) | (52 | ) | (305 | ) | (1,196 | ) | (56 | ) | (630 | ) | ||||||||||||
Deferred income taxes
|
255 | 14 | 4 | 587 | 19 | 2 | ||||||||||||||||||
Non-owner changes to equity
|
436 | 24 | 168 | 1,000 | 32 | 471 | ||||||||||||||||||
Prepaid (accrued) pension cost
|
$ | 486 | $ | (14 | ) | $ | (114 | ) | $ | 391 | $ | (8 | ) | $ | (147 | ) | ||||||||
2007 | 2006 | |||||||||||||||
December 31 | U.S. | Non U.S. | U.S. | Non U.S. | ||||||||||||
Discount rate
|
6.00 | % | 4.81 | % | 6.00 | % | 4.62 | % | ||||||||
Investment return assumption (Regular Plan)
|
8.50 | % | 6.74 | % | 8.50 | % | 6.27 | % | ||||||||
Investment return assumption (Officers Plan)
|
6.00 | % | N/A | 6.00 | % | N/A | ||||||||||
2007 | 2006 | |||||||||||||||
December 31 | U.S. | Non U.S. | U.S. | Non U.S. | ||||||||||||
Discount rate
|
6.75 | % | 5.68 | % | 6.00 | % | 4.81 | % | ||||||||
Future compensation increase rate (Regular Plan)
|
4.00 | % | 4.34 | % | 4.00 | % | 4.18 | % | ||||||||
Future compensation increase rate (Officers Plan)
|
0.00 | % | N/A | 0.00 | % | N/A | ||||||||||
2007 | 2006 | |||||||||||||||||||||||
Officers
|
Officers
|
|||||||||||||||||||||||
and
|
Non
|
and
|
Non
|
|||||||||||||||||||||
December 31 | Regular | MSPP | U.S. | Regular | MSPP | U.S. | ||||||||||||||||||
Accumulated benefit obligation
|
$ | 4,694 | $ | 118 | $ | 1,608 | $ | 4,969 | $ | 125 | $ | 1,690 | ||||||||||||
Target Mix | ||||||||
Asset Category | 2007 | 2006 | ||||||
Equity securities
|
71 | % | 75 | % | ||||
Fixed income securities
|
27 | % | 24 | % | ||||
Cash and other investments
|
2 | % | 1 | % | ||||
Actual Mix | ||||||||
Asset Category | 2007 | 2006 | ||||||
Equity securities
|
70 | % | 75 | % | ||||
Fixed income securities
|
27 | % | 24 | % | ||||
Cash and other investments
|
3 | % | 1 | % | ||||
Officers
|
||||||||||||
and
|
Non
|
|||||||||||
Year | Regular | MSPP | U.S. | |||||||||
2008
|
$ | 196 | $ | 14 | $ | 25 | ||||||
2009
|
211 | 5 | 26 | |||||||||
2010
|
220 | 13 | 27 | |||||||||
2011
|
235 | 21 | 28 | |||||||||
2012
|
251 | 22 | 30 | |||||||||
2013-2017
|
1,544 | 26 | 173 | |||||||||
December 31 | 2007 | 2006 | ||||||
Discount rate for obligations
|
6.50 | % | 5.75 | % | ||||
Investment return assumptions
|
8.50 | % | 8.50 | % | ||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Service cost
|
$ | 7 | $ | 8 | $ | 9 | ||||||
Interest cost
|
23 | 25 | 30 | |||||||||
Expected return on plan assets
|
(19 | ) | (18 | ) | (19 | ) | ||||||
Amortization of:
|
||||||||||||
Unrecognized net loss
|
6 | 9 | 10 | |||||||||
Unrecognized prior service cost
|
(2 | ) | (2 | ) | (3 | ) | ||||||
Net postretirement health care expense
|
$ | 15 | $ | 22 | $ | 27 | ||||||
Years Ended December 31 | 2007 | 2006 | ||||||
Current liability
|
$ | | $ | (3 | ) | |||
Non-current liability
|
(144 | ) | (214 | ) | ||||
Deferred income taxes
|
55 | 88 | ||||||
Non-owner changes to equity
|
35 | 74 | ||||||
Accrued postretirement health care cost
|
$ | (54 | ) | $ | (55 | ) | ||
Target Mix | ||||||||
Asset Category | 2007 | 2006 | ||||||
Equity securities
|
75 | % | 75 | % | ||||
Fixed income securities
|
24 | % | 24 | % | ||||
Cash and other investments
|
1 | % | 1 | % | ||||
Actual Mix | ||||||||
Asset Category | 2007 | 2006 | ||||||
Equity securities
|
74 | % | 75 | % | ||||
Fixed income securities
|
25 | % | 22 | % | ||||
Cash and other investments
|
1 | % | 3 | % | ||||
Year | ||||
2008
|
$ | 38 | ||
2009
|
36 | |||
2010
|
35 | |||
2011
|
34 | |||
2012
|
31 | |||
2013-2017
|
143 | |||
1% Point
|
1% Point
|
|||||||
Increase | Decrease | |||||||
Effect on:
|
||||||||
Accumulated postretirement benefit obligation
|
$ | 14 | $ | (13 | ) | |||
Net retiree health care expense
|
1 | (1 | ) | |||||
8. | Share-Based Compensation Plans and Other Incentive Plans |
Year Ended December 31 | 2007 | 2006 | ||||||
Share-based compensation expense included in:
|
||||||||
Costs of sales
|
$ | 33 | $ | 30 | ||||
Selling, general and administrative expenses
|
149 | 138 | ||||||
Research and development expenditures
|
94 | 84 | ||||||
Share-based compensation expense for employee stock options and
employee stock purchase plans included in Operating earnings
(loss)
|
276 | 252 | ||||||
Tax benefit
|
85 | 78 | ||||||
Share-based compensation expense for employee stock options and
employee stock purchase plans, net of tax
|
$ | 191 | $ | 174 | ||||
Decrease in Basic earnings per share
|
$ | (0.08 | ) | $ | (0.07 | ) | ||
Decrease in Diluted earnings per share
|
$ | (0.08 | ) | $ | (0.07 | ) | ||
2007 | 2006 | 2005 | ||||||||||
Expected volatility
|
28.3 | % | 36.2 | % | 35.2 | % | ||||||
Risk-free interest rate
|
4.5 | % | 5.0 | % | 3.9 | % | ||||||
Dividend yield
|
1.1 | % | 0.8 | % | 1.0 | % | ||||||
Expected life (years)
|
6.5 | 6.5 | 5.0 | |||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||
Shares
|
Wtd. Avg.
|
Shares
|
Wtd. Avg.
|
Shares
|
Wtd. Avg.
|
|||||||||||||||||||
Subject to
|
Exercise
|
Subject to
|
Exercise
|
Subject to
|
Exercise
|
|||||||||||||||||||
Years Ended December 31 | Options | Price | Options | Price | Options | Price | ||||||||||||||||||
Options outstanding at January 1
|
233,445 | $ | 18 | 267,755 | $ | 17 | 335,757 | $ | 16 | |||||||||||||||
Options granted
|
40,257 | 18 | 37,202 | 21 | 40,675 | 16 | ||||||||||||||||||
Options exercised
|
(26,211 | ) | 11 | (59,878 | ) | 13 | (85,527 | ) | 12 | |||||||||||||||
Options terminated, canceled or expired
|
(23,236 | ) | 19 | (11,634 | ) | 19 | (23,150 | ) | 25 | |||||||||||||||
Options outstanding at December 31
|
224,255 | 19 | 233,445 | 18 | 267,755 | 17 | ||||||||||||||||||
Options exercisable at December 31
|
138,741 | 19 | 135,052 | 19 | 149,329 | 19 | ||||||||||||||||||
Approx. number of employees granted options
|
32,000 | 28,900 | 25,300 | |||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Wtd. avg.
|
Wtd. avg.
|
Wtd. avg.
|
||||||||||||||||||
No. of
|
Exercise
|
contractual
|
No. of
|
Exercise
|
||||||||||||||||
Exercise price range | options | Price | life (in yrs.) | options | Price | |||||||||||||||
Under $7
|
907 | $ | 4 | 7 | 264 | $ | 6 | |||||||||||||
$7-$13
|
51,569 | 10 | 4 | 51,085 | 10 | |||||||||||||||
$14-$20
|
110,907 | 17 | 7 | 49,363 | 16 | |||||||||||||||
$21-$27
|
31,923 | 22 | 8 | 9,080 | 22 | |||||||||||||||
$28-$34
|
1,716 | 32 | 2 | 1,716 | 32 | |||||||||||||||
$35-$41
|
26,865 | 39 | 7 | 26,865 | 39 | |||||||||||||||
$42-$48
|
332 | 44 | 3 | 332 | 44 | |||||||||||||||
$49-$55
|
36 | 51 | 2 | 36 | 51 | |||||||||||||||
224,255 | 138,741 | |||||||||||||||||||
2007 | 2006 | |||||||||||||||
Wtd. Avg.
|
Wtd Avg.
|
|||||||||||||||
Grant Date
|
Grant Date
|
|||||||||||||||
Years Ended December 31 | RS and RSU | Fair Value | RS and RSU | Fair Value | ||||||||||||
RS and RSU outstanding at January 1
|
6,016 | $ | 19 | 4,383 | $ | 16 | ||||||||||
Granted
|
7,766 | 18 | 2,761 | 22 | ||||||||||||
Vested
|
( 1,068 | ) | 19 | (938 | ) | 15 | ||||||||||
Terminated, canceled or expired
|
(1,959 | ) | 19 | (190 | ) | 18 | ||||||||||
RS and RSU outstanding at December 31
|
10,755 | 17 | 6,016 | 19 | ||||||||||||
Continuing Operations | Net Earnings (Loss) | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Earnings (loss):
|
||||||||||||||||||||||||
Earnings (loss), as reported
|
$ | (105 | ) | $ | 3,261 | $ | 4,519 | $ | (49 | ) | $ | 3,661 | $ | 4,578 | ||||||||||
Add: Share-based employee compensation expense included in
reported earnings, net of related tax effects
|
n/a | n/a | 9 | n/a | n/a | 9 | ||||||||||||||||||
Deduct: Share-based employee compensation expense determined
under fair value-based method for all awards, net of related tax
effects
|
n/a | n/a | (170 | ) | n/a | n/a | (170 | ) | ||||||||||||||||
Pro forma earnings (loss)
|
$ | (105 | ) | $ | 3,261 | $ | 4,358 | $ | (49 | ) | $ | 3,661 | $ | 4,417 | ||||||||||
Basic earnings (loss) per common share:
|
||||||||||||||||||||||||
As reported
|
$ | (0.05 | ) | $ | 1.33 | $ | 1.83 | $ | (0.02 | ) | $ | 1.50 | $ | 1.85 | ||||||||||
Pro forma
|
$ | n/a | $ | n/a | $ | 1.76 | $ | n/a | $ | n/a | $ | 1.79 | ||||||||||||
Diluted earnings (loss) per common share:
|
||||||||||||||||||||||||
As reported
|
$ | (0.05 | ) | $ | 1.30 | $ | 1.79 | $ | (0.02 | ) | $ | 1.46 | $ | 1.81 | ||||||||||
Pro forma
|
$ | n/a | $ | n/a | $ | 1.72 | $ | n/a | $ | n/a | $ | 1.75 | ||||||||||||
9. | Financing Arrangements |
December 31 | 2007 | 2006 | ||||||
Gross finance receivables
|
$ | 123 | $ | 279 | ||||
Less allowance for losses
|
(5 | ) | (10 | ) | ||||
118 | 269 | |||||||
Less current portion
|
(50 | ) | (124 | ) | ||||
Long-term finance receivables
|
$ | 68 | $ | 145 | ||||
10. | Commitments and Contingencies |
11. | Information by Segment and Geographic Region |
| The Mobile Devices segment designs, manufactures, sells and services wireless handsets with integrated software and accessory products, and licenses intellectual property. |
| The Home and Networks Mobility segment designs, manufactures, sells, installs and services: (i) digital video, Internet Protocol (IP) video and broadcast network interactive set-tops (digital entertainment devices), end-to-end video delivery solutions, broadband access infrastructure systems, and associated data and voice customer premise equipment (broadband gateways) to cable television and telecom service providers (collectively, referred to as the home business), and (ii) wireless access systems (wireless networks), including cellular infrastructure systems and wireless broadband systems, to wireless service providers. | |
| The Enterprise Mobility Solutions segment designs, manufactures, sells, installs and services analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets, including government and public safety agencies (which, together with all sales to distributors of two-way communication products, are referred to as the government and public safety market), as well as retail, utility, transportation, manufacturing, healthcare and other commercial customers (which, collectively, are referred to as the commercial enterprise market). |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Mobile Devices
|
$ | 56 | $ | 65 | $ | 190 | ||||||
Home and Networks Mobility
|
14 | 13 | 7 | |||||||||
Enterprise Mobility Solutions
|
58 | 31 | 45 | |||||||||
$ | 128 | $ | 109 | $ | 242 | |||||||
Net Sales | Operating Earnings (Loss) | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Mobile Devices
|
$ | 18,988 | $ | 28,383 | $ | 21,459 | $ | (1,201 | ) | $ | 2,690 | $ | 2,192 | |||||||||||
Home and Networks Mobility
|
10,014 | 9,164 | 9,037 | 709 | 787 | 1,232 | ||||||||||||||||||
Enterprise Mobility Solutions
|
7,729 | 5,400 | 5,038 | 1,213 | 958 | 860 | ||||||||||||||||||
36,761 | 42,947 | 35,534 | 721 | 4,435 | 4,284 | |||||||||||||||||||
Other and Eliminations
|
(109 | ) | (100 | ) | (224 | ) | (1,274 | ) | (343 | ) | 321 | |||||||||||||
$ | 36,622 | $ | 42,847 | $ | 35,310 | |||||||||||||||||||
Operating earnings (loss)
|
(553 | ) | 4,092 | 4,605 | ||||||||||||||||||||
Total other income
|
163 | 518 | 1,807 | |||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes
|
$ | (390 | ) | $ | 4,610 | $ | 6,412 | |||||||||||||||||
Depreciation
|
||||||||||||||||||||||||||||||||||||
Assets | Capital Expenditures | Expense | ||||||||||||||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||
Mobile Devices
|
$ | 6,318 | $ | 9,316 | $ | 7,551 | $ | 132 | $ | 164 | $ | 126 | $ | 146 | $ | 133 | $ | 127 | ||||||||||||||||||
Home and Networks Mobility
|
7,451 | 6,746 | 5,688 | 160 | 149 | 135 | 141 | 165 | 180 | |||||||||||||||||||||||||||
Enterprise Mobility Solutions
|
8,694 | 3,268 | 2,647 | 113 | 190 | 164 | 167 | 92 | 98 | |||||||||||||||||||||||||||
22,463 | 19,330 | 15,886 | 405 | 503 | 425 | 454 | 390 | 405 | ||||||||||||||||||||||||||||
Other and Eliminations
|
12,349 | 19,263 | 19,281 | 122 | 146 | 123 | 83 | 73 | 68 | |||||||||||||||||||||||||||
34,812 | 38,593 | 35,167 | $ | 527 | $ | 649 | $ | 548 | $ | 537 | $ | 463 | $ | 473 | ||||||||||||||||||||||
Discontinued Operations
|
| | 635 | |||||||||||||||||||||||||||||||||
$ | 34,812 | $ | 38,593 | $ | 35,802 | |||||||||||||||||||||||||||||||
Net Sales* | Assets** | Property, Plant, and Equipment | ||||||||||||||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||
United States
|
$ | 18,548 | $ | 18,776 | $ | 16,749 | $ | 22,385 | $ | 24,212 | $ | 23,635 | $ | 1,252 | $ | 1,089 | $ | 1,010 | ||||||||||||||||||
China
|
2,632 | 4,664 | 2,908 | 3,926 | 4,649 | 3,843 | 311 | 278 | 189 | |||||||||||||||||||||||||||
United Kingdom
|
1,070 | 1,306 | 1,532 | 1,305 | 1,773 | 1,962 | 121 | 134 | 127 | |||||||||||||||||||||||||||
Germany
|
516 | 874 | 882 | 644 | 1,195 | 990 | 75 | 131 | 118 | |||||||||||||||||||||||||||
Israel
|
741 | 659 | 534 | 1,374 | 1,195 | 1,372 | 165 | 156 | 134 | |||||||||||||||||||||||||||
Singapore
|
128 | 176 | 156 | 3,120 | 3,713 | 2,993 | 40 | 39 | 35 | |||||||||||||||||||||||||||
Other nations, net of eliminations
|
12,987 | 16,392 | 12,549 | 2,058 | 1,856 | 372 | 516 | 440 | 407 | |||||||||||||||||||||||||||
$ | 36,622 | $ | 42,847 | $ | 35,310 | $ | 34,812 | $ | 38,593 | $ | 35,167 | $ | 2,480 | $ | 2,267 | $ | 2,020 | |||||||||||||||||||
* | Net sales by geographic region are measured by the locale of end customer. | |
** | Excludes assets held for sale relating to discontinued operations of $635 million at December 31, 2005. |
12. | Shareholder Rights Plan |
13. | Reorganization of Businesses |
Year Ended December 31, | 2007 | |||
Mobile Devices
|
$ | 229 | ||
Home and Networks Mobility
|
71 | |||
Enterprise Mobility Solutions
|
30 | |||
330 | ||||
General Corporate
|
64 | |||
$ | 394 | |||
Accruals at
|
2007
|
2007
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2007
(1)(2)
|
Amount
|
December 31,
|
||||||||||||||||
2007 | Charges | Adjustments | Used | 2007 | ||||||||||||||||
Exit costslease terminations
|
$ | 54 | $ | 19 | $ | 2 | $ | (33 | ) | $ | 42 | |||||||||
Employee separation costs
|
104 | 401 | (64 | ) | (248 | ) | 193 | |||||||||||||
$ | 158 | $ | 420 | $ | (62 | ) | $ | (281 | ) | $ | 235 | |||||||||
(1) | Includes translation adjustments. | |
(2) | Includes $6 million of accruals established through purchase accounting for businesses acquired, covering exit costs and separation costs for approximately 200 employees. |
Year Ended December 31, | 2006 | |||
Mobile Devices
|
$ | (1 | ) | |
Home and Networks Mobility
|
124 | |||
Enterprise Mobility Solutions
|
83 | |||
206 | ||||
General Corporate
|
7 | |||
$ | 213 | |||
Accruals at
|
2006
|
2006
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2006
(1)
|
Amount
|
December 31,
|
||||||||||||||||
2006 | Charges | Adjustments | Used | 2006 | ||||||||||||||||
Exit costslease terminations
|
$ | 50 | $ | 30 | $ | (7 | ) | $ | (19 | ) | $ | 54 | ||||||||
Employee separation costs
|
53 | 191 | (16 | ) | (124 | ) | 104 | |||||||||||||
$ | 103 | $ | 221 | $ | (23 | ) | $ | (143 | ) | $ | 158 | |||||||||
(1) | Includes translation adjustments. |
Year Ended December 31, | 2005 | |||
Mobile Devices
|
$ | 27 | ||
Home and Networks Mobility
|
7 | |||
Enterprise Mobility Solutions
|
49 | |||
83 | ||||
General Corporate
|
8 | |||
$ | 91 | |||
Accruals at
|
2005
|
2005
|
Accruals at
|
|||||||||||||||||
January 1,
|
Additional
|
2005
(1)
|
Amount
|
December 31,
|
||||||||||||||||
2005 | Charges | Adjustments | Used | 2005 | ||||||||||||||||
Exit costslease terminations
|
$ | 73 | $ | 5 | $ | (7 | ) | $ | (21 | ) | $ | 50 | ||||||||
Employee separation costs
|
41 | 86 | (14 | ) | (60 | ) | 53 | |||||||||||||
$ | 114 | $ | 91 | $ | (21 | ) | $ | (81 | ) | $ | 103 | |||||||||
(1) | Includes translation adjustments. |
14. | Acquisitions and Related Intangibles |
In-Process
|
||||||||||||||||
Research and
|
||||||||||||||||
Quarter
|
Form of
|
Development
|
||||||||||||||
Acquired | Consideration, net | Consideration | Charge | |||||||||||||
2007 Acquisitions
|
||||||||||||||||
Symbol Technologies, Inc.
|
Q1 | $ | 3,528 | Cash | $ | 95 | ||||||||||
Good Technology, Inc.
|
Q1 | $ | 438 | Cash | | |||||||||||
Netopia, Inc.
|
Q1 | $ | 183 | Cash | | |||||||||||
Terayon Communication Systems, Inc.
|
Q3 | $ | 137 | Cash | | |||||||||||
2006 Acquisitions
|
||||||||||||||||
Broadbus Technologies, Inc.
|
Q3 | $ | 181 | Cash | $ | 12 | ||||||||||
TTP Communications plc
|
Q3 | $ | 193 | Cash | $ | 17 | ||||||||||
Kreatel Communications AB
|
Q1 | $ | 108 | Cash | $ | 1 | ||||||||||
2005 Acquisitions
|
||||||||||||||||
No significant acquisitions
|
| | | | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Tangible net assets
|
$ | 83 | $ | 20 | $ | | ||||||
Goodwill
|
2,793 | 262 | | |||||||||
Other intangibles
|
1,315 | 170 | | |||||||||
In-process research and development
|
95 | 30 | | |||||||||
$ | 4,286 | $ | 482 | $ | | |||||||
Consideration, net:
|
||||||||||||
Cash
|
$ | 4,286 | $ | 482 | $ | | ||||||
Stock
|
| | | |||||||||
$ | 4,286 | $ | 482 | $ | | |||||||
2007 | 2006 | |||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
December 31 | Amount | Amortization | Amount | Amortization | ||||||||||||
Intangible assets:
|
||||||||||||||||
Completed technology
|
$ | 1,234 | $ | 484 | $ | 486 | $ | 334 | ||||||||
Patents
|
292 | 69 | 27 | 12 | ||||||||||||
Customer-related
|
264 | 58 | 65 | 21 | ||||||||||||
Licensed technology
|
123 | 109 | 119 | 107 | ||||||||||||
Other intangibles
|
166 | 99 | 193 | 62 | ||||||||||||
$ | 2,079 | $ | 819 | $ | 890 | $ | 536 | |||||||||
2007 | 2006 | |||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
December 31 | Amount | Amortization | Amount | Amortization | ||||||||||||
Mobile Devices
|
$ | 36 | $ | 36 | $ | 154 | $ | 41 | ||||||||
Home and Networks Mobility
|
712 | 455 | 588 | 430 | ||||||||||||
Enterprise Mobility Solutions
|
1,331 | 328 | 148 | 65 | ||||||||||||
$ | 2,079 | $ | 819 | $ | 890 | $ | 536 | |||||||||
January 1,
|
December 31,
|
|||||||||||||||||||
Segment | 2007 | Acquired | Adjustments | Dispositions | 2007 | |||||||||||||||
Mobile Devices
|
$ | 69 | $ | | $ | (50 | ) | $ | | $ | 19 | |||||||||
Home and Networks Mobility
|
1,266 | 427 | 2 | (119 | ) | 1,576 | ||||||||||||||
Enterprise Mobility Solutions
|
371 | 2,569 | (36 | ) | | 2,904 | ||||||||||||||
$ | 1,706 | $ | 2,996 | $ | (84 | ) | $ | (119 | ) | $ | 4,499 | |||||||||
January 1,
|
December 31,
|
|||||||||||||||||||
Segment | 2006 | Acquired | Adjustments | Dispositions | 2006 | |||||||||||||||
Mobile Devices
|
$ | 17 | $ | 52 | $ | | $ | | $ | 69 | ||||||||||
Home and Networks Mobility
|
1,009 | 235 | 22 | | 1,266 | |||||||||||||||
Enterprise Mobility Solutions
|
323 | 49 | (1 | ) | | 371 | ||||||||||||||
$ | 1,349 | $ | 336 | $ | 21 | $ | | $ | 1,706 | |||||||||||
15. | Valuation and Qualifying Accounts |
Balance at
|
Charged to
|
Balance at
|
||||||||||||||||||
January 1 | Earnings | Used | Adjustments (1) | December 31 | ||||||||||||||||
2007
|
||||||||||||||||||||
Reorganization of Businesses
|
$ | 158 | $ | 420 | $ | (281 | ) | $ | (62 | ) | $ | 235 | ||||||||
Allowance for Doubtful Accounts
|
78 | 130 | (3 | ) | (21 | ) | 184 | |||||||||||||
Allowance for Losses on Finance Receivables
|
10 | 2 | | (7 | ) | 5 | ||||||||||||||
Inventory Reserves
|
416 | 546 | (524 | ) | (67 | ) | 371 | |||||||||||||
Warranty Reserves
|
530 | 756 | (735 | ) | (135 | ) | 416 | |||||||||||||
Customer Reserves
|
1,305 | 2,809 | (2,205 | ) | (937 | ) | 972 | |||||||||||||
2006
|
||||||||||||||||||||
Reorganization of Businesses
|
103 | 221 | (143 | ) | (23 | ) | 158 | |||||||||||||
Allowance for Doubtful Accounts
|
101 | 50 | (58 | ) | (15 | ) | 78 | |||||||||||||
Allowance for Losses on Finance Receivables
|
12 | 5 | (8 | ) | 1 | 10 | ||||||||||||||
Inventory Reserves
|
529 | 517 | (490 | ) | (140 | ) | 416 | |||||||||||||
Warranty Reserves
|
467 | 977 | (891 | ) | (23 | ) | 530 | |||||||||||||
Customer Reserves
|
1,171 | 4,218 | (3,597 | ) | (487 | ) | 1,305 | |||||||||||||
2005
|
||||||||||||||||||||
Reorganization of Businesses
|
114 | 91 | (81 | ) | (21 | ) | 103 | |||||||||||||
Allowance for Doubtful Accounts
|
173 | 17 | (14 | ) | (75 | ) | 101 | |||||||||||||
Allowance for Losses on Finance Receivables
|
1,966 | | (1,926 | ) | (28 | ) | 12 | |||||||||||||
Inventory Reserves
|
522 | 569 | (389 | ) | (173 | ) | 529 | |||||||||||||
Warranty Reserves
|
472 | 816 | (696 | ) | (125 | ) | 467 | |||||||||||||
Customer Reserves
|
842 | 3,215 | (2,588 | ) | (298 | ) | 1,171 | |||||||||||||
(1) | Includes translation adjustments. |
16. | Quarterly and Other Financial Data (unaudited)* |
2007 | 2006 | |||||||||||||||||||||||||||||||
1st | 2nd | 3rd | 4th | 1st | 2nd | 3rd | 4th | |||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||||||
Net sales
|
$ | 9,433 | $ | 8,732 | $ | 8,811 | $ | 9,646 | $ | 9,632 | $ | 10,820 | $ | 10,603 | $ | 11,792 | ||||||||||||||||
Costs of sales
|
6,979 | 6,279 | 6,306 | 7,106 | 6,701 | 7,463 | 7,233 | 8,723 | ||||||||||||||||||||||||
Gross margin
|
2,454 | 2,453 | 2,505 | 2,540 | 2,931 | 3,357 | 3,370 | 3,069 | ||||||||||||||||||||||||
Selling, general and administrative expenses
|
1,313 | 1,296 | 1,210 | 1,273 | 1,069 | 1,154 | 1,123 | 1,158 | ||||||||||||||||||||||||
Research and development expenditures
|
1,117 | 1,115 | 1,100 | 1,097 | 964 | 1,035 | 1,046 | 1,061 | ||||||||||||||||||||||||
Other charges (income)
|
390 | 200 | 205 | 189 | 49 | (354 | ) | 233 | 97 | |||||||||||||||||||||||
Operating earnings (loss)
|
(366 | ) | (158 | ) | (10 | ) | (19 | ) | 849 | 1,522 | 968 | 753 | ||||||||||||||||||||
Earnings (loss) from continuing operations
|
(218 | ) | (38 | ) | 40 | 111 | 656 | 1,349 | 727 | 529 | ||||||||||||||||||||||
Net earnings (loss)
|
(181 | ) | (28 | ) | 60 | 100 | 686 | 1,384 | 968 | 623 | ||||||||||||||||||||||
Per Share Data (in dollars)
|
||||||||||||||||||||||||||||||||
Continuing Operations:
|
||||||||||||||||||||||||||||||||
Basic earnings (loss) per common share
|
$ | (0.09 | ) | $ | (0.02 | ) | $ | 0.02 | $ | 0.05 | $ | 0.26 | $ | 0.55 | $ | 0.30 | $ | 0.22 | ||||||||||||||
Diluted earnings (loss) per common share
|
(0.09 | ) | (0.02 | ) | 0.02 | 0.05 | 0.26 | 0.54 | 0.29 | 0.21 | ||||||||||||||||||||||
Net Earnings:
|
||||||||||||||||||||||||||||||||
Basic earnings (loss) per common share
|
(0.08 | ) | (0.01 | ) | 0.03 | 0.04 | 0.28 | 0.56 | 0.40 | 0.26 | ||||||||||||||||||||||
Diluted earnings (loss) per common share
|
(0.08 | ) | (0.01 | ) | 0.03 | 0.04 | 0.27 | 0.55 | 0.39 | 0.25 | ||||||||||||||||||||||
Dividends declared
|
0.05 | 0.05 | 0.05 | 0.05 | 0.04 | 0.05 | 0.05 | 0.05 | ||||||||||||||||||||||||
Dividends paid
|
0.05 | 0.05 | 0.05 | 0.05 | 0.04 | 0.04 | 0.05 | 0.05 | ||||||||||||||||||||||||
Stock prices
|
||||||||||||||||||||||||||||||||
High
|
20.91 | 19.18 | 18.88 | 19.68 | 24.67 | 24.24 | 25.55 | 26.30 | ||||||||||||||||||||||||
Low
|
17.45 | 17.32 | 15.61 | 14.87 | 20.22 | 19.01 | 18.66 | 20.17 | ||||||||||||||||||||||||
* | Certain amounts in prior years financial statements and related notes have been reclassified to conform to the 2007 presentation. |
(a) | 1. Financial Statements |
(b) | Exhibits: |
By: |
/s/
Gregory
Q. Brown
|
Signature | Title | Date | ||||
/s/
Gregory
Q. Brown
|
President and Chief Executive Officer
and Director (Principal Executive Officer) |
February 28, 2008 | ||||
/s/
Thomas
J. Meredith
|
Executive Vice President,
Acting Chief Financial Officer and Director (Principal Financial Officer) |
February 28, 2008 | ||||
/s/
Marc
E. Rothman
|
Senior Vice President, Finance
and Corporate Controller (Principal Accounting Officer) |
February 28, 2008 | ||||
/s/
Edward
J. Zander
|
Chairman of the Board | February 28, 2008 | ||||
/s/
David
W. Dorman
|
Director | February 28, 2008 | ||||
/s/
Judy
C. Lewent
|
Director | February 28, 2008 | ||||
/s/
Nicholas
Negroponte
|
Director | February 28, 2008 | ||||
/s/
Samuel
C. Scott III
|
Director | February 28, 2008 | ||||
/s/
Ron
Sommer
|
Director | February 28, 2008 | ||||
/s/
James
R. Stengel
|
Director | February 28, 2008 |
Signature | Title | Date | ||||
/s/
Anthony
J. Vinciquerra
|
Director | February 28, 2008 | ||||
/s/
Douglas
A. Warner III
|
Director | February 28, 2008 | ||||
/s/
Dr. John
A. White
|
Director | February 28, 2008 | ||||
/s/
Miles
D. White
|
Director | February 28, 2008 |
Exhibit No.
|
Exhibit
|
|||
2 | .1 | Agreement and Plan of Merger, dated as of September 18, 2006, among Motorola, Inc., Motorola GTG Subsidiary I Corp. and Symbol Technologies, Inc. (incorporated by reference to Exhibit 2.1 to Motorolas Report on Form 8-K filed on September 25, 2006 (File No. 1-7221)). | ||
2 | .2 | Amendment No. 1, dated as of October 30, 2006, to Agreement and Plan of Merger, dated as of September 18, 2006, among Motorola, Inc., Motorola GTG Subsidiary I Corp. and Symbol Technologies, Inc. (incorporated by reference to Exhibit 2.2 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006) (File No. 1-7221)). | ||
3 | .1 | Restated Certificate of Incorporation of Motorola, Inc., as amended through May 3, 2000 (incorporated by reference to Exhibit 3(i)(b) to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2000) (File No. 1-7221)). | ||
3 | .2 | Motorola, Inc. Amended and Restated Bylaws as of February 23, 2006 (incorporated by reference to Exhibit 3.1 to Motorolas Report on Form 8-K filed March 1, 2006 (File No. 1-7221)). | ||
4 | .1(a) | Senior Indenture, dated as of May 1, 1995, between The Bank of New York Trust Company, N.A. (as successor Trustee to JPMorgan Chase Bank (as successor in interest to Bank One Trust Company) and BNY Midwest Trust Company (as successor in interest to Harris Trust and Savings Bank) and Motorola, Inc. (incorporated by reference to Exhibit 4(d) of the Registrants Registration Statement on Form S-3 dated September 25, 1995 (Registration No. 33-62911)). | ||
4 | .1(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) (incorporated by reference to Exhibit 4.2(b) to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)). | ||
Certain instruments defining the rights of holders of long-term debt of Motorola and of all its 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. Motorola agrees to furnish a copy of any such instrument to the Commission upon request. | ||||
*10 | .1 | Motorola Omnibus Incentive Plan of 2006 (As Amended and Restated as of January 30, 2008). | ||
10 | .2 | Form of Motorola, Inc. Award DocumentTerms and Conditions Related to Employee Nonqualified Stock Options relating to the Motorola Omnibus Incentive Plan of 2006 for grants on or after February 11, 2007 (incorporated by reference to Exhibit 10.37 to Motorolas Report on Form 8-K filed on February 15, 2007 (File No. 1-7221)). | ||
10 | .3 | Form of Motorola, Inc. Restricted Stock Unit Agreement relating to the Motorola Omnibus Incentive Plan of 2006 for grants on or after February 27, 2007 (incorporated by reference to Exhibit 10.3 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). | ||
10 | .4 | Form of Motorola Stock Option Consideration Agreement for grants on or after February 27, 2007 (incorporated by reference to Exhibit 10.4 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). | ||
10 | .5 | Form of Motorola, Inc. Award DocumentTerms and Conditions Related to Employee Nonqualified Stock Options for Edward J. Zander, relating to the Motorola Omnibus Incentive Plan of 2006 or any successor plan for grants on or after February 11, 2007 (incorporated by reference to Exhibit 10.5 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). |
Exhibit No.
|
Exhibit
|
|||
10 | .6 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Edward J. Zander relating to the Motorola Omnibus Incentive Plan for 2006 for grants on or after February 11, 2007 (incorporated by reference to Exhibit 10.6 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). | ||
10 | .7 | Form of Motorola Stock Option Consideration Agreement for Edward J. Zander for grants on or after May 2, 2006 (incorporated by reference to Exhibit 10.41 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2006) ( File No. 1-7221)). | ||
10 | .8 | Motorola, Inc. Award Document for the Motorola Omnibus Incentive Plan of 2006, Terms and Conditions Related to Employee Nonqualified Stock Options, granted to Edward J. Zander on May 8, 2007 (Market-based vesting) (incorporated by reference to Exhibit 10.40 to Motorolas Report on Form 8-K filed on May 14, 2007 (File No. 1-7221)). | ||
*10 | .9 | Motorola, Inc. Award Document for the Motorola Omnibus Incentive Plan of 2006, Terms and Conditions Related to Employee Nonqualified Stock Options granted to Gregory Q. Brown on January 31, 2008 (Market-based vesting). | ||
*10 | .10 | Form of Motorola Stock Option Consideration Agreement for Gregory Q. Brown for grants on or after January 31, 2008. | ||
*10 | .11 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Gregory Q. Brown relating to the Motorola Omnibus Incentive Plan of 2006 for grants on or after January 31, 2008. | ||
*10 | .12 | Form of Motorola, Inc. Award Document for the Motorola Omnibus Incentive Plan of 2006, Terms and Conditions Related to Employee Nonqualified Stock Options for Paul J. Liska (Sign-on Grant). | ||
*10 | .13 | Form of Motorola, Inc. Award Document for the Motorola Omnibus Incentive Plan of 2006, Terms and Conditions Related to Employee Nonqualified Stock Options for Paul J. Liska (Market-based vesting). | ||
*10 | .14 | Form of Motorola Stock Option Consideration Agreement for Paul J. Liska. | ||
*10 | .15 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Paul J. Liska relating to the Motorola Omnibus Incentive Plan of 2006 (Sign-on Grant). | ||
*10 | .16 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Paul J. Liska relating to the Motorola Omnibus Incentive Plan of 2006. | ||
10 | .17 | Form of Deferred Stock Units Agreement between Motorola, Inc. and its non-employee directors, relating to the deferred stock units issued in lieu of cash compensation to directors under the Motorola Omnibus Incentive Plan of 2006 or any successor plan, for acquisitions on or after February 11, 2007 (incorporated by reference to Exhibit 10.8 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). | ||
10 | .18 | Form of Deferred Stock Units Award Agreement between Motorola, Inc. and its non-employee directors under the Motorola Omnibus Incentive Plan of 2006 or any successor plan for grants on or after February 11, 2007 (incorporated by reference to Exhibit 10.9 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). | ||
10 | .19 | Motorola Omnibus Incentive Plan of 2003, as amended through April 2, 2004 (incorporated by reference to Exhibit 10.1 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). | ||
10 | .20 | Motorola Omnibus Incentive Plan of 2002, as amended through April 2, 2004 (incorporated by reference to Exhibit 10.2 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). |
Exhibit No.
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Exhibit
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10 | .21 | Motorola Omnibus Incentive Plan of 2000, as amended through April 2, 2004 (incorporated by reference to Exhibit 10.3 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). | ||
10 | .22 | Motorola Compensation/ Acquisition Plan of 2000, as amended through April 2, 2004 (incorporated by reference to Exhibit 10.4 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). | ||
10 | .23 | Motorola Amended and Restated Incentive Plan of 1998, as amended through April 2, 2004 (incorporated by reference to Exhibit 10.5 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). | ||
10 | .24 | Share Option Plan of 1996, as amended through May 7, 1997 (incorporated by reference to Exhibit 10.6 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 1-7221)). | ||
10 | .25 | Form of Motorola, Inc. Award DocumentTerms and Conditions Related to Non-Employee Director Nonqualified Stock Options relating to the Motorola Omnibus Incentive Plan of 2002 (incorporated by reference to Exhibit 10.2 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2002 (File No. 1-7221)). | ||
10 | .26 | Form of Motorola, Inc. Award DocumentTerms and Conditions Related to Employee Nonqualified Stock Options, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000, the Motorola Amended and Restated Incentive Plan of 1998 and the Motorola Compensation/ Acquisition Plan of 2000 for grants on or after May 2, 2005 (incorporated by reference to Exhibit 10.46 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 2005 (File No. 1-7221)). | ||
10 | .27 | Form of Motorola, Inc. Restricted Stock Agreement, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, for grants on or after July 29, 2004 (incorporated by reference to Exhibit 10.11 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2004 (File No. 1-7221)). | ||
10 | .28 | Form of Motorola, Inc. Restricted Stock Unit Agreement (Cliff Vesting), relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/ Acquisition Plan of 2000, for grants on or after July 29, 2004 (incorporated by reference to Exhibit 10.12 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2004 (File No. 1-7221)). | ||
10 | .29 | Form of Motorola, Inc. Restricted Stock Unit Agreement (Periodic Vesting), relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/ Acquisition Plan of 2000, for grants on or after July 29, 2004 (incorporated by reference to Exhibit 10.34 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2004 (File No. 1-7221)). | ||
10 | .30 | Form of Motorola, Inc. Award DocumentTerms and Conditions Related to Employee Nonqualified Stock Options for Edward J. Zander, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Amended and Restated Incentive Plan of 1998, for grants on or after February 14, 2005 (incorporated by reference to Exhibit 10.24(b) to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 1-7221)). | ||
10 | .31 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Edward J. Zander, relating to the Motorola Omnibus Incentive Plan of 2003, for grants on or after May 3, 2005 (incorporated by reference to Exhibit No. 10.45 to Motorolas Report on Form 8-K filed on May 6, 2005 (File No. 1-7221)). |
Exhibit No.
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Exhibit
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10 | .32 | Form of Motorola, Inc. Restricted Stock Unit Award Agreement for Edward J. Zander, relating to the Motorola Omnibus Incentive Plan of 2003 (incorporated by reference to Exhibit 10.33 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2004 (File No. 1-7221)). | ||
10 | .33 | Form of Deferred Stock Units Agreement between Motorola, Inc. and its non-employee directors, relating to the deferred stock units issued in lieu of cash compensation to directors under the Motorola Omnibus Incentive Plan of 2003 or any successor plan, for acquisitions from January 1, 2006 to February 11, 2007 (incorporated by reference to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 1-7221)). | ||
10 | .34 | Motorola Non-Employee Directors Stock Plan, as amended and restated on May 6, 2003 (incorporated by reference to Exhibit 10.20 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2003 (File No. 1-7221)). | ||
*10 | .35 | 2006 Motorola Incentive Plan (As Amended and Restated as of January 30, 2008). | ||
*10 | .36 | Motorola Long-Range Incentive Plan (LRIP) of 2005 (As Amended and Restated as of January 30, 2008). | ||
*10 | .37 | Motorola Long-Range Incentive Plan (LRIP) of 2006 (As Amended and Restated as of January 30, 2008). | ||
10 | .38 | Motorola Elected Officers Supplementary Retirement Plan, as amended through May 8, 2007 (incorporated by reference to Exhibit No. 10.29 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007 (File No. 1-7221)). | ||
10 | .39 | Motorola Management Deferred Compensation Plan, as amended through May 2, 2006 (incorporated by reference to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2006 (File No. 1-7221)). | ||
10 | .40 | Motorola, Inc. Senior Officer Change in Control Severance Plan, amended on May 2, 2006 (incorporated by reference to Exhibit 10.30 to Motorolas Annual Report on Form 10-Q for the fiscal quarter ended April 1, 2006 (File No. 1-7221)). | ||
10 | .41 | Motorola, Inc. Retiree Basic Life Insurance for Elected Officers prior to January 1, 2004 who retire after January 1, 2005 (incorporated by reference to Exhibit 10.36 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 1-7221)). | ||
10 | .42 | Arrangement for directors fees and retirement plan for non-employee directors (description incorporated by reference from the information under the caption How Are the Directors Compensated? of Motorolas Proxy Statement for the Annual Meeting of Stockholders to be held on May 5, 2008 (Motorola Proxy Statement)). | ||
10 | .43 | Insurance covering non-employee directors and their spouses (including a description incorporated by reference from the information under the caption How Are the Directors Compensated? of the Motorola Proxy Statement and to Exhibit 10.38 to Motorolas Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 1-7221)). | ||
*10 | .44 | Description of Certain Compensatory Arrangements between Motorola, Inc. and Gregory Q. Brown. | ||
*10 | .45 | Description of Certain Compensatory Arrangements between Motorola, Inc. and Paul J. Liska. | ||
10 | .46 | Employment Agreement between Motorola, Inc. and Edward J. Zander dated as of December 15, 2003 as amended through May 11, 2007 (incorporated by reference to Exhibit 10.35 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007 (File No. 1-7221)). | ||
*10 | .47 | Chairman/CEO Retirement Term Sheet dated November 29, 2007 for Edward J. Zander. |
Exhibit No.
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Exhibit
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*10 | .48 | Amended and Restated Employment Agreement between Thomas J. Meredith and Motorola, Inc. (As Amended January 30, 2008). | ||
10 | .49 | Agreement between Motorola, Inc. and Adrian Nemcek dated July 18, 2006 (incorporated by reference to Exhibit 10.45 to Motorolas Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2006 (File No. 1-7221)). | ||
10 | .50 | Agreement between Motorola, Inc. and David Devonshire dated September 18, 2007 (incorporated by reference to Exhibit 10.41 to Motorolas Report on Form 8-K filed on September 19, 2007 (File No. 1-7221)). | ||
*10 | .51 | Agreement between Ruth Fattori and Motorola, Inc. dated December 20, 2007. | ||
*12 | Statement regarding Computation of Ratio of Earnings to Fixed Charges. | |||
*21 | Subsidiaries of Motorola. | |||
23 | Consent of Independent Registered Public Accounting Firm, see page 128 of the Annual Report on Form 10-K of which this Exhibit Index is a part. | |||
*31 | .1 | Certification of Gregory Q. Brown pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
*31 | .2 | Certification of Thomas J. Meredith pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
*32 | .1 | Certification of Gregory Q. Brown pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
*32 | .2 | Certification of Thomas J. Meredith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith |
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Recipient:
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Greg Brown | Date of Expiration: | January 31, 2018 | |||||
Commerce ID #:
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Number of Options: | 679,348 | ||||||
Date of Grant:
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January 31, 2008 | Exercise Price: | $13.31 |
Dollar Amount | Options Vested | |||
$16.00
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226,449 |
Dollar Amount | Options Vested | |||
$20.00
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226,449 |
Dollar Amount | Options Vested | |||
$23.00
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226,450 |
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1. | Award of Restricted Stock Units . The Company hereby grants to Grantee a total of 304,348 Motorola restricted stock units (the Units ) subject to the terms and conditions set forth below. All Awards shall be paid in whole shares of Motorola Common Stock ( Common Stock ); no fractional shares shall be credited or delivered to Grantee. |
2. | Restrictions . The Units are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the Restrictions ) which shall lapse, if at all, as described in Section 3 below. For purposes of this Award, the term Units includes any additional Units granted to the Grantee with respect to Units, still subject to the Restrictions. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Any Units still subject to the Restrictions shall be automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary for any reason other than death, Total and Permanent Disability, or Involuntary Termination due to (i) a Divestiture or (ii) for a reason other than for Serious Misconduct. For purposes of this Agreement, a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Total and Permanent Disability is defined in Section 3(a). | ||
c. | If Grantee engages in any of the following conduct for any reason, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or | ||
(iii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee engages in activities which are entirely or in part the same as or similar to activities in which Grantee engaged at any time during the two years preceding termination of Grantees employment with the Company, for any person, company or entity in connection with products, services or technological developments (existing or planned) that are entirely or in part the same as, similar to, or competitive with, any products, services or technological developments (existing or planned) on which Grantee worked at any time during the two years preceding termination of Grantees |
(iv) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned confidential information at any time during the two years prior to Grantees termination of employment with the Company; and/or | ||
(v) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, in any capacity, provides products or services competitive with or similar to products or services offered by the Company to any person, company or entity which was a customer for such products or services and with which customer Grantee had direct or indirect contact regarding those products or services or about which customer Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
d. | The Units are subject to the terms and conditions of the Companys Policy Regarding Recoupment of Incentive Payments upon Financial Restatement (such policy, as it may be amended from time to time, being the Recoupment Policy ). The Recoupment Policy provides for determinations by the Companys independent directors that, as a result of intentional misconduct by Grantee, the Companys financial results were restated (a Policy Restatement ). In the event of a Policy Restatement, the Companys independent directors may require, among other things (a) cancellation of any of the Units that remain outstanding; and/or (b) reimbursement of any gains in respect of the Units, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon Grantee. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. |
3. | Lapse of Restrictions . |
a. | The Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows: |
Vesting Percentage | Date | |
50%
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On July 31, 2010 if Grantee is continuously employed by the Company through that date | |
50%
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On January 31, 2013 if Grantee is continuously employed by the Company through that date |
(ii) | If a Change in Control of the Company occurs and the successor corporation (or parent thereof) does not assume this Award or replace it with a comparable award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced awards shall provide that the Restrictions shall lapse if Grantee is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 24 months of the Change in Control. For purposes of this paragraph, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | ||
(iii) | Upon termination of Grantees employment by Motorola or a Subsidiary by Total and Permanent Disability. 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 or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | ||
(iv) | If the Grantee dies. |
b. | In the case of Involuntary Termination due to (i) a Divestiture or (ii) for a reason other than for Serious Misconduct before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse on a pro rata basis determined by dividing (i) the number of completed full years of service by the Grantee from the Award Date to the employees date of termination by (ii) the total length of the Restriction Period. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction (a Divestiture). |
d. | Serious Misconduct for purposes of this Agreement 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. | ||
e. | If, during the Restriction Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. | ||
f. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than 2(c)). |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. | |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. | |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. | |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation in whole or in part by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. Fair Market Value for this purpose shall be the closing price for a share of Common Stock on the date the Restrictions applicable to the Units lapse (the Restrictions Lapse Date) as reported for the New York Stock Exchange- Composite Transactions in the Wall Street Journal at www.online.wsj.com or, for purposes of imposing sanctions under paragraph 2(d), on any date specified therein. In the event the New York Stock Exchange is not open for trading on the Restrictions Lapse Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Restrictions Lapse Date. | |
8. | Voting and Other Rights . |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. |
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the identity of any new employer (or the nature of any start-up business or self-employment), (b) Grantees new title, and (c) Grantees job duties and responsibilities. Grantee hereby authorizes Motorola or a Subsidiary to provide a copy of this Award Document to Grantees new employer. Grantee further agrees to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine his/her compliance with the terms hereof. |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 Grantees 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, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantees 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 Grantees behalf to a broker or other third party with whom Grantee may elect to deposit any shares of stock acquired pursuant to the Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing consent may affect Grantees ability to participate in the Plan. |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services. Grantees acceptance of this Award is voluntary. The |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii), (iii), (iv) and/or (v) of this Agreement will be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. |
13. | Acknowledgements . With respect to the subject matter of paragraphs 2(c)(i), (ii), (iii), (iv) and (v) and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this Agreement shall be severable and in the event that any provision of this Agreement shall be found by any court as specified in paragraph 15 below to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this Agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this Agreement, Grantee affirmatively states that (s)he has not, will not and cannot rely on any representations not expressly made herein. |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or delegate shall be binding upon the parties. |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award ( Email Notification Date ), Grantee agrees to be bound by the foregoing terms |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay.finances/awards_incentives/stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196, (847) 576-7885. |
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25%
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25%
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_____ ____, 200__ | |||
25%
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25%
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_____ ____, 200__ |
Recipient:
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Paul Liska | Date of Expiration: | ||||||
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Number of Options: | 728,000 | ||||||
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Exercise Price: | $ | ||||||
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Dollar Amount | Options Vested | |||
$16.00
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242,666 |
Dollar Amount | Options Vested | |||
$20.00
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242,666 |
Dollar Amount | Options Vested | |||
$23.00
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242,668 |
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Commerce ID |
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1. | Award of Restricted Stock Units . The Company hereby grants to Grantee a total of 131,000 Motorola restricted stock units (the Units ) subject to the terms and conditions set forth below. All Awards shall be paid in whole shares of Motorola Common Stock ( Common Stock ); no fractional shares shall be credited or delivered to Grantee. |
2. | Restrictions . The Units are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the Restrictions ) which shall lapse, if at all, as described in Section 3 below. For purposes of this Award, the term Units includes any additional Units granted to the Grantee with respect to Units, still subject to the Restrictions. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Any Units still subject to the Restrictions shall be automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary for any reason other than death, Total and Permanent Disability, or Involuntary Termination due to (i) a Divestiture or (ii) for a reason other than for Cause. For purposes of this Agreement, a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Total and Permanent Disability is defined in Section 3(a). | ||
c. | If Grantee engages in any of the following conduct for any reason, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions |
have not lapsed, and, for all restricted stock units under the Award whose Restrictions have lapsed, Grantee shall immediately pay to the Company the Fair Market Value (as defined in paragraph 7 below) of Motorola Common Stock ( Common Stock ) on the date(s) such Restrictions lapsed, without regard to any taxes that may have been deducted from such amount. For purposes of subparagraphs (i) through and including (v) below, Company or Motorola shall mean Motorola, Inc. and/or any of its Subsidiaries: |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or | ||
(iii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee engages in activities which are entirely or in part the same as or similar to activities in which Grantee engaged at any time during the two years preceding termination of Grantees employment with the Company, for any person, company or entity in connection with products, services or technological developments (existing or planned) that are entirely or in part the same as, similar to, or competitive with, any products, services or technological developments (existing or planned) on which Grantee worked at any time during the two years preceding termination of Grantees |
employment. This paragraph applies in countries in which Grantee has physically been present performing work for the Company at any time during the two years preceding termination of Grantees employment; and/or |
(iv) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned confidential information at any time during the two years prior to Grantees termination of employment with the Company; and/or | ||
(v) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, in any capacity, provides products or services competitive with or similar to products or services offered by the Company to any person, company or entity which was a customer for such products or services and with which customer Grantee had direct or indirect contact regarding those products or services or about which customer Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
d. | The Units are subject to the terms and conditions of the Companys Policy Regarding Recoupment of Incentive Payments upon Financial Restatement (such policy, as it may be amended from time to time, being the Recoupment Policy ). The Recoupment Policy provides for determinations by the Companys independent directors that, as a result of intentional misconduct by Grantee, the Companys financial results were restated (a Policy Restatement ). In the event of a Policy Restatement, the Companys independent directors may require, among other things (a) cancellation of any of the Units that remain outstanding; and/or (b) reimbursement of any gains in respect of the Units, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon Grantee. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. |
3. | Lapse of Restrictions . |
a. | The Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows: |
(i) | On the third anniversary of the Date of Grant if Grantee is continuously employed by the Company through that date. For purposes of this Agreement, the Restriction Period applicable to a Unit shall refer to the period of time beginning on the Date of Grant and ending on the date that the Restrictions applicable to such Unit shall lapse, as set forth above. | ||
(ii) | If a Change in Control of the Company occurs and the successor corporation (or parent thereof) does not assume this Award or replace it with a comparable award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced awards shall provide that the Restrictions shall lapse if Grantee is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 24 months of the Change in Control. For purposes of this Agreement, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | ||
(iii) | Upon termination of Grantees employment by Motorola or a Subsidiary by Total and Permanent Disability. 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 or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | ||
(iv) | If the Grantee dies. |
b. | In the case of Involuntary Termination due to a Divestiture before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse on a pro rata basis determined by dividing (i) the number of completed full years of service by the Grantee from the Award Date to the employees date of termination by (ii) the total length of the Restriction Period. In the case of Involuntary Termination for a reason other than Cause (but not a Divestiture) before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions on all the Units shall lapse. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction (a Divestiture). | ||
d. | If, during the Restriction Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the |
Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. |
e. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than 2(c)). |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation in whole or in part by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. Fair Market Value for this purpose shall be the closing price for a share of Common Stock on the date the Restrictions applicable to the Units lapse (the Restrictions Lapse Date) as reported for the New York Stock Exchange- Composite Transactions in the Wall Street Journal at www.online.wsj.com or, for purposes of imposing sanctions under paragraph 2(d), on any date specified therein. In the event the New York Stock Exchange is not open for trading on the Restrictions Lapse Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Restrictions Lapse Date. |
8. | Voting and Other Rights . |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. | ||
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the identity of any new employer (or the nature of any start-up business or self-employment), |
(b) Grantees new title, and (c) Grantees job duties and responsibilities. Grantee hereby authorizes Motorola or a Subsidiary to provide a copy of this Award Document to Grantees new employer. Grantee further agrees to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine his/her compliance with the terms hereof. |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 Grantees 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, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantees 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 Grantees behalf to a broker or other third party with whom Grantee may elect to deposit any shares of stock acquired pursuant to the Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing consent may affect Grantees ability to participate in the Plan. |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services. Grantees acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary, |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii), (iii), (iv) and/or (v) of this |
Agreement will be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. |
13. | Acknowledgements . With respect to the subject matter of paragraphs 2(c)(i), (ii), (iii), (iv) and (v) and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this Agreement shall be severable and in the event that any provision of this Agreement shall be found by any court as specified in paragraph 15 below to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this Agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this Agreement, Grantee affirmatively states that (s)he has not, will not and cannot rely on any representations not expressly made herein. |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or delegate shall be binding upon the parties. |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award ( Email Notification Date ), Grantee agrees to be bound by the foregoing terms and conditions, the 2006 Incentive Plan and any and all rules and regulations established by Motorola in connection with awards issued under the 2006 Incentive Plan. If Grantee does not electronically accept this Award within 30 days of the Email Notification Date Grantee will not be entitled to the Units. |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay.finances/awards_incentives/stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196, (847) 576-7885. |
1. | Award of Restricted Stock Units . The Company hereby grants to Grantee a total of 131,000 Motorola restricted stock units (the Units ) subject to the terms and conditions set forth below. All Awards shall be paid in whole shares of Motorola Common Stock ( Common Stock ); no fractional shares shall be credited or delivered to Grantee. |
2. | Restrictions . The Units are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the Restrictions ) which shall lapse, if at all, as described in Section 3 below. For purposes of this Award, the term Units includes any additional Units granted to the Grantee with respect to Units, still subject to the Restrictions. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Any Units still subject to the Restrictions shall be automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary for any reason other than death, Total and Permanent Disability, or Involuntary Termination due to (i) a Divestiture or (ii) for a reason other than for Serious Misconduct. For purposes of this Agreement, a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Total and Permanent Disability is defined in Section 3(a). | ||
c. | If Grantee engages in any of the following conduct for any reason, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions |
have not lapsed, and, for all restricted stock units under the Award whose Restrictions have lapsed, Grantee shall immediately pay to the Company the Fair Market Value (as defined in paragraph 7 below) of Motorola Common Stock ( Common Stock ) on the date(s) such Restrictions lapsed, without regard to any taxes that may have been deducted from such amount. For purposes of subparagraphs (i) through and including (v) below, Company or Motorola shall mean Motorola, Inc. and/or any of its Subsidiaries: |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or | ||
(iii) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee engages in activities which are entirely or in part the same as or similar to activities in which Grantee engaged at any time during the two years preceding termination of Grantees employment with the Company, for any person, company or entity in connection with products, services or technological developments (existing or planned) that are entirely or in part the same as, similar to, or competitive with, any products, services or technological developments (existing or planned) on which Grantee worked at any time during the two years preceding termination of Grantees |
employment. This paragraph applies in countries in which Grantee has physically been present performing work for the Company at any time during the two years preceding termination of Grantees employment; and/or | |||
(iv) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned confidential information at any time during the two years prior to Grantees termination of employment with the Company; and/or | ||
(v) | During Grantees employment and for a period of two years following the termination of Grantees employment for any reason, Grantee, directly or indirectly, in any capacity, provides products or services competitive with or similar to products or services offered by the Company to any person, company or entity which was a customer for such products or services and with which customer Grantee had direct or indirect contact regarding those products or services or about which customer Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
d. | The Units are subject to the terms and conditions of the Companys Policy Regarding Recoupment of Incentive Payments upon Financial Restatement (such policy, as it may be amended from time to time, being the Recoupment Policy ). The Recoupment Policy provides for determinations by the Companys independent directors that, as a result of intentional misconduct by Grantee, the Companys financial results were restated (a Policy Restatement ). In the event of a Policy Restatement, the Companys independent directors may require, among other things (a) cancellation of any of the Units that remain outstanding; and/or (b) reimbursement of any gains in respect of the Units, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon Grantee. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. |
3. | Lapse of Restrictions . |
a. | The Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows: |
(i) |
Vesting | ||||
Percentage | Date | |||
50 | % | On the 30-month anniversary of the Date of Grant if Grantee is continuously employed by the Company through that date | ||
50 | % | On the 60-month anniversary of the Date of Grant if Grantee is continuously employed by the Company through that date |
For purposes of this Agreement, the Restriction Period applicable to a Unit shall refer to the period of time beginning on the Date of Grant and ending on the date that the Restrictions applicable to such Unit shall lapse, as set forth in the table above. | |||
(ii) | If a Change in Control of the Company occurs and the successor corporation (or parent thereof) does not assume this Award or replace it with a comparable award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced awards shall provide that the Restrictions shall lapse if Grantee is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 24 months of the Change in Control. For purposes of this paragraph, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | ||
(iii) | Upon termination of Grantees employment by Motorola or a Subsidiary by Total and Permanent Disability. 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 or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | ||
(iv) | If the Grantee dies. |
b. | In the case of Involuntary Termination due to (i) a Divestiture or (ii) for a reason other than for Serious Misconduct before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse on a pro rata basis determined by dividing (i) the number of completed full years of service by the Grantee from the Award Date to the employees date of termination by (ii) the total length of the Restriction Period. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is |
sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction (a Divestiture). | |||
d. | Serious Misconduct for purposes of this Agreement 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. | ||
e. | If, during the Restriction Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. | ||
f. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than 2(c)). |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation in whole or in part by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. Fair Market Value for this purpose shall be the closing price for a share of Common Stock on the date the Restrictions applicable to the Units lapse (the Restrictions Lapse Date) as reported for the New York Stock Exchange- Composite Transactions in the Wall Street Journal at www.online.wsj.com or, for purposes of imposing sanctions under paragraph 2(d), on any date specified therein. In the event the New York Stock Exchange is not open for trading on the Restrictions Lapse Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Restrictions Lapse Date. |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other |
distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. | |||
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the identity of any new employer (or the nature of any start-up business or self-employment), (b) Grantees new title, and (c) Grantees job duties and responsibilities. Grantee hereby authorizes Motorola or a Subsidiary to provide a copy of this Award Document to Grantees new employer. Grantee further agrees to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine his/her compliance with the terms hereof. |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 Grantees 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, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantees 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 Grantees behalf to a broker or other third party with whom Grantee may elect to deposit any shares of stock acquired pursuant to the Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing consent may affect Grantees ability to participate in the Plan. |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on |
an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services. Grantees acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary, |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii), (iii), (iv) and/or (v) of this Agreement will be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. |
13. | Acknowledgements . With respect to the subject matter of paragraphs 2(c)(i), (ii), (iii), (iv) and (v) and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this Agreement shall be severable and in the event that any provision of this Agreement shall be found by any court as specified in paragraph 15 below to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this Agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this Agreement, Grantee affirmatively states that (s)he has not, will not and cannot rely on any representations not expressly made herein. |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or delegate shall be binding upon the parties. |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award ( Email Notification Date ), Grantee agrees to be bound by the foregoing terms and conditions, the 2006 Incentive Plan and any and all rules and regulations established by Motorola in connection with awards issued under the 2006 Incentive Plan. If Grantee does not electronically accept this Award within 30 days of the Email Notification Date Grantee will not be entitled to the Units. |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay.finances/awards_incentives/stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196, (847) 576-7885. |
| A full-time or part-time Employee of Motorola assigned to a Participating Organization; | ||
| Not a participant in any other annual group incentive or bonus plan ( e.g., sales commission plans, etc.); and | ||
| The Employee must meet one of the following conditions: |
| The Employee is active on a Company payroll as of the end of the Plan Year; | ||
| The Employee is on a Leave of Absence as of the end of the Plan Year; | ||
| The Employee Retired from the Company during the Plan Year while actively employed or from a Leave of Absence; or | ||
| The Employee died during the Plan Year while actively employed by the Company or while on a Leave of Absence. |
Award
|
= | Eligible Earnings | * | Target Award | * | Business | * | Individual | ||||||||
|
Percentage | Performance Factor | Performance Factor |
| All earned awards will be paid in cash. Payment will be made as soon as administratively practical following the close of a Plan Year. | ||
| A Participant shall have no right to any award until that award is paid. |
| The Compensation Committee has the overall responsibility for administering and amending this Plan, subject to the following: |
| The Compensation Committee, in its discretion, can include or exclude individual items from the calculation of the Business Performance Factors for good reason. | ||
| The Compensation Committee has delegated to the MIP Committee the authority to manage the day-to-day administration of the Plan including without limitation the discretionary authority to (i) administer and interpret the terms of the Plan, and (ii) amend the Plan only as necessary to reflect any ministerial, administrative or managerial functions; provided |
2
that any such amendment does not alter the Business Performance Factor once established for any Participating Organization or the Motorola-Wide Business Performance Factor for any Plan Year and provided that any such amendment does not increase the total payout under the Plan unless such increase is minor and due to increased Target Award Percentages, additional Participants, or other administrative changes. | |||
| The Compensation Committee has delegated certain responsibilities to the Chief Executive Officer of the Company, the exercise of which cannot result in an increased aggregate cost of the Plan in any Plan Year. | ||
| The Compensation Committee specifically reserves to itself the authority to set the initial Target Award Percentage and to determine any final award payment for any Participant who is (i) subject to Section 162(m), (ii) subject to Section 16, or (iii) designated as a member of the Motorola Senior Leadership Team. |
| Any claims for payments under the Plan or any other matter relating to the Plan must be presented in writing to the MIP Committee within 60 days after the event that is the subject of the claim. The MIP Committee will then provide a response within 60 days, which shall be final and binding. |
| Awards are subject to all applicable withholding taxes and other required deductions. | ||
| The Plan will not be available to Employees who are subject to the laws of any jurisdiction which prohibits any provisions of this Plan or in which tax or other business considerations make participation impracticable in the judgment of the MIP Committee. | ||
| This Plan does not constitute a guarantee of employment nor does it restrict the Companys rights to terminate employment at any time or for any reason. | ||
| The Plan and any individual award is offered as a gratuitous award at the sole discretion of the Company. The Plan does not create vested rights of any nature nor does it constitute a contract of employment or a contract of any other kind. The Plan does not |
3
create any customary concession or privilege to which there is any entitlement from year-to-year, except to the extent required under applicable law. Nothing in the Plan entitles an Employee to any remuneration or benefits not set forth in the Plan nor does it restrict the Companys rights to increase or decrease the compensation of any Employee, except as otherwise required under applicable law. | |||
| Except as explicitly provided by law, the awards shall not become a part of any employment condition, regular salary, remuneration package, contract or agreement, but shall remain gratuitous in all respects. Awards are not to be taken into account for determining overtime pay, severance pay, termination pay, pay in lieu of notice, or any other form of pay or compensation. | ||
| Except as explicitly provided by law, this Plan is provided at the Companys sole discretion and the Compensation Committee may modify or terminate it at any time, prospectively or retroactively, without notice or obligation for any reason. In addition, there is no obligation to extend the Plan or establish a replacement plan in subsequent years. | ||
| Effective as of January 1, 2008, all awards to Covered Persons are subject to the terms and conditions of the Recoupment Policy. The Recoupment Policy provides for determinations by the Companys independent directors of a Policy Restatement. In the event of a Policy Restatement, the Companys independent directors may require, among other things, reimbursement of the gross amount of any bonus or incentive compensation paid to the Covered Person hereunder on or after January 1, 2008 if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon the Covered Person. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. | ||
| The Plan shall not be funded in any way. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of awards. To the extent any person acquires a right to receive payment under the Plan, such right will be no greater than the right of an unsecured general creditor of the Company. | ||
| Award opportunities may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. |
4
| The Compensation Committee establishes the following administrative provisions reflecting changes in Employee status during the Plan Year: |
| Because employee retention is an important objective of this Plan and awards do not bear a precise relationship to time worked within the calendar year or length of service with the Company, Participants who separate from employment (payroll) prior to the end of the Plan Year (for reasons other than death or Retirement) shall not receive any award attributable to that Plan Year. | ||
| In the event a Participant (i) remains on payroll as an active Employee or is on a Leave of Absence at the end of a Plan Year, but is not actually working, (ii) Retires or dies prior to the end of the Plan Year while actively employed or on a Leave of Absence, any award received by the Participant shall be based solely on the Participants Eligible Earnings for the time the Participant actually worked during the Plan Year. Any such award payable on behalf of a deceased Participant shall be paid to the decedents estate. A Participant on any type of leave of absence shall not be considered to be actually working for purposes of this Plan. | ||
| Awards for transferred, promoted or demoted Participants will be calculated using (i) the Individual Performance Factor assigned at the end of the Plan Year and (ii) the Target Award Percentages and Business Performance Factors prorated for the portions of the Plan Year the Participant was assigned different target awards or was in different Participating Organizations during the Plan Year; provided, however, that the Target Award Percentage may not be increased without Compensation Committee approval for any Participant who is (i) subject to Section 162(m), (ii) subject to Section 16, or (iii) designated as a member of the Motorola Senior Leadership Team. |
5
| Any independent contractor, consultant, or individual performing services for the Company who has entered into an independent contractor or consultant agreement; | ||
| Any individual performing services under an independent contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement that the Company enters into for services; | ||
| Any person classified by the Company as a temporary or contract labor (such as black badges, brown badges, contractors, contract employees, job shoppers) regardless of the length of service; and | ||
| Any leased employee as defined in Section 414(n) of the U.S. Internal Revenue Code of 1986, as amended. |
6
7
8
» | Performance Cycle | |
The Plan is based upon multi-year performance cycles selected by the Committee with an initial three-year performance cycle beginning on January 1, 2005. | ||
» | Performance Measures | |
Performance measures for each cycle will be determined by the Committee based on improvement in economic profit and growth in sales of Motorola during each multi-year performance cycle. Performance measures may apply to performance in each year in the performance cycle, to cumulative performance during the entire performance cycle, or a combination of both. If performance measures are applied to performance in each year in the performance cycle, performance to target for each year shall be divided by the number of years in the performance cycle and added |
together to determine the award for the entire performance cycle. Awards may be subject to partial forfeiture if Motorolas total shareholder return for the entire performance cycle does not exceed the median total shareholder return for the performance cycle for a defined comparator group. | ||
Economic profit is defined as net operating profit after tax minus a capital charge. | ||
Net operating profit after tax and sales for each year during a performance cycle shall be determined in accordance with generally accepted accounting principles but shall exclude the effect of all acquisitions with a purchase price of $250 million or more, all gains or losses on the sale of a business, any asset impairment equal to $100 million or more, and any other special items designated by the Committee. | ||
» | Maximum Earned Award | |
A participants maximum earned award will be two times his/her target award. A participants target award is established at the commencement of a performance cycle based on a percentage of the participants base pay rate in effect at that time. The target award of any participant (other than a participant who is a covered employee within the meaning of Section 162(m) of the Internal Revenue Code (a Covered Employee)), will be adjusted at the time of promotion, demotion or other change of status and the award earned by the participant will be determined using a blended target award reflecting the period of time before and after the change of status and, if any, the target award applicable to each period. If performance measures are applied to performance in each year in the performance cycle, the target award for a Covered Employee for any succeeding year will be adjusted at the commencement of the next year in the performance cycle. | ||
» | The Payout Process |
| All earned awards will be paid in cash or Company stock, as determined by the Committee in its discretion. To the extent awards are paid in Company stock, the number of shares of stock earned by a participant shall be determined by dividing the amount of the award earned during the performance cycle by the Certification Date Value. The shares will be issued under, and subject to the limitations of, the Omnibus Plan or such other shareholder-approved Company equity-based incentive plan as designated by the Committee. | ||
| The Company shall have the right to satisfy all federal, state and local withholding tax requirements with respect to the award earned by reducing either (1) the cash paid (in the event or a cash payment) by the amount of withholding or (2) the number of earned shares (in the event of a stock payment) by the number of shares determined by dividing the amount of withholding required by the Certification Date Value. | ||
| Payments will be made as soon as administratively practicable following the close of a performance cycle. A participant has no right to any award until that award is paid. |
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| The Committee may reduce the amount of the payment to be made pursuant to this Plan to any participant who is or may be a covered employee within the meaning of Section 162(m) of the Internal Revenue Code at any time prior to payment as a result of the participants performance during the performance cycle. The Chief Executive Officer may adjust the amount of the payment to be made pursuant to this Plan to any other participant at any time prior to payment as a result of the participants performance during the performance cycle; provided, however, that any such adjustment may not result in a payment to the participant in excess of the participants maximum award under the Plan and any such adjustment to a payment to a member of the Senior Leadership Team will be subject to the approval of the Committee. | ||
| If the Committee determines, in its sole discretion, that a participant has willfully engaged in any activity at any time, prior to the payment of an award, that the Committee determines was, is, or will be harmful to the Company, the participant will forfeit any unpaid award. |
» | Change in Employment |
| Generally, a participant will be eligible for payment of an earned award only if employment continues through the last day of the performance cycle. | ||
| Pro rata awards may be possible, however, depending upon the type of employment termination. The table below summarizes how earned awards will generally be prorated in accordance with the type of employment termination: |
-3-
| In the event a participant is reclassified from a higher elected officer level to a lower elected officer level ( i.e. , (a) from Executive Vice President to either Senior Vice President or Corporate Vice President or (b) from Senior Vice President to Corporate Vice President), the participants target award will be recalculated to reflect (a) the higher target award level for the actual number of months completed within the performance cycle while employed in the higher elected officer level and (b) the lower target award level for the actual number of months completed within the performance cycle while employed in the lower elected officer level. | |
| In the event a participant is promoted from a lower elected officer level to a higher elected officer level ( i.e. , (a) from Corporate Vice President to Senior Vice President or Executive Vice President or (b) from Senior Vice President to Executive Vice President), the participants target award will be recalculated to reflect (a) the lower target award level for the actual number of months completed within the performance cycle while employed in the lower elected officer level and (b) the higher target award level for the actual number of months completed within the performance cycle while employed in the higher elected officer level. | |
| In the event a participant remains on payroll as an active employee at the end of a performance cycle, but is not actually working and/or is on a leave of absence which carries a right to return to work, the participant will be entitled to a pro rata award based on the number of completed months of employment within the performance cycle in which the participant was actually working as an Officer, provided that the participant is otherwise eligible for an award. | |
| A prorated payout will be based on final performance results and paid as soon as administratively practicable after the end of a performance cycle. | |
For purposes of the Plan, Total and Permanent Disability and Retirement will be defined as set forth below: | ||
| 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. | |
| Retirement shall only apply in countries other than member states or acceding countries of the European Union and shall mean retirement from Motorola or a Subsidiary as follows: |
-4-
» | Change in Control | |
If Motorola undergoes a Change in Control as defined in the Omnibus Plan: |
| If performance measures are applied to performance in the entire performance cycle, the sales growth and economic profit improvement for the performance cycle will be determined as of the effective date of the Change in Control and pro rata award payments will be made based on the number of completed months of the cycle as of the effective date of the Change in Control. | ||
| If performance measures are applied to performance in each year in the performance cycle, the sales growth and economic profit improvement for any partial year will be determined as of the date of the Change in Control and performance to target as of that date will be divided by the number of years in the performance cycle and added to the amounts earned in any completed years. | ||
| Awards will not be subject to any partial forfeiture based on total shareholder return. | ||
| Awards will be paid in stock as soon as administratively practicable following the effective date of the Change in Control, but no later than 90 days after that date. |
| The selection of any employee for participation in the Plan will not give that participant any right to be retained in the employ of the Company. |
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| Participation in the Plan is completely at the discretion of Motorola, and Motorolas decision to make an award in no way implies that similar awards may be granted in the future. | ||
| Anyone claiming a benefit under the Plan will not have any right to or interest in any awards unless and until all terms, conditions, and provisions of Plan that affect that person have been fulfilled as specified herein. | ||
| No employee will at any time have a right to be selected for participation in a future performance period for any fiscal year, despite having been selected for participation in a previous performance period. |
| Award opportunities may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. | ||
| To the extent permitted by law, amounts paid under the Plan will not be considered to be compensation for purposes of any benefit plan or program maintained by the Company. | ||
| All obligations of the Company under the Plan 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. | ||
| Effective as of January 1, 2008, all awards to Covered Persons are subject to the terms and conditions of the Recoupment Policy. The Recoupment Policy provides for determinations by the Companys independent directors of a Policy Restatement. In the event of a Policy Restatement, the Companys independent directors may require, among other things, reimbursement of the gross amount of any bonus or incentive compensation paid to the Covered Person hereunder on or after January 1, 2008, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in |
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accordance with the Recoupment Policy shall be binding upon the Covered Person. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. | |||
| In the event that any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included. | ||
| No participant or beneficiary 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 Plan, such right will be no greater than the right of any unsecured general creditor of the Company. | ||
| To the extent not preempted by federal law, the Plan, 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. | ||
| This Plan constitutes a legal document which governs all matters involved with its interpretation and administration and supersedes any writing or representation inconsistent with its terms. |
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Page 2 of 11
| All earned awards will be paid in cash or Company stock, as determined by the Committee in its discretion. To the extent awards are paid in Company stock, the number of shares of stock earned by a participant shall be determined by dividing the amount of the award earned during the performance cycle by the Certification Date Value. The shares will be issued under, and subject to the limitations of, the Omnibus Plan or such other shareholder-approved Company equity-based incentive plan as designated by the Committee. | ||
| The Chief Executive Officer may adjust the amount of the payment to be made pursuant to this Plan to any other participant at any time prior to payment as a result of the participants performance during the performance cycle; provided, however, that any such adjustment may not result in a payment to the participant in excess of the participants maximum award under the Plan and any such adjustment to a payment to a member of the Senior Leadership Team will be subject to the approval of the Committee. | ||
| The Committee may reduce the amount of the payment to be made pursuant to this Plan to any participant who is or may be a Covered Employee at any time prior to payment as a result of the participants performance during the performance cycle. | ||
| If the Committee determines, in its sole discretion, that a participant has willfully engaged in any activity at any time, prior to the payment of an award, that the Committee determines was, is, or will be harmful to the Company, the participant will forfeit any unpaid award. | ||
| The Company shall have the right to satisfy all federal, state and local withholding tax requirements with respect to the award earned by reducing either (1) the cash paid (in the vent of a cash payment) by the amount of withholding or (2) the number of earned shares (in the event of a stock payment) by the number of shares determined by dividing the amount of withholding required by the Certification Date Value. |
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| Payments will be made as soon as administratively practicable following the close of a performance cycle. A participant has no right to any award until that award is paid. |
» | Change in Employment |
| Generally, a participant will be eligible for payment of an earned award only if employment continues through the last day of the performance cycle. | ||
| Because employee retention is an important objective of this Plan and awards do not bear a precise relationship to time worked within the calendar year or length of service with the Company, Participants who separate from employment prior to the end of the performance cycle (for reasons other than death, Total and Permanent Disability or Retirement) shall not receive any award attributable to that performance cycle. | ||
| Pro rata awards may be possible, however, depending upon the type of employment termination. In the event a participant (i) remains on payroll as an active employee at the end of a performance cycle, but is not actually working, whether or not on a leave of absence, (ii) Retires, dies or incurs a Total and Permanent Disability prior to the end of the performance cycle while actively employed or on a leave of absence, the participant will be entitled to a pro rata award based on the number of completed months of employment within the performance cycle in which the participant was actually working as an Officer, provided that the participant is otherwise eligible for an award. The table below summarizes how earned awards will generally be prorated in accordance with the type of employment termination: |
Page 4 of 11
A prorated payout will be based on final performance results and paid as soon as administratively practicable after the end of a performance cycle. | |||
| In the event a participant is reclassified from a higher Officer level to a lower Officer level ( i.e. , from Executive Vice President to either Senior Vice President or Corporate Vice President or from Senior Vice President to Corporate Vice President), the participants target award will be recalculated to reflect (a) the higher target award for the actual number of months completed within the performance cycle while employed in the higher Officer level and (b) the lower target award level for the actual number of months completed within the performance cycle while employed in the lower Officer level. | ||
| In the event a participant (other than a Covered Employee) is reclassified from a lower Officer level to a higher Officer level ( i.e. , from Corporate Vice President to Senior Vice President or Executive Vice President or from Senior Vice President to Executive Vice President), the participants target award will be recalculated to reflect (a) the lower target award level for the actual number of months completed within the performance cycle while employed in the lower Officer level and (b) the |
Page 5 of 11
higher target award for the actual number of months completed within the performance cycle while employed in the higher Officer level. |
» | Change in Control | |
If the Company undergoes a Change in Control as defined in the Omnibus Plan, the treatment of outstanding awards under this Plan shall be determined by the terms of the Omnibus Plan in effect at the time of the commencement of the performance cycle. |
| The selection of any employee for participation in the Plan will not give that participant any right to be retained in the employ of the Company. | ||
| The Committees decision to make an award in no way implies that similar awards may be granted in the future. | ||
| Anyone claiming a benefit under the Plan will not have any right to or interest in any awards unless and until all terms, conditions, and provisions of Plan that affect that person have been fulfilled as specified herein. | ||
| No employee will at any time have a right to be selected for participation in a future performance period for any fiscal year, despite having been selected for participation in a previous performance period. |
Page 6 of 11
| Award opportunities may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. | ||
| To the extent permitted by law, amounts paid under the Plan will not be considered to be compensation for purposes of any benefit plan or program maintained by the Company. | ||
| All obligations of the Company under the Plan 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. | ||
| Effective as of January 1, 2008, all awards to Covered Persons are subject to the terms and conditions of the Recoupment Policy. The Recoupment Policy provides for determinations by the Companys independent directors of a Policy Restatement. In the event of a Policy Restatement, the Companys independent directors may require, among other things, reimbursement of the gross amount of any bonus or incentive compensation paid to the Covered Person hereunder on or after January 1, 2008, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon the Covered Person. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. | ||
| In the event that any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included. | ||
| No participant or beneficiary 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 Plan, such right will be no greater than the right of any unsecured general creditor of the Company. | ||
| This Plan constitutes a legal document which governs all matters involved with its interpretation and administration and supersedes any writing or representation inconsistent with its terms. |
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(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; or | ||
(iv) | Retiring with any other combination of age and service, at the discretion of the Committee. |
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Ending share price
|
||||
200-day average through last day of cycle
|
||||
+ |
|
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|
||||
= |
Total ending value
|
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|
|
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200-day average through first day of cycle
|
||||
|
||||
= |
Total value created
|
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÷ |
|
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200-day average through first day of cycle
|
||||
|
||||
= |
Total shareholder return
|
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Page 11 of 11
(a). | The establishment of Mr. Browns target award for calendar year 2008 under a 2008 cash-based, pay-for-performance annual incentive plan to be established by the Company with a target payout at 220% of his eligible earnings; | |
(b). | The establishment of Mr. Browns target award for an additional cash-based pay-for-performance annual incentive award to be established by the Company for calendar year 2008 with a target payout at 130% of his eligible earnings; and | |
(c). | The establishment of Mr. Browns target award at 350% of his eligible earnings for a long range incentive award to be established by the Company. |
* | For the purpose of the sign-on bonus, Cause is as defined in the 2006 Omnibus Incentive Plan. | |
** | For the purpose of entitlement to severance payments described above, Cause means (i) Mr. Liskas willful and continued failure to substantially perform his duties, other than any such failure resulting from incapacity due to physical or mental illness, which failure |
has continued for a period of at least 30 days; or (ii) his willful engagement in (A) any malfeasance, dishonesty or fraud that is intended to or does result in his substantial personal enrichment or a material detrimental effect on the Companys reputation or business or (B) gross misconduct; (iii) his indictment for, or plea of guilty or nolo contendere to (A) a felony in the United States or (B) to a felony outside the United States, which, regardless of where such felony occurs, the independent directors of the Board of Directors of the Company reasonably believe has had or will have a detrimental effect on the Companys reputation or business or his reputation; or (iv) his breach of one or more restrictive covenants in any written agreement between him and Motorola. |
1. | Retirement . |
| Edward J. Zander (Executive) will cease to be Chief Executive Officer (CEO) of Motorola, Inc. (the Company) as of the close of business on December 31, 2007 and will no longer be an officer of the Company as of such date, but will serve as non-executive Chairman of the Board of Directors of the Company (the Board) until the 2008 annual meeting of stockholders. | ||
| Executive will not be nominated or stand for re-election to the Board at the 2008 annual meeting of stockholders. | ||
| Executive will retire as an employee of the Company and all of its subsidiaries and affiliates effective as of the close of business on January 5, 2009 (the Retirement Date). | ||
| Prior to the Companys 2008 annual meeting of stockholders, Executives right to serve on corporate, civic or charitable boards or committees shall be subject to the last sentence of Section 3(a)(ii) of his Employment Agreement (the Employment Agreement) dated as of the 15 th day of December 2003, as amended through May 11, 2007. Following the Companys 2008 annual meeting of stockholders, subject to Section 7 of the Employment Agreement, Executive may serve on corporate, civic or charitable boards or committees. So long as Executive remains an employee of the Company, Executive may not otherwise perform services (including consulting services) for any other business. |
2. | Payments to Executive . |
| Executive will continue as a non-officer employee with the title Strategic Advisor to the CEO through the Retirement Date. During 2008, Executive will assist the Board and the new CEO with transition matters as may be mutually agreed upon by the new CEO and the Executive. | ||
| Until the Retirement Date: |
| Executive will continue to receive his regular base salary ($1.5 million) and employee benefits and fringe benefits pursuant to the Employment Agreement (except that he will no longer have personal use of corporate aircraft). If corporate aircraft are available, Executive may use corporate aircraft for travel relating to Company business. | ||
| Executive will not, however, be eligible to participate in the annual bonus, mid-range incentive or long-term incentive described in Section 3(b) of the Employment Agreement during 2008. (For the avoidance of doubt, Executive will be eligible to receive an annual bonus, a mid-range incentive payout and a long-range incentive payout for services through December 31, 2007.) | ||
| Executive will be provided with an office and administrative assistance commensurate with his role as a retired CEO of the Company. Such office shall be located in a non-Company facility at a location near Executives home in California. |
| Subject to the third bullet under item 3 (Effect on Employment Agreement) below, the outstanding equity awards listed in Exhibit 1 will vest on the dates shown therein. Stock options will remain exercisable in accordance with the terms of the applicable option award document as shown in Exhibit 1 . The equity awards listed in Exhibit 2 will not vest and will be forfeited. |
| In connection with the Executives retirement: |
| The Company will reimburse Executive for the expenses incurred by Executive relocating his residence from his apartment in Illinois to his existing house in California, excluding expenses associated with selling the apartment in Illinois. | ||
| For purposes of the Companys supplemental retirement plan, upon his retirement, Executive will be credited with a total of 5 years of credited service, and his final average compensation will be determined as of December 31, 2007. | ||
| All deferred compensation amounts and deferred restricted stock units will be paid to Executive at such times and in such manner as are consistent with the existing plans and the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, or the terms of any grandfathered deferred compensation plans, as applicable. See Exhibit 3 . |
3. | Effect on Employment Agreement . |
| Nothing reflected in this Chairman/CEO Retirement Term Sheet will constitute a termination of Executives employment by the Company without Cause or give Executive the right to terminate his employment for Good Reason (as those terms are used in the Employment Agreement). | ||
| The Executive will perform the agreements set forth in Section 7 of the Employment Agreement and will be subject to the provisions of any Stock Option Consideration Agreement or Restricted Stock Unit Award Agreement between the Company and Executive. For purposes of Section 7 of the Employment Agreement, the Date of Termination shall mean the Retirement Date. | ||
| If Executive terminates employment with the Company prior to January 5, 2009, (1) such earlier date shall be the Retirement Date for purposes of this Chairman/CEO Retirement Term Sheet, (2) Executive will cease to receive his regular base salary and employee benefits and fringe benefits and (3) any outstanding equity awards that have not vested as of the Retirement Date will be forfeited (including equity awards listed on Exhibit 1 ). |
EDWARD J. ZANDER
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/s/ Edward J. Zander
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Date: November 29, 2007 | |
|
2
Post-Retirement | ||||||||||||||||
Date Exercise | ||||||||||||||||
Grant Date | Vest Date | Shares | Strike Price | Period | ||||||||||||
01/05/04
|
01/05/08 | 377,190 | $ | 12.97 | None | |||||||||||
05/04/04
|
05/04/08 | 265,430 | $ | 16.30 | None | |||||||||||
02/14/05
|
02/14/08 | 75,000 | $ | 15.91 | 90 days | |||||||||||
05/03/05
|
05/03/08 | 187,500 | $ | 15.47 | 90 days | |||||||||||
05/03/06
|
05/03/08 | 200,000 | $ | 21.25 | 90 days |
Grant Date | Vest Date | Shares | ||||||
01/05/04
|
01/05/08 | 200,000 | ||||||
05/04/04
|
05/04/08 | 43,908 | ||||||
05/03/06
|
11/03/08 | 50,000 |
Scheduled
Grant Date
Vest Date
Shares
Strike Price
02/14/09
75,000
$
15.91
05/03/09
187,500
$
15.47
05/03/09
200,000
$
21.25
05/03/10
200,000
$
21.25
Grant Date
Scheduled Vest Date
Shares
05/03/10
75,000
05/03/11
50,000
Form
Payment Timing
January 1, 2008
Form
Payment Timing
January 1, 2008
1. | Title . For the Employment Period (as defined below), Executive shall serve as Acting Chief Financial Officer and Executive Vice President with such duties and responsibilities as are commensurate with such position, reporting directly to the Chief Executive Officer of the Company. During the Employment Period, Executive shall continue to serve as a member of the Board of Directors of the Company (the Board ). | |
2. | Effective Date . The Effective Date of the Agreement shall mean April 1, 2007. | |
3. | Employment Period . The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the earliest of: |
(a) | April 1, 2008; | ||
(b) | the expiration of the 30 calendar day period after the start date of another individual to serve as Chief Financial Officer of the Company; | ||
(c) | the Executives termination of employment for any other reason pursuant to Section 5, below. |
The period of Executives interim employment with the Company pursuant to this Agreement is referred to herein as the Employment Period . |
4. | Compensation and Benefits. |
(a) | Base Salary . |
(i) | For the period April 1, 2007 through September 30, 2007, the Executive shall receive salary of $1 payable in a lump sum upon completion of the Employment Period. |
(ii) | Beginning October 1, 2007 through the balance of the Employment Period, the Executive shall receive a gross monthly salary of $75,000 payable in a lump sum on the last business day of each month. The Company shall cease payment of the Executives monthly salary upon the expiration of the Employment Period. In the event the expiration of the Employment Period does not coincide with the last business day of the month, the Executive shall receive a pro rata lump sum payment based on the number of calendar days in the month occurring prior to the expiration of the Employment Period. |
(b) | Director Compensation . During the Employment Period, Executive shall not receive any compensation for his service on the Board. | ||
(c) | Annual & Long-Term Cash Bonuses . During the Employment Period, the Executive shall not be eligible to receive an annual or long-term cash bonus. | ||
(d) | Long-Term Equity Awards . The Executive shall receive grants of equity compensation awards pursuant to the Companys Omnibus Incentive Plan of 2006 (the Incentive Plan ) as set forth below. |
(i) | Initial Stock Option Grant . On the Effective Date, the Executive shall be granted an option (the Initial Stock Option ) to purchase 250,000 shares of common stock of the Company (the Common Stock ). The Initial Stock Option shall have: |
(A) | a per share exercise price equal to the closing price of a share of Common Stock on the date of grant as reported on the New York Stock Exchange Composite Transactions in the Wall Street Journal, Midwest Edition (the Fair Market Value ); | ||
(B) | a vesting schedule such that the Initial Stock Option will become exercisable in full on the first anniversary of the date of grant, provided that the Executive remains in the employ of the Company through September 30, 2007; and | ||
(C) | a ten-year term. |
All the terms and conditions of the Initial Stock Option shall be subject to the terms of the Incentive Plan and the award agreement evidencing the grant of the Initial Stock Option. |
(ii) | Initial Restricted Stock Unit Grant . On the Effective Date, the Executive shall be granted an award of 500,000 restricted stock units (the Initial RSUs ) based on shares of Common Stock pursuant to the Incentive Plan. The Initial RSUs shall vest: |
(A) | 33% if the Fair Market Value of Company common stock reaches $20.00 and remains at or above $20.00 for ten Trading Days (as |
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defined below) out of any thirty consecutive Trading Days all of which occur within the two-year period beginning on the date the Initial RSUs are granted (the Restriction Period ); |
(B) | an additional 33% if the Fair Market Value of Company common stock reaches $22.00 and remains at or above $22.00 for ten Trading Days out of any thirty consecutive Trading Days all of which occur within the Restriction Period; and | ||
(C) | the remaining 34% if the Fair Market Value of Company common stock reaches $24.00 and remains at or above $24.00 for ten Trading Days out of any thirty consecutive Trading Days all of which occur within the Restriction Period. |
For this purpose, a Trading Day shall be any day on which the New York Stock Exchange is open for trading. All the terms and conditions of the Initial RSUs shall be subject to the terms of the Incentive Plan and the award agreement evidencing the grant of the Initial RSUs, as provided to senior executives of the Company generally. | |||
(iii) | Subsequent Stock Option Grants . Beginning October 1, 2007, on the last business day of each month, if the Employment Period has not ended prior to that date, then the Executive will be granted a number of stock options (the Subsequent Stock Options ) as determined below. | ||
The number of options will be determined by dividing $200,000 by the Black-Scholes option value calculated on the date the Subsequent Stock Options are granted, as determined by the Company pursuant to the methodology set forth in the Companys annual report as filed on Form 10-K. | |||
Each Subsequent Stock Option shall have the following terms: |
(A) | a per share exercise price equal to the Fair Market Value on the applicable date of grant; | ||
(B) | a vesting schedule such that the Subsequent Stock Options will vest in four equal annual installments commencing on the first anniversary of the applicable date of grant if the Executive remains in the employ of the Company or serves as a Board member through each such date; and | ||
(C) | a ten-year term. |
The terms and conditions of the Subsequent Stock Options shall be subject to the terms of the Incentive Plan and the award agreements evidencing the grant of the Subsequent Stock Options which shall be in the form of the award attached hereto as Exhibit 1. From October 1, 2007 until |
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December 31, 2007, as a condition for accepting a Subsequent Stock Option, a stock option consideration agreement in the form attached as Attachment A hereto must be signed by Mr. Meredith and returned to the Secretary of the Compensation and Leadership Committee of Motorola Board of Directors. After December 31, 2007, as a condition for accepting a Subsequent Stock Option, a stock option consideration agreement in the form attached hereto as Exhibit 3 must be signed by Mr. Meredith and returned to the Secretary of the Compensation and Leadership Committee of the Motorola Board of Directors. | |||
(iv) | Subsequent RSUs . Beginning October 1, 2007, on the last business day of each month, if the Employment Period has not ended prior to that date, then the Executive will be granted a number of restricted stock units (the Subsequent RSUs ) equal to $300,000 divided by the Fair Market Value of company stock on the date of grant. Each Subsequent RSU shall vest in two equal installments as follows: |
(A) | 50% vesting on the 30 month anniversary of the applicable date of grant; and | ||
(B) | 50% vesting on the 60 month anniversary of the applicable date of grant, if the Executive remains in the employ of the Company or serves as a Board member through each such date. |
The terms and conditions of the Subsequent RSUs shall be subject to the terms of the Incentive Plan and the award agreements evidencing the grant of the Subsequent RSUs. From October 1, 2007 until December 31, 2007, the award agreements for the Subsequent RSUs shall be in the form of the award attached hereto as Exhibit 2. After December 31, 2007, the award agreements for the Subsequent RSUs shall be in the form of the award attached hereto as Exhibit 4. |
(e) | Change in Control Benefits . Upon a Change in Control (as defined in the Incentive Plan, and pursuant to the Motorola, Inc. Senior Officer Change in Control Severance Plan or any successor change in control plan or program (the Change in Control Plan )), the equity-based awards granted herein to the Executive shall become fully vested and exercisable (or, if applicable, all restrictions shall lapse), and all RSUs shall be paid out as promptly as practicable; provided, however, that the treatment of outstanding awards set forth above (referred to herein as Accelerated Treatment ) shall not apply if and to the extent that such awards are assumed by the successor corporation (or parent thereof) or are replaced with awards that preserve the existing value of such awards at the time of the Change in Control and provide for subsequent payout in accordance with the same vesting schedule applicable to the original awards; provided, further, that (i) with respect to any Initial Stock Options or Initial RSUs that are assumed or replaced, such assumed or replaced awards shall provide for the Accelerated Treatment if the Executive is involuntarily terminated or quits for |
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Good Reason (as defined in the Incentive Plan) prior to the one year anniversary of the Effective Date; and (ii) with respect to any Subsequent Stock Options or Subsequent RSUs that are assumed or replaced, such assumed or replaced awards shall provide for the Accelerated Treatment to the extent required in the attached award documents. During the Employment Period, if the Company adopts an equity incentive plan with Change in Control benefits more generous than the benefits provided in this Section 4(e) or a Change in Control severance plan for senior executives generally with more generous benefits than the Change in Control Plan, then the Executive will be entitled to those more generous benefits to the extent Executives awards are granted under such plan or such Change in Control severance plan is adopted, as applicable. | |||
(f) | Retirement Plans . During the Employment Period, the Executive shall not be eligible to participate in any of the qualified or non-qualified pension plans, practices, policies and programs of the Company, as may be in effect from time to time, for senior executives of the Company generally. The Executive may, however, participate in the Motorola 401(k) Plan, in accordance with the terms of such plan. | ||
(g) | Other Benefits . Until the end of the Employment Period, the Executive shall be eligible to participate in the welfare, perquisites, fringe benefit, and other benefit plans, practices, policies and programs, as may be in effect from time to time, for senior executives of the Company generally including without limitation: (i) reasonable use of Company aircraft for personal and business purposes (up to 165 flight hours for personal use; (ii) participation in the Companys Elected Officer Life Insurance Program; (iii) reimbursement of up to $60,000 of living expenses in Chicago; and (iv) financial planning. | ||
(h) | Expenses . During the Employment Period, the Executive shall be eligible for prompt reimbursement for business expenses reasonably incurred by the Executive in accordance with the Companys policies, as may be in effect from time to time, for its senior executives generally. |
5. | Termination of Employment . If the Executives employment is terminated for any reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive or the Executives legal representatives under this Agreement. The vesting of each stock option and RSU that is outstanding as of the date of termination shall be governed by the applicable provisions of the applicable award agreement, each of which is incorporated herein by reference, and the Incentive Plan. | |
6. | Additional Covenants . |
(a) | Confidential Information . The Executive shall not communicate, divulge or disseminate Confidential Information, as defined in the attached agreements, at any time during or after the Executives employment with the Affiliated Group, except with prior written consent of the Company, or as otherwise required by law or legal process or as such disclosure or use may be required in the course of the |
-5-
Executive performing his duties and responsibilities as Acting Chief Financial Officer and Executive Vice President. Notwithstanding the foregoing provisions, if the Executive is required to disclose any such confidential or proprietary information pursuant to applicable law or a subpoena or court order, the Executive shall promptly notify the Company in writing of any such requirement so that the Company or the appropriate member of the Affiliated Group may seek an appropriate protective order or other appropriate remedy or waive compliance with the provisions hereof. The Executive shall reasonably cooperate with the Affiliated Group to obtain such a protective order or other remedy. If such order or other remedy is not obtained prior to the time the Executive is required to make the disclosure, or the Company waives compliance with the provisions hereof, the Executive shall disclose only that portion of the confidential or proprietary information which he is advised by counsel in writing (either his or the Companys) that he is legally required to so disclose. Upon his termination of employment with the Company for any reason, the Executive shall promptly return to the Company, all records, files, memoranda, correspondence, notebooks, notes, reports, customer lists, drawings, plans, documents, and other documents and the like relating to the business of the Affiliated Group or containing any trade secrets relating to the Affiliated Group or that the Executive uses, prepares or comes into contact with during the course of the Executives employment with the Company, and all keys, credit cards and passes, and such materials shall remain the sole property of the Company and/or the Affiliated Group, as applicable. For purposes of the preceding sentence, the term trade secrets shall have the meaning ascribed to it under the Illinois Trade Secrets Act or, if such act is repealed, the Uniform Trade Secrets Act (on which the Illinois Trade Secrets Act is based). The Executive agrees to represent in writing to the Company upon termination of employment that he has complied with the foregoing provisions. |
(b) | Assistance . The Executive agrees that during and after his employment by the Company, the Executive will assist the Affiliated Group in the defense of any claims, or potential claims that may be made or threatened to be made against any member of the Affiliated Group in any action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (a Proceeding ), and will assist the Affiliated Group in the prosecution of any claims that may be made by any member of the Affiliated Group in any Proceeding, to the extent that such claims may relate to the Executives employment or the period of the Executives employment by the Company. The Executive agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to participate (or otherwise become involved) in any Proceeding involving such claims or potential claims. The Executive also agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to assist in any investigation (whether governmental or otherwise) of any member of the Affiliated Group (or their actions), regardless of whether a lawsuit has then been filed against any member of the Affiliated Group with respect to such investigation. The Company agrees to reimburse the Executive for all of the Executives reasonable out-of-pocket expenses associated with such assistance, including travel expenses and any attorneys fees and shall pay a reasonable per diem fee for the Executives |
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service, other than for testimony. In addition, the Executive agrees to provide such services as are reasonably requested by the Company to assist any successor to the Executive in the transition of duties and responsibilities to such successor, including without limitation consulting services for the 60 calendar day period following the Employment Period for no additional compensation. Any services or assistance contemplated in this Section 6(b) shall be at mutually agreed to and convenient times. |
(c) | Remedies . The Executive acknowledges and agrees that in addition to all other remedies at law and/or equity, including but not limited to those set forth in the attached agreements, (x) the Executives breach of the provisions of Section 6 will cause the Company irreparable harm, which cannot be adequately compensated by money damages, and (y) if the Company elects to prevent the Executive from breaching such provisions by obtaining an injunction against the Executive, there is a reasonable probability of the Companys eventual success on the merits. The Executive consents and agrees that if the Executive commits any such breach or threatens to commit any breach, the Company shall be entitled to temporary and permanent injunctive relief from a court of competent jurisdiction, in addition to, and not in lieu of, such other remedies as may be available to the Company for such breach, including the recovery of money damages. The Parties further acknowledge and agree that the provisions of Section 7(a) below are accurate and necessary because (A) this Agreement is entered into in the State of Illinois, (B) as of the Effective Date, Illinois will have a substantial relationship to the Parties and to this transaction, (C) as of the Effective Date, Illinois will be the headquarters state of the Company, which has operations nationwide and has a compelling interest in having its employees treated uniformly within the United States, (D) the use of Illinois law provides certainty to the Parties in any covenant litigation in the United States, and (E) enforcement of the provision of this Section 6 would not violate any fundamental public policy of Illinois or any other jurisdiction. If any of the provisions of Section 6 are determined to be wholly or partially unenforceable, the Executive hereby agrees that this Agreement or any provision hereof may be reformed so that it is enforceable to the maximum extent permitted by law. If any of the provisions of this Section 6 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the Companys right to enforce any such covenant in any other jurisdiction. | ||
(d) | The covenants in this Section 6 apply in the countries in which Executive has physically been present performing work for the Company at any time during the two years preceding termination of his employment. |
7. | Successors . |
(a) | This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives legal representatives. This Agreement shall |
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inure to the benefit of and be binding upon the Company and its successors and assigns. |
(b) | The Company shall cause any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all or a substantial portion of its business and/or assets to assume expressly and agree to perform this Agreement immediately upon such succession in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, Company shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. |
8. | Miscellaneous . |
(a) | This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without reference to principles of conflict of laws. The Parties hereto irrevocably agree to submit to the jurisdiction and venue of the courts of the State of Illinois, in any action or proceeding brought with respect to or in connection with this Agreement. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the Parties hereto or their respective successors and legal representatives. | ||
(b) | The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. | ||
(c) | Notwithstanding any other provision of this Agreement, the Company may withhold from any amounts payable or benefits provided under this Agreement any Federal, state, and local taxes as shall be required to be withheld pursuant to any applicable law or regulation. | ||
(d) | The Executives or the Companys failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. | ||
(e) | From and after the Effective Date, this Agreement, including the attachments that are incorporated by reference, shall supersede any other employment agreement or understanding between the Parties, provided that, notwithstanding any other provision of this Agreement to the contrary, in the event of a Change in Control (as defined in the Change in Control Plan), the Change in Control Plan shall supersede this Agreement; provided, that, the Change in Control provisions in this Agreement will continue to apply. |
9. | Directors and Officers Insurance . The Company shall continue to provide the Executive with reasonable Directors and Officers insurance coverage that is at least as favorable as the coverage provided to other directors and officers of the Company. Such |
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insurance coverage shall continue in effect both during the Employment Period and, while potential liability exists, thereafter. |
10. | Indemnification . The Company shall indemnify the Executive and hold him harmless to the fullest extent permitted by law and under the by-laws of the Company against, and in respect to, any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney fees), losses and damages resulting from the Executives good faith performance of his duties and obligations with the Company. | |
11. | Representations . The Executive hereby represents and warrants to the Company that the Executive is not party to any contract, understanding, agreement or policy, whether or not written, with his current employer (or any other previous employer) or otherwise, that would be breached by the Executives entering into, or performing services under, this Agreement. The Executive further represents that he has complied with all export control requirements and that he is legally authorized to work in the United States, that he has disclosed to the Company in writing all material threatened, pending, or actual claims that are unresolved and still outstanding as of the Effective Date, in each case, against the Executive of which he is aware, if any, as a result of his employment with his current employer (or any other previous employer) or his membership on any boards of directors. Executive agrees that he has not, will not and cannot rely on any representations not expressly made herein and the only consideration for signing this Employment Agreement are the terms stated herein and no other promises or representations of any kind have been made by any person or entity whatsoever to cause him to sign this Employment Agreement. |
MOTOROLA, INC. | EXECUTIVE | |||||||||
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By
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/s/ Greg A. Lee | /s/ Thomas J. Meredith | ||||||||
Greg A. Lee | Thomas J. Meredith | |||||||||
Senior Vice President, Human Resources | ||||||||||
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Date
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January 30, 2008 | Date | January 30, 2008 | |||||||
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Commerce ID |
1. | Award of Restricted Stock Units . The Company hereby grants to Grantee a total of 500,000 Motorola restricted stock units (the Units ) subject to the terms and conditions set forth below. All Awards shall be paid in whole shares of Motorola Common Stock (Common Stock); no fractional shares shall be credited or delivered to Grantee. | |
2. | Restrictions . The Units are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the Restrictions ) which shall lapse, if at all, as described in Section 3 below. For purposes of this Award, the term Units includes any additional Units granted to the Grantee with respect to Units, still subject to the Restrictions. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Any Units still subject to the Restrictions shall be automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary during the twelve-month period following the Date of Grant for any reason other than death (as provided in Section 3(a) below), Total and Permanent Disability (as provided in Section 3(a) below), or Involuntary Termination due to (A) a Divestiture or (B) for a reason other than for Serious Misconduct. For purposes of this Agreement, a termination of employment shall not include a change in Grantees work assignment from Executive Vice President and Acting Chief Financial Officer to any other position in the Motorola Finance organization or on the Motorola Senior Leadership Team or as a consultant to the CEO or any member of the Senior Leadership Team. Likewise for purposes of this agreement, a termination of employment shall not include a change in Grantees employment status from a full-time employee to either a non-employee consultant to the Company or a non-employee director of the Company, and a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Total and Permanent Disability is defined in Section 3(a). |
c. | If Grantee engages in any of the following conduct, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions have not lapsed, and, for all restricted stock units under the Award whose Restrictions have lapsed, Grantee shall immediately pay to the Company the Fair Market Value (as defined in paragraph 7 below) of Common Stock on the date(s) such Restrictions lapsed, without regard to any taxes that may have been deducted from such amount. For purposes of subparagraphs (i) through and including (iii) below, Company or Motorola shall mean Motorola Inc. and/or any of its Subsidiaries: |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed not generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or | ||
(iii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason, Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
3. | Lapse of Restrictions . |
a. | As long as the Units have not been forfeited as described in Section 2 above, and except as set forth in Section 3(b) below, the Restrictions applicable to the Units shall lapse as follows: |
| If in the two years following the Date of Grant (the Restriction Period), the Fair Market Value (as defined in paragraph 7 below) of Common Stock meets or exceeds the dollar amount set forth below for at least ten Trading Days (as defined below) during any thirty consecutive Trading Days, then the Restrictions shall lapse as to the corresponding percentage of Units set forth below: |
Dollar Amount | Percent Vested | |||
$20.00 per share
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33 | % | ||
$22.00 per share
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An additional 33% | |||
$24.00 per share
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The final 34% |
For purposes of this Agreement, Trading Day means any date on which the New York Stock Exchange is open for trading. |
| If a Change in Control of the Company occurs and the successor corporation (or parent thereof) does not assume this Award or replace it with a comparable award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced awards shall provide that the Restrictions shall lapse for any Participant that is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 12 months of the Date of Grant. For purposes of this paragraph, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | ||
| Subject to the vesting conditions outlined in subparagraph (i) above, upon termination of Grantees employment by Motorola or a Subsidiary by Total and Permanent Disability. 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 or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | ||
| Subject to the vesting conditions outlined in subparagraph (i) above, if the Grantee dies. |
b. | Subject to the vesting conditions outlined in subparagraph (i) above, in the case of Involuntary Termination due to a Divestiture or for a reason other than for Serious Misconduct before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse immediately. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction (a Divestiture). |
d. | Serious Misconduct for purposes of this Agreement 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. | ||
e. | Subject to the vesting conditions outlined in subparagraph (i) above, if, during the Restriction Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. | ||
f. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than Section 2(c)). To the extent the Restrictions under this Section 3 do not lapse with respect to some or all of the Units prior to the end of the Restriction Period, any such Units shall be forfeited. |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. | |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. | |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. | |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. For purposes of this Agreement, the Fair Market Value of Common Stock on any date shall be the closing price for a share of Common Stock on that date as reported for the New York Stock Exchange Composite Transactions in the Wall Street Journal, Midwest edition. | |
8. | Voting and Other Rights . |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. | ||
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about the Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 Grantees 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, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantees 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 the Grantees behalf to a broker or other third party with whom the Grantee may elect to deposit any shares of stock acquired pursuant to the Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing consent may affect the Grantees ability to participate in the Plan. | |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his services. Grantees acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary. | |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii) and/or (iii) of this Agreement will be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the |
protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. | ||
13. | Acknowledgements . With respect to the subject matter of paragraphs 2(c)(i), (ii) and (iii) and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this Agreement shall be severable and in the event that any provision of this Agreement shall be found by any court as specified in paragraph 15 below to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this Agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this Agreement, Grantee affirmatively states that he has not, will not and cannot rely on any representations not expressly made herein. | |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. | |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. | |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. | |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties. | |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award (Email Notification Date), Grantee agrees to be bound by the foregoing terms and conditions, the 2006 Incentive Plan and any and all rules and regulations established by Motorola in connection with awards issued under the 2006 Incentive Plan. If Grantee does not electronically accept this Award within 30 days of the Email Notification Date, Grantee will not be entitled to the Units. | |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay_finances/awards_incentives/stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 (847) 576-7885. |
Recipient:
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Thomas J. Meredith
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Date of Expiration: |
April 2, 2017
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Commerce ID #:
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Number of Options: |
250,000
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Date of Grant:
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April 2, 2007
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Exercise Price: |
$
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Percent
100% |
Date April 2, 2008 |
Recipient:
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Date of Expiration: | |||||||
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Commerce ID #:
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Number of Options: | |||||||
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Date of Grant:
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Exercise Price: | |||||||
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Percent | Date | |
25%
|
, 20 | |
25%
|
, 20 | |
25%
|
, 20 | |
25%
|
, 20 |
| If you are removed from the Board or not re-nominated to the Board for Cause as defined in the Plan, then, all of your Options (vested and unvested) expire upon the date you cease to be a member of the Board. | |
| If you voluntarily resign from the Board, all of your unvested Options will automatically expire upon the effective date of your resignation, and all of your vested but not yet exercised Options will expire on the earlier of (i) the date ninety |
(90) days after the date of resignation, or (ii) the Date of Expiration stated above. | ||
| If your service with the Board ends 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 first 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. | |
| If a Change in Control of the Company occurs during your service with the Board, and the successor corporation does not assume these Options or replace them with options that preserve the existing value of this award at the time of the Change in Control and provide for subsequent payout in accordance with the same vesting schedule applicable to this award, then: (1) all of your unvested Options will be fully vested and (2) all of your Options will be exercisable until the Date of Expiration set forth above. Further, with respect to any Options that are assumed or replaced as described above, such assumed or replaced options shall provide that they will be fully vested and exercisable until the Date of Expiration set forth above if you resign from the Board for Good Reason or are removed from the Board or not renominated to the Board for a reason other than Cause within 24 months of the Change in Control. For purposes of this paragraph, the terms Good Reason, Change in Control and Cause are defined in the Plan. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Except to the extent Grantees Employment Period (as defined in his Amended and Restated Employment Agreement dated October 4, 2007) is immediately succeeded by his continued service as a non-employee director on the Board, any Units still subject to the Restrictions shall be (x) automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary for any reason other than death (as provided in Section 3(a) below), Total and Permanent Disability (as provided in Section 3(a) below), or Involuntary Termination due to (A) a Divestiture or (B) for a reason other than for Serious Misconduct (as provided in Section 3(b) below). Further, if Grantee is removed from the Board or is not renominated to the Board for Cause, or if Grantee or voluntarily |
resigns from the Board, then any Units still subject to the Restrictions shall be automatically forfeited. For purposes of this Award, a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Cause is defined in the 2006 Incentive Plan. | |||
c. | If Grantee engages in any of the following conduct, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions have not lapsed, and, for all restricted stock units under the Award whose Restrictions have lapsed, Grantee shall immediately pay to the Company the Fair Market Value (as defined in paragraph 7 below) of Common Stock on the date(s) such Restrictions lapsed, without regard to any taxes that may have been deducted from such amount. For purposes of subparagraphs (i) through and including (iii) below, Company or Motorola shall mean Motorola Inc. and/or any of its Subsidiaries: |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed not generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or |
(iii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
3. | Lapse of Restrictions . |
a. | Except as set forth in Section 3(b) below, the Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows: |
(i) | 50% on the 30 month anniversary of the Date of Grant and an additional 50% on the 60 month anniversay of the Date of Grant (the Restriction Period); | ||
(ii) | If Grantee ceases to serve as a member of the Board for any reason (other than Grantees voluntary resignation or if Grantee is removed from the Board or is not renominated to the Board for Cause); | ||
(iii) | If a Change in Control of the Company occurs during Grantees Employment Period or any subsequent period of service on the Board and the successor corporation (or parent thereof) does not, during the Restriction Period, assume this Award or replace it with an award that preserves the existing value of this Award at the time of the Change in Control and that provides for subsequent payout in accordance with the same vesting schedule applicable to this Award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced Award shall provide that the Restrictions shall lapse if Grantee is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 24 months of the Change in Control. For purposes of this paragraph, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | ||
(iv) | Upon termination of Grantees Employment Period by Motorola or a Subsidiary due to Grantees Total and Permanent Disability. 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 or a determination of a |
permanent and total disability under a state workers compensation statute and, (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | |||
(v) | If the Grantee dies. |
b. | In the case of Involuntary Termination during the Employment Period due to a Divestiture or for a reason other than for Serious Misconduct before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse on a pro rata basis determined by dividing (i) the number of completed full years of service by the Grantee from the Award Date to the employees date of termination by (ii) the total length of the Restriction Period. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if, during the Employment Period, Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction during the Employment Period (a Divestiture). | ||
d. | Serious Misconduct for purposes of this Agreement means any misconduct identified as a ground for termination of employment in the Motorola Code of Business Conduct, or the human resources policies, or other written policies or procedures. | ||
e. | If, during the Employment Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. | ||
f. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than Section 2(c)). |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. Fair Market Value for this purpose shall be the closing price for a share of Common Stock on the day the Restrictions applicable to the Units lapse as reported for the New York Stock Exchange-Composite Transactions in the Wall Street Journal, Midwest edition. |
8. | Voting and Other Rights . |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. | ||
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the identity of any new employer (or the nature of any start-up business or self-employment), (b) Grantees new title, and (c) Grantees job duties and responsibilities. Grantee hereby authorizes Motorola or a Subsidiary to provide a copy of this Award Document to Grantees new employer. Grantee further agrees to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine his/her compliance with the terms hereof. |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about the Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his services. Grantees acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary. |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii) and/or (iii) of this Agreement will be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. |
13. | Acknowledgements . With respect to the subject matter of paragraphs 2(c)(i), (ii), and (iii), and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties. |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award (Email Notification Date), Grantee agrees to be bound by the foregoing terms and conditions, the 2006 Incentive Plan and any and all rules and regulations established by Motorola in connection with awards issued under the 2006 Incentive Plan. If Grantee does not electronically accept this Award within 30 days of the Email Notification Date, Grantee will not be entitled to the Units. |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay_finances/awards_incentives/ stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 (847) 576-7885. |
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Commerce ID |
1. | Award of Restricted Stock Units . The Company hereby grants to Grantee a total of «Txt_Nbr_of_Shares» («Whole_Nbr_of_Shares») Motorola restricted stock units (the Units ) subject to the terms and conditions set forth below. All Awards shall be paid in whole shares of Motorola Common Stock (Common Stock); no fractional shares shall be credited of delivered to Grantee. |
2. | Restrictions . The Units are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the Restrictions ) which shall lapse, if at all, as described in Section 3 below. For purposes of this Award, the term Units includes any additional Units granted to the Grantee with respect to Units, still subject to the Restrictions. |
a. | Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units still subject to Restrictions. The Units shall be forfeited if Grantee violates or attempts to violate these transfer Restrictions. Motorola shall have the right to assign this Agreement, which shall not affect the validity or enforceability of this Agreement. This Agreement shall inure to the benefit of assigns and successors of Motorola. | ||
b. | Except to the extent Grantees Employment Period (as defined in his Amended and Restated Employment Agreement dated October 4, 2007) is immediately succeeded by his continued service as a non-employee director on the Board, any Units still subject to the Restrictions shall be (x) automatically forfeited upon the Grantees termination of employment with Motorola or a Subsidiary for any reason other than death (as provided in Section 3(a) below), Total and Permanent Disability (as provided in Section 3(a) below), or Involuntary Termination due to (A) a Divestiture or (B) for a reason other than for Serious Misconduct (as provided in Section 3(b) below). Further, if Grantee is removed from the Board or is not renominated to the Board for Cause, or if Grantee or voluntarily |
resigns from the Board, then any Units still subject to the Restrictions shall be automatically forfeited. For purposes of this Award, a Subsidiary is any corporation or other entity in which a 50 percent or greater interest is held directly or indirectly by Motorola and which is consolidated for financial reporting purposes. Cause is defined in the 2006 Incentive Plan. | |||
c. | If Grantee engages in any of the following conduct, in addition to all remedies in law and/or equity available to the Company or any Subsidiary, Grantee shall forfeit all restricted stock units under the Award whose Restrictions have not lapsed, and, for all restricted stock units under the Award whose Restrictions have lapsed, Grantee shall immediately pay to the Company the Fair Market Value (as defined in paragraph 7 below) of Common Stock on the date(s) such Restrictions lapsed, without regard to any taxes that may have been deducted from such amount. For purposes of subparagraphs (i) through and including (iii) below, Company or Motorola shall mean Motorola Inc. and/or any of its Subsidiaries: |
(i) | During the course of Grantees employment and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Companys directions, any Company Confidential Information. Confidential Information means information concerning the Company and its business that is not generally known outside the Company, and includes (A) trade secrets; (B) intellectual property; (C) the Companys methods of operation and Company processes; (D) information regarding the Companys present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (E) information on customers or potential customers, including customers names, sales records, prices, and other terms of sales and Company cost information; (F) Company personnel data; (G) Company business plans, marketing plans, financial data and projections; and (H) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed not generally known until such broader use is actually commercially implemented; and/or | ||
(ii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with Grantees new or prospective employer, or any other company; and/or |
(iii) | During Grantees employment and for a period of one year following the termination of Grantees employment for any reason Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned Confidential Information at any time during the two years prior to Grantees termination of employment with the Company. |
d. | The Units are subject to the terms and conditions of the Companys Policy Regarding Recoupment of Incentive Payments upon Financial Restatement (such policy, as it may be amended from time to time, being the Recoupment Policy). The Recoupment Policy provides for determinations by the Companys independent directors that, as a result of intentional misconduct by Grantee, the Companys financial results were restated (a Policy Restatement). In the event of a Policy Restatement, the Companys independent directors may require, among other things (a) cancellation of any of the Units that remain outstanding; and/or (b) reimbursement of any gains in respect of the Units, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon Grantee. The Recoupment Policy is in addition to any other remedies which may be otherwise available at law, in equity or under contract, to the Company. |
3. | Lapse of Restrictions . |
a. | Except as set forth in Section 3(b) below, the Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows: |
(i) | 50% on the 30 month anniversary of the Date of Grant and an additional 50% on the 60 month anniversay of the Date of Grant (the Restriction Period); | ||
(ii) | If Grantee ceases to serve as a member of the Board for any reason (other than Grantees voluntary resignation or if Grantee is removed from the Board or is not renominated to the Board for Cause); | ||
(iii) | If a Change in Control of the Company occurs during Grantees Employment Period or any subsequent period of service on the Board and the successor corporation (or parent thereof) does not, during the Restriction Period, assume this Award or replace it with an award that preserves the existing value of this Award at the time of the Change in Control and that provides for subsequent payout in |
accordance with the same vesting schedule applicable to this Award; provided, further, that with respect to any Award that is assumed or replaced, such assumed or replaced Award shall provide that the Restrictions shall lapse if Grantee is involuntarily terminated (for a reason other than Cause) or quits for Good Reason within 24 months of the Change in Control. For purposes of this paragraph, the terms Change in Control, Cause and Good Reason are defined in the 2006 Incentive Plan; | |||
(iv) | Upon termination of Grantees Employment Period by Motorola or a Subsidiary due to Grantees Total and Permanent Disability. 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 or a determination of a permanent and total disability under a state workers compensation statute and, (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or | ||
(v) | If the Grantee dies. |
b. | In the case of Involuntary Termination during the Employment Period due to a Divestiture or for a reason other than for Serious Misconduct before the expiration of the Restriction Period, if the Units have not been forfeited as described in Section 2 above, then the Restrictions shall lapse on a pro rata basis determined by dividing (i) the number of completed full years of service by the Grantee from the Award Date to the employees date of termination by (ii) the total length of the Restriction Period. | ||
c. | Termination due to a Divestiture for purposes of this Agreement means if, during the Employment Period, Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold or whose shares are distributed to the Motorola stockholders in a spin-off or similar transaction during the Employment Period (a Divestiture). | ||
d. | Serious Misconduct for purposes of this Agreement means any misconduct identified as a ground for termination of employment in the Motorola Code of Business Conduct, or the human resources policies, or other written policies or procedures. | ||
e. | If, during the Employment Period, the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restriction Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. Leave of Absence means an approved leave of absence from |
Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola. | |||
f. | To the extent the Restrictions lapse under this Section 3 with respect to the Units, they will be free of the terms and conditions of this Award (other than Section 2(c)). |
4. | Adjustments . If the number of outstanding shares of Common Stock is changed as a result of a stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted to correspond to the change in the outstanding shares of Common Stock. |
5. | Dividends . No dividends (or dividend equivalents) shall be paid with respect to Units credited to the Grantees account. |
6. | Delivery of Certificates or Equivalent . Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed. |
7. | Withholding Taxes . The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the Units. Grantee may satisfy any minimum withholding obligation by electing to have the plan administrator retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date the Restrictions applicable to the Units lapse equal to the amount to be withheld. Fair Market Value for this purpose shall be the closing price for a share of Common Stock on the day the Restrictions applicable to the Units lapse as reported for the New York Stock Exchange-Composite Transactions in the Wall Street Journal, Midwest edition. |
8. | Voting and Other Rights . |
a. | Grantee shall have no rights as a stockholder of the Company in respect of the Units, including the right to vote and to receive cash dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Units. | ||
b. | The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary, to terminate Grantees employment at any time. |
9. | Agreement Following Termination of Employment . Grantee agrees that upon termination of employment with Motorola or a Subsidiary, Grantee will immediately inform Motorola of (a) the identity of any new employer (or the nature of any start-up business or self-employment), (b) Grantees new title, and (c) Grantees job duties and responsibilities. Grantee hereby authorizes Motorola or a Subsidiary to provide a copy of this Award Document to Grantees new employer. |
Grantee further agrees to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine his/her compliance with the terms hereof. |
10. | Consent to Transfer Personal Data . By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this paragraph. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantees ability to participate in the Plan. Motorola, its Subsidiaries and Grantees employer hold certain personal information about the Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, 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 Grantees 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, including the United States. Grantees authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantees 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 the Grantees behalf to a broker or other third party with whom the Grantee may elect to deposit any shares of stock acquired pursuant to the Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing consent may affect the Grantees ability to participate in the Plan. |
11. | Nature of Award . By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorolas decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantees right or the Companys right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. In addition, the Grantee hereby acknowledges that he has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his services. Grantees acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary. |
12. | Remedies for Breach . Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of paragraphs 2(c)(i), (ii) and/or (iii) of this Agreement will |
be irreparable and further agrees the Company may obtain injunctive relief against the Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this Agreement, any other agreements between the Grantee and the Company for the protection of the Companys Confidential Information, or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in paragraph 15 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over the Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief. |
13. | Acknowledgements. With respect to the subject matter of paragraphs 2(c)(i), (ii), and (iii), and paragraphs 12 and 15 hereof, this Agreement is the entire agreement with the Company. No waiver of any breach of any provision of this Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this Agreement shall be severable and in the event that any provision of this Agreement shall be found by any court as specified in paragraph 15 below to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this Agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this Agreement, Grantee affirmatively states that he has not, will not and cannot rely on any representations not expressly made herein. |
14. | Funding . No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder. The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company. |
15. | Governing Law . All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any states conflicts of law principles. Any disputes regarding this Award or Agreement shall be brought only in the state or federal courts of Illinois. |
16. | Waiver . The failure of the Company to enforce at any time any provision of this Award shall in no way be construed to be a waiver of such provision or any other provision hereof. |
17. | Actions by the Compensation Committee . The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties. |
18. | Acceptance of Terms and Conditions . By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to Grantee of the grant of this Award (Email Notification Date), Grantee agrees to be bound by the foregoing terms and conditions, the 2006 Incentive Plan and any and all rules and regulations established by Motorola in connection with awards issued under the 2006 Incentive Plan. If Grantee does not electronically accept this Award within 30 days of the Email Notification Date, Grantee will not be entitled to the Units. |
19. | Plan Documents . The 2006 Incentive Plan and the Prospectus for the 2006 Incentive Plan are available at http://myhr.mot.com/pay_finances/awards_incentives/ stock_options/plan_documents.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 (847) 576-7885. |
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RUTH FATTORI | MOTOROLA, INC. | |||||||
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/s/ Ruth A. Fattori
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By: |
/s/ Gregory Q. Brown
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Date:
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December 20, 2007
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Date: |
December 20, 2007
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4
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Date:
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5
Years Ended December 31, | ||||||||||||||||||||
(In Millions) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Pretax income (loss)
(1)
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$ | (384 | ) | $ | 4,605 | $ | 6,402 | $ | 3,083 | $ | 1,214 | |||||||||
Capitalized interest
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Fixed charges
(as calculated below)
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439 | 411 | 407 | 449 | 573 | |||||||||||||||
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Earnings
(2)
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$ | 55 | $ | 5,016 | $ | 6,809 | $ | 3,532 | $ | 1,787 | ||||||||||
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Fixed charges:
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Interest expense
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$ | 362 | $ | 330 | $ | 324 | $ | 381 | $ | 504 | ||||||||||
Rent expense interest factor
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77 | 80 | 83 | 68 | 70 | |||||||||||||||
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Total fixed charges
(2)
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$ | 439 | $ | 411 | $ | 407 | $ | 449 | $ | 573 | ||||||||||
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Ratio of earnings to fixed charges
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0.1 | 12.2 | 16.7 | 7.9 | 3.1 | |||||||||||||||
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(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. |
1. | I have reviewed this annual report on Form 10-K of Motorola, Inc. for the period ended December 31, 2007; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
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/s/ Gregory Q. Brown | |||
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Gregory Q. Brown | |||
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President and Chief Executive Officer | |||
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Motorola, Inc. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
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/s/ Thomas J. Meredith | |||
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Thomas J. Meredith | |||
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Executive Vice President, | |||
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Acting Chief Financial Officer | |||
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Motorola, Inc. |
(1) | the annual report on Form 10-K for the period ended December 31, 2007 (the Annual Report), which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and | ||
(2) | the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc. |
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/s/ Gregory Q. Brown | |||
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Gregory Q. Brown | |||
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President and Chief Executive Officer | |||
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Motorola, Inc. |
(1) | the annual report on Form 10-K for the period ended December 31, 2007 (the Annual Report), which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and | ||
(2) | the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc. |
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/s/ Thomas J. Meredith | |||
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Thomas J. Meredith | |||
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Executive Vice President, | |||
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Acting Chief Financial Officer | |||
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Motorola, Inc. |