UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ending March 28, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to _________
Commission file number: 1-7221
MOTOROLA, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-1115800
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 E. Algonquin Road, Schaumburg, Illinois 60196
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 576-5000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of
common stock as of the close of business on March 28, 1998:
Class Number of Shares
Common Stock; $3 Par Value 597,676,024
Motorola, Inc. and Subsidiaries
Index
Part I
Financial Information
Item 1 Financial Statements
Condensed Consolidated Statements of Earnings for the
Three-Month Periods Ended March 28, 1998 and
March 29, 1997
Condensed Consolidated Balance Sheets at
March 28, 1998 and December 31, 1997
Condensed Consolidated Statement of Stockholders' Equity for
the Three-Month Period Ended March 28, 1998
Condensed Consolidated Statements of Cash Flows for the
Three-Month Periods Ended March 28, 1998 and
March 29, 1997
Notes to Condensed Consolidated Financial
Statements
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II
Other Information
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Part I - Financial Information
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 28, March 29,
1998 1997
Net sales $ 6,886 $ 6,642
Costs and expenses
Manufacturing and other costs of sales 4,814 4,384
Selling, general and
administrative expenses 1,237 1,162
Depreciation expense 540 565
Interest expense, net 38 32
Total costs and expenses 6,629 6,143
Earnings before income taxes 257 499
Income taxes 77 174
Net earnings $ 180 $ 325
Net earnings per common share
Basic $ .30 $ .55
Diluted $ .30 $ .53
Weighted average common shares outstanding
Basic 597.4 593.9
Diluted 611.3 610.8
Dividends paid per share $ .12 $ .12
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
(Unaudited)
March 28, December 31,
1998 1997
Assets
Current Assets
Cash and cash equivalents $ 1,509 $ 1,445
Short-term investments 289 335
Accounts receivable, net 4,906 4,847
Inventories 4,408 4,096
Deferred income taxes 1,748 1,726
Other current assets 764 787
Total current assets 13,624 13,236
Property, plant and equipment, net 9,927 9,856
Other assets 4,516 4,186
Total Assets $28,067 $27,278
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable and current portion of
long-term debt $ 1,994 $ 1,282
Accounts payable 2,098 2,297
Accrued liabilities 5,386 5,476
Total current liabilities 9,478 9,055
Long-term debt 2,127 2,144
Deferred income taxes 1,618 1,522
Other liabilities 1,317 1,285
Stockholders' Equity
Common stock, $3 par value 1,794 1,793
Preferred stock, $100 par value issuable
in series --- ---
Additional paid-in capital 1,725 1,720
Retained earnings 9,612 9,504
Non-owner changes to equity 396 255
Total stockholders' equity 13,527 13,272
Total liabilities and stockholders' equity $28,067 $27,278
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
(Dollars in millions)
Non-Owner Changes To Equity
Common
Stock Fair Value
and Adjustment Foreign Minimum
Additional to Certain Currency Pension
Paid-In Cost-Based Translation Liability Retained
Capital Investments Adjustments Adjustment Earnings
------- ----------- ----------- ---------- --------
BALANCES AT $3,513 $533 ($240) ($38) $9,504
12/31/97
Net earnings
180
Fair value
adjustment
to certain
cost-based
investments:
Reversal
of prior
period
adjustment (533)
Recognition
of current
period
unrecognized
gain 699
Change in foreign
currency
translation
adjustments (25)
Stock options
exercised
and other 6
Dividends declared (72)
BALANCES AT
3/28/98 $3,519 $699 ($265) ($38) $9,612
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)
Three Months Ended
March 28, March 29,
1998 1997
Operating
Net earnings $ 180 $ 325
Add(deduct) non-cash items
Depreciation 540 565
Deferred income taxes (35) 40
Amortization of debt discount and issue costs 2 2
Gain on disposition of investments in
affiliated companies (90) (17)
Change in assets and liabilities, net of
effects of acquisitions and dispositions
Accounts receivable, net (58) (259)
Inventories (312) (252)
Other current assets 21 11
Accounts payable and accrued liabilities (290) (29)
Other assets and liabilities 85 49
Net cash provided by operating activities $ 43 $ 435
Investing
Acquisitions and advances to affiliated
companies $ (111) $ (32)
Proceeds from the dispositions of investments
in affiliated companies 111 22
Capital expenditures (684) (521)
Other changes to property, plant and
equipment, net 57 197
Sales of short-term investments 46 31
Net cash used for investing activities $ (581) $ (303)
Financing
Proceeds from(repayment of) commercial paper
and short-term borrowings $ 712 $ 140
Proceeds from issuance of debt 5 1
Repayment of debt (24) (68)
Issuance of common stock 6 12
Payment of dividends (72) (71)
Net cash provided by financing activities $ 627 $ 14
Effect of exchange rate changes on cash and
cash equivalents (25) (79)
Net increase in cash and cash equivalents $ 64 $ 67
Cash and cash equivalents, beginning of period $1,445 $1,513
Cash and cash equivalents, end of period $1,509 $1,580
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements as of March 28, 1998 and
for the three-month periods ended March 28, 1998 and March 29, 1997,
include, in the opinion of management, all adjustments (consisting solely
of normal recurring adjustments and reclassifications) necessary to present
fairly the financial position, results of operations and cash flows at
March 28, 1998 and for all periods presented.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto incorporated
by reference in the Company's Form 10-K for the year ending December 31,
1997. The results of operations for the three-month period ended March 28,
1998 are not necessarily indicative of the operating results to be expected
for the full year.
2. Supplemental Balance Sheet Information
Inventories consist of the following (in millions):
March 28, Dec. 31,
1998 1997
Finished goods $1,182 $1,078
Work in process and production materials 3,226 3,018
Inventories $4,408 $4,096
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", requires the carrying
value of certain investments to be adjusted to fair value. The Company
recorded an increase to stockholders' equity, other assets and deferred
income taxes of $699 million, $1,157 million and $458 million as of March
28, 1998; compared to an increase of $533 million, $881 million and $348
million as of December 31, 1997.
3. Supplemental Cash Flows Information
Cash paid for interest during the first quarters of 1998 and 1997 was $60
million and $59 million, respectively. Cash paid for income taxes during
the first quarters of 1998 and 1997 was $158 million and $195 million,
respectively.
4. Earnings Per Share
The following table presents a reconciliation of the numerators and
denominators of basic and diluted earnings per common share for the periods
specified:
Three Months Ended
March 28, March 29,
(Dollars in millions, except per share amounts) 1998 1997
Basic earnings per common share:
Net earnings $ 180 $ 325
Weighted average common shares
Outstanding 597.4 593.9
Per share amount $ .30 $ .55
Diluted earnings per common share:
Net earnings $ 180 $ 325
Add: Interest on zero coupon
notes, net of taxes, and
effect of executive
incentive and employee
profit sharing plans 1 1
Net earnings, as adjusted $ 181 $ 326
Weighted average common shares
outstanding 597.4 593.9
Add: Effect of dilutive securities
Stock options 7.7 10.5
Zero coupon notes 6.2 6.4
Diluted weighted average common
shares outstanding 611.3 610.8
Per share amount $ .30 $ .53
5. Recent Accounting Pronouncements
As of January 1, 1998, the Company implemented SFAS No. 130 "Reporting
Comprehensive Income". This pronouncement, which is solely a financial
statement presentation standard, requires the Company to disclose non-owner
changes included in equity but not included in net earnings. These changes
include the fair value adjustment to certain cost-based investments, the
foreign currency translation adjustments, and the minimum pension liability
adjustment. Comprehensive earnings for the three-month periods ended March
28, 1998, and March 29, 1997, were $321 million and $265 million,
respectively.
During the first quarter, the Company adopted SFAS No. 132 "Employers'
Disclosures about Pensions and Other Postretirement Benefits". This new
accounting standard also only affects financial statement presentation and
disclosure.
Motorola, Inc. and Subsidiaries
Management's Discussion and Analysis
of Financial Condition and Results of Operations
This commentary should be read in conjunction with the Company's
consolidated financial statements and related notes thereto and
management's discussion and analysis of financial condition and results of
operations incorporated by reference in the Company's Form 10-K for the
year ended December 31, 1997.
Results of Operations:
Sales increased 4 percent to $6.9 billion from $6.6 billion in the first
quarter of 1997. Earnings were $180 million, compared with $325 million a
year earlier. Earnings per share (diluted) were 30 cents, compared with 53
cents a year ago. Earnings in both periods were positively affected by the
sale of assets and favorable settlements of patent claims.
Special items increased income by $54 million before taxes in 1998,
equivalent to 7 cents per share after taxes. In the first quarter of 1997,
the special items increased income by $59 million before taxes, equivalent
to 6 cents per share after taxes. Excluding special items from both
periods, earnings would have been $142 million, or 23 cents per share in
1998 and $286 million, or 47 cents per share in the year-earlier quarter.
Net margin on sales was 2.6 percent in 1998, compared with 4.9 percent in
1997. Excluding special items, these margins would have been 2.1 percent
in the first quarter and 4.3 percent a year ago.
Cellular Products Segment sales increased 3 percent to $2.81 billion,
orders were flat and segment operating profits were lower. The segment
includes results of the Cellular Subscriber Sector (CSS), the Cellular
Infrastructure Group (CIG) and the Network Management Group.
CSS sales and orders declined. Sales and orders were higher in Europe
but lower in the Americas and Asia. Digital product sales, which
accounted for approximately 65 percent of sales, increased
significantly versus a year ago. This increase was largely offset by a
decline in analog product sales, primarily caused by an accelerating
trend of demand shift to digital products. CSS began shipments of CDMA
(Code Division Multiple Access) phones using Motorola's CDMA chipset
and offering advanced digital features. The phones are for use in the
U.S., Hong Kong and South Korea. CSS also expanded its product line of
TDMA (Time Division Multiple Access) cellular telephones.
CIG sales and orders were higher. Sales increased significantly in
both the Americas and Japan while they declined in Europe and China,
and declined very significantly in other Asian markets. Orders were up
significantly in the Americas, higher in Japan but lower in Europe and
China, and declined very significantly in other Asian markets. Digital
product sales, which accounted for approximately 80 percent of sales,
increased significantly while analog product sales declined. CIG
announced four contracts totaling more than $150 million to deploy
commercial CDMA digital cellular systems in North Carolina, South
Carolina, South Dakota, and five other U.S. markets, as well as in
Mexico. In addition, CIG won contracts totaling more than $150 million
to expand GSM networks in China, Kuwait and Portugal.
Semiconductor Products Segment sales increased 1 percent to $1.83
billion, orders were 4 percent lower and the segment had an operating
loss, compared with a profit a year ago. The loss is attributable to
various restructuring charges, without which the segment would have
reported a slight profit. The segment also was affected by weak demand
in Asia and increased pricing pressure worldwide. On a regional basis,
orders were higher in Europe and lower in Japan, the Asia-Pacific
region and the Americas. By business, orders improved significantly
for the Networking and Computing Systems Group, were higher for the
Transportation Systems Group and the Wireless Subscriber Systems Group
but declined for the Consumer Systems Group and the Semiconductor
Components Group.
Land Mobile Products Segment sales climbed 27 percent to $1.24 billion,
orders rose 2 percent, and operating profits were higher. Profits include
a gain on the sale of a one-third interest in the shared network operation
of Motorola Communications Israel, Ltd. to Ampal (Israel) Ltd. Orders in
the iDEN(Registered Trademark) business were lower compared with the
significant demand experienced in the same period last year. The iDEN
business includes large infrastructure orders, which increase the potential
for volatility in the timing of order recognition during any particular
period. Contracts with a combined value of approximately $40 million were
received for new iDEN systems in Peru and in Singapore.
Messaging, Information and Media Segment sales declined 25 percent to
$693 million, orders were 21 percent lower and the segment had an
operating loss versus a profit a year ago. These results are largely
attributable to continued weak paging sales to operators in North
America and China as well as to the weak Asian economy. Management
believes paging operators continue to manage inventory levels very
closely to improve their financial position and cash flow. Management
also believes that sales by operators to consumers in North America and
China continue to grow.
Automotive, Component, Computer and Energy Sector sales rose 3 percent,
orders increased 9 percent and operating profits were higher. Two of
its businesses, the Component Products Group and Energy Systems Group,
were negatively affected by weakened Asian currencies which reduced
sales to their original-equipment manufacturing customers in the
region. The sector formed a new business, Telematics Information
Systems, to leverage technologies related to the emerging telematics
industry. Motorola Computer Group became part of the sector in
January. The sector's results are reported as part of the "Other
Products" segment.
Space and Systems Technology Group sales increased 41 percent, orders
were 32 percent lower than a year ago and the segment had an operating
profit compared with a loss a year ago, as anticipated due largely to
planned activity in the IRIDIUM(Registered Trademark) program. Results
are reported as part of the "Other Products" segment.
Since the beginning of 1998, the group has successfully launched 21
IRIDIUM system satellites into low-earth orbit, bringing the total
number of operational, on-orbit satellites to 62. The system's voice
links, paging signals, satellite crosslinks and satellite hand-offs
have been successfully tested. Testing of the satellite system will
continue until the start of commercial service, expected at the end of
September this year. As previously reported, Iridium LLC may require
additional financing, possibly during the second half of 1998, to
continue to make contractual payments to the Company.
Manufacturing and other costs of sales were 70 percent of sales,
compared with 66 percent in the first quarter of 1997. Increased
pricing pressures were experienced in several business segments and
were due to a variety of factors including weakened Asian currencies
and reduced demand for pagers and analog cellular telephones.
Selling, general and administrative expenses were 18 percent of sales
versus 17 percent in the year-earlier period. Excluding the losses
recognized on the Company's investments in Iridium LLC and the White
Oak semiconductor joint venture, selling, general and administrative
expenses would have declined as a percentage of sales.
Depreciation expense decreased as a percent of sales. Interest expense
increased slightly. The tax rate for the first quarter was 30 percent,
compared with 35 percent in the prior year.
Liquidity and Capital Resources:
Net cash provided by operations decreased to $43 million for the
three-month period ended March 28, 1998, as compared to $435 million for
the three-month period ended March 29, 1997. The decrease was due
primarily to lower earnings, increases in inventory, and decreases in
accounts payable and accrued liabilities for the first quarter of 1998.
Inventories at March 28, 1998 increased by 8 percent or $312 million,
compared with inventories at December 31, 1997. Property, plant and
equipment, less accumulated depreciation, increased $70 million since
December 31, 1997.
The Company's notes payable and current portion of long-term debt increased
to $2.0 billion at March 28, 1998, from $1.3 billion at December 31, 1997.
Net debt (notes payable and current portion of long-term debt plus
long-term debt less short-term investments and cash equivalents) to net
debt plus equity increased to 16.3 percent at March 28, 1998 from 12.4
percent at December 31, 1997. The Company's total domestic and non-U.S.
credit facilities aggregated $3.7 billion at March 28, 1998, of which $274
million were used and the remaining $3.4 billion were available to back up
outstanding commercial paper which totaled $1.7 billion.
At March 31, 1998, the off-balance sheet commitment to Nextel
Communications, Inc. for equipment financing aggregated $485 million. This
amount represents the maximum available commitment and may not be
completely utilized.
As a multinational company, the Company's transactions are denominated in a
variety of currencies. The Company uses financial instruments to hedge,
and therefore attempts to reduce, its overall exposure to the effects of
currency fluctuations on cash flows. The Company's policy is to not
speculate in financial instruments for profit on the exchange rate price
fluctuation, trade in currencies for which there are no underlying
exposures, or enter into trades for any currency to intentionally increase
the underlying exposure. Instruments used as hedges must be effective at
reducing the risk associated with the exposure being hedged and must be
designated as a hedge at the inception of the contract. Accordingly,
changes in market values of hedge instruments must be highly correlated
with changes in market values of underlying hedged items both at inception
of the hedge and over the life of the hedge contract.
The Company's strategy in foreign exchange exposure issues is to offset the
gains or losses of the financial instruments against losses or gains on the
underlying operational cash flows or investments based on the operating
business units' assessment of risk. Currently, the Company primarily
hedges firm commitments, including assets and liabilities currently on the
balance sheet. The Company expects that it may hedge anticipated
transactions, forecasted transactions or investments in foreign
subsidiaries in the future.
Almost all of the Company's non-functional currency receivables and
payables which are denominated in major currencies that can be traded on
open markets are hedged. The Company uses forward contracts and options to
hedge these currency exposures. A portion of the Company's exposure is to
currencies which are not traded on open markets, such as those in Latin
America and China, and these are addressed, to the extent reasonably
possible, through managing net asset positions, product pricing, and other
means, such as component sourcing.
At March 28, 1998, and March 29, 1997, the Company had net outstanding
foreign exchange contracts totaling $2.3 billion and $1.5 billion,
respectively. The following schedule shows the five largest foreign
exchange hedge positions as of March 28, 1998, and the corresponding
positions at March 29, 1997:
Dollars in millions
Buy (Sell) March 28, March 29,
1998 1997
Japanese Yen (831) (375)
British Pound Sterling (535) (529)
Italian Lira (178) (94)
Taiwan Dollar (170) (44)
German Mark (121) (48)
At March 28, 1998 and March 29, 1997, outstanding foreign exchange
contracts primarily consisted of short-term forward contracts. Net
deferred gains at March 28, 1998, and net deferred losses at March 29,
1997, on these forward contracts which hedge designated firm commitments
were immaterial.
As of the end of the reporting period, the Company had no outstanding
interest rate swaps, commodity derivatives, currency swaps or options
relating to either its debt instruments or investments. The Company does
not have any derivatives to hedge the value of its equity investments in
affiliated companies.
The Company's research and development expenditures were $703 million in
the first quarter of 1998, compared with $614 million in the first quarter
of 1997. Research and development expenditures for the year ended December
31, 1997 were $2.7 billion. The Company continues to believe that a strong
commitment to research and development drives long-term growth. The
Company's capital expenditures for the first quarter of 1998 totaled $684
million, compared with $521 million in the first quarter of 1997. The
Company is currently anticipating that capital expenditures for 1998 will
increase to $4.0 billion.
Return on average invested capital (net earnings divided by the sum of
stockholders' equity and net debt) was 7.2 percent based on the performance
of the four preceding fiscal quarters ending March 28, 1998, compared with
8.0 percent based on the performance of the four preceding fiscal quarters
ending March 29, 1997. Motorola's current ratio (the ratio of current
assets to current liabilities) was 1.44 at March 28, 1998, compared to 1.46
at December 31, 1997.
Outlook:
The first-quarter results were greatly affected by the worldwide impact
of Asian deflationary currency-influenced price competition, lower
Asian consumer confidence than a year ago and unfavorable shifts in
product mix. These conditions may continue for several more quarters.
Second-quarter sales are expected to be below those of a year ago.
Second-quarter earnings could be equal to or less than 1998
first-quarter earnings, excluding special items.
However, the Company remains fully committed to long-term growth
prospects in Asia and throughout the world while taking appropriate
capital spending and cost control measures to match capacity with
demand. Such ongoing actions include consolidating manufacturing
operations and reduced staffing or shortened work weeks in several
businesses.
Despite the weakness in Asia, the Company is benefiting from strong
growth in Latin America and continued expansion in the U.S.
Business Risks:
Statements that are not historical facts are forward-looking and involve
risks and uncertainties. These include statements in "Outlook" and
statements about the launch of commercial service by Iridium LLC, Iridium
LLC's financing needs and the Company's 1998 capital expenditures.
Motorola wishes to caution the reader that the factors below and those in
Motorola's 1998 Proxy Statement on pages F-8 and F-9 and in its other SEC
filings could cause Motorola's results to differ materially from those
stated in the forward-looking statements. These factors include (i) the
success of efforts to stabilize economic conditions in Asia; (ii) pricing
pressures and demand for product, especially in light of the current
economic conditions in Asia; (iii) the potential that the impact of
weakened currencies in Southeast Asia could spread to countries where
Motorola does a sizable amount of business, including China and Japan; (iv)
the ability of Motorola's cellular businesses to continue to transition to
digital products and gain market share; (v) product and technology
development and commercialization risks, including for newer digital
products and Iridium(Registered Trademark) products; (vi) the success of
strategic decisions to improve performance; (vii) steady growth in emerging
markets; (viii) unanticipated changes in demand for products; and (ix)
continued weak demand for paging products in North America and China.
IRIDIUM(Registered Trademark) is a registered trademark and service
mark of Iridium LLC.
Motorola, Inc. and Subsidiaries
Information by Industry Segment
(Unaudited)
Summarized below are the Company's segment sales as defined by industry
segment for the three months ended March 28, 1998 and March 29, 1997:
(Dollars in millions)
Three months ended
March 28, March 29,
1998 1997 % Change
Cellular Products $2,808 $2,713 3
Semiconductor Products 1,833 1,808 1
Land Mobile Products 1,243 977 27
Messaging, Information
and Media Products 693 924 (25)
Other Products 1,018 876 16
Adjustments & eliminations (709) (656) 8
Industry segment totals $6,886 $6,642 4
Part II _ Other Information
Item 1 _ Legal Proceedings.
See Item 3 of the Company's Form 10-K for the fiscal year ended December
31, 1997 for disclosures regarding pending matters.
In the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the consolidated financial position, liquidity
or results of operations of Motorola.
Item 2 _ Changes in Securities.
Not applicable.
Item 3 _ Defaults Upon Senior Securities.
Not applicable.
Item 4 _ Submission of Matters to Vote of Security Holders.
(a) and (c). The Company held its annual meeting of the stockholders on May 4,
1998, and the following matters were voted on at that meeting:
1. The election of the following directors, who will serve until their
successors are elected and qualified, or their earlier death or resignation:
BROKER
DIRECTOR FOR WITHHELD NON-VOTES
Ronnie C. Chan 513,386,757 8,683,888 0
H. Lawrence Fuller 515,812,691 6,257,954 0
Christopher B. Galvin 515,636,868 6,433,777 0
Robert W. Galvin 515,536,527 6,534,118 0
Robert L. Growney 515,777,042 6,293,603 0
Anne P. Jones 515,705,814 6,364,831 0
Donald R. Jones 515,705,440 6,365,205 0
Judy C. Lewent 515,788,666 6,281,979 0
Walter E. Massey 515,789,029 6,281,616 0
Thomas J. Murrin 515,712,626 6,358,019 0
Nicholas Negreponte 515,704,034 6,366,611 0
John E. Pepper, Jr. 515,901,300 6,169,345 0
Samuel C. Scott III 515,860,819 6,209,826 0
Gary L. Tooker 515,845,383 6,225,262 0
B. Kenneth West 515,763,794 6,306,851 0
John A. White 515,785,110 6,285,535 0
2. The adoption of the Motorola Incentive Plan of 1998 was approved by the
following vote: For, 362,067,901; Against, 25,886,659; Abstain, 3,877,919; and
Broker Non-Votes, 130,238,166.
Item 5 _ Other Information.
Not applicable.
Item 6 _ Exhibits and Reports on Form 8-K.
(a) Exhibits
10 Motorola Incentive Plan of 1998
27 Financial Data Schedule (filed only electronically with the
SEC)
(b) Reports on Form 8-K
No reports on form 8-K were filed during the first quarter
of 1998
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOTOROLA, INC.
(Registrant)
Date: May 8, 1998 By: /s/ Kenneth J. Johnson
Kenneth J. Johnson
Senior Vice President and Controller
(Chief Accounting Officer and Duly
Authorized Officer of the Registrant)
EXHIBIT INDEX
Number Description of Exhibits
10 Motorola Incentive Plan of 1998
27 Financial Data Schedule (filed only electronically with the
SEC)
MOTOROLA INCENTIVE PLAN OF 1998
1. NAME AND PURPOSE
1.1 Name. The name of this plan is the Motorola Incentive Plan of
1998 (the "Plan").
1.2 Purpose. Motorola has established the Plan to promote the
interests of Motorola and its stockholders by providing full and part-time
employees of Motorola or its Subsidiaries and members of Motorola's Board
of Directors who are not employees of Motorola or any of its Subsidiaries
(each a "Non-Employee Director") with additional incentive to increase
their efforts on Motorola's behalf and to remain in the employ or service
of Motorola or its Subsidiaries and with the opportunity, through stock
ownership, to increase their proprietary interest in Motorola and their
personal interest in its continued success and progress.
2. DEFINITIONS
2.1 General Definitions. The following words and phrases, when
used herein, unless otherwise specifically defined or unless the context
clearly indicates otherwise, shall have the following meanings:
(a) Affiliate. Any corporation, partnership, joint
venture or other business entity in which Motorola or a Subsidiary
holds an ownership interest.
(b) Agreement. The document, if any, which evidences the
grant of any Benefit under the Plan and which sets forth the Benefit
and the terms, conditions and provisions of, and restrictions relating
to, such Benefit.
(c) Benefit. Any benefit granted to, or received by, a
Participant under the Plan.
(d) Board. The Board of Directors of Motorola, Inc.
(e) Cash Award. A Benefit Awarded to a Participant under
Section 11 of the Plan.
(f) Change in Control. The events described in Section
17.2.
(g) Code. The Internal Revenue Code of 1986, as amended,
and the regulations promulgated pursuant thereto.
(h) Committee. The Compensation Committee of the Board.
(i) Common Stock. Motorola's common stock, $3 par value
per Share.
(j) Compensation. All cash remuneration payable to a Non-
Employee Director for services to Motorola as a Non-Employee Director
other than reimbursement for expenses, and shall include retainer
fees for service on the Board, fees for serving as chairman of a
committee of the Board, fees for attendance at meetings of the Board
and any committees thereof, compensation for work performed in
connection with service on a committee of the Board or at the request
of the Board, any committee thereof or a member of Motorola's Chief
Executive Office or the Chairman of the Board and any other kind or
category of fees or payments which may be put into effect in the
future.
(k) Directors. Members of the Board of Motorola.
(l) Effective Date. The date that the Plan is approved by
both the directors of Motorola and the stockholders of Motorola, and
if not approved by both on the same day, the date of the last
approval.
(m) Employee. Any person employed by Motorola or a
Subsidiary on a full or part-time basis.
(n) Employee Stock Options. Stock Options granted to an
Employee under Article 4 of the Plan, including both NSOs and ISOs,
as defined below.
(o) Exchange Act. The Securities Exchange Act of 1934, as
amended.
(p) Fair Market Value. The average of the high and low sale
prices of Shares as reported for the New York Stock Exchange -
Composite Transactions on a given date, or, in the absence of sales
on a given date, the average of the high and low sale prices (as so
reported) for the New York Stock Exchange - Composite Transactions on
the last previous day on which a sale occurred prior to such date.
With respect to an ISO, as defined below, if such method of
determining Fair Market Value shall not be consistent with the then
current regulations of the U.S. Secretary of the Treasury, Fair
Market Value shall be determined in accordance with those
regulations.
(q) ISO. An incentive stock option that meets the
requirements of Section 422 (or any successor section) of the Code.
(r) Motorola. Motorola, Inc. or any successor.
(s) NSO. A stock option that does not qualify as an ISO.
(t) Non-Employee Director. Is defined in Section 1.2.
(u) Non-Employee Stock Option Period. Is defined in Section
6.3.
(v) Non-Employee Stock Option. Is defined in Section 6.1.
(w) Non-Exercise Period. The period, for each Employee
Stock Option and each Stock Appreciation Right, ending twelve (12)
months from the date of its grant, or any longer period or periods
determined by the Committee and set forth in, or incorporated by
reference into, the Employee Stock Option or Stock Appreciation Right.
(x) Optionee. An Employee who has been granted an Employee
Stock Option under the Plan.
(y) Participant. An individual who is granted a Benefit
under or otherwise participates in the Plan. Benefits, other than
Non-Employee Stock Options, may be granted only to Employees.
(z) Performance Share. A Benefit awarded to a Participant
under Section 8 of the Plan.
(aa) Plan. The Motorola Incentive Plan of 1998 and all
amendments and supplements thereto.
(bb) Plan Year. The calendar year.
(cc) Restricted Stock. Shares issued under Article 5 of the
Plan.
(dd) Rule 16b-3. Rule 16b-3 promulgated by the SEC, as
amended, or any successor rule in effect from time to time.
(ee) SEC. The Securities and Exchange Commission.
(ff) Share. A share of Common Stock.
(gg) Stock Appreciation Right. A Benefit awarded to a
Participant under Section 9 of the Plan.
(hh) Stock Award. A Benefit awarded to a Participant under
Section 10 of the Plan.
(ii) Stock Options. Employee Stock Options and Non-Employee
Stock Options.
(jj) Subsidiary; Subsidiaries. Any corporation or other
entity in which a fifty percent (50%) or greater interest is, at the
time, directly or indirectly owned by Motorola or by one or more
Subsidiaries or by Motorola and one or more Subsidiaries, except that:
(i) with respect to ISOs, "Subsidiary" shall mean "subsidiary
corporation" as defined in Section 424(f) of the Code, and (ii) with
respect to Directors and any elected officer of Motorola or a
Subsidiary subject to Section 16 of the Exchange Act, the terms
"Subsidiary" or "Subsidiaries" mean and include any corporation or
other entity at least a majority of the outstanding voting shares of
which (other than directors' qualifying shares) is, at the time,
directly or indirectly owned by Motorola or by one or more
Subsidiaries or by Motorola and one or more Subsidiaries.
(kk) Successor-in-Interest. Is defined in Section
4.5(a)(ii).
(ll) Total and Permanent Disability. Is defined in Section
4.5(a)(i).
2.2 Other Definitions. In addition to the above definitions,
certain words and phrases used in the Plan and in any Agreement may be
defined elsewhere in the Plan or in such Agreement.
3. SHARES SUBJECT TO PLAN
3.1 Number of Shares. The number of Shares which may be issued or
sold or for which Benefits may be granted or received under the Plan, for
which Compensation may be paid to Non-Employee Directors in Common Stock
and restricted Common Stock under the Motorola Non-Employee Directors Stock
Plan and for which awards and grants payable in Common Stock and restricted
Common Stock may be made under the Motorola Long Range Incentive Plan of
1994 and the Motorola Executive Incentive Plan shall be (i) 12,500,000
Shares, plus (ii) the total number of Shares with respect to which no
options have been granted under Motorola's Share Option Plan of 1996 on the
Effective Date, plus (iii) the number of Shares as to which options granted
under Motorola's Share Option Plan of 1996 terminate or expire without
being fully exercised, subject, in each case, to Sections 3.2 and 3.3.
Shares issued under the Plan may be either authorized and unissued Shares
or issued Shares reacquired by Motorola. No Participant may receive (i)
Stock Options relating to more than 300,000 Shares in any Plan Year (as
adjusted pursuant to Section 3.3), (ii) Restricted Stock relating to more
than 100,000 Shares in any Plan Year (as adjusted pursuant to Section 3.3),
(iii) Stock Appreciation Rights relating to more than 50,000 Shares in any
Plan Year (as adjusted pursuant to Section 3.3) or (iv) Performance Shares
relating to more than 20,000 Shares in any Plan Year (as adjusted pursuant
to Section 3.3). The number of Shares which may be issued under the Plan
for Benefits other than Stock Options and which may be issued under the
other three plans named above in this Section 3.1 shall not exceed a total
of 5,000,000 Shares, subject to reusage and adjustments under Sections 3.2
and 3.3.
3.2 Reusage. If a Stock Option expires or is terminated,
surrendered or canceled without having been fully exercised or if
Restricted Stock, Performance Shares or a Stock Appreciation Right is
forfeited or terminates without the issuance of all of the Shares subject
thereto, the Shares covered by such Benefits shall again be available for
use under the Plan. Shares covered by a Benefit granted under the Plan
shall not be counted as used unless and until they are actually and
unconditionally issued and delivered to a Participant. The number of
Shares which are transferred to Motorola by a Participant to pay the
exercise or purchase price of a Benefit shall be subtracted from the number
of Shares issued with respect to such Benefit for the purpose of counting
Shares used. Shares withheld to pay withholding taxes in connection with
the exercise or payment of a Benefit shall not be counted as used. Shares
covered by a Benefit granted under the Plan which is settled in cash shall
not be counted as used.
3.3 Adjustments. If there is any change in the Common Stock by
reason of any stock split, stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares, the number and class of Shares available for Stock
Options and grants or purchases of Restricted Stock, Performance Shares,
Stock Appreciation Rights and Stock Awards, the number of Shares to be
automatically granted under Section 6.1 hereof and the number of Shares
subject to outstanding Stock Options, Performance Shares, Stock
Appreciation Rights and Restricted Stock, and the price of each of the
foregoing, as applicable, shall be appropriately adjusted by the Committee
to provide Participants with the same relative rights before and after such
adjustment.
4. EMPLOYEE STOCK OPTIONS
4.1 Grant of Employee Stock Options. The Committee shall have
authority to grant Stock Options (ISOs or NSOs) to Employees. The
Committee shall determine the number of Shares subject to each Employee
Stock Option, the purchase price per Share, the term of the Employee Stock
Option, the time or times at which the Employee Stock Option may be
exercised, and all other terms and conditions of the Employee Stock Option.
The Option exercise price per Share of an Employee Stock Option may not be
less than the Fair Market Value of a Share on the date of grant. The
Committee may accelerate the exercisability of any Employee Stock Option,
including the waiver or modification of any installment exercise
provisions. The Committee may, in its discretion, delegate to members of
the Committee and/or one or more elected officers of Motorola the authority
to grant Stock Options to Employees who are not subject to Section 16 of
the Exchange Act.
4.2 NSOs and ISOs.
(a) The Stock Option exercise price of any Stock Option may
not be less than the Fair Market Value on the date of grant of the
Shares of the Common Stock subject to the Stock Option.
(b) ISOs. The following additional terms and conditions
shall apply to ISOs:
(i) No ISO shall be granted to any Participant who, at
the time the Employee Stock Option is granted, would own (within the
meaning of Section 422(b) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of Motorola.
(ii) The aggregate Fair Market Value (determined as of
the time the Employee Stock Option is granted) of the Shares of Common
Stock with respect to which one or more ISO's are exercisable for the
first time by any individual Optionee during any calendar year (under
all plans of Motorola and its Subsidiaries) shall not exceed
$100,000.00.
(iii) Each ISO, by its terms, shall (1) not be
exercisable after the expiration of ten (10) years after the date it
is granted and (2) not be transferrable by the Optionee otherwise than
by will or the applicable laws of descent and distribution or by
operation of a death beneficiary designation made by the Optionee in
accordance with rules established by the Committee and shall be
exercisable during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative if the Optionee is legally
incompetent.
4.3 Exercise of Employee Stock Options; Payment.
(a) An Employee Stock Option may be exercised by the
Optionee submitting to Motorola such form(s) as are prescribed for
such purpose. Motorola may require the surrender of the Employee
Stock Option certificate if one has been issued. No Employee Stock
Option shall be exercisable for less than a minimum of fifty (50)
Shares except in cases where the number of Shares represented by the
Employee Stock Option being exercised is less than fifty (50), in
which case, the Employee Stock Option shall not be exercisable for
less than all shares represented by such Option.
(b) Payment for Shares purchased upon exercise of an
Employee Stock Option shall be paid in full as permitted by Section
19.1 for all Shares purchased at the time of purchase. No fractional
Shares may be purchased.
4.4 Non-Exercise Period. Except as provided herein for Optionees
who die while in the employ of Motorola or any Subsidiary or for a Change
in Control, no Employee Stock Option granted under the Plan may be
exercised prior to the expiration of the Non-Exercise Period. No Employee
Stock Option may be exercised after expiration of its stated term.
4.5 Effect of Termination of Employment on Employee Stock
Options:
(a) Termination of Employment During the Non-Exercise
Period.
(i) Except for a Change in Control and except for a
disability leave of absence as provided in Section 4.5(a)(iii)
hereof, if, during the Non-Exercise Period, the Optionee's
employment with Motorola and its Subsidiaries shall terminate
for any reason (including retirement) other than death,
transfer to an Affiliate and other than Total and Permanent
Disability (as that term is defined in the Motorola Profit
Sharing and Investment Plan) of the Optionee, as determined by
the Committee or its designee, the Optionee's right to
exercise the Employee Stock Option shall terminate and all
rights thereunder shall cease; provided, however, if the
Optionee's employment terminates by reason of the transfer of
such Optionee to an Affiliate, the Committee shall have the
power and authority, in its discretion, to determine whether
or not any or all of the Employee Stock Options held by the
Optionee shall terminate or shall continue in effect (in which
case such Options shall be subject to all of the conditions of
the Plan, including this Section 4.5, and such other
conditions as the Committee may impose, with "termination of
employment," "employment is terminated" or "employment shall
have been terminated" or words of like import or intent
meaning termination of employment with the Affiliate.)
(ii) If, during the Non-Exercise Period, an
Optionee dies while in the employ of Motorola or any
Subsidiary, the deceased Optionee's Successor-in-Interest
shall have the right to exercise, in whole or in part, at any
time during the remainder of the term of such Employee Stock
Option, the entire amount of the Shares subject to such
Employee Stock Option (without regard to any installment
limitation on the exercise of the Employee Stock Option). For
purposes of the Plan, the term "Successor-in-Interest" shall
mean the deceased Optionee's death beneficiary, personal
representative, or any person who acquired the right to
exercise such Employee Stock Option by bequest or inheritance
or by reason of the laws of descent and distribution.
(iii) If, during the Non-Exercise Period, an
Optionee's employment with Motorola and its Subsidiaries shall
terminate because of the Total and Permanent Disability of the
Optionee or if the Optionee shall be put on disability leave
of absence status because of the Total and Permanent
Disability of the Optionee, each Employee Stock Option held by
such an Optionee which has a Non-Exercise Period in effect at
the time of termination of employment or commencement of the
disability leave of absence shall become exercisable at the
time the applicable Non-Exercise Period elapses or terminates,
and the Optionee shall then have the right to exercise, in
whole or in part, each such Employee Stock Option for the
entire amount of Shares subject to each such Employee Stock
Option (without regard to any installment limitation on
exercise of the Employee Stock Option) at any time during the
remainder of the term of the Employee Stock Option. The
unexercised portion of each Employee Stock Option shall
terminate upon expiration of the term of such Stock Option,
and any unexercised portion shall terminate immediately if and
when the Optionee is employed by a competitor of Motorola or
any Subsidiary without written consent of the Committee.
(b) Termination of Employment After the Non-Exercise
Period.
(i) By Termination of Employment Without Cause.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee's employment with Motorola and
its Subsidiaries shall have been terminated thereafter by
Motorola or any Subsidiary without cause, the Optionee
shall have the right to exercise the then presently
exercisable unexercised portion of the Employee Stock
Option at any time during a period of twelve (12) months
after the date of termination of employment. The
unexercised portion of the Employee Stock Option may be
exercised, in whole or in part, for the number of Shares
which were or would have become exercisable to the extent
the Optionee could have exercised such Employee Stock
Option had the Optionee remained in the employ of Motorola
or any Subsidiary during the twelve (12) month period
immediately following the date of termination of
employment. Except as otherwise provided in Section
4.5(b)(vii) hereof, the unexercised and/or unexercisable
portion of each Employee Stock Option shall terminate
twelve (12) months after an Optionee's employment with
Motorola and its Subsidiaries shall have been so
terminated, and any unexercised and/or unexercisable
portion shall terminate immediately if and when the
Optionee is employed by a competitor of Motorola or any
Subsidiary without the written consent of the Committee.
(ii) By Termination of Employment for Cause.
If the Non-Exercise Period shall have elapsed
oterminated and the Optionee's employment is terminated by
Motorola or any Subsidiary for cause, any unexercised
portion of any Employee Stock Option granted to the Optionee
shall terminate with the Optionee's termination of
employment. As used herein, the term "cause" means (a) the
failure of the Optionee to carry out the duties assigned to
the Optionee as a result of incompetence or willful neglect,
as determined by the Committee, or (b) such other reasons,
including the existence of a conflict of interest, as the
Committee may determine.
(iii) By Voluntary Termination of Employment.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee voluntarily terminates
employment with Motorola or any Subsidiary for reasons other
than the retirement of the Optionee, any unexercised portion
of the Optionee's Employee Stock Option shall terminate with
the Optionee's termination of employment.
(iv) By Retirement.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee's employment with Motorola or
any Subsidiary shall have been terminated because of the
retirement of the Optionee from Motorola or any Subsidiary
at age 55 or older, the Optionee shall have the right to
exercise, in whole or in part, the unexercised portion of
any Employee Stock Option held by such Optionee for the
entire amount of Shares subject to such Stock Option
(without regard to any installment limitation on exercise of
the Employee Stock Option) at any time during the remainder
of the term of such Stock Option. The unexercised portion
of each Employee Stock Option shall terminate upon
expiration of the term applicable to each such Employee
Stock Option, and any unexercised portion shall terminate
immediately if and when the Optionee is employed by a
competitor of Motorola or any Subsidiary without the written
consent of the Committee.
For purposes of this Section 4.5, if the Optionee is
a participant in Motorola's pension plan or the pension plan
of any Subsidiary, the term "retirement" shall mean the
Optionee's retirement as provided for in the applicable
pension plan. If the Optionee is not a participant in
Motorola's pension plan or the pension plan of any
Subsidiary, "retirement" of an Optionee shall be determined
by the Committee. In no event can retirement take place
prior to age 55 even if permitted under the applicable
pension plan.
(v) By Total and Permanent Disability.
If the Non-Exercise Period shall have elapsed or
terminated, and the Optionee's employment with Motorola and
its Subsidiaries shall have been terminated because of the
Total and Permanent Disability of the Optionee or if the
Optionee shall be put on disability leave of absence status
because of the Total and Permanent Disability of the
Optionee, the Optionee shall have the right to exercise, in
whole or in part, the unexercised portion of any Employee
Stock Option held by such Optionee for the entire amount of
Shares subject to such Employee Stock Option (without regard
to any installment limitation on exercise of the Employee
Stock Option) at any time during the remainder of the term of
the Employee Stock Option. The unexercised portion of each
Employee Stock Option shall terminate upon expiration of the
term of each such Employee Stock Option, and any unexercised
portion shall terminate immediately if and when the Optionee
is employed by a competitor of Motorola or any Subsidiary
without the written consent of the Committee.
(vi) By Death.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee dies while in the employ of
Motorola or any Subsidiary, the unexercised portion of the
Employee Stock Option may be exercised, in whole or in part,
at any time during the remainder of the term of the Employee
Stock Option by the Optionee's Successor-in-Interest, for the
entire number of Shares subject to the Employee Stock Option
(without regard to any installment limitation on exercise of
the Employee Stock Option).
(vii) Effect of Death After Termination of
Employment Without Cause or Retirement.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee dies during the twelve (12) month
period immediately following the Optionee's termination of
employment by Motorola or any Subsidiary without cause and at
the time of death such Optionee is not employed by a
competitor of Motorola or any Subsidiary (or while employed
by a competitor of Motorola or any Subsidiary with the
written consent of the Committee), the unexercised portion of
the Employee Stock Option may be exercised by the Optionee's
Successor-in-Interest at any time during the remainder of the
term of the Employee Stock Option, in whole or in part, for
the number of Shares which were or would have become
exercisable had the Optionee survived for the remainder of
the term of the Employee Stock Option, without regard to the
requirement of exercise within twelve (12) months after
termination of employment without cause.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee dies after retirement prior to
the expiration of the term of the Employee Stock Option, and,
if at the time of death such Optionee is not employed by a
competitor of Motorola or any Subsidiary (or while employed
by a competitor of Motorola or any Subsidiary with the
written consent of the Committee), the unexercised portion of
the Employee Stock Option may be exercised for the entire
number of Shares subject to such Employee Stock Option
(without regard to any installment limitation on exercise of
the Employee Stock Option), by the Optionee's Successor-in-
Interest at any time during the remainder of the term of the
Employee Stock Option.
(viii) By Transfer of Optionee to an Affiliate.
If the Non-Exercise Period shall have elapsed or
terminated and the Optionee's employment with Motorola and
its Subsidiaries shall terminate by reason of the transfer of
such Optionee to an Affiliate, the Committee shall have the
power and authority, in its discretion, to determine whether
or not any or all of the Employee Stock Options held by the
Optionee shall continue in effect for the remainder of the
term of such Employee Stock Option or for the period
otherwise applicable under the provisions of the Plan. Any
Employee Stock Option which the Committee permits to continue
in effect beyond the period otherwise applicable under the
Plan shall be subject to all of the terms and conditions of
the Plan, including this Section 4.5 and such other
conditions as the Committee may impose (with "termination of
employment", "employment shall terminate", "terminates
employment", "employment is terminated" or "employment shall
have been terminated" or words of like import or intent
meaning termination of employment with the Affiliate).
(c) Procedure on Death. No transfer of an Employee Stock
Option by an Optionee pursuant to Section 4.5 (a)(ii), (b)(vi) and
(b)(vii) above, by will or by the laws of descent and distribution,
shall be effective unless Motorola shall have been furnished with
written notice thereof and a copy of the will, if any, and/or such
other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the Successor-in-
interest or Successors-in-interest of the terms and conditions of the
Employee Stock Option, and under no circumstances shall the right of
any such Successor-in-Interest to exercise any such Employee Stock
Option extend beyond the applicable period specified in sub-paragraph
(a)(ii), (b)(vi) or (b)(vii) above, or beyond the expiration of the
term of such Employee Stock Option.
(d) Leaves of Absence and Lay-offs. If an Optionee is
placed on leave of absence status (except as provided in Section 4.5
(a)(iii) or (b)(v) above) by Motorola or any Subsidiary, each Employee
Stock Option then held by the Optionee, whether exercisable or non-
exercisable, shall be suspended at such time, but the period of time
during which the Optionee is on leave of absence shall be counted in
determining when the Non-Exercise Period elapses. If an Optionee is
placed on lay-off status by Motorola or any Subsidiary, any then non-
exercisable Employee Stock Option shall terminate and any then
exercisable Employee Stock Option may be exercised during the period
of twelve (12) months from the date the Optionee is placed on lay-off
status and shall be suspended thereafter to the extent not exercised.
In any case, the unexercised portion of each suspended Employee Stock
Option shall either (i) terminate upon the Optionee's termination of
employment with Motorola and its Subsidiaries or (ii) be reinstated
upon such Optionee returning from leave of absence or lay-off status
to active employment status with Motorola or any Subsidiary.
(e) Meaning of Termination of Employment. Wherever in
this Article or elsewhere in the Plan the words "termination of
employment, employment is terminated, employment shall terminate or
employment shall have been terminated" or words of like import or
intent are used, they shall mean the last day worked by the
Participant rather than the last day the Participant is on the payroll
of Motorola or any Subsidiary.
5. RESTRICTED STOCK
5.1 Grants of Restricted Stock. The Committee may grant Benefits
in Shares available under Article 3 of the Plan as Restricted Stock.
Restricted Stock consists of Shares of Common Stock which are transferred
without payment, or sold at a specified price, as determined by the
Committee, by Motorola to a Participant, but subject to a substantial risk
of forfeiture and to restrictions on their sale or other transfer by the
Participant. The Committee shall determine the eligible Employees to whom,
and the time or times at which, grants of Restricted Stock will be made,
the number of Shares to be granted, the price to be paid, the time or times
within which the Shares covered by such grants shall be subject to
forfeiture, the time or times at which the restrictions will terminate, and
all other terms and conditions of the grants.
5.2 Price, Agreement, Stock Certificates, Escrow. The recipient
of a Restricted Stock grant shall not have any rights with respect to such
grant unless and until such recipient has executed and delivered to
Motorola an Agreement evidencing the grant. The purchase price, if any,
for Shares of Restricted Stock shall be paid in cash and in full for all
Shares of Restricted Stock then to be delivered. Grants of Restricted
Stock must be accepted within such period after the grant date as the
Committee may specify at the time of grant, by executing an Agreement and
paying the price required. Each Participant receiving a Restricted Stock
grant may be issued a stock certificate in respect of such Shares of
Restricted Stock. Such certificate, if issued, shall be registered in the
name of such Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such grant. The
Committee may require that the stock certificates evidencing such Shares be
held in escrow by Motorola until the restrictions thereon shall have
terminated, and that, as a condition of any Restricted Stock grant, the
Participant shall have delivered to Motorola a stock power, endorsed in
blank, relating to the Restricted Stock covered by such grant.
5.3 Restrictions. All Shares of Restricted Stock shall be subject
to such restrictions and conditions as the Committee may determine,
including, without limitation, any or all of the following restrictions and
conditions:
(a) a prohibition against the sale, assignment, transfer,
pledge or encumbrance of the Shares of Restricted Stock, such
prohibition to terminate at such time or times (including the passage
of time only) as the Committee shall determine, whether in
installments or otherwise, or at the time of death, Total and
Permanent Disability or retirement, or based on service, of the holder
of such Shares, or otherwise as the Committee may provide;
(b) a provision that the holder of Shares of Restricted
Stock forfeit, or in the case of Shares sold to a Participant, resell
back to Motorola at the price the Participant paid, all or part of
such Shares in the event of termination of his or her employment for
any reason other than death, Total and Permanent Disability or
retirement during any period in which such Shares are subject to
restrictions; or a provision vesting such Shares in the event of
termination of employment; or
(c) a provision that the holder of Shares of Restricted
Stock forfeit, or in the case of Shares sold to a Participant, resell
back to Motorola at the price the Participant paid, such Shares in the
event the Participant engages, directly or indirectly, in any activity
which is in competition with any activity of Motorola or any
Subsidiary or in any action or conduct which is in any manner adverse
or in any way contrary to the interests of Motorola or any Subsidiary
unless otherwise determined by the Committee. The determination of
whether a Participant is or has engaged in any competitive activity or
in any action or conduct which is adverse or contrary to the interests
of Motorola or any of its Subsidiaries shall be made by the Committee,
and such determination shall be conclusive and binding upon all
parties.
The Committee shall have the right at any time to accelerate, reduce
or terminate any restrictions, in whole or in part, in its sole discretion.
5.4 Termination of Restrictions. Promptly after the termination
of the restrictions, by lapse of time or otherwise, without a prior
forfeiture, with respect to Shares of Restricted Stock, a certificate for
such Shares shall be delivered free of all restrictions and legends
together with deferred dividends, if any, to the Participant or to the
Participant's Successor-in-Interest. If a stock certificate was previously
delivered to the Participant, the replacement certificate will not be
delivered to the Participant until the previously delivered certificate is
returned to Motorola in a form acceptable for transfer, free and clear of
all liens, claims and encumbrances.
5.5 Stockholder Rights. Subject to the applicable restrictions,
the Participant may be given, with respect to the Shares of Restricted
Stock, any or all rights of a stockholder of Motorola, including the right
to vote the Shares, and the right to receive any cash or stock dividends.
The Committee, in its sole discretion, as determined at the time of grant,
may permit or require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested in additional Restricted Stock to
the extent Shares are available under Article 3 or otherwise be reinvested.
The Committee may require that stock dividends issued with respect to
Restricted Stock shall be treated as additional shares of Restricted Stock
that are subject to the same restrictions and other terms and conditions
that apply to the Shares with respect to which such dividends are issued.
5.6 Payment for Employee Stock Option. The Committee may, at any
time, and in its sole discretion, allow a Participant to use his or her
Restricted Stock during the period the restrictions are in effect as
payment of the Employee Stock Option exercise price for Employee Stock
Options which he or she has been granted. In such an event, a number of
the Shares issued upon the exercise of the Employee Stock Option, equal to
the number of Shares of Restricted Stock used as payment therefor, shall be
subject to the same restrictions as the Restricted Stock so used, plus any
additional restrictions that may be imposed by the Committee.
5.7 Substitution of Rights. Prior to the end of the period the
restrictions are in effect with respect to any Shares of Restricted Stock
granted to a Participant, the Committee may, with the consent of the
Participant, substitute an unsecured obligation of Motorola to pay cash or
stock (on such reasonable terms and conditions as the Committee may, in its
sole discretion, determine) in lieu of its obligations under this Article 5
to deliver unrestricted Shares plus accrued dividends, if any.
5.8 Cash Awards and Restricted Stock. The Committee, at the time
it grants Restricted Stock to a Participant or at anytime thereafter, may
grant a corresponding Cash Award which will entitle the Participant to
receive cash as of the date as of which the Restricted Stock is transferred
to him or her pursuant to paragraph 5.4, in an amount specified by the
Committee. Any such Cash Award shall be in addition to the Participant's
rights to the Shares of Restricted Stock and shall be subject to such
additional terms and conditions, if any, as the Committee determines which
are not inconsistent with the terms and conditions of the Plan. The
Committee may, at any time, grant unrestricted Shares (in lieu of such a
Cash Award and subject to the limitations thereof) to any Participant under
the Plan subject to such terms and conditions as the Committee may
determine.
6. NON-EMPLOYEE STOCK OPTIONS
6.1 Automatic Grant of Non-Employee Stock Options. On June 1,
1998 and on June 1 of each Plan Year after 1998 in which the Plan is in
effect, each individual elected, re-elected or continuing as a Non-Employee
Director shall automatically receive a NSO covering 2,500 Shares, or such
greater number of Shares as shall be determined by the Board (a "Non-
Employee Stock Option"). Notwithstanding the foregoing, if, on that day,
the General Counsel of Motorola determines, in his or her sole discretion,
that Motorola is in possession of material, undisclosed information about
Motorola, then the annual grant of NSOs to Non-Employee Directors shall be
suspended until the second day after public dissemination of such
information and the price, exercisability date and Non-Employee Stock
Option Period shall then be determined by reference to such later date. If
Common Stock is not reported as traded on the New York Stock Exchange -
Composite Transactions on any date a grant would otherwise be awarded, then
the grant shall be made the next day thereafter on which Common Stock is so
traded.
6.2 Price. The Stock Option exercise price of a Non-Employee
Stock Option shall be the Fair Market Value of the Shares subject to such
Stock Option on the date of grant.
6.3 Exercisability. A Non-Employee Stock Option granted under the
Plan shall become exercisable twelve (12) months after the date of grant
(except as otherwise provided in Section 6.6 for retirement and Section 6.7
for death which occurs during such period and in Article 17 if a Change in
Control occurs during such period) and shall expire, except as otherwise
provided herein, 10 years after the date of grant ("Non-Employee Stock
Option Period").
6.4 Payment. The Non-Employee Stock Option exercise price shall
be paid in full as permitted by Section 19.1 for all Shares purchased at
the time the Non-Employee Stock Option is exercised. No fractional Shares
may be purchased. Motorola may require the surrender of the Non-Employee
Stock Option certificate if one has been issued and no Non-Employee Stock
Option may be exercised for less than fifty (50) Shares, except in cases
where the number of shares represented by the Non-Employee Stock Option
being exercised is less than fifty (50), in which case the Non-Employee
Stock Option shall not be exercisable for less than all Shares represented
by such Stock Option.
6.5 Termination. Upon cessation of services as a Non-Employee
Director (for reasons other than retirement as defined in Section 6.6
hereof or death) only those Non-Employee Stock Options immediately
exercisable at the date of cessation of service shall be exercisable by the
Non-Employee Director. Such Non-Employee Stock Options must be exercised
within 30 days after cessation of service (but in no event after the
expiration of the Non-Employee Stock Option Period) or they shall be
forfeited. If, however, the Non-Employee Director during or after his or
her service on the Board, engages, directly or indirectly, in any activity
which is in competition with any activity of Motorola or any Subsidiary or
in any action or conduct which is in any manner adverse or in any way
contrary to the interests of Motorola, or any Subsidiary, any unexercised
portion of such Non-Employee Stock Options shall immediately terminate,
unless otherwise determined by the Chief Executive Officer of Motorola.
The determination of whether a Director is or has engaged in any
competitive activity or in any action or conduct which is adverse or
contrary to the interests of Motorola or any of its Subsidiaries shall be
made by the Chief Executive Officer of Motorola, and such determination
shall be conclusive and binding upon all parties.
6.6 Retirement. As used in this Article 6, the term "retirement"
shall mean, for Non-Employee Directors, resignation at or after age 65,
failure to stand for re-election at or after age 65 or failure to be re-
elected at or after age 65. Upon retirement, all Non-Employee Stock
Options previously granted to a Non-Employee Director shall become or
continue to be exercisable, except as otherwise provided herein. Such Non-
Employee Stock Options must be exercised prior to the expiration of the
Non-Employee Stock Option Period or they shall be forfeited.
6.7 Death. Upon the death of a Non-Employee Director, all Non-
Employee Stock Options previously granted to the Non-Employee Director
shall become exercisable by his or her Successor-in-Interest, except as
otherwise provided herein. Such Non-Employee Stock Options can be
exercised during the remainder of the Non-Employee Stock Option Period.
6.8 Amendments. No amendment may revoke or alter in a manner
unfavorable to a Non-Employee Director holding Non-Employee Stock Options
any Non-Employee Stock Options then outstanding, without such Non-Employee
Director's approval.
6.9 Interpretation. The Chief Executive Officer of Motorola
shall administer, construe and interpret this Article 6, whose decisions
shall be conclusive and binding on all parties. The Chief Executive
Officer of Motorola is authorized, subject to the provisions of this
Article 6, from time to time to establish such rules and regulations as he
or she may deem appropriate for the proper administration or operation of
this Article 6. Non-Employee Stock Options may be evidenced by
certificates or Agreements, at the option of the Chief Executive Officer of
Motorola.
7. MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994, MOTOROLA EXECUTIVE
INCENTIVE PLAN AND MOTOROLA NON-EMPLOYEE DIRECTORS STOCK PLAN
Awards and grants made under the Motorola Long Range Incentive Plan of
1994 and the Motorola Executive Incentive Plan which are payable in Common
Stock or restricted Common Stock, or both, shall be paid from the Shares
reserved or available for issuance under Section 3 of the Plan.
Compensation of Non-Employee Directors which is payable in Common Stock or
restricted Common Stock, or both, under the Motorola Non-Employee Directors
Stock Plan shall be paid from Shares reserved or available for issuance
under Section 3 of the Plan.
8. PERFORMANCE SHARES
8.1 Description. Performance Shares are the right of a
Participant to whom a grant of such Shares is made to receive Shares or
cash or a combination of Shares and cash equal to the Fair Market Value of
such Shares at a future date in accordance with the terms of such grant.
8.2 Grant. The Committee may grant an award of Performance
Shares. The award shall be subject to such terms and conditions as the
Committee deems appropriate. The number of Performance Shares and the
terms and conditions of the grant shall be set forth in the applicable
Agreement.
8.3 Performance Objectives. Each Performance Share shall be
subject to conditions established by the Committee, which may include, but
are not limited to, achievement of specific business objectives, attainment
of growth rates, attainment of profit and/or other performance objectives
for Motorola or one of its operating units to be achieved by the end of a
specified period or other measurements of performance. If the established
performance objectives are achieved, the Participant shall be paid in
Shares of Common Stock equal to the number of Performance Shares initially
granted to that Participant or in cash equal to the Fair Market Value of
such Shares as specified in the Agreement or in a combination of Shares and
cash. If such objectives are not met, each award of Performance Shares may
provide for lesser payments in accordance with formulas established in the
award.
8.4 Not Stockholder. The award of Performance Shares to a
Participant shall not create any rights in such Participant as a
stockholder of Motorola until the issuance of Shares of Common Stock with
respect to an award.
8.5 No Adjustments. No adjustment shall be made in Performance
Shares awarded on account of cash or stock dividends which may be paid or
other rights which may be issued to the holders of Common Stock prior to
the end of any period for which performance objectives were established and
Common Stock or cash is issued to the Participant.
8.6 Nontransferability. Performance Shares may not be
transferred, assigned or pledged by the holder thereof except as may be
provided in the Agreement.
9. STOCK APPRECIATION RIGHTS
9.1 Grant of Stock Appreciation Rights. The Committee shall have
authority to grant Stock Appreciation Rights to Employees. The Committee
shall determine the number of Shares subject to each Stock Appreciation
Right, the term of the Stock Appreciation Right, the time or times at which
the Stock Appreciation Right may be exercised and all other terms and
conditions of the Stock Appreciation Right. A Stock Appreciation Right is
a right, denominated in Shares, to receive, upon exercise of the right, in
whole or in part, without payment to Motorola, an amount, payable in
Shares, in cash (in U.S. dollars, or the currency of the country of the
Employee's citizenship or of the country in which the Employee resides, at
the election of Motorola), or a combination of Shares and cash (in U.S.
dollars, or the currency of the country of the Employee's citizenship or of
the country in which the Employee resides, at the election of Motorola) as
the Committee shall determine at the time the right is exercised) that is
equal to the excess of (i) the Fair Market Value of Common Stock on the
date of exercise of the right over (ii) the Fair Market Value of Common
Stock on the date of grant of the right multiplied by the number of Shares
for which the right is exercised.
9.2 Non-Exercise Period. Except as provided in Section 9.3
hereof, no Stock Appreciation Right granted under the Plan may be exercised
prior to the expiration of the Non-Exercise Period. No Stock Appreciation
Right may be exercised after expiration of its stated term.
9.3 Application of Certain Terms and Conditions to Stock
Appreciation Rights. The terms and conditions of Section 4.5 of the Plan
applicable to Employee Stock Options shall also apply to Stock Appreciation
Rights with the term "Optionee" changed to "grantee", the term "Employee
Stock Option" changed to "Stock Appreciation Right" and with such other
changes as may be necessary to conform the language of Section 4.5 to apply
to Stock Appreciation Rights.
10. STOCK AWARDS
A Stock Award consists of the transfer by Motorola to an Employee of
Shares of Common Stock, without payment therefor, as additional
compensation for his or her services to the Company or a Subsidiary. The
number of Shares to be awarded and transferred to any Employee shall be
determined by the Committee.
11. CASH AWARDS
A Cash Award consists of a monetary payment made by Motorola to an
Employee as additional compensation for his or her services to the Company
or a Subsidiary. A Cash Award may be made in tandem with another Benefit
or may be made independently of any other Benefit. The amount of any
monetary payment constituting a Cash Award shall be determined by the
Committee in its sole discretion. Cash Awards may be subject to other
terms and conditions, which may vary from time to time and among Employees,
as the Committee determines to be appropriate.
12. ELIGIBILITY
The Participants and the Benefits they receive under the Plan shall be
determined by the Committee, except for Non-Employee Stock Options which
shall be automatically granted to Non-Employee Directors under Article 6
and except to the extent authority has been delegated under Section 13.1
hereof. In making its determinations, the Committee shall consider past,
present and expected future contributions of Employees to Motorola and its
Subsidiaries.
13. ADMINISTRATION
13.1 Committee. The Plan (except for Article 6 and the Non-
Employee Stock Options automatically granted thereunder) shall be
administered by the Committee; provided, however, if at any time Rule 16b-3
and Section 162(m) of the Code, and any implementing regulations (and any
successor provisions thereof), so permit without adversely affecting the
ability of the Plan to comply with the conditions for exemption from
Section 16 of the Exchange Act (or any successor provision) provided by
Rule 16b-3 and the exemption from the limitations on the deductibility of
certain executive compensation provided by Section 162(m), the Committee
may delegate the administration of the Plan in whole or in part, on such
terms and conditions, to such other person or persons as it may determine
in its discretion. References to the Committee hereunder shall include the
Board where appropriate. The membership of the Committee or such successor
committee shall be constituted so as to comply at all times with the
applicable requirements of Rule 16b-3 and Section 162(m).
13.2 Authority. Subject to the terms of the Plan, and except for
the Non-Employee Stock Options granted under Article 6 (over which the
Committee shall have no discretion), the Committee shall have complete
power and authority to:
(a) determine the individuals to whom Benefits are granted,
the type and amounts of Benefits to be granted and the time of all
such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;
(c) administer, interpret and construe the Plan, the
Benefits and all Agreements;
(d) prescribe, amend and revoke rules and regulations
relating to the Plan;
(e) determine the content and form of all Agreements;
(f) maintain accounts, records and ledgers relating to
Benefits;
(g) maintain records concerning its decisions and
proceedings;
(h) employ agents, attorneys, accountants or other persons
for such purposes as the Committee considers necessary or desirable;
(i) take, at any time, any action permitted by Section 17.1
irrespective of whether any Change in Control has occurred or is
imminent; and
(j) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry out the
purposes of the Plan.
(k) determine all questions relating to Benefits under the
Plan.
13.3 Replacement. The Committee may permit a Participant to elect
to surrender a Benefit in exchange for a new Benefit, excluding the
replacement of a Stock Option with a Stock Option at a lower price than the
Stock Option surrendered.
13.4 Tandem Awards. Benefits may be granted by the Committee
singly or in combination or tandem with other Benefits.
13.5 Determinations. All determinations of the Committee shall be
final, binding and conclusive upon all persons, including Motorola and its
Subsidiaries and Participants and their respective legal representatives,
Successors-in Interest and permitted assigns and upon all other persons
claiming by, through, under or against any of them.
14. AMENDMENT
Except as hereinafter provided, and except as may be required for
compliance with Rule 16b-3 and Section 162(m) of the Code, the Board or the
Committee shall have the right and power to amend the Plan at any time and
from time to time. Only the Board may amend Article 6 of the Plan, subject
to such Article and subject to compliance with Rule 16b-3. Neither the
Board nor the Committee may amend the Plan in a manner which would impair
or adversely affect the rights of the holder of a Benefit without the
holder's consent. If the Code or any other applicable statute, rule or
regulation, including, but not limited to, those of any securities
exchange, requires stockholder approval with respect to the Plan or any
type of Plan amendment, then to the extent so required, stockholder
approval shall be obtained.
15. TERM AND TERMINATION
15.1 Term. The Plan shall commence as of the Effective Date and,
subject to the terms of the Plan, including those in Section 20.8 requiring
stockholder approval for implementation or limiting the period over which
ISOs or any other Benefits may be granted, shall continue in full force and
effect until four (4) years from the Effective Date, unless sooner
terminated by the Board.
15.2 Termination. The Plan may be terminated at any time by the
Board. Termination shall not in any manner impair or adversely affect any
Benefit outstanding at the time of termination.
16. MODIFICATION OR TERMINATION
16.1 General. Subject to the provisions of Section 16.2, the
amendment or termination of the Plan shall not impair or adversely affect a
Participant's right to any Benefit granted prior to such amendment or
termination.
16.2 Committee's Right. Any Benefit granted may be converted,
modified, forfeited or canceled, in whole or in part, by the Committee if
and to the extent permitted in the Plan or applicable Agreement or with the
consent of the Participant to whom such Benefit was granted. The Committee
may grant Benefits on such terms and conditions, which may be different
than those specified in the Plan, as it may deem desirable in order to
comply with, or make available the benefits of, the laws and regulations of
any foreign jurisdiction, to assure the viability of Benefits granted and
to enable Participants, regardless of where employed, to receive Benefits
under the Plan and such laws and regulations.
17. CHANGE IN CONTROL
17.1 Benefit Vesting and Payment.
(a) Stock Options. Upon the occurrence of a Change in
Control, each Stock Option outstanding on the date on which the Change
in Control occurs shall immediately become exercisable in full for the
remainder of its term and each Participant holding Stock Options shall
have the right, at his or her election made during a period of sixty
(60) days following the date on which the Change in Control occurs,
to have Motorola purchase any or all such Stock Options for an
immediate lump-sum cash payment equal to the product of (1) the
excess, if any, of the higher of (i) the average of the high and low
sale prices of the Common Stock as reported on the New York Stock
Exchange - Composite Transactions on the date immediately prior to the
date of payment, or if Shares did not trade on such date, on the last
previous day on which Shares traded prior to such date, or (ii) the
highest per Share price for Common Stock actually paid in connection
with the Change in Control, over the per Share exercise price of each
such Stock Option held, and (2) the number of Shares covered by each
such Stock Option.
(b) Restricted Stock. Upon the occurrence of a Change in
Control, the restrictions on all Shares of Restricted Stock
outstanding on the date on which the Change in Control occurs shall be
automatically terminated and each Participant holding Restricted Stock
shall have the right to receive unrestricted Shares in substitution
for the Shares of Restricted Stock or, at his or her election made
during a period of sixty (60) days following the date on which the
Change in Control occurs, the right to have Motorola purchase any or
all Shares of Restricted Stock for an immediate lump-sum cash payment
equal to the product of (1) the higher of (i) the average of the high
and low sale prices of the Common Stock as reported on the New York
Stock Exchange - Composite Transactions on the date immediately prior
to the date of payment, or if Shares did not trade on such date, on
the last previous day on which Shares traded prior to such date, or
(ii) the highest per Share price for Common Stock actually paid in
connection with the Change in Control and (2) the number of Shares of
such Restricted Stock, plus the value of any related Cash Award
relating to such Restricted Stock.
(c) Performance Shares. Upon the occurrence of a Change
in Control, any performance objectives with respect to any Performance
Shares previously granted, but still considered outstanding (as a
right to receive Shares at a future date and any related Cash Award)
shall be deemed to have been attained to the full and maximum extent,
and Shares of Common Stock and any related Cash Award shall be paid to
the Participant in an amount or amounts determined in accordance with
the terms and conditions set forth in the applicable Agreement.
(d) Stock Appreciation Rights. Upon the occurrence of a
Change in Control, each Stock Appreciation Right outstanding on the
date on which the Change in Control occurs shall immediately become
exercisable in full for the remainder of its term and each Participant
holding a Stock Appreciation Right shall have the right, at his or her
election made during a period of sixty (60) days following the date on
which the Change in Control occurs, to have Motorola purchase any or
all such Stock Appreciation Rights for an immediate lump-sum cash
payment equal to the product of (1) the higher of (i) the average of
the high and low sale prices of the Common Stock as reported on the
New York Stock Exchange - Composite Transactions on the date
immediately prior to the date of payment, or if Shares did not trade
on such date, on the last previous day on which Shares traded prior to
such date, or (ii) the highest per Share price for Common Stock
actually paid in connection with the Change in Control and (2) the
number of Shares covered by each such Stock Appreciation Right.
(e) Other Benefits. Upon the occurrence of a Change in
Control, any terms and conditions with respect to other Benefits
previously granted under the Plan, shall be deemed to be fully
satisfied and the Benefits shall be paid out immediately to the
Participants in amounts determined in accordance with the terms and
conditions set forth in the applicable grant, award or Agreement.
17.2 Change in Control. A Change in Control shall mean:
A Change in Control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act whether or not Motorola is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (A) any "person" or "group" (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Motorola representing 20% or
more of the combined voting power of Motorola's then outstanding securities
(other than Motorola or any employee benefit plan of Motorola; and, for
purposes of the Plan, no Change in Control shall be deemed to have occurred
as a result of the "beneficial ownership," or changes therein, of
Motorola's securities by either of the foregoing), (B) there shall be
consummated (i) any consolidation or merger of Motorola in which Motorola
is not the surviving or continuing corporation or pursuant to which Shares
of Common Stock would be converted into cash, securities or other property,
other than a merger of Motorola in which the holders of Common Stock
immediately prior to the merger have (directly or indirectly) at least an
80% ownership interest in the outstanding common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of Motorola, (C) the
stockholders of Motorola approve any plan or proposal for the liquidation
or dissolution of Motorola, or (D) as the result of, or in connection with,
any cash tender offer, exchange offer, merger or other business
combination, sale of assets, proxy or consent solicitation (other than by
the Board), contested election or substantial stock accumulation (a
"Control Transaction"), the members of the Board immediately prior to the
first public announcement relating to such Control Transaction shall
thereafter cease to constitute a majority of the Board.
18. AGREEMENTS AND TRANSFER OF BENEFITS
18.1 Grant Evidenced by Agreement. The grant of any Benefit under
the Plan may be evidenced by, and as required by Sections 5.2 and 8.2
hereof shall be evidenced by, an Agreement which describes the specific
Benefit granted and describes or refers to the terms and conditions of the
Benefit. The granting of any Benefit may be subject to, and conditioned
upon, the recipient's execution of any Agreement required by the Committee
or the Plan. Except as otherwise provided in an Agreement, all capitalized
terms used in the Agreement shall have the same meaning as in the Plan, and
each Agreement shall be subject to all of the terms of the Plan.
18.2 Provisions of Agreement. Each Agreement shall contain such
provisions that the Committee or Chief Executive Officer of Motorola, as
appropriate, shall determine to be necessary, desirable and appropriate for
the Benefit granted. ISOs may be evidenced by Incentive Stock Option
certificates and NSOs may be evidenced by Non-Qualified Stock Option
certificates. Each Agreement may include, but shall not be limited to, the
following with respect to any Benefit: description of the type of Benefit;
the Benefit's duration; its transferability; if a Stock Option, the
exercise price, the exercise period, the Non-Exercise Period and the person
or persons who may exercise the Stock Option; the effect upon such Benefit
of the Participant's death or other termination of employment; the
Benefit's conditions; when, if, and how any Benefit may be forfeited,
converted into another Benefit, modified, exchanged for another Benefit, or
replaced; and the restrictions on any Shares purchased by, received by, or
granted to, a Participant under the Plan.
18.3 Transfer of Benefits. Except as set forth in the next
sentence of this Section 18.3, a Benefit shall not be transferable by a
Participant other than by operation of a death beneficiary designation made
by the Participant in accordance with rules established by the Committee,
or the Chief Executive Officer of Motorola, as appropriate, by will or the
applicable laws of descent and distribution and shall be exercisable during
the Participant's lifetime only by him or her or his or her guardian or
legal representative if the Participant is legally incompetent.
Notwithstanding the foregoing, except to the extent that it would cause the
Plan to fail to meet the conditions required to be met under Rule 16b-3,
the Committee shall have the power and authority to provide, as a term of
any NSO, that such NSO may be transferred without consideration by the Non-
Employee Director or the Optionee to a member or members of his or her
immediate family (i.e., a child, children, grandchild, grandchildren, or
spouse) and/or to a trust or trusts for the benefit of an immediate family
member or family members.
19. PAYMENT AND DEFERRAL
19.1 Payment. Upon the exercise of a Stock Option or in the case
of any other Benefit that requires a payment to Motorola, the amount due
Motorola is to be paid:
(a) in cash;
(b) by the transfer to Motorola of Shares owned by the
Participant valued at Fair Market Value on the date of transfer;
(c) by any combination of the payment methods specified
in (a) and (b) above; or
(d) such other manner as may be authorized from time to
time by the Committee.
(e) as provided in Section 5.6 hereof;
Notwithstanding the foregoing, any method of payment other than (a) and (b)
may be used only with the approval of the Committee, or if and to the
extent so provided in the applicable Agreement.
19.2 Deferral. The right to receive any Benefit (other than Non-
Employee Stock Options) under the Plan may, at the written request of the
Participant and in the sole discretion of the Committee, be deferred for
such period and upon such terms as the Committee shall determine, which may
include crediting of interest on deferrals of cash and crediting of
dividends on deferrals denominated in Shares.
20. GENERAL
20.1 Tax Withholding. At the time Motorola is required to
withhold any Federal Insurance Contribution Act ("FICA") tax and/or any
federal, state or local tax of any kind with respect to any award or grant
of any Benefit or the exercise of any Stock Option or the distribution or
receipt of Common Stock under the Plan, the Participant shall pay to
Motorola the amount of any such FICA, federal, state or local tax or taxes
required to be withheld. The obligations of Motorola under the Plan shall
be conditional on payment of all withholding taxes, and Motorola shall have
the right to deduct any such taxes from any payment of any kind under the
Plan or otherwise due to the Participant. Withholding tax obligations may
be settled, in whole or in part, with Common Stock including Common Stock
that is part of the Benefit that gives rise to the withholding requirement.
At any time when a Participant is required to pay to Motorola an amount
required to be withheld under applicable tax laws in connection with an
award or grant, a distribution or receipt of Common Stock or upon exercise
of a Stock Option, the Participant may satisfy this obligation in whole or
in part by transfer to Motorola of Shares previously owned by the
Participant, by electing (the "Election") to have Motorola withhold from
the distribution Shares of Common Stock having a value equal (as near as
possible) to the amount required to be withheld or by a combination of such
means, provided, however, that the amount of federal, state and local
income taxes that may be paid by transfer or withholding of Shares shall
not exceed the statutory minimum withholding requirements. The amount of
any withholding tax not paid by transfer or withholding of Shares shall be
paid to Motorola in cash. The value of the Shares transferred or to be
withheld shall be based on the Fair Market Value of the Common Stock on the
date that the amount of tax to be withheld shall be determined ("Tax Date")
or if Shares did not trade on the New York Stock Exchange on the Tax Date,
as of the last previous date Shares did so trade. Each Election must be
made on or prior to the Tax Date. The Committee may disapprove of any
Election, may suspend, condition, restrict or terminate the right to make
Elections, or may provide with respect to any Benefit that the right to
make Elections shall not apply to such Benefit. An Election is
irrevocable, unless revocation is approved by the Committee.
20.2 Compliance With Legal Requirements. Anything in the Plan to
the contrary notwithstanding: (a) Motorola may, if it shall determine it
necessary or desirable for any reason, at the time of award of any Benefit
or the issuance of any Shares of Common Stock pursuant to any Benefit,
require the recipient of the Benefit, as a condition to the receipt thereof
or to the receipt of Shares of Common Stock issued pursuant thereto, to
deliver to Motorola a written representation of present intention to
acquire the Benefit or the Shares of Common Stock issued pursuant thereto
for his or her own account for investment and not for distribution; and (b)
if at any time Motorola further determines that the listing, registration
or qualification (or any updating of any such document) of any Benefit or
the Shares of Common Stock issuable pursuant thereto is necessary on any
securities exchange or under any federal or state securities or blue sky
law, or that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with the award
of any Benefit, the issuance of Shares of Common Stock pursuant thereto or
the removal of any restrictions imposed on such Shares, such Benefit shall
not be awarded or such Shares of Common Stock shall not be issued or such
restrictions shall not be removed, as the case may be, in whole or in part,
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to
Motorola. In addition, Motorola may terminate any Benefit or terminate,
withhold, condition, restrict or limit the issuance or delivery of any
Shares of Common Stock if it determines that such Benefit or the issuance
or delivery of Shares violates, or is prohibited or restricted or made
impractical or administratively burdensome by, any applicable laws, rules
or regulations, including but not limited to, those of any foreign
jurisdiction, stock exchange or Rule 16b-3.
20.3 Leaves of Absence and Lay-Offs. Except as provided in
Sections 4.5(a)(iii), 4.5(b)(v) and 4.5(d), whether a leave of absence or
lay-off shall constitute termination of employment for purposes of the Plan
or any Employee Stock Option or Benefit granted under and pursuant to the
Plan to Employees shall be determined by the Committee, in its sole
discretion, subject to then currently applicable law. The Committee shall
adopt such rules, in its sole discretion, as to the time, any installment
limitations, restrictions and manner of the exercise or vesting of Benefits
held by Employees who are placed on leave of absence or lay-off status by
the Company or any Affiliate, except as provided in Sections 4.5(a)(iii),
4.5(b)(v) and 4.5(d).
20.4 Indemnification and Exculpation. Each person, who is or
shall have been a member of the Board or of the Committee, shall be
indemnified and held harmless by Motorola against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim,
action, suit or proceeding to which such person may be a party or in which
such person may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by such person
in settlement thereof (with Motorola's written approval) or paid by such
person in satisfaction of a judgment in any such action, suit, or
proceeding, except a judgment based upon a finding of such person's bad
faith, subject, however, to the condition that upon the institution of any
claim, action, suit or proceeding against such person, such person shall in
writing give Motorola an opportunity, at its own expense, to participate
in, and to the extent it may wish, to assume the defense thereof before
such person undertakes to handle it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other
right to which such person may be entitled as a matter of law, under the
Delaware General Corporation Law, the Restated Certificate of Incorporation
or By-Laws of Motorola or otherwise, or any power that the Company may have
to indemnify such person or hold such person harmless. Each member of the
Board or of the Committee, and each officer and employee of Motorola shall
be fully justified in relying or acting upon any information furnished on
behalf of Motorola by any person or persons other than himself or herself
in connection with the administration of the Plan. In no event shall any
person who is or shall have been a member of the Board or of the Committee,
or an officer or employee of Motorola, be liable for any determination made
or other action taken or any omission to act in reliance upon any such
information, or for any action taken (including the furnishing of
information) or any failure to act, if in good faith.
20.5 Headings. The headings of the sections and subsections of
the Plan are for convenience of reference only and shall not be used to
construe any provision of the Plan.
20.6 Governing Law. The Plan and all Agreements under it shall be
governed by, and construed and administered in accordance with, the laws of
the State of Illinois except to the extent that any federal law otherwise
controls.
20.7 Employment Rights. Nothing in the Plan or in any Agreement
or grant or award of any Benefit shall restrict the right of Motorola or
any Subsidiary to terminate the employment of any Participant at any time,
with or without cause, or to increase or decrease the compensation of any
Participant.
20.8 Approval by Stockholders. The Plan has been approved by the
Board of Directors and is subject to approval by the affirmative votes of
the holders of a majority of the Shares present, or represented, and
entitled to vote at the meeting of stockholders at which the Plan is
submitted.
20.9 Implementation of the Plan and Grant of Employee Stock
Options Under 1996 Plan. If this Plan is implemented pursuant to Section
20.8, except as herein provided, no further options will be granted under
the Share Option Plan of 1996. If the Board of Directors terminates this
Plan after it has been implemented, stock options may be granted under the
Share Option Plan of 1996, but not as to any Shares issued or subject to
Benefits under this Plan.
TABLE OF CONTENTS
1. NAME AND PURPOSE
1.1 Name
1.2 Purpose
2. DEFINITIONS
2.1 General Definitions
2.2 Other Definitions
3. SHARES SUBJECT TO PLAN
3.1 Number of Shares
3.2 Reusage
3.3 Adjustments
4. EMPLOYEE STOCK OPTIONS
4.1 Grant of Employee Stock Options
4.2 NSOs and ISOs
4.3 Exercise of Employee Stock Options; Payment
4.4 Non-Exercise Period
4.5 Effect of Termination of Employment on Employee Stock Option
5. RESTRICTED STOCK
5.1 Grants of Restricted Stock
5.2 Price, Agreement, Stock Certificates, Escrow
5.3 Restrictions
5.4 Termination of Restrictions
5.5 Stockholder Rights
5.6 Payment for Employee Stock Option
5.7 Substitution of Rights
5.8 Cash Awards and Restricted Stock
6. NON-EMPLOYEE STOCK OPTIONS
6.1 Automatic Grant of Non-Employee Stock Options
6.2 Price
6.3 Exercisability
6.4 Payment
6.5 Termination
6.6 Retirement
6.7 Death
6.8 Amendments
6.9 Interpretation
7. MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994, MOTOROLA EXECUTIVE
INCENTIVE PLAN AND MOTOROLA NON-EMPLOYEE DIRECTORS STOCK PLAN
8. PERFORMANCE SHARES
8.1 Description
8.2 Grant
8.3 Performance Objectives
8.4 Not Stockholder
8.5 No Adjustments
8.6 Nontransferability
9. STOCK APPRECIATION RIGHTS
9.1 Grant of Stock Appreciation Right
9.2 Non-Exercise Period
9.3 Application of Certain Terms and Conditions to Stock
Appreciation Rights
10. STOCK AWARDS
11. CASH AWARDS
12. ELIGIBILITY
13. ADMINISTRATION
13.1 Committee
13.2 Authority
13.3 Replacement
13.4 Tandem Awards
13.5 Determination
14. AMENDMENT
15. TERM AND TERMINATION
15.1 Term
15.2 Termination
16. MODIFICATION OR TERMINATION
16.1 General
16.2 Committee's Right
17. CHANGE IN CONTROL
17.1 Benefit Vesting and Payment
17.2 Change in Control
18. AGREEMENTS AND TRANSFER OF BENEFITS
18.1 Grant Evidenced by Agreement
18.2 Provisions of Agreement
18.3 Transfer of Benefits
19. PAYMENT AND DEFERRAL
19.1 Payment
19.2 Deferral
20. GENERAL
20.1 Tax Withholding
20.2 Compliance with Legal Requirements
20.3 Leaves of Absence and Lay-Offs
20.4 Indemnification and Exculpation
20.5 Headings
20.6 Governing Law
20.7 Employment Rights
20.8 Approval by Stockholde
20.9 Implementation of the Plan and Grant of Employee Stock
Options Under 96 Plan
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated Balance Sheet as of 03/28/98 and the Statement of Consolidated
Earnings for the quarter ended 03/28/98 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-28-1998
<CASH> 1,509
<SECURITIES> 289
<RECEIVABLES> 5,107
<ALLOWANCES> (201)
<INVENTORY> 4,408
<CURRENT-ASSETS> 13,624
<PP&E> 21,774
<DEPRECIATION> (11,847)
<TOTAL-ASSETS> 28,067
<CURRENT-LIABILITIES> 9,478
<BONDS> 2,127
0
0
<COMMON> 1,794
<OTHER-SE> 11,733
<TOTAL-LIABILITY-AND-EQUITY> 28,067
<SALES> 6,886
<TOTAL-REVENUES> 0
<CGS> 4,814
<TOTAL-COSTS> 6,051<F1>
<OTHER-EXPENSES> 540<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 257
<INCOME-TAX> 77
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180
<EPS-PRIMARY> 0.301
<EPS-DILUTED> 0.296
<FN>
<F1>Total cost includes: cost of goods sold, selling & admin expense, total exch
(gain)/loss.
<F2>Other expense includes: Depreciations Expenses
</FN>
</TABLE>
