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 June 27, 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 June 27, 1998:
Class Number of Shares
Common Stock; $3 Par Value 598,117,115
Motorola, Inc. and Subsidiaries
Index
Part I
Financial Information Page
Item 1 Financial Statements
Condensed Consolidated Statements of Operations for the
Three-Month and Six-Month Periods Ended
June 27, 1998 and June 28, 1997 3
Condensed Consolidated Balance Sheets at
June 27, 1998 and December 31, 1997 4
Condensed Consolidated Statement of Stockholders'
Equity for the Six-Month Period Ended June 27, 1998 5
Condensed Consolidated Statements of Cash Flows for the
Six-Month Periods ended June 27, 1998 and
June 28, 1997 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Part II
Other Information
Item 1 Legal Proceedings 18
Item 2 Changes in Securities 18
Item 3 Defaults Upon Senior Securities 18
Item 4 Submission of Matters to a Vote of Security Holders 18
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 19
Part I - Financial Information
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
Net sales $ 7,023 $ 7,521 $13,909 $14,163
Costs and expenses
Manufacturing and other
costs of sales 5,018 5,019 9,832 9,403
Selling, general and
administrative expenses 1,351 1,311 2,588 2,473
Restructuring charges 1,980 170 1,980 170
Depreciation expense 518 572 1,058 1,137
Interest expense, net 53 36 91 68
Total costs and expenses 8,920 7,108 15,549 13,251
Earnings(loss) before income taxes (1,897) 413 (1,640) 912
Income tax provision(benefit) (569) 145 (492) 319
Net earnings(loss) $(1,328) $ 268 $(1,148) $ 593
Net earnings(loss) per share
Basic $ (2.22) $ .45 $ (1.92) $ 1.00
Diluted $ (2.22) $ .44 $ (1.92) $ .97
Weighted average common shares
outstanding
Basic 597.9 594.7 597.6 594.3
Diluted 597.9 610.2 597.6 611.4
Dividends paid per share $ .12 $ .12 $ .24 $ .24
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
(Unaudited)
June 27, December 31,
1998 1997
Assets
Cash and cash equivalents $ 1,177 $ 1,445
Short-term investments 268 335
Accounts receivable, net 4,904 4,847
Inventories 4,383 4,096
Deferred income taxes 2,204 1,726
Other current assets 816 787
Total current assets 13,752 13,236
Property, plant and equipment, net 9,990 9,856
Other assets 4,930 4,186
Total Assets $28,672 $27,278
Liabilities and Stockholders' Equity
Notes payable and current portion of
long-term debt $ 2,973 $ 1,282
Accounts payable 1,972 2,297
Accrued liabilities 6,584 5,476
Total current liabilities 11,529 9,055
Long-term debt 2,129 2,144
Deferred income taxes 1,642 1,522
Other liabilities 1,300 1,285
Stockholders' Equity
Common Stock, $3 par value 1,795 1,793
Preferred stock, $100 par value issuable
in series --- ---
Additional paid-in capital 1,737 1,720
Retained earnings 8,212 9,504
Non-owner changes to equity 328 255
Total stockholders' equity 12,072 13,272
Total liabilities and stockholders' equity $28,672 $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
12/31/97 $3,513 $533 ($240) ($38) $9,504
Net loss (1,148)
Conversion of
zero coupon
notes 1
Fair value
Adjustment
to certain
cost-based
investments:
Reversal of
prior
period
adjustment (533)
Recognition
of current
period
unrecognized
gain 642
Change in foreign
Currency
translation
adjustments (36)
Stock options
exercised and
other 18
Dividends declared (144)
BALANCES AT
6/27/98 $3,532 $642 ($276) ($38) $8,212
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)
Six Months Ended
June 27, June 28,
1998 1997
Operating
Net earnings(loss) $(1,148) $ 593
Add(deduct) non-cash items
Restructuring charges 1,980 170
Depreciation 1,058 1,137
Deferred income taxes (430) 98
Amortization of debt discount and issue costs 5 5
Gain on disposition of investments in
affiliated companies (168) (47)
Change in assets and liabilities, net of
effects of acquisitions and dispositions
Accounts receivable, net (64) (624)
Inventories (314) (443)
Other current assets (40) (66)
Accounts payable and accrued liabilities (848) 245
Other assets and liabilities (298) 17
Net cash (used for)provided by operating activities $ (267) $1,085
Investing
Acquisitions and advances to affiliated
companies $ (320) $ (80)
Proceeds from the dispositions of investments
in affiliated companies 184 81
Capital expenditures (1,688) (1,052)
Proceeds from dispositions of property, plant and
equipment and other changes 246 127
(Purchases)sales of short-term investments 67 (20)
Net cash used for investing activities $(1,511) $ (944)
Financing
Proceeds from commercial paper and short-term
borrowings $1,691 $ 3
Proceeds from issuance of debt 8 1
Repayment of debt (27) (52)
Issuance of common stock 18 52
Payment of dividends (144) (143)
Net cash provided by(used for) financing activities $1,546 $ (139)
Effect of exchange rate changes on cash and
cash equivalents (36) (62)
Net decrease in cash and cash equivalents $ (268) $ (60)
Cash and cash equivalents, beginning of period $1,445 $1,513
Cash and cash equivalents, end of period $1,177 $1,453
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 June 27, 1998 and for
the three-month and six-month periods ended June 27, 1998 and June 28,
1997, include, in the opinion of management, all adjustments (consisting of
normal recurring adjustments, reclassifications, and restructuring charges)
necessary to present fairly the financial position, results of operations
and cash flows at June 27, 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 and six-month periods
ended June 27, 1998 are not necessarily indicative of the operating results
to be expected for the full year. Certain amounts have been reclassified
in the 1997 financial statements to conform to the 1998 presentation.
2. Supplemental Balance Sheet Information
Inventories consist of the following (in millions):
June 27, Dec. 31,
1998 1997
Finished goods $ 1,227 $ 1,078
Work in process and production materials 3,156 3,018
Inventories $ 4,383 $ 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 $642 million, $1,062 million and $420 million as of June
27, 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 six months of 1998 and 1997 was
$146 million and $95 million, respectively. Cash paid for income taxes
during the first six months of 1998 and 1997 was $307 million and $318
million, respectively.
4. Earnings(Loss) Per Share
The following tables present a reconciliation of the numerators and
denominators of basic and diluted earnings(loss) per share for the periods
specified:
Three Months Ended
June 27, June 28,
(In millions, except per share amounts) 1998 1997
Basic earnings(loss) per share:
Net earnings(loss) $ (1,328) $ 268
Weighted average common shares
outstanding 597.9 594.7
Per share amount $ (2.22) $ .45
Diluted earnings(loss) per share:
Net earnings(loss) $ (1,328) $ 268
Add: Interest on zero coupon
notes, net of taxes, and
effect of executive
incentive and employee
profit sharing plans --- 2
Net earnings(loss), as adjusted $ (1,328) $ 270
Weighted average common shares
outstanding 597.9 594.7
Add: Effect of dilutive securities
Stock options --- 9.0
Zero coupon notes --- 6.5
Diluted weighted average common
shares outstanding 597.9 610.2
Per share amount $ (2.22) $ .44
4. Earnings(Loss) Per Share-cont'd
Six Months Ended
June 27, June 28,
(In millions, except per share amounts) 1998 1997
Basic earnings(loss) per share:
Net earnings(loss) $ (1,148) $ 593
Weighted average common shares
outstanding 597.6 594.3
Per share amount $ (1.92) $ 1.00
Diluted earnings(loss) per share:
Net earnings(loss) $ (1,148) $ 593
Add: Interest on zero coupon
notes, net of taxes, and
effect of executive
incentive and employee
profit sharing plans --- 3
Net earnings(loss), as adjusted $ (1,148) $ 596
Weighted average common shares
outstanding 597.6 594.3
Add: Effect of dilutive securities
Stock options --- 10.8
Zero coupon notes --- 6.3
Diluted weighted average common
shares outstanding 597.6 611.4
Per share amount $ (1.92) $ .97
5. Reorganization of Businesses
In the second quarter of 1998, the Company recorded a pre-tax restructuring
charge of $1.98 billion to cover: a reduction in employment by
approximately 15,000 over the next 12 months from the approximate 150,000
employees worldwide; the consolidation of manufacturing operations
throughout the Company with emphasis on the Semiconductor Products and
Messaging, Information and Media segments; the exit of additional non-
strategic, poorly performing businesses; and the writedown of assets which
have become impaired either as a result of current business conditions or
business portfolio decisions.
Throughout 1997, the Company established restructuring accruals totalling
$327 million to exit its modem business in Huntsville, AL, to exit the
MacOSr-compatible computer systems business, and to phase out participation
in the dynamic random access memory (DRAM) market. At June 27, 1998, $256
million of the accruals had been utilized with the remainder expected to be
used by the end of 1998.
6. Comprehensive Earnings(Loss)
SFAS No. 130 "Reporting Comprehensive Income", 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(loss). These
changes include the fair value adjustment to certain cost-based
investments, foreign currency translation adjustments, and minimum pension
liability adjustment. Comprehensive earnings(loss) for the three-month
periods ended June 27, 1998, and June 28, 1997, were $(1.4) billion and
$567 million, respectively. Comprehensive earnings(loss) for the six-month
periods ended June 27, 1998, and June 28, 1997, were $(1.1) billion and
$832 million, respectively.
7. Recent Accounting Pronouncement
During the second quarter, the Financial Accounting Standards Board issued
SFAS 133 "Accounting for Derivative Instruments and Hedging Activities",
which will be effective for the Company's fiscal year 2000. This statement
establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments imbedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement also requires that
changes in the derivative's fair value be recognized in earnings unless
specific hedge accounting criteria are met. The Company is currently
assessing the impact of this new statement on its consolidated financial
position, liquidity, and results of operations.
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:
In the second quarter of 1998, sales decreased 7 percent to $7.0
billion from $7.5 billion a year earlier. In the first half of 1998,
sales declined 2 percent to $13.9 billion from $14.2 billion in the
first half of 1997.
Excluding special items, second-quarter earnings were $6 million, or
1 cent per share in 1998, compared with $392 million, or 64 cents per
share in the second quarter of 1997. Excluding special items,
earnings for the six months were $147 million, or 25 cents per share,
compared with $678 million, or $1.11 per share a year earlier.
The Company recorded special items of $1.91 billion pre-tax, or $2.23
per share after-tax, in the second quarter of 1998. These items
include $1.98 billion of charges associated with a comprehensive
series of manufacturing consolidations, cost reductions and
restructuring steps intended to improve financial performance, as
announced June 4, partially offset by gains on the sale of assets.
As a result, the second-quarter loss, including the special items,
was $1.3 billion, or $2.22 per share, compared with earnings of $268
million, or 44 cents per share, in the second quarter a year ago.
The year-earlier quarter includes special charges against pre-tax
earnings of $190 million, or 20 cents per share after-tax, largely
from the phase-out of the dynamic random access memory (DRAM)
business.
In the first six months of 1998, the loss, including special items
was $1.15 billion, or $1.92 per share, compared with earnings of $593
million, or 97 cents per share, in last year's first half.
Cellular Products Segment sales declined 1 percent to $2.78 billion
and orders were down 11 percent. Excluding special items referred to
earlier, the segment had a smaller operating profit than a year ago.
Including special items, the segment had an operating loss versus a
profit a year ago.
Cellular Subscriber Sector (CSS) sales and orders declined. Sales
and orders were higher in Europe, lower in Pan America and
significantly lower in Asia. Sales of digital products continued to
increase versus last year. This increase was entirely offset by a
decline in sales of analog products, caused by a continuing trend of
demand shift to digital products.
Cellular Infrastructure Group (CIG) sales increased while orders were
significantly lower. Sales were up significantly in Japan and Pan
America, lower in Europe and significantly lower in Asia. Orders
were higher in Europe, lower in Asia and Pan America, and
significantly lower in Japan than a year ago when an unusually high
level of orders was recorded on a contract to build a nationwide Code
Division Multiple Access (CDMA) system. The cellular infrastructure
business has been historically characterized by large orders and
irregular purchasing patterns, which can cause volatility in
quarterly growth rates.
Semiconductor Products Segment sales decreased 11 percent to $1.81
billion and orders were down 25 percent. Excluding special items
referred to earlier, the segment had an operating loss versus a
profit a year ago. Including special items, the segment had a larger
operating loss than a year ago. Orders were higher in the
Transportation Systems Group, lower in the Consumer Systems and
Networking and Computing Systems Groups, and significantly lower in
the Wireless Subscriber Systems Group and Semiconductor Components
Group. All major regions posted lower orders with orders in Japan
and Asia down significantly. The semiconductor market continued to
be adversely affected by economic difficulties in Asia, contributing
to general market weakness and severe pricing pressures in many
product lines.
Land Mobile Products Segment sales increased 18 percent to $1.37
billion, orders rose 12 percent and operating profits increased.
Orders for iDEN (Registered) equipment for integrated digital
enhanced networks were up significantly, led by orders for
infrastructure equipment in North America, Brazil, Colombia and
Japan. A new system in Sao Paulo, Brazil, and a second system in
Buenos Aires, Argentina, began operations during the quarter. A 900
MHz dispatch-only system based on iDEN technology was announced and
the first trial system was launched in Las Vegas, Nev. The segment
also won several contracts for TETRA (Terrestrial Trunked Radio)
equipment. TETRA is the only European-approved standard for digital
trunked radio communications. A contract in excess of $60 million
was received from Dolphin Telecommunications for 150,000 radio
handsets for use on its national network in the U.K.
Messaging, Information and Media Segment sales declined 32 percent to
$771 million and orders were down 35 percent. Excluding special
items referred to earlier, the segment had a smaller operating profit
than a year ago. Including special items, the segment had an
operating loss versus a profit a year ago. Orders in the Paging
Group were down significantly. Sales and orders were lower in North
America and significantly lower in China. The Company announced the
first commercial launch of the FLEX (Trademark) high speed, multi-
frequency roaming paging network in the Guangxi Zhuang Autonomous
Region of China's nationwide paging network. Orders and sales
increased significantly in the emerging cable modem business.
Automotive, Component, Computer and Energy Sector sales declined 9
percent and orders were down 15 percent. Excluding special items
referred to earlier, the sector had a smaller operating profit than a
year ago. Including special items, the sector had an operating loss
versus a profit a year ago. The sector's results are reported as
part of the "Other Products" segment.
Space and Systems Technology Group Sales declined 36 percent, orders
were 30 percent lower, and the group had an operating loss versus a
profit a year ago. The changes in sales, orders and operating
profits are all largely attributable to the lower dollar value than a
year ago of contractual milestones on the IRIDIUM (Registered)
program. Results are reported as part of the "Other Products"
segment.
Initial deployment of the IRIDIUM global personal communications
system was completed. The total number of operational, on-orbit
satellites is currently 65. Motorola is planning 2 additional
launches of Iridium satellites, carrying a total of 7 additional
satellites, by the end of August. Operational and voice quality
testing of the system continued to be demonstrated successfully, and
nine Iridium gateways achieved pre-commercial acceptance by gateway
owners. 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 71 percent of sales,
compared with 67 percent in the second 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.
Selling, general and administrative expenses were 19 percent of sales
compared with 17 percent in the year-earlier period, largely as a
result of lower sales.
Depreciation expense decreased slightly as a percent of sales.
Interest expense increased slightly as a percent of sales. The tax
rate for the second quarter was 30 percent versus a 35 percent tax
rate a year ago.
Liquidity and Capital Resources:
Operating activities used $267 million in cash for the six-month
period ended June 27, 1998, as compared to providing $1.1 billion in
cash for the six-month period ended June 28, 1997. The use of cash
was due primarily to lower earnings, increases in inventory for the
first half of 1998, and recognition of the restructuring charge in
the second quarter of 1998.
Inventories at June 27, 1998 increased by 7 percent or $287 million,
compared to inventories at December 31, 1997. Property, plant and
equipment, less accumulated depreciation, increased $134 million
since December 31, 1997.
The Company's notes payable and current portion of its long-term debt
increased to $3.0 billion at June 27, 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 24.5 percent
at June 27, 1998 from 12.4 percent at December 31, 1997. The
Company's total domestic and foreign credit facilities aggregated
$4.0 billion at June 27, 1998, of which $297 million were used and
the remaining $3.7 billion were available to back up outstanding
commercial paper which totaled $2.6 billion.
At June 27, 1998, the off-balance sheet commitment to Nextel
Communications, Inc. for equipment financing remained at $485
million. This amount represents the maximum available commitment and
may not be completely used.
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 June 27, 1998 and June 28, 1997, the Company had net outstanding
foreign exchange contracts totaling $2.0 billion and $1.6 billion,
respectively. The following schedule shows the five largest foreign
exchange hedge positions as of June 27, 1998 and the corresponding
positions at June 28, 1997:
Dollars in millions
Buy (Sell) June 27, June 28,
1998 1997
Japanese Yen (569) (427)
British Pound Sterling (405) (356)
German Mark (352) (149)
Italian Lira (177) (129)
Malaysian Ringgit 69 4
At June 27, 1998 and June 28, 1997, outstanding foreign exchange
contracts primarily consisted of short-term forward contracts. Net
deferred gains at June 27, 1998, and net deferred losses at June 28,
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 $722 million
in the second quarter of 1998, compared with $678 million in the
second 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 second quarter of 1998 totaled $1.0 billion,
compared with $611 million in the second quarter of 1997. The
Company is currently anticipating that fixed asset expenditures for
1998 will be $3.5 billion.
Return on average invested capital (net earnings divided by the sum
of stockholders' equity, long-term debt, notes payable and the
current portion of long-term debt, less short-term investments and
cash equivalents) was (3.8%) percent based on the performance of the
four preceding fiscal quarters ending June 27, 1998, compared with
7.4 percent based on the performance of the four preceding fiscal
quarters ending June 28, 1997. The Company's current ratio (the
ratio of current assets to current liabilities) was 1.19 at June 27,
1998, compared to 1.46 at December 31, 1997.
Year 2000:
The Company has been aggressively addressing "Year 2000" issues relating to
the processing of date data at the turn of the century. A company-wide
task force has been formed, milestones have been established, and detailed
plans are actively being implemented so that Motorola research programs,
products and internal computer, financial, manufacturing and other
infrastructure systems are reviewed and the necessary changes are
addressed.
Additionally, Motorola customer and supplier relationships are being
reviewed to assess and address Year 2000 issues. The Company has undertaken
internal reviews and has contacted certain of its customers to assess, to
the extent possible, Year 2000 issues related to Motorola products. While
the Company is taking all reasonable efforts to make information on the
Year 2000 readiness of Motorola products available to its customers, this
information may not reach all customers, particularly indirect purchasers.
Although the Company believes that it can address Year 2000 readiness
issues related to its products, there still may be disruptions and/or
product failures that are unforeseen, particularly with respect to its
infrastructure equipment.
Motorola is requesting assurances from its major suppliers that they are
addressing this issue and that products procured by Motorola will function
properly in the Year 2000. Certain critical suppliers, such as energy
providers, have been unwilling to provide such assurances and do not expect
to provide such assurances prior to the Year 2000. Other critical
suppliers do not expect to be able to provide such assurances until 1999.
In both instances, this is particularly the case outside of the United
States where the Company has significant operations. In addition, many
governmental agencies are not expected to be Year 2000 compliant. As a
result, it is difficult for the Company to assess the likelihood, or the
impact on its business, of such entities' failure to be Year 2000
compliant.
While Motorola's efforts to address Year 2000 issues will involve
additional costs and the time and effort of a number of Motorola employees,
the Company believes, based on currently available information, that it
will be able to manage its total Year 2000 transition without any material
adverse effect on the Company's future consolidated results of operations,
liquidity and capital resources.
Euro Conversion:
On January 1, 1999, eleven of the fifteen member countries of the European
Union are scheduled to establish fixed conversion rates between their
existing sovereign currencies and the euro. The participating countries
have agreed to adopt the euro as their common legal currency on that date.
The Company has formed a task force and has begun to assess the potential
impact to the Company that may result from the euro conversion. In
addition to tax and accounting considerations, the Company is assessing the
potential impact from the euro conversion in a number of areas, including
the following: (1) the technical challenges to adapt information
technology and other systems to accommodate euro-denominated transactions;
(2) the competitive impact of cross-border price transparency, which may
make it more difficult for businesses to charge different prices for the
same products on a country-by-country basis; (3) the impact on currency
exchange costs and currency exchange rate risk; and (4) the impact on
existing contracts.
At this early stage of its assessment, the Company can not yet predict the
anticipated impact of the euro conversion on the Company.
Outlook:
Conditions in the whole semiconductor industry worldwide and general
business conditions in Asia weakened further in the second quarter.
The currency-related impact on pricing and consumer confidence
continues to affect the Asian region and the Company. Significant
efforts to stabilize the region by the International Monetary Fund
and various governments have not yet proven successful. The negative
impact on the Company's business is likely to continue for at least
the remainder of the year.
To respond to the severity of these business conditions, the Company
is resizing itself through aggressive restructuring steps announced
last month. These actions are intended to improve the Company's
long-term profitability and efficiency.
The Company announced a more collaborative and market-focused
Communications Enterprise that links together all of Motorola's
communications businesses so they can easily share resources and
cooperate on key business and technology issues. At the same time,
it will realign individual businesses so they can quickly and more
efficiently direct the Company's diverse core competencies toward
winning solutions, as the convergence of wireless technologies
continues. In the longer term, the Company expects to see the
benefits of alliances and joint development projects in technologies
ranging from digital signal processors to Internet Protocol
telephony. The Company has announced, and is pursuing additional,
cooperative efforts to enable it to build on its software strengths
and technology portfolio and to bring profitable new products to the
marketplace ahead of the competition. The Company believes these
efforts, coupled with its strong position in emerging markets
throughout the world, set the stage for a renewal of growth in sales
and earnings.
Business Risks:
Statements that are not historical facts are forward-looking and involve
risks and uncertainties. These include the statements in "Outlook" and
statements about Iridium LLC's financing needs, the Company's 1998 fixed
asset expenditures and the impact of Year 2000 issues. 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 ability of
Motorola to implement manufacturing consolidations, cost reductions and
restructuring actions in a timely manner and the success of those efforts;
(ii) the ability of the Company to integrate its businesses to reduce costs
and increase efficiencies; (iii) unanticipated impact of the renewal plan
on productivity and the ability of the company to retain, and where
necessary recruit, employees; (iv) the success of efforts to stabilize
economic conditions in Asia; (v) pricing pressures and demand for the
company's products, particularly semiconductor and messaging products,
especially in light of the current economic conditions in Asia; (vi) 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; (vii) the potential that deteriorating economic
conditions in Japan could continue or worsen; (viii) the ability of
Motorola's cellular businesses to continue to transition to digital
products and gain market share; (ix) product and technology development and
commercialization risks, including for newer digital products, Iridiumr
satellite deployment and software development and Iridium products; (x)
steady growth in emerging markets; (xi) unanticipated changes in demand for
products; (xii) continued weak demand for paging products in North America
and China; and (xiii) unanticipated impact of Year 2000 issues,
particularly the failure of products of major suppliers to function
properly in the Year 2000.
IRIDIUM (Registered) is a registered trademark and service mark of
Iridium LLC.
MacOS (Registered) is a registered trademark of Apple Computer, Inc.
All other brand names mentioned are registered trademarks of their
respective holders and are herein acknowledged.
Motorola, Inc. and Subsidiaries
Information by Industry Segment
(Unaudited)
(Dollars In millions)
Summarized below are the Company's segment sales as defined by industry
segment for the three-month and six-month periods ended June 27, 1998 and
June 28, 1997:
Segment Sales
for the three months ended
June 27, June 28,
1998 1997 % Change
Cellular Products $2,785 $2,824 (1)
Semiconductor Products 1,808 2,032 (11)
Land Mobile Products 1,370 1,160 18
Messaging, Information and
Media Products 771 1,135 (32)
Other Products 959 1,166 (18)
Adjustments and eliminations (670) (796) (16)
Industry segment totals $7,023 $7,521 (7)
Six months ended
June 27, June 28,
1998 1997 % Change
Cellular Products $5,592 $5,537 1
Semiconductor Products 3,641 3,840 (5)
Land Mobile Products 2,613 2,137 22
Messaging, Information and
Media Products 1,463 2,059 (29)
Other Products 1,977 2,042 (3)
Adjustments and eliminations (1,377) (1,452) (5)
Industry segment totals $13,909 $14,163 (2)
Part II - Other Information
Item 1 - Legal Proceedings.
Motorola is a named defendant in seven cases arising out of alleged
groundwater, soil and air pollution in Phoenix and Scottsdale, Arizona. On
June 1, 1998, acting with respect to that portion of the consolidated
Lofgren personal injury cases that had been set for a June trial, and
following extensive evidentiary hearings held in April and May, the Lofgren
court ruled inadmissible proffered testimony from each of the plaintiffs'
medical causation experts and granted summary judgment on those personal
injury claims in favor of Motorola and the other remaining defendants.
Motorola has been a defendant in several cases arising out of its
manufacture and sale of portable cellular telephones. On June 30, 1998,
the Illinois Appellate Court affirmed the Circuit Court's earlier dismissal
of Schiffner v. Motorola, a purported class action by purchasers of
portable cellular phones alleging economic losses.
See Item 3 of the Company's Form 10-K for the fiscal year ended December
31, 1997 and Item 1 of Part II of the Company's Form 10-Q for the period
ended March 28, 1998 for additional 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 a Vote of Security Holders.
Not applicable.
Item 5 - Other Information.
Stockholder Proposals
Proposals of stockholders intended to be presented at the Company's 1999
annual meeting of stockholders must be received at the Company's principal
executive offices not later than November 23, 1998 in order to be included
in the Company's proxy statement and form of proxy relating to the 1999
annual meeting.
Pursuant to new amendments to Rule 14a-4(c) of the Securities Exchange Act
of 1934, as amended, if a stockholder who intends to present a proposal at
the 1999 annual meeting of stockholders does not notify the Company of such
proposal on or prior to February 6, 1999, then management proxies would be
allowed to use their discretionary voting authority to vote on the proposal
when the proposal is raised at the annual meeting, even though there is no
discussion of the proposal in the 1999 proxy statement.
Pursuant to the Company's Bylaws, proposals of stockholders intended to be
presented at the Company's 1999 annual meeting of stockholders must be
received by the Secretary of the Company at the Company's principal
executive offices not earlier than the 90th day prior to the date of the
annual meeting nor later than the 60th day prior to the date of the annual
meeting in order to be brought before the meeting. (Although, as stated
above, the proposal must be received no later than November 23, 1998 in
order to be included in the proxy statement relating to the 1999 annual
meeting). The Company currently believes that the 1999 annual meeting of
stockholders will be held during the first week of May 1999.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
3(ii) By-Laws of Motorola, Inc., as amended through July 16, 1997.
10.1 Motorola Executive Incentive Plan, as amended through February
4, 1998.
10.2 Motorola Long Range Incentive Plan of 1994, as amended through
February 4, 1998.
10.12 Motorola Non-Employee Directors Stock Plan, as amended and
restated on February 4, 1998.
27 Financial Data Schedule (filed only electronically with the
SEC).
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated
June 5, 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: July 31, 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
3(ii) By-Laws of Motorola, Inc., as amended through July 16, 1997.
10.1 Motorola Executive Incentive Plan, as amended through
February 4, 1998.
10.2 Motorola Long Range Incentive Plan of 1994, as amended
through February 4, 1998.
10.12 Motorola Non-Employee Directors Stock Plan, as amended and
restated on February 4, 1998.
27 Financial Data Schedule (filed only electronically with the
SEC).
Exhibit 10.1 to Form 10-Q
for the period ending June 27, 1998
MOTOROLA EXECUTIVE INCENTIVE PLAN, AS AMENDED
(as amended through February 4, 1998)
1. Purpose
The purpose of the Motorola Executive Incentive Plan, as Amended (the
"Plan") is to provide special incentive and reward to Motorola employees
who make substantial contributions to Motorola's success by their
exceptional service.
2. Definitions
For the purpose of the Plan, the following words and phrases, unless
the context clearly indicates otherwise, shall have the following meanings:
a. "Committee" shall mean the Compensation Committee of the Board of
Directors of Motorola, Inc. or any successor committee.
b. "Common Stock" shall mean Motorola, Inc. common stock, $3 par
value.
c. "Company" shall mean Motorola, Inc. and its subsidiaries.
d. "Employee" shall mean any employee of the Company, including, but
not limited to, the officers and directors who are employees of
Motorola, Inc.
e. "Grantee" shall mean any person who is an Employee of the Company
and has been or is eligible to be granted an award under the Plan.
f. "Restricted Stock" shall mean Shares issued under Section 6 of
the Plan.
g. "Share" shall mean a share of Common Stock.
h. "Total and Permanent Disability" shall mean entitlement to
disability benefits under Title II of the Social Security Act or
under the Motorola Long Term Disability Benefit Plan or the
determination by the Committee, in its reasonable discretion, that a
Grantee is totally and permanently disabled."
3. Reserve for the Plan; Shares
The Company may, with respect to each fiscal year, commencing with
the fiscal year ending December 31, 1977, set up a reserve for the purposes
of the Plan, out of the Consolidated Net Earnings for such fiscal year, as
hereinafter defined. The amount of such reserve for each fiscal year shall
be determined as follows: a percentage not to exceed 7%, as may be
determined by the Committee, of such Consolidated Net Earnings which
remains after deducting therefrom an amount which (after allowing for
United States federal, state and other nations' income taxes based on rates
applicable to the income of the Company for such fiscal year) will equal
five per centum (5%) of the Average Capital Employed for such fiscal year,
as hereinafter defined.
The term "Capital Employed" shall mean the consolidated net worth as
computed by Motorola, Inc. in accordance with generally accepted accounting
principles but without the deduction for the current year's reserve for the
Plan, plus long term debt (including the current portion thereof) plus
short term debt, less marketable securities, all as they may be classified
as such under generally accepted accounting principles on the same basis as
employed in preparation of the Company's audited and published financial
statements.
The term "Average Capital Employed" for any fiscal year shall mean
the total of Capital Employed at the beginning of each fiscal month of such
fiscal year plus the Capital Employed at the end of the last fiscal month
of such fiscal year divided by the number of fiscal months included therein
plus 1.
The term "Consolidated Net Earnings" for the fiscal year shall mean
the consolidated net earnings or profits of the Company, computed in
accordance with generally accepted accounting principles. The Consolidated
Net Earnings shall be adjusted so that there shall be no deductions for (a)
the reserve for the Plan, (b) the amount of United States federal, state
and other nations' income taxes of the Company with respect to such fiscal
year or (c) any extraordinary charge against the consolidated net earnings
or profits of the Company, as determined by the Committee or its designee.
The Company, however, in computing Consolidated Net Earnings shall make a
deduction for amounts paid by the Company under Social Security and other
laws having similar purposes. The Company, likewise, shall make deductions
of such amounts as are required under generally accepted standard
accounting practices for the purpose of setting up reserves for losses on
accounts and notes receivable, depreciation and maintenance or for any
other purposes provided such reserves are of the type established in
accordance with generally accepted accounting principles and reflected in
the Company's audited and published financial statements. In computing the
Consolidated Net Earnings and the Average Capital Employed in respect of
any fiscal year for the purpose of the reserve for the Plan, the Board of
Directors, the Committee and officers of Motorola, Inc. shall be entitled
to rely conclusively upon the computation of Consolidated Net Earnings and
Average Capital Employed as prepared and certified by a firm of independent
certified public accountants selected by the Board of Directors of
Motorola, Inc. for that purpose, which accountants may be the firm of
independent certified public accountants employed by Motorola, Inc. for any
other purposes, and such determination when made by independent certified
public accountants, as aforesaid, shall be binding upon all persons.
Nothing in the Plan shall be construed to obligate the Company to set
up any reserve for the Plan unless the Consolidated Net Earnings for the
fiscal year in question shall suffice therefor.
In the event that the Consolidated Net Earnings with respect to a
fiscal year shall not be sufficient to permit any reserve for the Plan, the
failure of the Company to set up a reserve for the Plan for such fiscal
year shall not be deemed to effect the termination of the Plan.
The Committee may in its sole and absolute discretion exclude the net
worth and net profit or loss of any subsidiary and/or affiliate in the
calculation of Average Capital Employed and Consolidated Net Earnings as
provided aforesaid.
Awards payable in Shares of Common Stock or Shares of Restricted
Stock, or a combination thereof, shall be paid from Shares reserved or
available for issuance under the Motorola Incentive Plan of 1998.
4. The Committee
The Committee shall have full power and authority to construe,
interpret, and administer the Plan, and each decision of the Committee
shall be final, conclusive, and binding upon all persons. Likewise, the
Committee shall have full discretion with respect to the determination of
each award. The Committee may grant awards which total the amount
available in the reserve for the Plan as determined by the independent
certified public accountants, plus the aggregate of (i) any part of the
reserve for prior years which is not awarded and which the Committee has
returned to the reserve, (ii) any unpaid portions of installments or
deferred payments forfeited and (iii) any reserves established and
accumulated but not awarded under the Plan from its adoption in 1968 up to
the date the Plan, as Amended, becomes effective, but the Committee shall
not be obliged to award the full amount so available to be awarded.
Recommendations for awards shall be made to the Committee by the Chairman
of the Board of Directors, by the Chief Executive Officer, by the President
and Chief Operating Officer, by the officers of Motorola, Inc. under such
procedures as may be prescribed by the Committee from time to time. Any
part of the reserve for the Plan that is not allocated to individual
Employees of the Company may, in the discretion of the Committee, be
returned to earnings or retained in the reserve for the Plan to be used for
future awards to Employees of the Company.
At the beginning of each fiscal year the Committee shall determine
which of the Company's key Employees will make substantial contributions to
the Company's success by their exceptional service and therefore
participate in the Plan. The Committee may grant awards from the reserve
for the Plan to such other Employees as the Committee in its sole and
absolute discretion shall select. A person whose employment terminates
during the year or who is granted a leave of absence during the year may,
at the discretion of the Committee and under such rules as the Committee
may from time to time prescribe, receive an award.
5. Payment of Awards
Until the awards are paid to the Grantees as herein provided, the
unpaid awards shall be retained by the Company (without liability for
interest, unless interest is provided for by the Committee in accordance
with the provisions of this Section 5). Awards shall be paid in cash, in
Shares of Common Stock, in Shares of Restricted Stock or in a combination
of the foregoing, as elected by the Grantee. Such election (a) shall be in
writing, (b) shall specify a percentage or dollar amount to be paid in
cash, in Common Stock and/or in Restricted Stock, (c) shall be made prior
to the date the award is paid and (d) shall become effective on the date of
receipt by the Company; provided, however, an election to receive payment
in Shares of Common Stock or Shares of Restricted Stock or a combination
thereof, shall be contingent upon approval thereof, in whole or in part, by
the Committee or its designee in its sole discretion, and to the extent not
approved, payment shall be made in cash, and provided further, if the
Committee or its designee determines that payment in Shares of Common Stock
or Shares of Restricted Stock violates, or is prohibited or restricted or
made impractical or administratively burdensome by, any applicable law,
rule or regulation, the award shall be paid in cash. The number of Shares
payable with respect to an award payable in Shares shall be determined by
using the average of the high and low sale prices per Share of Motorola
Common Stock as reported on the New York Stock Exchange - Composite
Transactions on the day the award is made or if Shares of Common Stock did
not trade on the New York Stock Exchange on that day, on the last previous
day on which Shares of Common Stock did so trade. The Committee may, in
order to more fully implement the purpose of the Plan, provide that any or
all cash awards shall be paid (a) in full at the time of the cash award,
(b) in installments, (c) on a deferred basis, in whole or in part, until
some future date or dates specified by the Committee or (d) upon the
written request of a Grantee, on a deferred basis, in whole or in part,
until some future date or dates specified in the request and agreed to by
the Committee; provided however, that with respect to cash awards deferred
at the request of a Grantee as to any year, such request for deferral shall
be irrevocable as to such year, and provided further, that such irrevocable
written request must be received by the Committee on or before December 31
of the year for which the cash award is payable. With respect to cash
awards not payable in full at the time of the award, the Committee shall
have full power and authority in its sole discretion to set all terms and
conditions relating thereto, including, but not limited to (i) the payment
date or dates if payment of the cash award is deferred by the Committee
under (c) above or if the cash award is payable in installments and (ii)
the forfeiture provisions, if any, which shall apply to cash awards
deferred by the Committee under (c) above - it being the intent that the
forfeiture provisions contained in this Section 5 shall not apply to cash
awards deferred by the Committee under (c) above unless the Committee
expressly provides for their applicability as a term or condition of the
deferral and then they shall apply only to the extent so provided. The
Committee shall also have the power and authority to provide forfeiture
provisions with respect to cash awards it defers under (c) above which are
different from those contained in this Section 5 and forfeiture provisions
with respect to cash awards payable in installments or deferred at the
request of a participant which are additional to those contained in this
Section 5. As to cash awards not payable in full at the time of the
award, the Committee may impose such terms, conditions, restrictions and
forfeitures with respect thereto as it shall determine to be in the best
interests of the Company and to effect the purposes of the Plan. The
Committee may provide that interest shall be paid out of the reserve on the
amount of any cash award payable in installments under (b) above, or
deferred in whole or in part by the Committee under (c) above, or deferred
in whole or in part at the request of any Grantee with the agreement of the
Committee under (d) above. If the Committee provides for the payment of
interest with respect to any such cash award, such interest shall be
accrued as of the last day of each fiscal quarter of the Company, shall be
credited to an account which shall be established by the Company in the
name of the Grantee and shall be compounded as of the end of each such
fiscal quarter. Accumulated interest shall be distributed to the Grantee
at the time or times the cash award is paid out. In the case of cash
awards payable in installments and deferred cash awards which are not paid
out in a single sum, the interest to be distributed shall be proportionate
to the amount of the cash award being paid at the time. The rate of
interest to be paid shall be set by the Committee at the time of the grant
of the cash award to which it relates. The Committee is authorized to
change the rate of interest at any time and to set different rates for
different Grantees and for differing circumstances.
If the Committee shall determine that the actions or conduct of a
Grantee have been in any manner adverse, or in any way contrary, to the
best interests of the Company, such Grantee shall lose any right to receive
any portion of any installment, or deferred payment, or amount that would
otherwise have been paid subsequent to the first of the month in which such
act or conduct first occurred, provided, however, that in no case shall the
Grantee lose the right to be paid the Grantee's unpaid cash awards or cash
award, as the case may be, as of a date prior to January 1 of the year in
which the determination resulting in such loss of right is made, and
provided further, that no installment, deferred payment or amount delivered
or paid prior to the date of such determination shall be required to be
returned. The determination as to whether any act or conduct of a Grantee
is adverse or in any way contrary to the best interests of the Company
shall be made by the Committee under such procedure as may from time to
time be prescribed by the Committee and shall be made in the absolute
discretion of the Committee. Any determination so made, including any
determination of the time at which such act or conduct first occurred,
shall be conclusive. The provisions relating to forfeiture contained in
this subparagraph shall not apply to cash awards deferred by the Committee
under clause (c) in the first subparagraph of this Section 5 unless and to
the extent specifically made applicable by the Committee.
A Grantee whose employment terminates by dismissal for cause, as
determined by the Committee in its sole discretion, or who voluntarily
terminates employment with the Company or any of its subsidiaries shall,
unless otherwise determined by the Committee in connection with such
termination of employment, lose any right to receive any unpaid
installments or deferred payments. A Grantee whose employment terminates
for any reason other than by death or as set forth in the preceding
sentence shall, unless otherwise determined in connection with the
termination of the Grantee's employment, continue to be paid any unpaid
installments or deferred payments in the same manner as though the
Grantee's employment had continued without interruption until such cash
awards are fully paid. The provisions relating to forfeiture contained in
this subparagraph shall not apply to cash awards deferred by the Committee
under clause (c) in the first subparagraph of this Section 5 unless and to
the extent specifically made applicable by the Committee.
If it shall be determined by the Committee that a Grantee who was
permitted to retain the right to receive any unpaid installments or
deferred payments upon termination of employment has, after such
termination of employment, engaged, directly or indirectly, in any activity
which is in competition with any activity of the Company or whose actions
or conduct, either prior to or after such termination of employment, has
been in any manner adverse or in any way contrary to the best interests of
the Company, such Grantee shall, unless otherwise determined, lose any
right to receive any unpaid installments or deferred payments as of the
first of the month in which such competitive activity or such act or
conduct first occurred, provided, however, that in no case shall the
Grantee lose the right to receive any unpaid installments or deferred
payments as of a date prior to January 1 of the year in which the
determination resulting in such loss of right is made, and provided
further, that no installment or amount delivered or paid prior to the date
of any such determination shall be required to be returned. Each
determination provided for in this subparagraph shall be made by the
Committee under such procedure as may from time to time be prescribed by
the Committee and shall be made in the absolute discretion of the
Committee. Any determination so made, including any determination of the
time at which such competitive activity or such act or conduct first
occurred, shall be conclusive. The provisions relating to forfeiture
contained in this subparagraph shall not apply to cash awards deferred by
the Committee under clause (c) in the first subparagraph of this Section 5
unless and to the extent specifically made applicable by the Committee.
A Grantee who loses the right to be paid any unpaid installments or
deferred payments shall receive forthwith all portions of such Grantee's
cash awards, unpaid but earned installments or deferred payments not
otherwise forfeited in accordance with this Section 5. The unpaid portions
of installments or deferred payments which are forfeited shall be credited
to the reserve for the Plan.
If a Grantee dies, the Grantee's unpaid and undelivered cash awards
shall be paid and delivered to the beneficiary previously designated by
such Grantee in writing, or, if such Grantee did not designate any
beneficiary in writing or if all of the Grantee's designated beneficiaries
predeceased the Grantee, to the Grantee's legal representative at such time
and in such manner as if such Grantee were living and in service with the
Company unless the Committee in its sole and absolute discretion
accelerates such payment and delivery.
6. Awards Paid in Restricted Stock
Restricted Stock consists of Shares of Common Stock which are subject
to a substantial risk of forfeiture and to restrictions on their sale or
other transfer by the Grantee. The Committee shall determine the time or
times within which Shares of Restricted Stock shall be subject to
forfeiture, the time or times at which the restrictions will terminate and
all other terms and conditions relating to the Restricted Stock. A Grantee
who receives Restricted Stock shall execute and deliver to Motorola an
agreement evidencing the terms, conditions and restrictions applicable to
such Restricted Stock. A Grantee who receives Restricted Stock 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
Grantee, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Shares. The Committee may
require that the stock certificates evidencing such Shares be held in
escrow by the Company until the restrictions thereon shall have terminated,
and that, as a condition to delivery of any Restricted Stock certificate,
the Grantee shall have delivered to the Company a stock power, endorsed in
blank, relating to such Restricted Stock certificate.
All Shares of Restricted Stock shall be subject to such restrictions
and conditions as the Committee may determine, including, but not limited
to, 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 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 such Shares in the event the Grantee engages, directly or
indirectly, in any activity which is in competition with any activity
of the Company or any subsidiary or in any action or conduct which is
in any manner adverse or in any way contrary to the interests of the
Company or any subsidiary unless otherwise determined by the
Committee. The determination of whether a Grantee is or has engaged
in any competitive activity or in any action or conduct which is
adverse or contrary to the interests of the Company 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.
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 Grantee or to the Grantee's legal representative, beneficiary or heir.
If a stock certificate was previously delivered to the Grantee, the
replacement certificate will not be delivered to the Grantee until the
previously delivered certificate is returned to the Company in a form
acceptable for transfer, free and clear of all liens, claims and
encumbrances.
Subject to the applicable restrictions, the Grantee may be given,
with respect to the Shares of Restricted Stock, any or all rights of a
stockholder of the Company, 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 the award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Restricted Stock 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.
7. Change in Control
Notwithstanding the provisions of Section 5 or any of the eligibility
requirements of the Plan, in the event of a Change in Control, all Grantees
on the date of the Change in Control shall have a fully vested and
nonforfeitable right to receive all amounts of all cash awards which remain
payable under clause (b) of the first subparagraph of Section 5 or which
were previously deferred under clauses (c) or (d) of the first subparagraph
of Section 5, and no amendment, suspension, curtailment or termination of
the Plan shall adversely affect or terminate such vested and nonforfeitable
right to receive any cash award granted under the Plan.
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 Grantee 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 the Company 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 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.
For purposes of the Plan, 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
Securities Exchange Act of 1934, as amended ("Exchange Act") whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities (other than the
Company, any employee benefit plan of the Company, any "person" who is a
natural person and was shown as the "beneficial owner", directly or
indirectly, of securities of the Company representing more than 5% of the
combined voting power of the Company's securities in the Company's Proxy
Statement dated earlier than, but closest to, the date of this amendment of
the Plan; and, for purposes of the Plan, no Change in Control shall be
deemed to have occurred as a result of the "beneficial ownership," or
changes therein, of the Company's securities by any of the foregoing), (B)
there shall be consummated (i) any consolidation or merger of the Company
in which the Company is not the surviving or continuing corporation or
pursuant to which shares of the Company's Common Stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of the Company's Common Stock immediately prior to the
merger have (directly or indirectly) at least an 80% ownership interest in
the outstanding Common Stock of the surviving corporation immediately after
the merger, or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company, (C) the stockholders of the Company
approve any plan or proposal for the liquidation or dissolution of the
Company, or (D) as a 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 of Directors
of the Company), 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.
Furthermore, in the event a Grantee's employment with the Company
terminates within one year of a Change in Control, that Grantee shall
receive an award from the reserve for the year in which the Grantee's
employment is terminated. Such award shall be prorated from the first day
of the fiscal year in which the Grantee's employment is terminated up to
the date of termination of employment. This pro rata share of the award
shall be paid within thirty days after the date on which the Grantee's
employment is terminated.
A Grantee shall be entitled to a pro rata award if his or her
employment with the Company is terminated for any reason (including
disability or retirement) except: (a) when the relevant Change in Control
occurs as a result of a transaction or transactions initiated by the
Company, other than a transaction or transactions initiated by the Company
in response to or otherwise in connection with an unsolicited proposal to
the Company which would result in a Change in Control, or (b) the Company
involuntarily terminates the Grantee's employment with the Company or a
subsidiary of the Company for good cause. For purposes of the Plan, "good
cause" means (a) the conviction of a Grantee of any criminal violation
involving dishonesty, fraud or breach of trust, or (b) the Grantee's
willful engagement in gross misconduct in the performance of his or her
duties that materially injures the Company.
8. Amount of Individual Awards
The Committee shall make the sole determination of the amount of the
awards to be made under the Plan, provided, that the aggregate amount of
all awards made under the Plan does not exceed the aggregate amount in the
reserve.
9. Nature of Grantee's Rights Under The Plan
Neither the adoption of the Plan, nor any modification hereof, nor
any payment hereunder, shall be construed as giving to the Grantee or any
person whomsoever any legal or equitable rights against the Company or its
officers or directors or as giving any Grantee the right to be retained in
the service of the Company or any of its subsidiaries. No loan shall be
made to any Grantee by the Company because one or more payments might be
made to the Grantee under the Plan. No Grantee shall have any right to
assign, transfer, appropriate, encumber, commute or anticipate any payment
that might be made to the Grantee under the Plan, and no benefits, rights
or interest of a Grantee under the Plan shall in any way be subject to any
legal process to levy upon, garnishee or attach the same for payment of any
claim against the Grantee, nor shall any Grantee have any right of any kind
whatsoever under the Plan other than the right to receive any payment as
and when it is due and payable under the terms of the Plan.
10. Administration of the Plan
The Committee shall keep and maintain records and accounts which will
accurately disclose at all times the reserve for the Plan, if any, for each
year during which the Plan is in effect, the awards made by the Committee
under the Plan, the payment or other disposition of these awards, and any
other pertinent information with respect to the activities of the
Committee.
The fiscal year of the Plan shall at all times be the same as the
fiscal year of the Company.
The Committee may consult with counsel, who may be of counsel to the
Company, and shall not incur any liability for any action taken in good
faith in reliance upon the advice of such counsel.
The expenses of administering the Plan shall be borne by the Company
and shall not be charged against the reserve for the Plan, if any.
11. Indemnification and Exculpation
Each person who is or shall have been a member of the Board of
Directors of the Company or of the Committee shall be indemnified and held
harmless by the Company 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 the Company'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 the
Company 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 or otherwise, or any power that
the Company may have to indemnify such person or hold such person harmless.
Each member of the Board of Directors of the Company or of the
Committee, and each officer and employee of the Company shall be fully
justified in relying or acting upon any information furnished on behalf of
the Company 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 of Directors of the
Company or of the Committee, or any officer or employee of the Company, 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 (including the
furnishing of information) taken or any failure to act, if in good faith.
12. Amendment of the Plan
The Plan may be amended from time to time by the Board of Directors
of the Company or the Committee and may be terminated at any time by the
Board of Directors of the Company.
Exhibit 10.2 to Form 10-Q
for the period ending June 27, 1998
MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994
(as amended through February 4, 1998)
(Approved by Motorola stockholders on May 3, 1994)
1. Name of the Plan and Plan Objectives
The name of the Plan is the Motorola Long Range Incentive Plan of
1994 (the "Plan"). The objectives of the Plan are:
a. To increase the value of the stockholders' investment in
Motorola, Inc. common stock through the achievement of outstanding
corporate performance;
b. To reward participating executives for the Company's achieving
outstanding performance, based on pre-established objective
performance standards, over extended periods;
c. To provide long term incentives in addition to the short term
incentives of the Motorola Executive Incentive Plan, as amended; and
d. To enhance the Company's ability to retain participating
executives.
2. Definitions
For the purpose of the Plan, the following words and phrases, unless
the context clearly indicates otherwise, shall have the following meanings:
a. "Committee" shall mean the Compensation Committee of the Board
of Directors of Motorola, Inc. or any successor committee.
b. "Common Stock" shall mean Motorola, Inc. common stock, $3 par
value.
c. "Company" shall mean Motorola, Inc.
d. "Cycle" shall mean a period equal to four consecutive fiscal
years of the Company.
e. "Eligible Employee" shall mean any elected officer of the
Company.
f. "Grantee" shall mean any elected officer of the Company who is
or has been eligible to receive an award under the Plan.
g. "Restricted Stock" shall mean Shares issued under Section 9 of
the Plan.
h. "Share" shall mean a share of Common Stock.
i. "Total and Permanent Disability" shall mean entitlement to
disability benefits under Title II of the Social Security Act or
under the Motorola Long Term Disability Benefit Plan or the
determination by the Committee, in its reasonable discretion, that a
Grantee is totally and permanently disabled.
3. Stockholder Approval
Awards, if any, granted under the Plan are contingent on receiving
approval of the Plan by the stockholders of the Company, by a majority of
the shares voting at a meeting of the stockholders, prior to payment of
awards, if any.
4. Cash Reserve; Shares
The Company may, with respect to each Cycle, set up a cash reserve
for the purpose of the Plan in such amount as may be determined by the
Company in its sole discretion. Nothing in the Plan shall be construed to
obligate the Company to set up a cash reserve for the Plan. The failure of
the Company to set up a cash reserve for the Plan in any given year shall
not be deemed to effect termination of the Plan. Awards payable in Shares
of Common Stock or Shares of Restricted Stock shall be paid from Shares
reserved or available for issuance under the Motorola Incentive Plan of
1998.
5. Committee
The Committee shall have full power and authority to construe,
interpret and administer the Plan, and each decision of the Committee shall
be final, conclusive and binding upon all persons.
At the beginning of each Cycle, the Committee shall determine (1)
which of the Company's Eligible Employees are in positions in which they
are likely to make substantial long term contributions to the Company's
success and therefore participate in the Plan for the Cycle, and (2) which
award level category each participant is assigned to.
After the close of each Cycle, the Committee shall determine and
certify the extent to which the performance measures/metrics and other
terms and conditions, if any, relating to the achievement of the
performance measures /metrics were satisfied.
6. Comparator Companies and Performance Measures/Metrics
At the beginning of each Cycle, the Committee shall determine the
comparator companies (Exhibit A) to be used in comparing performance and
the objective measures/metrics for the Cycle. The measures/metrics to be
used for this purpose shall be Return on Net Assets, Shareholder Return,
Sales Growth and Fundable Growth (Exhibits B and C), each of which shall be
weighted 25%.
In the event that the financial reports of one or more of the
comparator companies is not published for one or more years of a Cycle,
such company or companies shall be excluded from the calculations of
comparator company performance for such Cycle.
7. Award Level Categories, Maximum Awards and Calculation of Awards
Each participant shall be assigned by the Committee to one of the
following categories, with the associated maximum award, at the beginning
of each Cycle:
Award Level Maximum Award As Percent
Category Of Annualized Base Salary
A 200%
B 150
C 100
The Company's actual performance for the Cycle in relation to the
objective performance measures/metrics shall determine the percent of the
maximum award to be paid to each Grantee. This percent shall be multiplied
by the maximum award for each Grantee (i.e., 200%, 150% and 100% for award
level categories A, B and C, respectively) to calculate the award, as a
percent of annualized base salary, to be paid to each Grantee. For the
purpose of computing the maximum dollar amount of the award for each
Grantee, the lesser of (1) 125% of annualized base salary on January 1 of
the first year of the Cycle, or (2) 100% of annualized base salary on
December 31 of the last year of the Cycle, shall be used. The maximum
dollar amount of the award for any Grantee for any Cycle shall not exceed
$5 million.
8. Payment of Awards
After performance has been determined by the Committee, awards, if
any, shall be paid (i) one-half (1/2) in cash and (ii) one-half (1/2) in
either Shares of Common Stock or Shares of Restricted Stock, as elected by
the Grantee; provided, however, if the Committee determines that payment in
Shares of Common Stock or Shares of Restricted Stock violates, or is
prohibited or restricted or made impractical or administratively burdensome
by, any applicable law, rule or regulation, the award shall be paid in
cash. Such election (a) shall be in writing, (b) shall be made prior to
the date the award is paid and (c) shall become effective on the date of
receipt by the Company. The number of Shares payable with respect to an
award payable in Shares shall be determined by using the average of the
high and low sale prices per Share of Motorola Common Stock as reported on
the New York Stock Exchange - Composite Transactions on the day the award
is made or if Shares of Common Stock did not trade on the New York Stock
Exchange on that day, on the last previous day on which Shares of Common
Stock did so trade. Until the awards are paid to the Grantees as herein
provided, the unpaid awards shall be retained by the Company (without
liability for interest, unless interest is provided for by the Committee in
accordance with the provisions of this Section 8). Awards shall be payable
in full promptly after the time the performance has been determined by the
Committee, provided that the Committee may specify that cash awards shall
be paid (a) in installments, (b) on a deferred basis, in whole or in part,
until some future date or dates specified by the Committee or (c) upon the
written request of a Grantee, on a deferred basis, in whole or in part,
until some future date or dates specified in the request and agreed to by
the Committee; provided, however, that with respect to cash awards deferred
at the request of a Grantee as to any Cycle, such request for deferral
shall be irrevocable as to such Cycle, and provided further, that such
irrevocable written request must be received by the Committee on or before
December 31 of the last year of the Cycle for which the cash award is
payable. With respect to cash awards not payable in full at the time of
the cash award, the Committee shall have full power and authority in its
sole discretion to set all terms and conditions relating thereto,
including, but not limited to (i) the payment date or dates if payment of
the cash award is deferred by the Committee under (b) above or if the cash
award is payable in installments and (ii) the forfeiture provisions, if
any, which shall apply to cash awards deferred by the Committee under (b)
above - it being the intent that the forfeiture provisions contained in
this Section 8 shall not apply to cash awards deferred by the Committee
under (b) above unless the Committee expressly provides for their
applicability as a term or condition of the deferral and then they shall
apply only to the extent so provided. The Committee shall also have the
power and authority to provide forfeiture provisions with respect to cash
awards it defers under (b) above which are different from those contained
in this Section 8 and forfeiture provisions with respect to cash awards
payable in installments or deferred at the request of a participant which
are additional to those contained in this Section 8. As to cash awards not
payable in full at the time of the cash award, the Committee may impose
such terms, conditions, restrictions and forfeitures with respect thereto
as it shall determine to be in the best interests of the Company and to
effect the purposes of the Plan. The Committee may provide that interest
shall be paid out of the reserve, if any, or by the Company, on the amount
of any cash award payable in installments under (a) above, or deferred in
whole or in part by the Committee under (b) above, or deferred in whole or
in part at the request of any Grantee with the agreement of the Committee
under (c) above. If the Committee provides for the payment of interest
with respect to any such cash award, such interest shall be accrued as of
the last day of each fiscal quarter of the Company, shall be credited to an
account which shall be established by the Company in the name of the
Grantee and shall be compounded as of the end of each such fiscal quarter.
Accumulated interest shall be distributed to the Grantee at the time or
times the cash award is paid out. In the case of cash awards payable in
installments and deferred cash awards which are not paid out in a single
sum, the interest to be distributed shall be proportionate to the amount of
the cash award being paid at the time. The rate of interest to be paid
shall be set by the Committee at the time of the grant of the cash award to
which it relates. The Committee is authorized to change the rate of
interest at any time and to set different rates for different Grantees and
for differing circumstances.
If the Committee shall determine that the actions or conduct of a
Grantee have been in a manner adverse, or in any way contrary, to the best
interests of the Company, such Grantee shall lose any right to receive any
portion of any installment, or deferred payment, or amount that would
otherwise have been paid subsequent to the first of the month in which such
act or conduct first occurred, provided, however, that in no case shall the
Grantee lose the right to be paid the Grantee's unpaid cash awards or cash
award, as the case may be, as of a date prior to January 1 of the year in
which the determination resulting in such loss of right is made, and
provided further, that no installment, deferred payment or amount delivered
or paid prior to the date of such determination shall be required to be
returned. The determination as to whether any act or conduct of a Grantee
is adverse, or in any way contrary, to the best interests of the Company
shall be made by the Committee under such procedure as may from time to
time be prescribed by the Committee and shall be made in the absolute
discretion of the Committee. Any determination so made, including any
determination of the time at which such act or conduct first occurred,
shall be conclusive. The provisions relating to forfeiture contained in
this subparagraph shall not apply to cash awards deferred by the Committee
under clause (b) in the first subparagraph of this Section 8 unless and to
the extent specifically made applicable by the Committee.
A Grantee whose employment terminates by dismissal for cause, as
determined by the Committee in its sole discretion, or who voluntarily
terminates employment with the Company or any of its subsidiaries shall,
unless otherwise determined by the Committee in connection with such
termination of employment, lose any right to receive any unpaid
installments or deferred payments. A Grantee whose employment terminates
for any reason other than by death or as set forth in the preceding
sentence shall, unless otherwise determined in connection with the
termination of the Grantee's employment, continue to be paid any unpaid
installments or deferred payments in the same manner as though the
Grantee's employment had continued without interruption until such cash
awards are fully paid. The provisions relating to forfeiture contained in
this subparagraph shall not apply to cash awards deferred by the Committee
under clause (b) in the first subparagraph of this Section 8 unless and to
the extent specifically made applicable by the Committee.
If it shall be determined by the Committee that a Grantee who was
permitted to retain the right to receive any unpaid installments or
deferred payments upon termination of employment has, after such
termination of employment, engaged, directly or indirectly, in any activity
which is in competition with any activity of the Company or whose actions
or conduct, either prior to or after such termination of employment, has
been in any manner adverse or in any way contrary to the best interests of
the Company, such Grantee shall, unless otherwise determined, lose any
right to receive any unpaid installments or deferred payments as of the
first of the month in which such competitive activity or such act or
conduct first occurred, provided, however, that in no case shall the
Grantee lose the right to receive any unpaid installments or deferred
payments as of a date prior to January 1 of the year in which the
determination resulting in such loss of right is made, and provided
further, that no installment or amount delivered or paid prior to the date
of any such determination shall be required to be returned. Each
determination provided for in this subparagraph shall be made by the
Committee under such procedure as may from time to time be prescribed by
the Committee and shall be made in the absolute discretion of the
Committee. Any determination so made, including any determination of the
time at which such competitive activity or such act or conduct first
occurred, shall be conclusive. The provisions relating to forfeiture
contained in this subparagraph shall not apply to cash awards deferred by
the Committee under clause (b) in the first subparagraph of this Section 8
unless and to the extent specifically made applicable by the Committee.
A Grantee who loses the right to be paid any unpaid installments or
deferred payments shall receive forthwith all portions of such Grantee's
cash awards, unpaid but earned installments or deferred payments not
otherwise forfeited in accordance with this Section 8. The unpaid portions
of installments or deferred payments which are forfeited shall be credited
to the reserve, if any, for the Plan, or if there is no reserve, shall be
retained by the Company.
If a Grantee dies, the Grantee's unpaid and undelivered cash awards
shall be paid and delivered to the beneficiary previously designated by
such Grantee in writing, or, if such Grantee did not designate any
beneficiary in writing or if all of the Grantee's designated beneficiaries
predeceased the Grantee, to the Grantee's legal representative at such time
and in such manner as if such Grantee were living and in service with the
Company unless the Committee in its sole and absolute discretion
accelerates such payment and delivery.
9. Awards Paid in Restricted Stock
Restricted Stock consists of Shares of Common Stock which are subject
to a substantial risk of forfeiture and to restrictions on their sale or
other transfer by the Grantee. The Committee shall determine the time or
times within which Shares of Restricted Stock shall be subject to
forfeiture, the time or times at which the restrictions will terminate and
all other terms and conditions relating to the Restricted Stock. A Grantee
who receives Restricted Stock shall execute and deliver to Motorola an
agreement evidencing the terms, conditions and restrictions applicable to
such Restricted Stock. A Grantee who receives Restricted Stock 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
Grantee, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Shares. The Committee may
require that the stock certificates evidencing such Shares be held in
escrow by the Company until the restrictions thereon shall have terminated,
and that, as a condition to delivery of any Restricted Stock certificate,
the Grantee shall have delivered to the Company a stock power, endorsed in
blank, relating to such Restricted Stock certificate.
All Shares of Restricted Stock shall be subject to such restrictions
and conditions as the Committee may determine, including, but not limited
to, 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
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
such Shares in the event the Grantee engages, directly or indirectly,
in any activity which is in competition with any activity of the
Company or any subsidiary or in any action or conduct which is in any
manner adverse or in any way contrary to the interests of the Company
or any subsidiary unless otherwise determined by the Committee. The
determination of whether a Grantee is or has engaged in any
competitive activity or in any action or conduct which is adverse or
contrary to the interests of the Company 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.
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 Grantee or to the Grantee's legal representative, beneficiary or heir.
If a stock certificate was previously delivered to the Grantee, the
replacement certificate will not be delivered to the Grantee until the
previously delivered certificate is returned to the Company in a form
acceptable for transfer, free and clear of all liens, claims and
encumbrances.
Subject to the applicable restrictions, the Grantee may be given,
with respect to the Shares of Restricted Stock, any or all rights of a
stockholder of the Company, 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 the award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Restricted Stock 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.
10. Change in Control
Notwithstanding the provisions of Section 8 or any of the eligibility
requirements of the Plan, in the event of a Change in Control, all Grantees
on the date of the Change in Control shall have a fully vested and
nonforfeitable right to receive all amounts of all cash awards which remain
payable under clause (a) of the first subparagraph of Section 8 or which
were previously deferred under clauses (b) or (c) of the first subparagraph
of Section 8, and no amendment, suspension, curtailment or termination of
the Plan shall adversely affect or terminate such vested and nonforfeitable
right to receive any cash award granted under the Plan.
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 Grantee 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 the Company 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 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.
For purposes of the Plan, 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
Securities Exchange Act of 1934, as amended, ("Exchange Act") whether or
not the Company is then subject to such reporting requirement; provided
that, without limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities (other than the
Company, any employee benefit plan of the Company, any "person" who is a
natural person and was shown as the "beneficial owner", directly or
indirectly, of securities of the Company representing more than 5% of the
combined voting power of the Company's securities in the Company's Proxy
Statement dated earlier than, but closest to, the date the Plan is approved
by the Company's stockholders, and, for purposes of the Plan, no Change in
Control shall be deemed to have occurred as a result of the "beneficial
ownership," or changes therein, of the Company's securities by any of the
foregoing), (B) there shall be consummated (i) any consolidation or merger
of the Company in which the Company is not the surviving or continuing
corporation or pursuant to which shares of the Company's Common Stock would
be converted into cash, securities or other property, other than a merger
of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have (directly or indirectly) at least an
80% ownership interest in the outstanding Common Stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company, (C) the
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (D) as a 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 of Directors ("Board") of the Company ), 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.
Furthermore, in the event a Grantee's employment with the Company
terminates within one year of a Change in Control, that Grantee shall
receive an award(s) for the Cycle(s) in which the Grantee's employment is
terminated. Such award(s) shall be prorated from the first day of the
Cycle(s) in which the Grantee's employment is terminated up to the date of
termination of employment. This pro rata share of the award(s) shall be
paid within thirty days after the date on which the Grantee's employment is
terminated.
A Grantee shall be entitled to a pro rata award(s) if his or her
employment with the Company is terminated for any reason (including
disability or retirement) except: (a) when the relevant Change in Control
occurs as a result of a transaction or transactions initiated by the
Company, other than a transaction or transactions initiated by the Company
in response to or otherwise in connection with an unsolicited proposal to
the Company which would result in a Change in Control, or (b) the Company
terminates the Grantee's employment with the Company or a subsidiary of the
Company for good cause. For purposes of the Plan, "good cause" means (a)
the conviction of a Grantee of any criminal violation involving dishonesty,
fraud or breach of trust, or (b) the Grantee's willful engagement in gross
misconduct in the performance of his or her duties that materially injures
the Company.
11. Nature of Grantee's Rights Under the Plan
Neither the adoption of the Plan, nor any modification thereof, nor
any payment thereunder, shall be construed as giving to the Grantee or any
person whomsoever any legal or equitable rights against the Company or its
officers or directors or as giving any Grantee the right to be retained in
the service of the Company or any of its subsidiaries. No loan shall be
made to any Grantee by the Company because one or more payments might be
made to the Grantee under the Plan. No Grantee shall have any right to
assign, transfer, appropriate, encumber, commute or anticipate any payment
that might be made to the Grantee under the Plan, and no benefits, rights
or interest of a Grantee under the Plan shall in any way be subject to any
legal process to levy upon, garnishee or attach the same for payment of any
claim against the Grantee, nor shall any Grantee have any right of any kind
whatsoever under the Plan other than the right to receive any payment as
and when it is due and payable under the terms of the Plan.
12. Administration of the Plan
The Committee shall keep and maintain records and accounts which will
accurately disclose at all times the reserve for the Plan, if any, for each
year during which the Plan is in effect, the awards made under the Plan,
the payment or other disposition of these awards, and any other pertinent
information with respect to the activities of the Committee.
The fiscal year of the Plan shall at all times be the same as the
fiscal year of the Company.
The Committee may consult with counsel, who may be of counsel to the
Company, and shall not incur any liability for any action taken in good
faith in reliance upon the advice of such counsel.
The expenses of administering the Plan shall be borne by the Company
and shall not be charged against the reserve for the Plan, if any.
13. 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 the Company 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 the Company'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 the Company 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 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 the Company shall be fully justified in relying or acting upon
any information furnished on behalf of the Company 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 any officer or employee of the Company,
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 (including
the furnishing of information) taken or any failure to act, if in good
faith.
14. Amendment of the Plan
The Plan may be amended from time to time by the Board or the
Committee and may be terminated at any time by the Board.
Exhibit 10.12 to Form 10-Q
for the period ending June 27, 1998
MOTOROLA
NON-EMPLOYEE DIRECTORS STOCK PLAN
AS AMENDED AND RESTATED FEBRUARY 4, 1998
1. Purpose
The purpose of the Motorola Non-Employee Directors Stock Plan (the "Plan")
is to advance the interests of the Company, as herein defined, and its
stockholders by enabling Non-Employee Directors, as herein defined, to
receive additional shares of Common Stock, as herein defined, and
Restricted Stock, as herein defined, which Common Stock and Restricted
Stock may be either authorized but unissued or treasury shares, in lieu of
all or a portion of the Compensation, as herein defined, they receive.
2. Definitions
(a) Board. The Board of Directors of Motorola, Inc.
(b) Change in Control. Is defined in Section 8 of the Plan.
(c) Committee. The Compensation Committee of the Board or any
successor committee.
(d) Common Stock. Motorola, Inc. common stock, $3 par value per
Share.
(e) Company. Motorola, Inc.
(f) Compensation. All remuneration payable to a Non-Employee
Director for services to the Company 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 the Company'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.
(g) Non-Employee Director. A member of the Board who is not an
employee of the Company or any of its Subsidiaries.
(h) Plan. The Motorola Non-Employee Directors Stock Plan and all
amendments and supplements thereto.
(i) Restricted Stock. Common Stock which is subject to a
substantial risk of forfeiture and to restrictions on its sale or
other transfer.
(j) Share. A share of Common Stock.
(k) Subsidiary. Any corporation, partnership, joint venture or
other business entity in which a fifty percent (50%) or greater
interest is, at the time, directly or indirectly, owned by the
Company or by one or more Subsidiaries or by the Company and one or
more Subsidiaries.
(l) Total and Permanent Disability. Entitlement to disability
benefits under Title II of the Social Security Act or the
determination by the Committee, in its reasonable discretion, that a
Non-Employee Director is totally and permanently disabled.
3. Administration
The Plan shall be administered by the Committee. The Committee shall,
subject to the provisions of the Plan, have the authority and power to
construe and interpret the Plan and to adopt, amend and revoke such rules
and regulations for the administration of the Plan as it may deem
desirable. Any decisions of the Committee in the administration of the
Plan shall be final and conclusive. The Committee may authorize any one or
more of its members or the secretary of the Committee or any officer,
appointed vice president or employee of the Company to execute and deliver
documents on behalf of the Committee. No member of the Committee shall be
liable for anything done or omitted to be done by him or her or by any
other member of the Committee in connection with the Plan, except for his
or her own willful misconduct or as expressly provided by statute.
4. Participation
Each Non-Employee Director shall participate in the Plan.
5. Election as to the Form of Payment of Compensation
Each Non-Employee Director shall have fifty percent (50%) of his or her
Compensation paid in Common Stock or in Restricted Stock or a combination
thereof, at his or her election. Each Non-Employee Director shall also
have the right to elect to have all or a portion of the fifty percent (50%)
of his or her Compensation otherwise payable in cash to be paid in Common
Stock or Restricted Stock or a combination thereof. Any such election (a)
shall be in writing, (b) with respect to Common Stock Compensation, shall
specify a percentage or dollar amount to be paid in Restricted Stock, (c)
with respect to cash Compensation, shall specify a percentage or dollar
amount to be paid in Common Stock or Restricted Stock, or both, (d) shall
be made prior to the date of payment of the Compensation and (e) shall
become effective on the date of receipt by the Company. Any such election
shall continue in effect until a written election to revoke or change such
election is received by the Company.
6. Restricted Stock
Each Non-Employee Director who receives Restricted Stock shall execute and
deliver to the Company an agreement evidencing the terms, conditions and
restrictions applicable to such Restricted Stock. Each Non-Employee
Director receiving Restricted Stock may be issued a stock certificate with
respect to such shares of Restricted Stock. Such certificate, if issued,
shall be registered in the name of such Non-Employee Director and shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock. The Committee may
require that the stock certificates evidencing such Restricted Stock be
held in escrow by the Company until the restrictions thereon shall have
terminated and that, as a condition to delivery of any Restricted Stock
certificate, the Non-Employee Director deliver to the Company a stock
power, endorsed in blank, relating to such Restricted Stock certificate.
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 Restricted Stock, with such prohibition
to terminate at the end of a fixed number of months, to be set by the
Committee, after the date of purchase or, if earlier, upon the Non-
Employee Director's cessation of services as a Non-Employee Director
because of his or her failure to stand for re-election at or after
age 65, failure to be re-elected at or after age 65, Total and
Permanent Disability or death;
(b) a provision that the Non-Employee Director resell back
to the Company at the price the Non-Employee Director paid, all or
part of such Restricted Stock, in the event of termination of his or
her services for any reason other than failure to stand for re-
election at or after age 65, failure to be re-elected at or after age
65, Total and Permanent Disability or death during any period in
which such Restricted Stock is subject to restrictions; and
(c) a provision that the Non-Employee Director resell back
to the Company at the price the Non-Employee Director paid, all such
Restricted Stock in the event 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 the Company or any Subsidiary or in any action or conduct which is
in any manner adverse or in any way contrary to the interests of the
Company or any Subsidiary unless otherwise determined by the
Committee. The determination of whether a Director is engaging in,
or has engaged in, any competitive activity or in any action or
conduct which is adverse or contrary to the interests of the Company
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.
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
Non-Employee Director. If a stock certificate was previously delivered to
the Non-Employee Director, the replacement certificate will not be
delivered to the Non-Employee Director until the previously delivered
certificate is returned to the Company in a form acceptable for transfer,
free and clear of all liens, claims and encumbrances.
Subject to the applicable restrictions, the Non-Employee Director may be
given, with respect to the shares of Restricted Stock, any or all rights of
a stockholder of the Company, including the right to vote the shares, and
the right to receive any cash or stock dividends. The payment of cash
dividends may be required by the Committee to be deferred and reinvested in
additional Restricted Stock. The 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.
7. Issuance of Common Stock and Restricted Stock
If a Non-Employee Director elects pursuant to Section 5 above to receive
Restricted Stock in lieu of Common Stock Compensation and/or to receive
Common Stock and/or Restricted Stock in lieu of cash Compensation, there
shall be issued to such director promptly after the end of each calendar
quarter with respect to which such election applies a number of shares of
Common Stock and/or Restricted Stock determined as follows: (a) with
respect to Restricted Stock which is to be paid in lieu of Common Stock
Compensation, a number of shares of Restricted Stock equal to the number of
shares of Common Stock which would otherwise have been paid and (b) with
respect to Common Stock and/or Restricted Stock which is to be paid in lieu
of cash Compensation, a number of shares of Common Stock and/or Restricted
Stock equal to the amount of such cash Compensation divided by the average
of the high and low prices per Share of Common Stock as reported on the New
York Stock Exchange - Composite Transactions on the last business day of
the calendar quarter for which the Compensation would have been paid in
cash in the absence of such election; provided, however, if the New York
Stock Exchange is not open for trading on such business day or if Common
Stock does not trade on such business day, the average of the high and low
prices for the last day of such calendar quarter on which Common Stock did
so trade shall be used. To the extent that the application of the
foregoing formula would result in fractional shares of Common Stock being
issuable, cash will be paid to the Non-Employee Director in lieu of such
fractional shares based upon the value established pursuant to such
formula.
8. 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 the
Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities (other than the
Company or any employee benefit plan of the Company; and, for purposes of
the Plan, no Change in Control shall be deemed to have occurred as a result
of the "beneficial ownership," or changes therein, of the Company's
securities by either of the foregoing), (B) there shall be consummated (i)
any consolidation or merger of the Company in which the Company is not the
surviving or continuing corporation or pursuant to which Shares of Common
Stock would be converted into cash, securities or other property, other
than a merger of the Company 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 the Company, (C) the
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (D) as the result of, or in
connection with, any cash tender offer, exchange offer, merger or other
business combination, sale of assets, proxy or consent solicitation (other
than by the Board), contested election or substantial stock accumulation (a
"Control Transaction"), the members of the Board immediately prior to the
first public announcement relating to such Control Transaction shall
thereafter cease to constitute a majority of the Board.
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 Non-Employee Director
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 the Company 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.
9. Number of Shares of Common Stock Issuable Under the Plan
The maximum number of Shares of Common Stock that may be issued under the
Plan shall be 100,000; provided, however, that if the Company shall at any
time increase or decrease the number of its outstanding Shares of Common
Stock or change in any way the rights and privileges of such Shares by
means of a payment of a stock dividend or any other distribution upon such
Shares payable in Common Stock, or through a stock split, reverse stock
split, subdivision, consolidation, combination, reclassification or
recapitalization involving Common Stock, then the numbers, rights and
privileges of the Shares issuable under the Plan shall be increased,
decreased or changed in like manner. In addition, Compensation payable in
Common Stock and Restricted Stock to Non-Employee Directors under the Plan
may be paid from Shares reserved or available for issuance under the
Motorola Incentive Plan of 1998.
10. Miscellaneous Provisions
(a) Neither the Plan nor any action taken hereunder shall be construed
as giving any Non-Employee Director any right to be retained in the service
of the Company.
(b) A participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part
either directly or by operation of law or otherwise (except in the event of
a participant's death, by will or the laws of descent and distribution),
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no such right or
interest of any participant in the Plan shall be subject to any obligation
or liability of such participant.
(c) No shares of Common Stock shall be issued hereunder unless counsel
for the Company shall be satisfied that such issuance will be in compliance
with applicable federal, state, local and foreign securities, securities
exchange and other applicable laws and requirements.
(d) It shall be a condition to the obligation of the Company to issue
shares of Common Stock hereunder, that the participant pay to the Company,
upon its demand, such amount as may be requested by the Company for the
purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the
Company shall have no obligation to issue, and the participant shall have
no right to receive, shares of Common Stock.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or reserve or to make any other
segregation of assets to assure the issuance of shares hereunder.
(g) By accepting any Common Stock or Restricted Stock hereunder or
other benefit under the Plan, each participant and each person claiming
under or through him or her shall be conclusively deemed to have indicated
his or her acceptance and ratification of, and consent to, any action taken
under the Plan by the Company or the Committee.
(h) The appropriate officers of the Company shall cause to be filed any
registration statement required by the Securities Act of 1933, as amended,
and any reports, returns or other information regarding any shares of
Common Stock issued pursuant hereto as may be required by Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any other applicable statute, rule or regulation.
(i) The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Delaware.
(j) Pending issuance of shares of Common Stock or Restricted Stock
hereunder, all Compensation earned by a Non-Employee Director with respect
to which an election to receive Common Stock and/or Restricted Stock in
lieu of cash Compensation pursuant to Section 5 above has been made shall
be the property of such director and shall be paid to him or her in cash in
the event that shares of Common Stock and/or Restricted Stock are not used.
(k) Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or
relevant to the construction of this Plan or any provisions thereof. The
use of the singular shall also include within its meaning the plural, where
appropriate, and vice versa.
11. Amendment
The Plan may be amended at any time and from time to time by resolution of
the Board as the Board shall deem advisable; provided, however, that no
amendment shall become effective without stockholder approval if such
stockholder approval is required by law, rule or regulation. No amendment
of the Plan shall materially and adversely affect any right of any
participant with respect to any shares of Common Stock and/or Restricted
Stock theretofore issued without such participant's written consent.
12. Termination
This Plan shall terminate upon the earlier of the following dates or events
to occur: (a) upon the adoption of a resolution of the Board terminating
the Plan; or (b) ten years from the date the Plan is initially approved
and adopted by the stockholders of the Company in accordance with Section
13 below. No termination of the Plan shall materially and/or adversely
affect any of the rights or obligations of any Non-Employee Director
without his or her consent with respect to any shares of Common Stock
and/or Restricted Stock theretofore paid for and issuable under the Plan.
13. Stockholder Approval and Adoption
The Plan shall be submitted to the stockholders of the Company for their
approval and adoption at the meeting of stockholders of the Company to be
held on May 2, 1995. The Plan shall not be effective unless and until the
Plan has been so approved and adopted. The stockholders shall be deemed to
have approved and adopted the Plan only if it is approved and adopted at a
meeting of the stockholders duly held on that date (or any adjournment of
said meeting occurring subsequent to such date) by vote taken in the manner
required by the laws of the State of Delaware.
Exhibit 3 (ii) to Form 10-Q
for the period ending June 27, 1998
MOTOROLA, INC. BYLAWS
(Revised as of July 16, 1997)
ARTICLE I
Offices and Corporate Seal
The registered office of the Corporation required by the Delaware
General Corporation Law shall be 1209 Orange Street, Wilmington, Delaware,
19801, and the address of the registered office may be changed from time to
time by the Board of Directors.
The principal business office of the Corporation shall be located in
the Village of Schaumburg, County of Cook, State of Illinois. The
Corporation may have such other offices, either within or without the State
of Illinois, as the Board of Directors may designate or as the business of
the Corporation may require from time to time.
The registered office of the Corporation required by the Illinois
Business Corporation Act may be, but need not be, the same as its place of
business in the State of Illinois, and the address of the registered office
may be changed from time to time by the Board of Directors.
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
Corporation and the state of incorporation and the words "Corporate Seal".
ARTICLE II
Board of Directors
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by, or under the direction of, its Board of
Directors.
Section 2. Number, Tenure and Qualifications. The number of
directors of the Corporation shall be seventeen (17), or such other number
fixed from time to time by the Board of Directors. Each director shall
hold office until his successor shall have been elected and qualified, or
until his earlier death or resignation.
Section 3. Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled for the remainder of the unexpired term by the
affirmative vote of a majority of the directors then in office although
less than a quorum.
Section 4. Compensation. Directors who also are employees of the
Corporation shall not receive any additional compensation for services on
the Board of Directors. By resolution of the Board of Directors, a fixed
sum may be allowed directors who are not employees of the Corporation for
attendance at each regular or special meeting of the Board of Directors or
any committee of the Board of Directors, and by resolution of the Board of
Directors an additional fixed fee may be allowed directors who are not
employees of the Corporation in consideration of other services and
continuous interest and study of the affairs of the Corporation. Travel
and other expenses actually incurred may be allowed all directors for
attendance at each regular or special meeting of the Board of Directors or
at any meeting of a committee of the Board of Directors or in connection
with their other services to the Corporation. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor.
Section 5. Committees of Directors. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees. Each committee shall consist of one or more of the directors
of the Corporation, as selected by the Board of Directors, and the Board of
Directors shall also designate a chairman of each committee and the members
of each committee shall designate a person to act as secretary of the
committee to keep the minutes of, and serve the notices for, all meetings
of the committee and perform such other duties as the committee may direct.
Such person may, but need not be a member of the committee. Any such
committee, to the extent provided in a resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power
and authority of the Board of Directors in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation under Section 251 or 252 of the Delaware General Corporation
Law, recommending to the shareholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to
the shareholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation, and, unless the
resolution expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware General Corporation Law. Each committee of the Board of Directors
may establish its own rules of procedure. Except as otherwise specified in
a resolution designating a committee, one-third of the members of a
committee shall be necessary to constitute a quorum of that committee for
the transaction of business and the act of a majority of committee members
present at a meeting at which a quorum is present shall be the act of the
committee.
Section 6. Validity of Contracts. No contract or other transaction
entered into by the Corporation shall be affected by the fact that a
director or officer of the Corporation is in any way interested in or
connected with any party to such contract or transaction, or himself is a
party to such contract or transaction, even though in the case of a
director the vote of the director having such interest or connection shall
have been necessary to obligate the Corporation upon such contract or
transaction; provided, however, that in any such case (i) the material
facts of such interest are known or disclosed to the directors or
shareholders and the contract or transaction is authorized or approved in
good faith by the shareholders or by the Board of Directors or a committee
thereof through the affirmative vote of a majority of the disinterested
directors (even though not a quorum), or (ii) the contract or transaction
is fair to the Corporation as of the time it is authorized, approved or
ratified by the shareholders, or by the Board of Directors, or by a
committee thereof.
ARTICLE III
Shareholders' Meetings
Section 1. Place of Meetings. The Board of Directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the
Board of Directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal business
office of the Corporation in the State of Illinois.
Section 2. Annual Meetings. The annual meeting of the shareholders
shall be held on the first Tuesday in the month of May in each year, at the
hour of 5:00 o'clock P.M., or at such other day and hour as may be fixed by
or under the authority of the Board of Directors, for the purpose of
electing directors and for the transaction of such other business as may
come before the meeting. If the day fixed for the annual meeting shall be
a legal holiday in the state where the meeting is to be held, such meeting
shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated herein for the annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as is convenient.
Section 3. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the Chairman of the Board or by the Board of Directors.
Section 4. Voting - Quorum. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at
a meeting of shareholders, except to the extent that the voting rights of
any class or classes are enlarged, limited or denied by the Certificate of
Incorporation or in the manner therein provided. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the
shareholders, except that directors shall be elected by a plurality of the
votes of the shares represented at the meeting and entitled to vote on the
election of directors, except as otherwise required by Delaware law, the
Certificate of Incorporation, or these Bylaws. No matter shall be
considered at a meeting of shareholders except upon a motion duly made and
seconded. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
as originally called.
Section 5. Adjournment of Meetings. If less than a majority of the
outstanding shares are represented at a meeting of the shareholders, a
majority of the shares so represented may adjourn the meeting from time to
time without further notice. The chairman of a meeting of the shareholders
may adjourn the meeting from time to time without further notice, whether
or not less than a majority of the outstanding shares are represented at
the meeting. No notice of the time and place of adjourned meetings need be
given except as required by law. In no event shall the public announcement
of an adjournment of any meeting of the shareholders commence a new time
period for the giving of shareholder notice of nominations or proposals for
other business as described in Section 13 of Article III. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
as originally called.
Section 6. Proxies. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. No proxy shall be valid after three years
from the date of its execution, unless otherwise provided in the proxy.
Section 7. Notice of Meetings. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less
than ten days (twenty days if the shareholders are to approve a merger or
consolidation or a sale, lease or exchange of all or substantially all the
Corporation's assets) nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the
Chairman of the Board, or the Secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited
in the United States mail, addressed to the shareholder at his address as
it appears on the records of the Corporation, with postage thereon prepaid.
Section 8. Postponement of Meetings. Any previously scheduled
meeting of the shareholders may be postponed by resolution of the Board of
Directors upon public notice given prior to the time previously scheduled
for such meeting of the shareholders. In no event shall the public
announcement of a postponement of any previously scheduled meeting of the
shareholders commence a new time period for the giving of shareholder
notice of nominations or proposals for other business as described in
Section 13 of Article III.
Section 9. Cancellation of Meetings. Any special meeting of the
shareholders may be canceled by resolution of the Board of Directors upon
public notice given prior to the time previously scheduled for such meeting
of the shareholders.
Section 10. Voting Lists. The officer or agent having charge of the
stock ledger of the Corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each; which
list, for a period of ten days prior to such meeting, shall be kept at the
place where the meeting is to be held, or at another place within the city
where the meeting is to be held, which other place shall be specified in
the notice of meeting and the list shall be subject to inspection by any
shareholder for any purpose germane to the meeting, at any time during
usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting. The original stock
ledger shall be prima facie evidence as to who are the shareholders
entitled to examine such list or ledger or to vote at any meeting of
shareholders.
Section 11. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any
other proper purpose, the Board of Directors of the Corporation may fix in
advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty days and, in
case of a meeting of shareholders, not less than ten days prior to the date
on which the particular action, requiring such determination of
shareholders, is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend,
the close of business on the date next preceding the date on which notice
of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such dividend is adopted, as the case may be, shall
be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
Section 12. Voting of Shares by Certain Holders. Neither treasury
shares nor shares of the Corporation held by another corporation, if a
majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall be entitled to vote or to be counted for quorum purposes. Nothing in
this paragraph shall be construed as limiting the right of the Corporation
to vote its own stock held by it in a fiduciary capacity.
Shares standing in the name of another corporation, domestic or
foreign, may be voted in the name of such corporation by any officer
thereof or pursuant to any proxy executed in the name of such corporation
by any officer of such corporation in the absence of express written notice
filed with the Secretary that such officer has no authority to vote such
shares.
Shares held by an administrator, executor, guardian, conservator,
trustee in bankruptcy, receiver or assignee for creditors may be voted by
him, either in person or by proxy, without a transfer of such shares into
his name. Shares standing in the name of a fiduciary may be voted by him,
either in person or by proxy.
A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer by the pledgor on the books of the
Corporation the pledgor has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent such
stock and vote thereon.
Section 13. Advance Notice of Shareholder Nominations and Proposals
for other Business. Nominations of persons for election to the Board of
Directors and the proposal of business to be transacted by the shareholders
may be made at an annual or special meeting of the shareholders only (a)
pursuant to the Corporation's notice with respect to such meeting, (b) by
or at the direction of the Board of Directors or (c) by any shareholder of
the Corporation who was a shareholder of record on the record date set with
respect to such meeting as provided for in Section 11 of Article III, who
is entitled to vote at the meeting and who has complied with the notice
procedures set forth in this Section 13. For nominations or proposals for
other business to be properly brought before an annual or special meeting
by a shareholder pursuant to clause (c) above, the shareholder must give
timely notice thereof in writing to the Secretary of the Corporation and
such business must be a proper matter for shareholder action under the
Delaware General Corporation Law and a proper matter for consideration at
such meeting under the Certificate of Incorporation and these Bylaws. For
such notice to be timely, it must be delivered to the Secretary at the
principal business office of the Corporation not earlier than the 90th day
prior to the date of such meeting and not later than the close of business
on the later of (i) the 60th day prior to the date of such meeting or (ii)
the 10th day following the day on which public announcement of the date of
such meeting is first made. If such shareholder notice relates to a
proposal by such shareholder to nominate one or more persons for election
or re-election as a director, it shall set forth all information relating
to each such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including, if and to the extent so required,
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected). If such shareholder
notice relates to any other business that the shareholder proposes to bring
before the meeting, it shall set forth a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made. Each such notice
shall also set forth as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is
made (i) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and
number of shares of capital stock of the Corporation which are owned
beneficially and of record by such shareholder and such beneficial owner.
Persons nominated by shareholders to serve as directors of the Corporation
who have not been nominated in accordance with this Section 13 shall not be
eligible to serve as directors. Only such business shall be conducted at
an annual or special meeting of shareholders as shall have been brought
before the meeting in accordance with this Section 13. The chairman of the
meeting shall determine whether a nomination or any business proposed to be
transacted by the shareholders has been properly brought before the meeting
and, if any proposed nomination or business has not been properly brought
before the meeting, the chairman shall declare that such proposed business
or nomination shall not be presented for shareholder action at the meeting.
For purposes of this Section 13, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or a comparable national news service. Notwithstanding
any provision in this Section 13 to the contrary, requests for inclusion of
proposals in the Corporation's proxy statement made pursuant to Rule 14a-8
under the Exchange Act shall be deemed to have been delivered in a timely
manner if delivered in accordance with such Rule. Notwithstanding
compliance with the requirements of this Section 13, the chairman presiding
at any meeting of the shareholders may, in his sole discretion, refuse to
allow a shareholder or shareholder representative to present any proposal
which the Corporation would not be required to include in a proxy statement
under any rule promulgated by the Securities and Exchange Commission.
ARTICLE IV
Board of Directors' Meetings
Section 1. Annual Meetings. An annual meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of shareholders.
Section 2. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board
or any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or
without the State of Delaware, as the place for holding any special meeting
of the Board of Directors called by them.
Section 3. Notice. Except as set forth in the next sentence, notice
of any special meeting shall be given at least 24 hours prior to the
meeting by written notice delivered or given personally (including by
phone) or by mail or telegram or other written communication to each
director at his business address or residence. If, however, the meeting is
called by or at the request of the Chairman of the Board and if the
Chairman of the Board decides that unusual and urgent business is to be
transacted at the meeting (which decision shall be conclusively
demonstrated by his giving notice of the meeting less than 24 hours prior
to the meeting), then at least 2 hours' prior notice shall be given. If
notice is given by telegram or courier, such notice shall be deemed to be
given when the telegram is delivered to the telegraph company or courier
company and any personal notice shall be deemed given when given. Any
director may waive notice of any meeting. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where
a director attends a meeting and objects thereat to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in the notice
or waiver of notice of such meeting.
Section 4. Quorum. One-third of the number of directors fixed by, or
pursuant to, Section 2 of Article II shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if
less than such one-third is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice.
Section 5. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.
Section 6. Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent is entered in the minutes of the meeting or unless
he files his written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or forwards such
dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not
apply to a director who voted in favor of such action.
Section 7. Action by Directors Without a Meeting. Any action
required to be taken at a meeting of directors, or at a meeting of a
committee of directors, or any other action which may be taken at a
meeting, may be taken without a meeting if a consent in writing setting
forth the action so taken shall be signed by all of the directors or
members of the committee thereof entitled to vote with respect to the
subject matter thereof and filed with the minutes of proceedings of the
Board of Directors or committee and such consent shall have the same force
and effect as a unanimous vote.
Section 8. Participation in a Meeting by Telephone. Members of the
Board of Directors or any committee of directors may participate in a
meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participating in a
meeting pursuant to this Section 8 shall constitute presence in person at
such meeting.
ARTICLE V
Officers and Chairman of the Board
Section 1. Number, Election, Appointment, Removal, Vacancy. The
elected officers of the Corporation shall be one Chairman, one Chief
Executive Officer, a President, one or more Vice Presidents, a Chief
Financial Officer, a Treasurer, a Secretary and a Controller, each of whom
shall be elected by the Board of Directors. The appointed officers of the
Corporation shall be one or more Assistant Treasurers and Assistant
Secretaries, each of whom shall be appointed by the Chief Executive Officer
and shall serve at his pleasure. The Board of Directors may designate one
or more Vice Presidents as Senior Executive Vice President, one or more
Vice Presidents as Executive Vice President and one or more Vice Presidents
as Senior Vice President. Such other officers as may be necessary,
including one or more Vice Chairmen of the Board, one or more Officers of
the Board and a Chairman of the Executive Committee may be elected by the
Board of Directors. Any two or more offices may be held by the same
person, except the offices of President and Secretary, and the offices of
President and Vice President. The elected officers of the Corporation
shall be elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders.
If the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as convenient. Each elected
officer shall hold office until his successor shall have been duly elected
or until his death or until he shall resign or shall have been removed in
the manner hereinafter provided. Any officer elected by the Board of
Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the Corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election shall not of itself create contract rights. A
vacancy in any elected office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for
the unexpired portion of the term.
Section 2. Chairman of the Board of Directors. At its first meeting
after the annual meeting of shareholders, the Board of Directors shall
elect one of its own members to be the Chairman of the Board of Directors
("Chairman of the Board"). The Chairman of the Board shall work with the
Board of Directors to define its structure, agenda and activities in order
to fulfill its responsibilities and shall work with senior management to
help ensure that matters for which management is responsible are
appropriately reported to the Board of Directors. He shall preside at all
meetings of the shareholders and of the Board of Directors and shall call
and prescribe the content of such meetings. The Chairman of the Board
shall lead the Board of Directors in its role of assessing the performance
of the management of the Corporation. The Chairman of the Board shall also
counsel the members of the Chief Executive Office, where appropriate, and
shall perform such other duties as may be prescribed by the Board of
Directors from time to time. The Chairman of the Board may designate one
or more other directors to exercise the functions and to have the authority
of the Chairman of the Board during the absence or disability of the
Chairman of the Board and prior to any action by the Board of Directors to
fill any vacancy. The Board of Directors may remove or replace the
Chairman of the Board at any time and any vacancy in such position because
of death, resignation, removal, disqualification or otherwise, may be
filled by the Board of Directors for the unexpired portion of the term.
Section 3. Chief Executive Officer. The Chief Executive Officer
("CEO") shall be the senior executive officer of the Corporation and shall
in general supervise and control all the business and affairs of the
Corporation. He shall direct the policy of the Corporation; and he may
delegate powers to any other officer of the Corporation. Except where by
law the signature of such other officer is required, the CEO shall possess
the same power as such other officer to sign all certificates, contracts
and other instruments and documents of the Corporation which may be
authorized by the Board of Directors or otherwise, and shall possess the
same power as such other officer to take any action authorized by these
Bylaws or by the Board of Directors or otherwise. He shall also perform
such duties as may be prescribed by the Board of Directors or by the
Chairman of the Board of Directors acting for the Board of Directors from
time to time.
Section 4. The President. The President, in the absence or
disability of the CEO, shall exercise the functions and shall have the
authority of the CEO. The President may sign, with the Secretary or other
proper officer of the Corporation thereunto authorized by the Board of
Directors (if the signature of the Secretary or such other officer is
required), certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts, and other instruments and documents which may
be authorized by the Board of Directors or otherwise, except in cases where
the signing and execution thereof shall be expressly delegated by the Board
of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or
executed; and in general, shall perform all duties incident to the office
of President and such other duties as may be prescribed by the Board of
Directors from time to time
Section 5. The Chairman of the Executive Committee, Senior Executive
Vice Presidents, Executive Vice Presidents, Officers of the Board, Senior
Vice Presidents and the Corporate Vice Presidents. The Chairman of the
Executive Committee, Senior Executive Vice Presidents, Executive Vice
Presidents, Officers of the Board, Senior Vice Presidents and the Corporate
Vice Presidents, in the order designated by the Board of Directors or the
Chairman of the Board, shall exercise the functions and shall have the
authority of the President during the absence or disability of the
President. The Chairman of the Executive Committee, each Senior Executive
Vice President, Executive Vice President, Officer of the Board, Senior Vice
President and Corporate Vice President shall have such powers as may be
designated and shall discharge such duties as may be assigned to him from
time to time by the Board of Directors or the Chief Executive Office. In
addition to the duties described in the prior sentence, all these elected
officers (except the Chairman of the Executive Committee) are authorized to
sign and execute all agreements, contracts, leases, bids, proposals, deeds,
assignments, powers of attorney, guarantee undertakings, instruments,
documents, claims, including claims against the United States of America,
and certifications of such claims, in the ordinary course of business of
the Corporation, and to redelegate that authority in writing to others;
provided, however, that only the CEO, the President, the Chief Financial
Officer and the Treasurer are authorized to perform those activities set
forth in the third sentence of the first paragraph of Article V, Section 7,
of these Bylaws.
Section 6. The Secretary. The Secretary shall keep the minutes of
all meetings of the Board of Directors and the minutes of all meetings of
the shareholders, in books provided by the Corporation for such purpose.
He shall attend to giving and serving of all notices of the Corporation
whereby meetings of the Board of Directors and shareholders are assembled.
He shall provide lists of shareholders and their addresses required to be
prepared by the provisions of any present or future statute of the State of
Delaware. He may sign, with any other officer, in the name of the
Corporation, all contracts and other instruments requiring the seal of the
Corporation and may affix the seal thereto. He shall have charge of such
books and papers as the Board of Directors may direct. He shall in general
perform all of the duties which are incident to the office of secretary of
a corporation, subject at all times to the direction and control of the
Board of Directors.
Section 7. The Chief Financial Officer and the Treasurer. The Chief
Financial Officer shall be the senior financial officer of the Corporation.
The Chief Financial Officer, the CEO, the President and the Treasurer shall
each individually have the power, which may be redelegated in writing, on
behalf of the Corporation, to borrow funds and to otherwise incur
liabilities, to sell or discount bills, receivables and other instruments
and rights, to enter into and deliver repurchase, credit, guarantee,
surety, loan, interest rate, currency and other agreements, which may
contain covenants restricting the Corporation's ability to take certain
actions or require it to take certain actions, to sign and deliver
acceptances, notes and other obligations, to buy and sell foreign exchange,
whether for current or future delivery, or options on foreign exchange, to
purchase, sell, exchange or otherwise deal in stock or other securities, to
procure letters of credit, travelers' checks or similar instruments, to
open and close accounts with any banking institution or other depository of
funds, to sign, manually, by facsimile signature or otherwise, checks,
drafts or other orders for the payment of funds (which each such
institution is hereby authorized and directed to honor), to issue written,
telephonic, electronic or oral instructions for the transfer of funds by
wire or other electronic means or otherwise, to enter into agreements or
documents with any banking or financial institution with respect to any
services, including, without limitation, electronic services, and to do all
things in connection with any of these as any of them sees fit. The Chief
Financial Officer, the CEO, the President and the Treasurer shall each
individually also have the power, which may be redelegated in writing, on
behalf of the Corporation, to guarantee, or to act as surety with respect
to, any of the obligations of any entity of which any of the outstanding
stock or securities is owned, directly or indirectly by the Corporation.
In addition, the Chief Financial Officer, as well as each of the CEO, the
President and the Treasurer, shall individually have the authority to vote
all shares or securities in any entity directly or indirectly owned by the
Corporation and to redelegate that authority in writing to others.
The Treasurer shall have the custody of all of the funds and
securities of the Corporation. He shall be empowered to endorse on behalf
of the Corporation all checks, notes or other obligations and evidences of
the payment of money, payable to the Corporation or coming into his
possession, and shall deposit the funds arising therefrom, together with
all other funds of the Corporation, coming into his possession, in such
banks as may be selected as the depositories of the Corporation, or
properly care for them in such other manner as the Board of Directors may
direct. All checks and other instruments drawn on or payable out of the
funds of the Corporation and all bills, notes or other evidence of
indebtedness shall be signed by such officers and employees as the Board of
Directors may designate. Whenever required by the Board of Directors so to
do, he shall exhibit a complete and true statement of property in his
possession, custody or control. He shall provide for the entry regularly,
in records belonging to the Corporation, a full and accurate account of all
money received and paid on account of the Corporation, together with all
other business transactions. He shall, at all reasonable times within the
hours of business, exhibit his records and accounts to any director. He
shall perform all duties which are incident to the office of treasurer of a
corporation, subject, however, at all times to the direction and control of
the Board of Directors. If the Board of Directors shall so require, he
shall give bond, in such sum and with such securities as the Board of
Directors may direct, for the faithful performance of his duties and for
the safe custody of the funds and property of the Corporation coming into
his possession.
Section 8. The Controller. The Controller shall be the Chief
Accounting Officer of the Corporation and shall: (a) keep, or cause to be
kept, correct and complete books and records of account, including full and
accurate accounts of receipt and disbursements in books belonging to the
Corporation; and (b) in general, perform all duties incident to the office
of Controller and such other duties as from time to time may be assigned to
him by the Chairman of the Board or by the Board of Directors. In
addition, the Controller, the Chief Financial Officer and the Treasurer
shall each individually be authorized to sign powers of attorney on behalf
of the Corporation and to appoint agents and attorneys to represent the
Corporation in dealings before or with the Bureau of Customs.
Section 9. Statutory Duties. Each respective officer shall discharge
any and every duty, appertaining to his respective office, which is imposed
on such officer by the provisions of any present or future statute of the
State of Delaware.
Section 10. Delegation of Duties. In case of the absence of any
officer of the Corporation, the Chairman of the Board or the Board of
Directors may delegate, for the time being, the duties of such officer to
any other officer or to any director.
Section 11. Salaries. The salaries of the officers and the Chairman
of the Board shall be fixed from time to time by the Board of Directors
unless such authority has been delegated by the Board of Directors, in
which case, salaries shall be fixed by the person, persons or committee to
whom authority has been delegated, subject to any limitations which may be
contained in the resolution delegating such authority. No officer shall be
prevented from receiving such salary by reason of the fact that he or she
is also a director of the Corporation.
Section 12. Assistant Treasurers and Assistant Secretaries. The CEO
may appoint, from time to time, as he may see fit, and may (but shall not
be required to) fix the compensation of, one or more Assistant Treasurers
and Assistant Secretaries, each of whom shall hold office during the
pleasure of the CEO, and shall perform such duties as he may assign.
ARTICLE VI
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares
of the Corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the CEO or
President, and by the Treasurer or the Secretary. Any or all of the
signatures on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. All certificates for
shares shall be consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on
the stock ledger of the Corporation.
Section 2. Transfer of Certificate. Transfer of shares of the
Corporation shall be made only upon the records of the Transfer Agent
appointed for this purpose, by the owner in person or by the legal
representative of such owner and, upon such transfer being made, the old
certificates shall be surrendered to the Transfer Agent who shall cancel
the same and thereupon issue a new certificate or certificates therefor.
Whenever a transfer is made for collateral security, and not absolutely,
the fact shall be so expressed in the recording of the transfer.
Section 3. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent and registrar of transfers and thereafter may
require all stock certificates to bear the signature of such transfer agent
and such registrar of transfers. The signature of either the transfer
agent or the registrar, but not both, may be a facsimile.
Section 4. Registered Holder. The Corporation shall be entitled to
treat the registered holder of any shares as the absolute owner thereof
and, accordingly, shall not be bound to recognize any equitable or other
claim thereto, or interest therein, on the part of any other person,
whether or not it shall have express or other notice thereof, save as
expressly provided by the statutes of the State of Delaware.
Section 5. Rules of Transfer. The Board of Directors also shall have
the power and authority to make all such rules and regulations as they may
deem expedient concerning the issue, transfer and registration of the
certificates for the shares of the Corporation.
Section 6. Lost Certificates. Any person claiming a certificate for
shares of this Corporation to be lost or destroyed, shall make affidavit of
the fact and lodge the same with the Secretary of the Corporation,
accompanied by a signed application for a new certificate. Such person
shall give to the Corporation, to the extent deemed necessary by the
Secretary or Treasurer, a bond of indemnity with one or more sureties
satisfactory to the Secretary, and in an amount which, in his judgment,
shall be sufficient to save the Corporation from loss, and thereupon the
proper officer or officers may cause to be issued a new certificate of like
tenor with the one alleged to be lost or destroyed. But the Secretary may
recommend to the Board of Directors that it refuse the issuance of such new
certificate in the event that the applicable provisions of the Uniform
Commercial Code are not met.
ARTICLE VII
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize, by these
Bylaws or any resolution, any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name
of and on behalf of the Corporation, and such authority may be general or
confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by these Bylaws or a resolution of the Board of
Directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such officer or
officers, agent or agents, of the Corporation and in such manner as shall
from time to time be determined by these Bylaws or a resolution of the
Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the
Board of Directors may select.
ARTICLE VIII
Books and Records
Section 1. Location. Complete books and records of account together
with minutes of the proceedings of the meetings of the shareholders and
Board of Directors shall be kept. A record of shareholders, giving the
names and addresses of all shareholders, and the number and class of the
shares held by each, shall be kept by the Corporation at its registered
office or principal place of business in the State of Illinois or at the
office of a Transfer Agent or Registrar.
ARTICLE IX
Notices
Section 1. Manner of Notice. Whenever, under the provisions of the
Certificate of Incorporation or of the Bylaws of the Corporation or of the
statutes of the State of Delaware, notice is required to be given to a
shareholder, to a director or to an officer, it shall not be construed to
mean personal notice, unless expressly stated so to be. And any notice so
required (other than notice by publication) may be given in writing by
depositing the same in the United States mail, postage prepaid, directed to
the shareholder, director or officer, at his, or her, address as the same
appears on the records of the Corporation, and the time when the same is
mailed shall be deemed the time of the giving of such notice.
Section 2. Waiver of Notice. Any shareholder, director or officer
may, in writing, waive the giving and the mailing of any notice required to
be given or mailed either by and under the statutes of the State of
Delaware or by and under the Bylaws.
ARTICLE X
Fiscal Year
Section 1. Fiscal Year. The fiscal year of the Corporation shall
begin on the 1st day of January and terminate on the 31st day of December.
ARTICLE XI
Emergency Bylaws
The Emergency Bylaws provided in this Article XI shall be operative
upon (a) the declaration of a civil defense emergency by the President of
the United States or by concurrent resolution of the Congress of the United
States pursuant to Title 50, Appendix, Section 2291 of the United States
Code, or any amendment thereof, or (b) upon a proclamation of a civil
defense emergency by the Governor of the State of Illinois which relates to
an attack or imminent attack on the United States or any of its
possessions. Such Emergency Bylaws, or any amendments to these Bylaws
adopted during such emergency, shall cease to be effective and shall be
suspended upon any proclamation by the President of the United States, or
the passage by the Congress of a concurrent resolution, or any declaration
by the Governor of Illinois that such civil defense emergency no longer
exists.
Section 1. Board of Directors' Meetings. During any such emergency,
any meeting of the Board of Directors may be called by any officer of the
Corporation or by any director. Notice shall be given by such person or by
any officer of the Corporation. The notice shall specify the place of the
meeting, which shall be at the head office of the Corporation at the time
if feasible, and otherwise, any other place specified in the notice. The
notice shall also specify the time of the meeting. Notice may be given
only to such of the directors as it may be feasible to reach at the time
and by such means as may be feasible at the time, including publication or
radio. If given by mail, messenger, telephone, or telegram, the notice
shall be addressed to the director at his residence or business address, or
such other place as the person giving the notice shall deem most suitable.
Notice shall be similarly given, to the extent feasible in the judgment of
the person giving the notice, to the other directors. Notice shall be
given at least two days before the meeting, if feasible in the judgment of
the person giving the notice, and otherwise on any shorter time he may deem
necessary.
Section 2. Change of Head Office. The Board of Directors, during any
such emergency may, effective in the emergency, change the head office or
designate several alternative head offices, or regional offices or
authorize the officers to do so.
ARTICLE XII
Director Emeritus
Section 1. Director Emeritus. The Board of Directors may at any time
and from time to time award to former members of the Board of Directors in
recognition of their past distinguished service and contribution rendered
to the Corporation the honorary title "Director Emeritus." The award of
this title shall not constitute an election or appointment to the Board of
Directors, nor to any office of the Corporation, nor the bestowal of any
duties, responsibilities or privileges associated therewith; and
accordingly no "Director Emeritus" shall be deemed a "Director" as that
term is used in these Bylaws. The title "Director Emeritus" shall carry no
compensation, and holders thereof shall not attend any meetings of the
Board of Directors or committees of the Board of Directors, except by
written invitation, nor shall they be specially privy to any confidential
information arising from such meeting.
ARTICLE XIII
Amendment of Bylaws
Section 1. Amendment of Bylaws. These Bylaws may be altered, amended
or repealed and new Bylaws may be adopted at any meeting of the Board of
Directors by a majority vote of the directors present at the meeting.
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