Exhibit 10.1 to Form 10-Q
for the period ending July 1, 2000
MOTOROLA INCENTIVE PLAN OF 1998
(amended through June 2, 2000)
1. NAME AND PURPOSE
1.1 Name. The name of this plan is the Motorola Incentive Plan of
1998 (the "Plan").
1.2 Purpose. Motorola has established the Plan to promote the
interests of Motorola and its stockholders by providing full and part-time
employees of Motorola or its Subsidiaries and members of Motorola's Board
of Directors who are not employees of Motorola or any of its Subsidiaries
(each a "Non-Employee Director") with additional incentive to increase
their efforts on Motorola's behalf and to remain in the employ or service
of Motorola or its Subsidiaries and with the opportunity, through stock
ownership, to increase their proprietary interest in Motorola and their
personal interest in its continued success and progress.
2. DEFINITIONS
2.1 General Definitions. The following words and phrases, when
used herein, unless otherwise specifically defined or unless the context
clearly indicates otherwise, shall have the following meanings:
(a) Affiliate. Any corporation, partnership, joint venture or
other business entity in which Motorola or a Subsidiary holds an
ownership interest.
(b) Agreement. The document, if any, which evidences the grant of
any Benefit under the Plan and which sets forth the Benefit and the
terms, conditions and provisions of, and restrictions relating to,
such Benefit.
(c) Benefit. Any benefit granted to, or received by, a
Participant under the Plan.
(d) Board. The Board of Directors of Motorola, Inc.
(e) Cash Award. A Benefit Awarded to a Participant under Section
11 of the Plan.
(f) Change in Control. The events described in Section 17.2.
(g) Code. The Internal Revenue Code of 1986, as amended, and the
regulations promulgated pursuant thereto.
(h) Committee. The Compensation Committee of the Board.
(i) Common Stock. Motorola's common stock, $3 par value per
Share.
(j) Compensation. All cash remuneration payable to a Non-Employee
Director for services to Motorola as a Non-Employee Director other
than reimbursement for expenses, and shall include retainer fees for
service on the Board, fees for serving as chairman of a committee of
the Board, fees for attendance at meetings of the Board and any
committees thereof, compensation for work performed in connection with
service on a committee of the Board or at the request of the Board,
any committee thereof or a member of Motorola's Chief Executive Office
or the Chairman of the Board and any other kind or category of fees or
payments which may be put into effect in the future.
(k) Directors. Members of the Board of Motorola.
(l) Effective Date. The date that the Plan is approved by both
the directors of Motorola and the stockholders of Motorola, and if
not approved by both on the same day, the date of the last approval.
(m) Employee. Any person employed by Motorola or a Subsidiary on
a full or part-time basis.
(n) Employee Stock Options. Stock Options granted to an Employee
under Article 4 of the Plan, including both NSOs and ISOs, as defined
below.
(o) Exchange Act. The Securities Exchange Act of 1934, as
amended.
(p) Fair Market Value. The average of the high and low sale
prices of Shares as reported for the New York Stock Exchange -
Composite Transactions on a given date, or, in the absence of sales on
a given date, the average of the high and low sale prices (as so
reported) for the New York Stock Exchange - Composite Transactions on
the last previous day on which a sale occurred prior to such date.
With respect to an ISO, as defined below, if such method of
determining Fair Market Value shall not be consistent with the then
current regulations of the U.S. Secretary of the Treasury, Fair Market
Value shall be determined in accordance with those regulations.
(q) ISO. An incentive stock option that meets the requirements of
Section 422 (or any successor section) of the Code.
(r) Motorola. Motorola, Inc. or any successor.
(s) NSO. A stock option that does not qualify as an ISO.
(t) Non-Employee Director. Is defined in Section 1.2.
(u) Non-Employee Stock Option Period. Is defined in Section 6.3.
(v) Non-Employee Stock Option. Is defined in Section 6.1.
(w) Non-Exercise Period. The period, for each Employee Stock
Option and each Stock Appreciation Right, ending twelve (12) months
from the date of its grant, or any longer period or periods determined
by the Committee and set forth in, or incorporated by reference into,
the Employee Stock Option or Stock Appreciation Right.
(x) Optionee. An Employee who has been granted an Employee Stock
Option under the Plan.
(y) Participant. An individual who is granted a Benefit under or
otherwise participates in the Plan. Benefits, other than Non-Employee
Stock Options, may be granted only to Employees.
(z) Performance Share. A Benefit awarded to a Participant under
Section 8 of the Plan.
(aa) Plan. The Motorola Incentive Plan of 1998 and all amendments
and supplements thereto.
(bb) Plan Year. The calendar year.
(cc) Restricted Stock. Shares issued under Article 5 of the Plan.
(dd) Rule 16b-3. Rule 16b-3 promulgated by the SEC, as amended,
or any successor rule in effect from time to time.
(ee) SEC. The Securities and Exchange Commission.
(ff) Share. A share of Common Stock.
(gg) Stock Appreciation Right. A Benefit awarded to a
Participant under Section 9 of the Plan.
(hh) Stock Award. A Benefit awarded to a Participant under
Section 10 of the Plan.
(ii) Stock Options. Employee Stock Options and Non-Employee Stock
Options.
(jj) Subsidiary; Subsidiaries. Any corporation or other entity in
which a fifty percent (50%) or greater interest is, at the time,
directly or indirectly owned by Motorola or by one or more
Subsidiaries or by Motorola and one or more Subsidiaries, except that:
(i) with respect to ISOs, "Subsidiary" shall mean "subsidiary
corporation" as defined in Section 424(f) of the Code, and (ii) with
respect to Directors and any elected officer of Motorola or a
Subsidiary subject to Section 16 of the Exchange Act, the terms
"Subsidiary" or "Subsidiaries" mean and include any corporation or
other entity at least a majority of the outstanding voting shares of
which (other than directors' qualifying shares) is, at the time,
directly or indirectly owned by Motorola or by one or more
Subsidiaries or by Motorola and one or more Subsidiaries.
(kk) Successor-in-Interest. Is defined in Section 4.5(a)(ii).
(ll) Total and Permanent Disability. Is defined in Section
4.5(a)(i).
2.2 Other Definitions. In addition to the above definitions,
certain words and phrases used in the Plan and in any Agreement may be
defined elsewhere in the Plan or in such Agreement.
3. SHARES SUBJECT TO PLAN
3.1 Number of Shares. The number of Shares which may be issued or
sold or for which Benefits may be granted or received under the Plan, for
which Compensation may be paid to Non-Employee Directors in Common Stock
and restricted Common Stock under the Motorola Non-Employee Directors Stock
Plan and for which awards and grants payable in Common Stock and restricted
Common Stock may be made under the Motorola Long Range Incentive Plan of
1994 and the Motorola Executive Incentive Plan shall be (i) 37,500,000
Shares(as adjusted for the 3-for-1 stock split effective June 1, 2000),
plus (ii) the total number of Shares with respect to which no options have
been granted under Motorola's Share Option Plan of 1996 on the Effective
Date, plus (iii) the number of Shares as to which options granted under
Motorola's Share Option Plan of 1996 terminate or expire without being
fully exercised, subject, in each case, to Sections 3.2 and 3.3. Shares
issued under the Plan may be either authorized and unissued Shares or
issued Shares reacquired by Motorola. No Participant may receive (i) Stock
Options relating to more than 900,000 Shares (reflecting adjustment for the
3-for-1 stock split effective June 1, 2000) in any Plan Year (as adjusted
pursuant to Section 3.3), (ii) Restricted Stock relating to more than
300,000 Shares (reflecting adjustment for the 3-for-1 stock split effective
June 1, 2000) in any Plan Year (as adjusted pursuant to Section 3.3), (iii)
Stock Appreciation Rights relating to more than 150,000 Shares (reflecting
adjustment for the 3-for-1 stock split effective June 1, 2000) in any Plan
Year (as adjusted pursuant to Section 3.3) or (iv) Performance Shares
relating to more than 60,000 Shares (reflecting adjustment for the 3-for-1
stock split effective June 1, 2000) in any Plan Year (as adjusted pursuant
to Section 3.3). The number of Shares which may be issued under the Plan
for Benefits other than Stock Options and which may be issued under the
other three plans named above in this Section 3.1 shall not exceed a total
of 15,000,000 Shares (reflecting adjustment for the 3-for-1 stock split
effective June 1, 2000), subject to reusage and adjustments under Sections
3.2 and 3.3; provided however, that the number of Shares which may be
issued under the Plan for Benefits other than Stock Options after February
25, 2000, shall not exceed a total of 3,000,000 shares (reflecting
adjustment for the 3-for-1 stock split effective June 1, 2000), subject to
reusage and adjustments under Sections 3.2 and 3.3.
3.2 Reusage. If a Stock Option expires or is terminated,
surrendered or canceled without having been fully exercised or if
Restricted Stock, Performance Shares or a Stock Appreciation Right is
forfeited or terminates without the issuance of all of the Shares subject
thereto, the Shares covered by such Benefits shall again be available for
use under the Plan. Shares covered by a Benefit granted under the Plan
shall not be counted as used unless and until they are actually and
unconditionally issued and delivered to a Participant. The number of
Shares which are transferred to Motorola by a Participant to pay the
exercise or purchase price of a Benefit shall be subtracted from the number
of Shares issued with respect to such Benefit for the purpose of counting
Shares used. Shares withheld to pay withholding taxes in connection with
the exercise or payment of a Benefit shall not be counted as used. Shares
covered by a Benefit granted under the Plan which is settled in cash shall
not be counted as used.
3.3 Adjustments. If there is any change in the Common Stock by
reason of any stock split, stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares, the number and class of Shares available for Stock
Options and grants or purchases of Restricted Stock, Performance Shares,
Stock Appreciation Rights and Stock Awards, the number of Shares to be
automatically granted under Section 6.1 hereof and the number of Shares
subject to outstanding Stock Options, Performance Shares, Stock
Appreciation Rights and Restricted Stock, and the price of each of the
foregoing, as applicable, shall be appropriately adjusted by the Committee
to provide Participants with the same relative rights before and after such
adjustment.
4. EMPLOYEE STOCK OPTIONS
4.1 Grant of Employee Stock Options. The Committee shall have
authority to grant Stock Options (ISOs or NSOs) to Employees. The
Committee shall determine the number of Shares subject to each Employee
Stock Option, the purchase price per Share, the term of the Employee Stock
Option, the time or times at which the Employee Stock Option may be
exercised, and all other terms and conditions of the Employee Stock Option.
The Option exercise price per Share of an Employee Stock Option may not be
less than the Fair Market Value of a Share on the date of grant. The
Committee may accelerate the exercisability of any Employee Stock Option,
including the waiver or modification of any installment exercise
provisions. The Committee may, in its discretion, delegate to members of
the Committee and/or one or more elected officers of Motorola the authority
to grant Stock Options to Employees who are not subject to Section 16 of
the Exchange Act.
4.2 NSOs and ISOs.
(a) The Stock Option exercise price of any Stock Option may not be
less than the Fair Market Value on the date of grant of the Shares of
the Common Stock subject to the Stock Option.
(b) ISOs. The following additional terms and conditions shall apply
to ISOs:
(i) No ISO shall be granted to any Participant who, at the
time the Employee Stock Option is granted, would own (within the
meaning of Section 422(b) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of Motorola.
(ii) The aggregate Fair Market Value (determined as of the time
the Employee Stock Option is granted) of the Shares of Common
Stock with respect to which one or more ISO's are exercisable for
the first time by any individual Optionee during any calendar
year (under all plans of Motorola and its Subsidiaries) shall not
exceed $100,000.00.
(iii) Each ISO, by its terms, shall (1) not be exercisable
after the expiration of ten (10) years after the date it is
granted and (2) not be transferrable by the Optionee otherwise
than by will or the applicable laws of descent and distribution
or by operation of a death beneficiary designation made by the
Optionee in accordance with rules established by the Committee
and shall be exercisable during the Optionee's lifetime only by
the Optionee or the Optionee's guardian or legal representative
if the Optionee is legally incompetent.
(c) NSOs. Any NSO the grant of which is agreed to after February
25, 2000 shall not be exercisable after the expiration of ten (10)
years after the date it is granted.
4.3 Exercise of Employee Stock Options; Payment.
(a) An Employee Stock Option may be exercised by the Optionee
submitting to Motorola such form(s) as are prescribed for such
purpose. Motorola may require the surrender of the Employee Stock
Option certificate if one has been issued. No Employee Stock Option
shall be exercisable for less than a minimum of fifty (50) Shares
except in cases where the number of Shares represented by the Employee
Stock Option being exercised is less than fifty (50), in which case,
the Employee Stock Option shall not be exercisable for less than all
shares represented by such Option.
(b) Payment for Shares purchased upon exercise of an Employee
Stock Option shall be paid in full as permitted by Section 19.1 for
all Shares purchased at the time of purchase. No fractional Shares may
be purchased.
4.4 Non-Exercise Period. Except as provided herein for Optionees
who die while in the employ of Motorola or any Subsidiary or for a Change
in Control, no Employee Stock Option granted under the Plan may be
exercised prior to the expiration of the Non-Exercise Period. No Employee
Stock Option may be exercised after expiration of its stated term.
4.5 Effect of Termination of Employment on Employee Stock
Options:
(a) Termination of Employment During the Non-Exercise Period.
(i) Except for a Change in Control and except for a
disability leave of absence as provided in Section 4.5(a)(iii)
hereof, if, during the Non-Exercise Period, the Optionee's
employment with Motorola and its Subsidiaries shall terminate for
any reason (including retirement) other than death, transfer to
an Affiliate and other than Total and Permanent Disability (as
that term is defined in the Motorola Profit Sharing and
Investment Plan) of the Optionee, as determined by the Committee
or its designee, the Optionee's right to exercise the Employee
Stock Option shall terminate and all rights thereunder shall
cease; provided, however, if the Optionee's employment terminates
by reason of the transfer of such Optionee to an Affiliate, the
Committee shall have the power and authority, in its discretion,
to determine whether or not any or all of the Employee Stock
Options held by the Optionee shall terminate or shall continue in
effect (in which case such Options shall be subject to all of the
conditions of the Plan, including this Section 4.5, and such
other conditions as the Committee may impose, with "termination
of employment," "employment is terminated" or "employment shall
have been terminated" or words of like import or intent meaning
termination of employment with the Affiliate.)
(ii) If, during the Non-Exercise Period, an Optionee dies
while in the employ of Motorola or any Subsidiary, the deceased
Optionee's Successor-in-Interest shall have the right to
exercise, in whole or in part, at any time during the remainder
of the term of such Employee Stock Option, the entire amount of
the Shares subject to such Employee Stock Option (without regard
to any installment limitation on the exercise of the Employee
Stock Option). For purposes of the Plan, the term "Successor-in-
Interest" shall mean the deceased Optionee's death beneficiary,
personal representative, or any person who acquired the right to
exercise such Employee Stock Option by bequest or inheritance or
by reason of the laws of descent and distribution.
(iii) If, during the Non-Exercise Period, an Optionee's
employment with Motorola and its Subsidiaries shall terminate
because of the Total and Permanent Disability of the Optionee or
if the Optionee shall be put on disability leave of absence status
because of the Total and Permanent Disability of the Optionee,
each Employee Stock Option held by such an Optionee which has a
Non-Exercise Period in effect at the time of termination of
employment or commencement of the disability leave of absence
shall become exercisable at the time the applicable Non-Exercise
Period elapses or terminates, and the Optionee shall then have the
right to exercise, in whole or in part, each such Employee Stock
Option for the entire amount of Shares subject to each such
Employee Stock Option (without regard to any installment
limitation on exercise of the Employee Stock Option) at any time
during the remainder of the term of the Employee Stock Option.
The unexercised portion of each Employee Stock Option shall
terminate upon expiration of the term of such Stock Option, and
any unexercised portion shall terminate immediately if and when
the Optionee is employed by a competitor of Motorola or any
Subsidiary without written consent of the Committee.
(b) Termination of Employment After the Non-Exercise Period.
(i) By Termination of Employment Without Cause.
If the Non-Exercise Period shall have elapsed or terminated and
the Optionee's employment with Motorola and its Subsidiaries shall have
been terminated thereafter by Motorola or any Subsidiary without cause, the
Optionee shall have the right to exercise the then presently exercisable
unexercised portion of the Employee Stock Option at any time during a
period of twelve (12) months after the date of termination of employment.
The unexercised portion of the Employee Stock Option may be exercised, in
whole or in part, for the number of Shares which were or would have become
exercisable to the extent the Optionee could have exercised such Employee
Stock Option had the Optionee remained in the employ of Motorola or any
Subsidiary during the twelve (12) month period immediately following the
date of termination of employment. Except as otherwise provided in Section
4.5(b)(vii) hereof, the unexercised and/or unexercisable portion of each
Employee Stock Option shall terminate twelve (12) months after an
Optionee's employment with Motorola and its Subsidiaries shall have been so
terminated, and any unexercised and/or unexercisable portion shall
terminate immediately if and when the Optionee is employed by a competitor
of Motorola or any Subsidiary without the written consent of the Committee.
(ii) By Termination of Employment for Cause.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee's employment is terminated by Motorola or any Subsidiary for
cause, any unexercised portion of any Employee Stock Option granted to the
Optionee shall terminate with the Optionee's termination of employment. As
used herein, the term "cause" means (a) the failure of the Optionee to
carry out the duties assigned to the Optionee as a result of incompetence
or willful neglect, as determined by the Committee, or (b) such other
reasons, including the existence of a conflict of interest, as the
Committee may determine.
(iii) By Voluntary Termination of Employment.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee voluntarily terminates employment with Motorola or any Subsidiary
for reasons other than the retirement of the Optionee, any unexercised
portion of the Optionee's Employee Stock Option shall terminate with the
Optionee's termination of employment.
(iv) By Retirement.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee's employment with Motorola or any Subsidiary shall have been
terminated because of the retirement of the Optionee from Motorola or any
Subsidiary at age 55 or older, the Optionee shall have the right to
exercise, in whole or in part, the unexercised portion of any Employee
Stock Option held by such Optionee for the entire amount of Shares subject
to such Stock Option (without regard to any installment limitation on
exercise of the Employee Stock Option) at any time during the remainder of
the term of such Stock Option. The unexercised portion of each Employee
Stock Option shall terminate upon expiration of the term applicable to each
such Employee Stock Option, and any unexercised portion shall terminate
immediately if and when the Optionee is employed by a competitor of
Motorola or any Subsidiary without the written consent of the Committee.
For purposes of this Section 4.5, if the Optionee is a participant in
Motorola's pension plan or the pension plan of any Subsidiary, the term
"retirement" shall mean the Optionee's retirement as provided for in the
applicable pension plan. If the Optionee is not a participant in
Motorola's pension plan or the pension plan of any Subsidiary, "retirement"
of an Optionee shall be determined by the Committee. In no event can
retirement take place prior to age 55 even if permitted under the
applicable pension plan.
(v) By Total and Permanent Disability.
If the Non-Exercise Period shall have elapsed or terminated, and the
Optionee's employment with Motorola and its Subsidiaries shall have been
terminated because of the Total and Permanent Disability of the Optionee or
if the Optionee shall be put on disability leave of absence status because
of the Total and Permanent Disability of the Optionee, the Optionee shall
have the right to exercise, in whole or in part, the unexercised portion of
any Employee Stock Option held by such Optionee for the entire amount of
Shares subject to such Employee Stock Option (without regard to any
installment limitation on exercise of the Employee Stock Option) at any
time during the remainder of the term of the Employee Stock Option. The
unexercised portion of each Employee Stock Option shall terminate upon
expiration of the term of each such Employee Stock Option, and any
unexercised portion shall terminate immediately if and when the Optionee is
employed by a competitor of Motorola or any Subsidiary without the written
consent of the Committee.
(vi) By Death.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee dies while in the employ of Motorola or any Subsidiary, the
unexercised portion of the Employee Stock Option may be exercised, in whole
or in part, at any time during the remainder of the term of the Employee
Stock Option by the Optionee's Successor-in-Interest, for the entire number
of Shares subject to the Employee Stock Option (without regard to any
installment limitation on exercise of the Employee Stock Option).
(vii) Effect of Death After Termination of Employment Without
Cause or Retirement.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee dies during the twelve (12) month period immediately following the
Optionee's termination of employment by Motorola or any Subsidiary without
cause and at the time of death such Optionee is not employed by a
competitor of Motorola or any Subsidiary (or while employed by a competitor
of Motorola or any Subsidiary with the written consent of the Committee),
the unexercised portion of the Employee Stock Option may be exercised by
the Optionee's Successor-in-Interest at any time during the remainder of
the term of the Employee Stock Option, in whole or in part, for the number
of Shares which were or would have become exercisable had the Optionee
survived for the remainder of the term of the Employee Stock Option,
without regard to the requirement of exercise within twelve (12) months
after termination of employment without cause.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee dies after retirement prior to the expiration of the term of the
Employee Stock Option, and, if at the time of death such Optionee is not
employed by a competitor of Motorola or any Subsidiary (or while employed
by a competitor of Motorola or any Subsidiary with the written consent of
the Committee), the unexercised portion of the Employee Stock Option may be
exercised for the entire number of Shares subject to such Employee Stock
Option (without regard to any installment limitation on exercise of the
Employee Stock Option), by the Optionee's Successor-in-Interest at any time
during the remainder of the term of the Employee Stock Option.
(viii) By Transfer of Optionee to an Affiliate.
If the Non-Exercise Period shall have elapsed or terminated and the
Optionee's employment with Motorola and its Subsidiaries shall terminate by
reason of the transfer of such Optionee to an Affiliate, the Committee
shall have the power and authority, in its discretion, to determine whether
or not any or all of the Employee Stock Options held by the Optionee shall
continue in effect for the remainder of the term of such Employee Stock
Option or for the period otherwise applicable under the provisions of the
Plan. Any Employee Stock Option which the Committee permits to continue in
effect beyond the period otherwise applicable under the Plan shall be
subject to all of the terms and conditions of the Plan, including this
Section 4.5 and such other conditions as the Committee may impose (with
"termination of employment", "employment shall terminate", "terminates
employment", "employment is terminated" or "employment shall have been
terminated" or words of like import or intent meaning termination of
employment with the Affiliate).
(c) Procedure on Death. No transfer of an Employee Stock Option
by an Optionee pursuant to Section 4.5 (a)(ii), (b)(vi) and (b)(vii)
above, by will or by the laws of descent and distribution, shall be
effective unless Motorola shall have been furnished with written
notice thereof and a copy of the will, if any, and/or such other
evidence as the Committee may deem necessary to establish the validity
of the transfer and the acceptance by the Successor-in-interest or
Successors-in-interest of the terms and conditions of the Employee
Stock Option, and under no circumstances shall the right of any such
Successor-in-Interest to exercise any such Employee Stock Option
extend beyond the applicable period specified in sub-paragraph
(a)(ii), (b)(vi) or (b)(vii) above, or beyond the expiration of the
term of such Employee Stock Option.
(d) Leaves of Absence and Lay-offs. If an Optionee is placed on
leave of absence status (except as provided in Section 4.5 (a)(iii) or
(b)(v) above) by Motorola or any Subsidiary, each Employee Stock
Option then held by the Optionee, whether exercisable or non-
exercisable, shall be suspended at such time, but the period of time
during which the Optionee is on leave of absence shall be counted in
determining when the Non-Exercise Period elapses. If an Optionee is
placed on lay-off status by Motorola or any Subsidiary, any then non-
exercisable Employee Stock Option shall terminate and any then
exercisable Employee Stock Option may be exercised during the period
of twelve (12) months from the date the Optionee is placed on lay-off
status and shall be suspended thereafter to the extent not exercised.
In any case, the unexercised portion of each suspended Employee Stock
Option shall either (i) terminate upon the Optionee's termination of
employment with Motorola and its Subsidiaries or (ii) be reinstated
upon such Optionee returning from leave of absence or lay-off status
to active employment status with Motorola or any Subsidiary.
(e) Meaning of Termination of Employment. Wherever in this
Article or elsewhere in the Plan the words "termination of employment,
employment is terminated, employment shall terminate or employment
shall have been terminated" or words of like import or intent are
used, they shall mean the last day worked by the Participant rather
than the last day the Participant is on the payroll of Motorola or any
Subsidiary.
5. RESTRICTED STOCK
5.1 Grants of Restricted Stock. The Committee may grant Benefits
in Shares available under Article 3 of the Plan as Restricted Stock.
Restricted Stock consists of Shares of Common Stock which are transferred
without payment, or sold at a specified price, as determined by the
Committee, by Motorola to a Participant, but subject to a substantial risk
of forfeiture and to restrictions on their sale or other transfer by the
Participant. The Committee shall determine the eligible Employees to whom,
and the time or times at which, grants of Restricted Stock will be made,
the number of Shares to be granted, the price to be paid, the time or times
within which the Shares covered by such grants shall be subject to
forfeiture, the time or times at which the restrictions will terminate, and
all other terms and conditions of the grants.
5.2 Price, Agreement, Stock Certificates, Escrow. The recipient
of a Restricted Stock grant shall not have any rights with respect to such
grant unless and until such recipient has executed and delivered to
Motorola an Agreement evidencing the grant. The purchase price, if any,
for Shares of Restricted Stock shall be paid in cash and in full for all
Shares of Restricted Stock then to be delivered. Grants of Restricted
Stock must be accepted within such period after the grant date as the
Committee may specify at the time of grant, by executing an Agreement and
paying the price required. Each Participant receiving a Restricted Stock
grant may be issued a stock certificate in respect of such Shares of
Restricted Stock. Such certificate, if issued, shall be registered in the
name of such Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such grant. The
Committee may require that the stock certificates evidencing such Shares be
held in escrow by Motorola until the restrictions thereon shall have
terminated, and that, as a condition of any Restricted Stock grant, the
Participant shall have delivered to Motorola a stock power, endorsed in
blank, relating to the Restricted Stock covered by such grant.
5.3 Restrictions. All Shares of Restricted Stock shall be subject
to such restrictions and conditions as the Committee may determine,
including, without limitation, any or all of the following restrictions and
conditions:
(a) a prohibition against the sale, assignment, transfer, pledge
or encumbrance of the Shares of Restricted Stock, such prohibition to
terminate at such time or times (including the passage of time only)
as the Committee shall determine, whether in installments or
otherwise, or at the time of death, Total and Permanent Disability or
retirement, or based on service, of the holder of such Shares, or
otherwise as the Committee may provide;
(b) a provision that the holder of Shares of Restricted Stock
forfeit, or in the case of Shares sold to a Participant, resell back
to Motorola at the price the Participant paid, all or part of such
Shares in the event of termination of his or her employment for any
reason other than death, Total and Permanent Disability or retirement
during any period in which such Shares are subject to restrictions; or
a provision vesting such Shares in the event of termination of
employment; or
(c) a provision that the holder of Shares of Restricted Stock
forfeit, or in the case of Shares sold to a Participant, resell back
to Motorola at the price the Participant paid, such Shares in the
event the Participant engages, directly or indirectly, in any activity
which is in competition with any activity of Motorola or any
Subsidiary or in any action or conduct which is in any manner adverse
or in any way contrary to the interests of Motorola or any Subsidiary
unless otherwise determined by the Committee. The determination of
whether a Participant is or has engaged in any competitive activity or
in any action or conduct which is adverse or contrary to the interests
of Motorola or any of its Subsidiaries shall be made by the Committee,
and such determination shall be conclusive and binding upon all
parties.
The Committee shall have the right at any time to accelerate, reduce
or terminate any restrictions, in whole or in part, in its sole discretion.
5.4 Termination of Restrictions. Promptly after the termination
of the restrictions, by lapse of time or otherwise, without a prior
forfeiture, with respect to Shares of Restricted Stock, a certificate for
such Shares shall be delivered free of all restrictions and legends
together with deferred dividends, if any, to the Participant or to the
Participant's Successor-in-Interest. If a stock certificate was previously
delivered to the Participant, the replacement certificate will not be
delivered to the Participant until the previously delivered certificate is
returned to Motorola in a form acceptable for transfer, free and clear of
all liens, claims and encumbrances.
5.5 Stockholder Rights. Subject to the applicable restrictions,
the Participant may be given, with respect to the Shares of Restricted
Stock, any or all rights of a stockholder of Motorola, including the right
to vote the Shares, and the right to receive any cash or stock dividends.
The Committee, in its sole discretion, as determined at the time of grant,
may permit or require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested in additional Restricted Stock to
the extent Shares are available under Article 3 or otherwise be reinvested.
The Committee may require that stock dividends issued with respect to
Restricted Stock shall be treated as additional shares of Restricted Stock
that are subject to the same restrictions and other terms and conditions
that apply to the Shares with respect to which such dividends are issued.
5.6 Payment for Employee Stock Option. The Committee may, at any
time, and in its sole discretion, allow a Participant to use his or her
Restricted Stock during the period the restrictions are in effect as
payment of the Employee Stock Option exercise price for Employee Stock
Options which he or she has been granted. In such an event, a number of
the Shares issued upon the exercise of the Employee Stock Option, equal to
the number of Shares of Restricted Stock used as payment therefor, shall be
subject to the same restrictions as the Restricted Stock so used, plus any
additional restrictions that may be imposed by the Committee.
5.7
Substitution of Rights. Prior to the end of the period the
restrictions are in effect with respect to any Shares of Restricted Stock
granted to a Participant, the Committee may, with the consent of the
Participant, substitute an unsecured obligation of Motorola to pay cash or
stock (on such reasonable terms and conditions as the Committee may, in its
sole discretion, determine) in lieu of its obligations under this Article 5
to deliver unrestricted Shares plus accrued dividends, if any.
5.8 Cash Awards and Restricted Stock. The Committee, at the time
it grants Restricted Stock to a Participant or at anytime thereafter, may
grant a corresponding Cash Award which will entitle the Participant to
receive cash as of the date as of which the Restricted Stock is transferred
to him or her pursuant to paragraph 5.4, in an amount specified by the
Committee. Any such Cash Award shall be in addition to the Participant's
rights to the Shares of Restricted Stock and shall be subject to such
additional terms and conditions, if any, as the Committee determines which
are not inconsistent with the terms and conditions of the Plan. The
Committee may, at any time, grant unrestricted Shares (in lieu of such a
Cash Award and subject to the limitations thereof) to any Participant under
the Plan subject to such terms and conditions as the Committee may
determine.
6. NON-EMPLOYEE STOCK OPTIONS
6.1 Automatic Grant of Non-Employee Stock Options. On June 1,
1998 and on June 1 of each Plan Year after 1998 in which the Plan is in
effect, each individual elected, re-elected or continuing as a Non-Employee
Director shall automatically receive a NSO covering 15,000 (reflecting
adjustment for the 3-for-1 stock split effective June 1, 2000) Shares, or
such greater number of Shares as shall be determined by the Board (a "Non-
Employee Stock Option"). Notwithstanding the foregoing, if, on that day,
the General Counsel of Motorola determines, in his or her sole discretion,
that Motorola is in possession of material, undisclosed information about
Motorola, then the annual grant of NSOs to Non-Employee Directors shall be
suspended until the second day after public dissemination of such
information and the price, exercisability date and Non-Employee Stock
Option Period shall then be determined by reference to such later date. If
Common Stock is not reported as traded on the New York Stock Exchange -
Composite Transactions on any date a grant would otherwise be awarded, then
the grant shall be made the next day thereafter on which Common Stock is so
traded.
6.2 Price. The Stock Option exercise price of a Non-Employee
Stock Option shall be the Fair Market Value of the Shares subject to such
Stock Option on the date of grant.
6.3 Exercisability. A Non-Employee Stock Option granted under the
Plan shall become exercisable twelve (12) months after the date of grant
(except as otherwise provided in Section 6.6 for retirement and Section 6.7
for death which occurs during such period and in Article 17 if a Change in
Control occurs during such period) and shall expire, except as otherwise
provided herein, 10 years after the date of grant ("Non-Employee Stock
Option Period").
6.4 Payment. The Non-Employee Stock Option exercise price shall
be paid in full as permitted by Section 19.1 for all Shares purchased at
the time the Non-Employee Stock Option is exercised. No fractional Shares
may be purchased. Motorola may require the surrender of the Non-Employee
Stock Option certificate if one has been issued and no Non-Employee Stock
Option may be exercised for less than fifty (50) Shares, except in cases
where the number of shares represented by the Non-Employee Stock Option
being exercised is less than fifty (50), in which case the Non-Employee
Stock Option shall not be exercisable for less than all Shares represented
by such Stock Option.
6.5 Termination. Upon cessation of services as a Non-Employee
Director (for reasons other than retirement as defined in Section 6.6
hereof or death) only those Non-Employee Stock Options immediately
exercisable at the date of cessation of service shall be exercisable by the
Non-Employee Director. Such Non-Employee Stock Options must be exercised
within 30 days after cessation of service (but in no event after the
expiration of the Non-Employee Stock Option Period) or they shall be
forfeited. If, however, the Non-Employee Director during or after his or
her service on the Board, engages, directly or indirectly, in any activity
which is in competition with any activity of Motorola or any Subsidiary or
in any action or conduct which is in any manner adverse or in any way
contrary to the interests of Motorola, or any Subsidiary, any unexercised
portion of such Non-Employee Stock Options shall immediately terminate,
unless otherwise determined by the Chief Executive Officer of Motorola.
The determination of whether a Director is or has engaged in any
competitive activity or in any action or conduct which is adverse or
contrary to the interests of Motorola or any of its Subsidiaries shall be
made by the Chief Executive Officer of Motorola, and such determination
shall be conclusive and binding upon all parties.
6.6 Retirement. As used in this Article 6, the term "retirement"
shall mean, for Non-Employee Directors, resignation at or after age 65,
failure to stand for re-election at or after age 65 or failure to be re-
elected at or after age 65. Upon retirement, all Non-Employee Stock
Options previously granted to a Non-Employee Director shall become or
continue to be exercisable, except as otherwise provided herein. Such Non-
Employee Stock Options must be exercised prior to the expiration of the
Non-Employee Stock Option Period or they shall be forfeited.
6.7 Death. Upon the death of a Non-Employee Director, all Non-
Employee Stock Options previously granted to the Non-Employee Director
shall become exercisable by his or her Successor-in-Interest, except as
otherwise provided herein. Such Non-Employee Stock Options can be
exercised during the remainder of the Non-Employee Stock Option Period.
6.8 Amendments. No amendment may revoke or alter in a manner
unfavorable to a Non-Employee Director holding Non-Employee Stock Options
any Non-Employee Stock Options then outstanding, without such Non-Employee
Director's approval.
6.9 Interpretation. The Chief Executive Officer of Motorola
shall administer, construe and interpret this Article 6, whose decisions
shall be conclusive and binding on all parties. The Chief Executive
Officer of Motorola is authorized, subject to the provisions of this
Article 6, from time to time to establish such rules and regulations as he
or she may deem appropriate for the proper administration or operation of
this Article 6. Non-Employee Stock Options may be evidenced by
certificates or Agreements, at the option of the Chief Executive Officer of
Motorola.
7. MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994, MOTOROLA EXECUTIVE
INCENTIVE PLAN AND MOTOROLA NON-EMPLOYEE DIRECTORS STOCK PLAN
Awards and grants made under the Motorola Long Range Incentive Plan of
1994 and the Motorola Executive Incentive Plan which are payable in Common
Stock or restricted Common Stock, or both, shall be paid from the Shares
reserved or available for issuance under Section 3 of the Plan.
Compensation of Non-Employee Directors which is payable in Common Stock or
restricted Common Stock, or both, under the Motorola Non-Employee Directors
Stock Plan shall be paid from Shares reserved or available for issuance
under Section 3 of the Plan.
8. PERFORMANCE SHARES
8.1 Description. Performance Shares are the right of a
Participant to whom a grant of such Shares is made to receive Shares or
cash or a combination of Shares and cash equal to the Fair Market Value of
such Shares at a future date in accordance with the terms of such grant.
8.2 Grant. The Committee may grant an award of Performance
Shares. The award shall be subject to such terms and conditions as the
Committee deems appropriate. The number of Performance Shares and the
terms and conditions of the grant shall be set forth in the applicable
Agreement.
8.3 Performance Objectives. Each Performance Share shall be
subject to conditions established by the Committee, which may include, but
are not limited to, achievement of specific business objectives, attainment
of growth rates, attainment of profit and/or other performance objectives
for Motorola or one of its operating units to be achieved by the end of a
specified period or other measurements of performance. If the established
performance objectives are achieved, the Participant shall be paid in
Shares of Common Stock equal to the number of Performance Shares initially
granted to that Participant or in cash equal to the Fair Market Value of
such Shares as specified in the Agreement or in a combination of Shares and
cash. If such objectives are not met, each award of Performance Shares may
provide for lesser payments in accordance with formulas established in the
award.
8.4 Not Stockholder. The award of Performance Shares to a
Participant shall not create any rights in such Participant as a
stockholder of Motorola until the issuance of Shares of Common Stock with
respect to an award.
8.5 No Adjustments. No adjustment shall be made in Performance
Shares awarded on account of cash or stock dividends which may be paid or
other rights which may be issued to the holders of Common Stock prior to
the end of any period for which performance objectives were established and
Common Stock or cash is issued to the Participant.
8.6 Nontransferability. Performance Shares may not be
transferred, assigned or pledged by the holder thereof except as may be
provided in the Agreement.
9. STOCK APPRECIATION RIGHTS
9.1 Grant of Stock Appreciation Rights. The Committee shall have
authority to grant Stock Appreciation Rights to Employees. The Committee
shall determine the number of Shares subject to each Stock Appreciation
Right, the term of the Stock Appreciation Right, the time or times at which
the Stock Appreciation Right may be exercised and all other terms and
conditions of the Stock Appreciation Right. A Stock Appreciation Right is
a right, denominated in Shares, to receive, upon exercise of the right, in
whole or in part, without payment to Motorola, an amount, payable in
Shares, in cash (in U.S. dollars, or the currency of the country of the
Employee's citizenship or of the country in which the Employee resides, at
the election of Motorola), or a combination of Shares and cash (in U.S.
dollars, or the currency of the country of the Employee's citizenship or of
the country in which the Employee resides, at the election of Motorola) as
the Committee shall determine at the time the right is exercised) that is
equal to the excess of (i) the Fair Market Value of Common Stock on the
date of exercise of the right over (ii) the Fair Market Value of Common
Stock on the date of grant of the right multiplied by the number of Shares
for which the right is exercised.
9.2 Non-Exercise Period. Except as provided in Section 9.3
hereof, no Stock Appreciation Right granted under the Plan may be exercised
prior to the expiration of the Non-Exercise Period. No Stock Appreciation
Right may be exercised after expiration of its stated term.
9.3 Application of Certain Terms and Conditions to Stock
Appreciation Rights. The terms and conditions of Section 4.5 of the Plan
applicable to Employee Stock Options shall also apply to Stock Appreciation
Rights with the term "Optionee" changed to "grantee", the term "Employee
Stock Option" changed to "Stock Appreciation Right" and with such other
changes as may be necessary to conform the language of Section 4.5 to apply
to Stock Appreciation Rights.
10. STOCK AWARDS
A Stock Award consists of the transfer by Motorola to an Employee of
Shares of Common Stock, without payment therefor, as additional
compensation for his or her services to the Company or a Subsidiary. The
number of Shares to be awarded and transferred to any Employee shall be
determined by the Committee.
11. CASH AWARDS
A Cash Award consists of a monetary payment made by Motorola to an
Employee as additional compensation for his or her services to the Company
or a Subsidiary. A Cash Award may be made in tandem with another Benefit
or may be made independently of any other Benefit. The amount of any
monetary payment constituting a Cash Award shall be determined by the
Committee in its sole discretion. Cash Awards may be subject to other
terms and conditions, which may vary from time to time and among Employees,
as the Committee determines to be appropriate.
12. ELIGIBILITY
The Participants and the Benefits they receive under the Plan shall be
determined by the Committee, except for Non-Employee Stock Options which
shall be automatically granted to Non-Employee Directors under Article 6
and except to the extent authority has been delegated under Section 13.1
hereof. In making its determinations, the Committee shall consider past,
present and expected future contributions of Employees to Motorola and its
Subsidiaries.
13. ADMINISTRATION
13.1 Committee. The Plan (except for Article 6 and the Non-
Employee Stock Options automatically granted thereunder) shall be
administered by the Committee; provided, however, if at any time Rule 16b-3
and Section 162(m) of the Code, and any implementing regulations (and any
successor provisions thereof), so permit without adversely affecting the
ability of the Plan to comply with the conditions for exemption from
Section 16 of the Exchange Act (or any successor provision) provided by
Rule 16b-3 and the exemption from the limitations on the deductibility of
certain executive compensation provided by Section 162(m), the Committee
may delegate the administration of the Plan in whole or in part, on such
terms and conditions, to such other person or persons as it may determine
in its discretion. References to the Committee hereunder shall include the
Board where appropriate. The membership of the Committee or such successor
committee shall be constituted so as to comply at all times with the
applicable requirements of Rule 16b-3 and Section 162(m).
13.2 Authority. Subject to the terms of the Plan, and except for
the Non-Employee Stock Options granted under Article 6 (over which the
Committee shall have no discretion), the Committee shall have complete
power and authority to:
(a) determine the individuals to whom Benefits are granted, the
type and amounts of Benefits to be granted and the time of all such
grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;
(c) administer, interpret and construe the Plan, the Benefits and all
Agreements;
(d) prescribe, amend and revoke rules and regulations relating to the
Plan;
(e) determine the content and form of all Agreements;
(f) maintain accounts, records and ledgers relating to Benefits;
(g) maintain records concerning its decisions and proceedings;
(h) employ agents, attorneys, accountants or other persons for such
purposes as the Committee considers necessary or desirable;
(i) take, at any time, any action permitted by Section 17.1
irrespective of whether any Change in Control has occurred or is
imminent; and
(j) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry out the
purposes of the Plan.
(k) determine all questions relating to Benefits under the Plan.
13.3 Replacement. The Committee may permit a Participant to elect
to surrender a Benefit in exchange for a new Benefit, excluding the
replacement of a Stock Option with a Stock Option at a lower price than the
Stock Option surrendered.
13.4 Tandem Awards. Benefits may be granted by the Committee
singly or in combination or tandem with other Benefits.
13.5 Determinations. All determinations of the Committee shall be
final, binding and conclusive upon all persons, including Motorola and its
Subsidiaries and Participants and their respective legal representatives,
Successors-in Interest and permitted assigns and upon all other persons
claiming by, through, under or against any of them.
14. AMENDMENT
Except as hereinafter provided, and except as may be required for
compliance with Rule 16b-3 and Section 162(m) of the Code, the Board or the
Committee shall have the right and power to amend the Plan at any time and
from time to time. Only the Board may amend Article 6 of the Plan, subject
to such Article and subject to compliance with Rule 16b-3. Neither the
Board nor the Committee may amend the Plan in a manner which would impair
or adversely affect the rights of the holder of a Benefit without the
holder's consent. If the Code or any other applicable statute, rule or
regulation, including, but not limited to, those of any securities
exchange, requires stockholder approval with respect to the Plan or any
type of Plan amendment, then to the extent so required, stockholder
approval shall be obtained.
15. TERM AND TERMINATION
15.1 Term. The Plan shall commence as of the Effective Date and,
subject to the terms of the Plan, including those in Section 20.8 requiring
stockholder approval for implementation or limiting the period over which
ISOs or any other Benefits may be granted, shall continue in full force and
effect until four (4) years from the Effective Date, unless sooner
terminated by the Board.
15.2 Termination. The Plan may be terminated at any time by the
Board. Termination shall not in any manner impair or adversely affect any
Benefit outstanding at the time of termination.
16. MODIFICATION OR TERMINATION
16.1 General. Subject to the provisions of Section 16.2, the
amendment or termination of the Plan shall not impair or adversely affect a
Participant's right to any Benefit granted prior to such amendment or
termination.
16.2 Committee's Right. Any Benefit granted may be converted,
modified, forfeited or canceled, in whole or in part, by the Committee if
and to the extent permitted in the Plan or applicable Agreement or with the
consent of the Participant to whom such Benefit was granted. The Committee
may grant Benefits on such terms and conditions, which may be different
than those specified in the Plan, as it may deem desirable in order to
comply with, or make available the benefits of, the laws and regulations of
any foreign jurisdiction, to assure the viability of Benefits granted and
to enable Participants, regardless of where employed, to receive Benefits
under the Plan and such laws and regulations.
17. CHANGE IN CONTROL
17.1 Benefit Vesting and Payment.
(a) Stock Options. Upon the occurrence of a Change in Control,
each Stock Option outstanding on the date on which the Change in
Control occurs shall immediately become exercisable in full for the
remainder of its term and each Participant holding Stock Options shall
have the right, at his or her election made during a period of sixty
(60) days following the date on which the Change in Control occurs,
to have Motorola purchase any or all such Stock Options for an
immediate lump-sum cash payment equal to the product of (1) the
excess, if any, of the higher of (i) the average of the high and low
sale prices of the Common Stock as reported on the New York Stock
Exchange - Composite Transactions on the date immediately prior to the
date of payment, or if Shares did not trade on such date, on the last
previous day on which Shares traded prior to such date, or (ii) the
highest per Share price for Common Stock actually paid in connection
with the Change in Control, over the per Share exercise price of each
such Stock Option held, and (2) the number of Shares covered by each
such Stock Option.
(b) Restricted Stock. Upon the occurrence of a Change in Control,
the restrictions on all Shares of Restricted Stock outstanding on the
date on which the Change in Control occurs shall be automatically
terminated and each Participant holding Restricted Stock shall have
the right to receive unrestricted Shares in substitution for the
Shares of Restricted Stock or, at his or her election made during a
period of sixty (60) days following the date on which the Change in
Control occurs, the right to have Motorola purchase any or all Shares
of Restricted Stock for an immediate lump-sum cash payment equal to
the product of (1) the higher of (i) the average of the high and low
sale prices of the Common Stock as reported on the New York Stock
Exchange - Composite Transactions on the date immediately prior to
the date of payment, or if Shares did not trade on such date, on the
last previous day on which Shares traded prior to such date, or (ii)
the highest per Share price for Common Stock actually paid in
connection with the Change in Control and (2) the number of Shares of
such Restricted Stock, plus the value of any related Cash Award
relating to such Restricted Stock.
(c) Performance Shares. Upon the occurrence of a Change in
Control, any performance objectives with respect to any Performance
Shares previously granted, but still considered outstanding (as a
right to receive Shares at a future date and any related Cash Award)
shall be deemed to have been attained to the full and maximum extent,
and Shares of Common Stock and any related Cash Award shall be paid to
the Participant in an amount or amounts determined in accordance with
the terms and conditions set forth in the applicable Agreement.
(d) Stock Appreciation Rights. Upon the occurrence of a Change in
Control, each Stock Appreciation Right outstanding on the date on
which the Change in Control occurs shall immediately become
exercisable in full for the remainder of its term and each Participant
holding a Stock Appreciation Right shall have the right, at his or her
election made during a period of sixty (60) days following the date on
which the Change in Control occurs, to have Motorola purchase any or
all such Stock Appreciation Rights for an immediate lump-sum cash
payment equal to the product of (1) the higher of (i) the average of
the high and low sale prices of the Common Stock as reported on the
New York Stock Exchange - Composite Transactions on the date
immediately prior to the date of payment, or if Shares did not trade
on such date, on the last previous day on which Shares traded prior to
such date, or (ii) the highest per Share price for Common Stock
actually paid in connection with the Change in Control and (2) the
number of Shares covered by each such Stock Appreciation Right.
(e) Other Benefits. Upon the occurrence of a Change in Control,
any terms and conditions with respect to other Benefits previously
granted under the Plan, shall be deemed to be fully satisfied and the
Benefits shall be paid out immediately to the Participants in amounts
determined in accordance with the terms and conditions set forth in
the applicable grant, award or Agreement.
17.2 Change in Control. A Change in Control shall mean:
A Change in Control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act whether or not Motorola is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (A) any "person" or "group" (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Motorola representing 20% or
more of the combined voting power of Motorola's then outstanding securities
(other than Motorola or any employee benefit plan of Motorola; and, for
purposes of the Plan, no Change in Control shall be deemed to have occurred
as a result of the "beneficial ownership," or changes therein, of
Motorola's securities by either of the foregoing), (B) there shall be
consummated (i) any consolidation or merger of Motorola in which Motorola
is not the surviving or continuing corporation or pursuant to which Shares
of Common Stock would be converted into cash, securities or other property,
other than a merger of Motorola in which the holders of Common Stock
immediately prior to the merger have (directly or indirectly) at least an
80% ownership interest in the outstanding common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of Motorola, (C) the
stockholders of Motorola approve any plan or proposal for the liquidation
or dissolution of Motorola, or (D) as the result of, or in connection with,
any cash tender offer, exchange offer, merger or other business
combination, sale of assets, proxy or consent solicitation (other than by
the Board), contested election or substantial stock accumulation (a
"Control Transaction"), the members of the Board immediately prior to the
first public announcement relating to such Control Transaction shall
thereafter cease to constitute a majority of the Board.
18. AGREEMENTS AND TRANSFER OF BENEFITS
18.1 Grant Evidenced by Agreement. The grant of any Benefit under
the Plan may be evidenced by, and as required by Sections 5.2 and 8.2
hereof shall be evidenced by, an Agreement which describes the specific
Benefit granted and describes or refers to the terms and conditions of the
Benefit. The granting of any Benefit may be subject to, and conditioned
upon, the recipient's execution of any Agreement required by the Committee
or the Plan. Except as otherwise provided in an Agreement, all capitalized
terms used in the Agreement shall have the same meaning as in the Plan, and
each Agreement shall be subject to all of the terms of the Plan.
18.2 Provisions of Agreement. Each Agreement shall contain such
provisions that the Committee or Chief Executive Officer of Motorola, as
appropriate, shall determine to be necessary, desirable and appropriate for
the Benefit granted. ISOs may be evidenced by Incentive Stock Option
certificates and NSOs may be evidenced by Non-Qualified Stock Option
certificates. Each Agreement may include, but shall not be limited to, the
following with respect to any Benefit: description of the type of Benefit;
the Benefit's duration; its transferability; if a Stock Option, the
exercise price, the exercise period, the Non-Exercise Period and the person
or persons who may exercise the Stock Option; the effect upon such Benefit
of the Participant's death or other termination of employment; the
Benefit's conditions; when, if, and how any Benefit may be forfeited,
converted into another Benefit, modified, exchanged for another Benefit, or
replaced; and the restrictions on any Shares purchased by, received by, or
granted to, a Participant under the Plan.
18.3 Transfer of Benefits. Except as set forth in the next
sentence of this Section 18.3, a Benefit shall not be transferable by a
Participant other than by operation of a death beneficiary designation made
by the Participant in accordance with rules established by the Committee,
or the Chief Executive Officer of Motorola, as appropriate, by will or the
applicable laws of descent and distribution and shall be exercisable during
the Participant's lifetime only by him or her or his or her guardian or
legal representative if the Participant is legally incompetent.
Notwithstanding the foregoing, except to the extent that it would cause the
Plan to fail to meet the conditions required to be met under Rule 16b-3,
the Committee shall have the power and authority to provide, as a term of
any NSO, that such NSO may be transferred without consideration by the Non-
Employee Director or the Optionee to a member or members of his or her
immediate family (i.e., a child, children, grandchild, grandchildren, or
spouse) and/or to a trust or trusts for the benefit of an immediate family
member or family members.
19. PAYMENT AND DEFERRAL
19.1 Payment. Upon the exercise of a Stock Option or in the case
of any other Benefit that requires a payment to Motorola, the amount due
Motorola is to be paid:
(a) in cash;
(b) by the transfer to Motorola of Shares owned by the Participant
valued at Fair Market Value on the date of transfer;
(c) by any combination of the payment methods specified in (a) and
(b) above; or
(d) such other manner as may be authorized from time to time by
the Committee; and
(e) as provided in Section 5.6 hereof;
Notwithstanding the foregoing, any method of payment other than (a) and (b)
may be used only with the approval of the Committee, or if and to the
extent so provided in the applicable Agreement.
19.2 Deferral. The right to receive any Benefit (other than Non-
Employee Stock Options) under the Plan may, at the written request of the
Participant and in the sole discretion of the Committee, be deferred for
such period and upon such terms as the Committee shall determine, which may
include crediting of interest on deferrals of cash and crediting of
dividends on deferrals denominated in Shares.
20. GENERAL
20.1 Tax Withholding. At the time Motorola is required to
withhold any Federal Insurance Contribution Act ("FICA") tax and/or any
federal, state or local tax of any kind with respect to any award or grant
of any Benefit or the exercise of any Stock Option or the distribution or
receipt of Common Stock under the Plan, the Participant shall pay to
Motorola the amount of any such FICA, federal, state or local tax or taxes
required to be withheld. The obligations of Motorola under the Plan shall
be conditional on payment of all withholding taxes, and Motorola shall have
the right to deduct any such taxes from any payment of any kind under the
Plan or otherwise due to the Participant. Withholding tax obligations may
be settled, in whole or in part, with Common Stock including Common Stock
that is part of the Benefit that gives rise to the withholding requirement.
At any time when a Participant is required to pay to Motorola an amount
required to be withheld under applicable tax laws in connection with an
award or grant, a distribution or receipt of Common Stock or upon exercise
of a Stock Option, the Participant may satisfy this obligation in whole or
in part by transfer to Motorola of Shares previously owned by the
Participant, by electing (the "Election") to have Motorola withhold from
the distribution Shares of Common Stock having a value equal (as near as
possible) to the amount required to be withheld or by a combination of such
means, provided, however, that the amount of federal, state and local
income taxes that may be paid by transfer or withholding of Shares shall
not exceed the statutory minimum withholding requirements. The amount of
any withholding tax not paid by transfer or withholding of Shares shall be
paid to Motorola in cash. The value of the Shares transferred or to be
withheld shall be based on the Fair Market Value of the Common Stock on the
date that the amount of tax to be withheld shall be determined ("Tax Date")
or if Shares did not trade on the New York Stock Exchange on the Tax Date,
as of the last previous date Shares did so trade. Each Election must be
made on or prior to the Tax Date. The Committee may disapprove of any
Election, may suspend, condition, restrict or terminate the right to make
Elections, or may provide with respect to any Benefit that the right to
make Elections shall not apply to such Benefit. An Election is
irrevocable, unless revocation is approved by the Committee.
20.2 Compliance With Legal Requirements. Anything in the Plan to
the contrary notwithstanding: (a) Motorola may, if it shall determine it
necessary or desirable for any reason, at the time of award of any Benefit
or the issuance of any Shares of Common Stock pursuant to any Benefit,
require the recipient of the Benefit, as a condition to the receipt thereof
or to the receipt of Shares of Common Stock issued pursuant thereto, to
deliver to Motorola a written representation of present intention to
acquire the Benefit or the Shares of Common Stock issued pursuant thereto
for his or her own account for investment and not for distribution; and (b)
if at any time Motorola further determines that the listing, registration
or qualification (or any updating of any such document) of any Benefit or
the Shares of Common Stock issuable pursuant thereto is necessary on any
securities exchange or under any federal or state securities or blue sky
law, or that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with the award
of any Benefit, the issuance of Shares of Common Stock pursuant thereto or
the removal of any restrictions imposed on such Shares, such Benefit shall
not be awarded or such Shares of Common Stock shall not be issued or such
restrictions shall not be removed, as the case may be, in whole or in part,
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to
Motorola. In addition, Motorola may terminate any Benefit or terminate,
withhold, condition, restrict or limit the issuance or delivery of any
Shares of Common Stock if it determines that such Benefit or the issuance
or delivery of Shares violates, or is prohibited or restricted or made
impractical or administratively burdensome by, any applicable laws, rules
or regulations, including but not limited to, those of any foreign
jurisdiction, stock exchange or Rule 16b-3.
20.3 Leaves of Absence and Lay-Offs. Except as provided in
Sections 4.5(a)(iii), 4.5(b)(v) and 4.5(d), whether a leave of absence or
lay-off shall constitute termination of employment for purposes of the Plan
or any Employee Stock Option or Benefit granted under and pursuant to the
Plan to Employees shall be determined by the Committee, in its sole
discretion, subject to then currently applicable law. The Committee shall
adopt such rules, in its sole discretion, as to the time, any installment
limitations, restrictions and manner of the exercise or vesting of Benefits
held by Employees who are placed on leave of absence or lay-off status by
the Company or any Affiliate, except as provided in Sections 4.5(a)(iii),
4.5(b)(v) and 4.5(d).
20.4 Indemnification and Exculpation. Each person, who is or
shall have been a member of the Board or of the Committee, shall be
indemnified and held harmless by Motorola against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim,
action, suit or proceeding to which such person may be a party or in which
such person may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by such person
in settlement thereof (with Motorola's written approval) or paid by such
person in satisfaction of a judgment in any such action, suit, or
proceeding, except a judgment based upon a finding of such person's bad
faith, subject, however, to the condition that upon the institution of any
claim, action, suit or proceeding against such person, such person shall in
writing give Motorola an opportunity, at its own expense, to participate
in, and to the extent it may wish, to assume the defense thereof before
such person undertakes to handle it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other
right to which such person may be entitled as a matter of law, under the
Delaware General Corporation Law, the Restated Certificate of Incorporation
or By-Laws of Motorola or otherwise, or any power that the Company may have
to indemnify such person or hold such person harmless. Each member of the
Board or of the Committee, and each officer and employee of Motorola shall
be fully justified in relying or acting upon any information furnished on
behalf of Motorola by any person or persons other than himself or herself
in connection with the administration of the Plan. In no event shall any
person who is or shall have been a member of the Board or of the Committee,
or an officer or employee of Motorola, be liable for any determination made
or other action taken or any omission to act in reliance upon any such
information, or for any action taken (including the furnishing of
information) or any failure to act, if in good faith.
20.5 Headings. The headings of the sections and subsections of
the Plan are for convenience of reference only and shall not be used to
construe any provision of the Plan.
20.6 Governing Law. The Plan and all Agreements under it shall be
governed by, and construed and administered in accordance with, the laws of
the State of Illinois except to the extent that any federal law otherwise
controls.
20.7 Employment Rights. Nothing in the Plan or in any Agreement
or grant or award of any Benefit shall restrict the right of Motorola or
any Subsidiary to terminate the employment of any Participant at any time,
with or without cause, or to increase or decrease the compensation of any
Participant.
20.8 Approval by Stockholders. The Plan has been approved by the
Board of Directors and is subject to approval by the affirmative votes of
the holders of a majority of the Shares present, or represented, and
entitled to vote at the meeting of stockholders at which the Plan is
submitted.
20.9 Implementation of the Plan and Grant of Employee Stock
Options Under 1996 Plan. If this Plan is implemented pursuant to Section
20.8, except as herein provided, no further options will be granted under
the Share Option Plan of 1996. If the Board of Directors terminates this
Plan after it has been implemented, stock options may be granted under the
Share Option Plan of 1996, but not as to any Shares issued or subject to
Benefits under this Plan.
TABLE OF CONTENTS
1. NAME AND PURPOSE 1
1.1 Name 1
1.2 Purpose 1
2. DEFINITIONS 1
2.1 General Definitions 1
2.2 Other Definitions 4
3. SHARES SUBJECT TO PLAN 4
3.1 Number of Shares 4
3.2 Reusage 5
3.3 Adjustments 5
4. EMPLOYEE STOCK OPTIONS 5
4.1 Grant of Employee Stock Options 5
4.2 NSOs and ISOs 6
4.3 Exercise of Employee Stock Options; Payment 6
4.4 Non-Exercise Period 7
4.5 Effect of Termination of Employment on Employee Stock Options
7
5. RESTRICTED STOCK 12
5.1 Grants of Restricted Stock 12
5.2 Price, Agreement, Stock Certificates, Escrow 12
5.3 Restrictions 13
5.4 Termination of Restrictions 13
5.5 Stockholder Rights 14
5.6 Payment for Employee Stock Option 14
5.7 Substitution of Rights 14
5.8 Cash Awards and Restricted Stock 14
6. NON-EMPLOYEE STOCK OPTIONS 15
6.1 Automatic Grant of Non-Employee Stock Options 15
6.2 Price 15
6.3 Exercisability 15
6.4 Payment 15
6.5 Termination 15
6.6 Retirement 16
6.7 Death 16
6.8 Amendments 16
6.9 Interpretation 16
7. MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994, MOTOROLA EXECUTIVE
INCENTIVE PLAN AND MOTOROLA NON-EMPLOYEE DIRECTORS STOCK PLAN 16
8. PERFORMANCE SHARES 17
8.1 Description 17
8.2 Grant 17
8.3 Performance Objectives 17
8.4 Not Stockholder 17
8.5 No Adjustments 17
8.6 Nontransferability 17
9. STOCK APPRECIATION RIGHTS 17
9.1 Grant of Stock Appreciation Rights 17
9.2 Non-Exercise Period 18
9.3 Application of Certain Terms and Conditions to Stock
Appreciation Rights 18
10. STOCK AWARDS 18
11. CASH AWARDS 18
12. ELIGIBILITY 18
13. ADMINISTRATION 19
13.1 Committee 19
13.2 Authority 19
13.3 Replacement 20
13.4 Tandem Awards 20
13.5 Determinations 20
14. AMENDMENT 20
15. TERM AND TERMINATION 20
15.1 Term 20
15.2 Termination 20
16. MODIFICATION OR TERMINATION 21
16.1 General 21
16.2 Committee's Right 21
17. CHANGE IN CONTROL 21
17.1 Benefit Vesting and Payment 21
17.2 Change in Control 22
18. AGREEMENTS AND TRANSFER OF BENEFITS 23
18.1 Grant Evidenced by Agreement 23
18.2 Provisions of Agreement 23
18.3 Transfer of Benefits 23
19. PAYMENT AND DEFERRAL 24
19.1 Payment 24
19.2 Deferral 24
20. GENERAL 24
20.1 Tax Withholding 24
20.2 Compliance with Legal Requirements 25
20.3 Leaves of Absence and Lay-Offs 26
20.4 Indemnification and Exculpation 26
20.5 Headings 27
20.6 Governing Law 27
20.7 Employment Rights 27
20.8 Approval by Stockholders 27
20.9 Implementation of the Plan and Grant of Employee Stock
Options Under 1996 Plan 27
