Exhibit 99.1
MOTOROLA SHARE OPTION PLAN OF 1996
1. NAME AND PURPOSE
1.1 Name. The name of this plan is the Motorola Share Option Plan of
1996 (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 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) Board. The Board of Directors of Motorola.
(c) Change in Control. The events described in Section 11.2.
(d) Code. The Internal Revenue Code of 1986, as amended, and
the regulations promulgated pursuant thereto.
(e) Committee. The Compensation Committee of the Board.
(f) Common Stock. Motorola's common stock, $3 par value per
Share.
(g) Directors. Members of the Board of Motorola.
(h) Disinterested Person. A person described in Rule 16b-3(c)(2)
or any successor definition adopted by the SEC.
(i) 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.
(j) Employee. Any person employed by Motorola or a Subsidiary on
a full or part-time basis.
(k) Employee Stock Options. Stock Options granted to an Employee
under Article 4 of the Plan, including both NSOs and ISOs.
(l) Exchange Act. The Securities Exchange Act of 1934, as
amended.
(m) 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.
(n) ISO. An incentive stock option that meets the requirements of
Section 422 (or any successor section) of the Code.
(o) Motorola. Motorola, Inc. or any successor.
(p) NSO. A Stock Option that does not qualify as an ISO.
(q) Non-Employee Director. Is defined in Section 1.2.
(r) Non-Employee Stock Option Period. Is defined in Section 5.3.
(s) Non-Employee Stock Option. Is defined in Section 5.1.
(t) Non-Exercise Period. The period, for each Employee Stock
Option, 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.
(u) Optionee. An Employee who has been granted an Employee Stock
Option under the Plan.
(v) Participant. An individual who is granted a Stock Option under
in the Plan.
(w) Plan. The Motorola Share Option Plan of 1996 and all
amendments and supplements thereto.
(x) Plan Year. The calendar year.
(y) Rule 16b-3. Rule 16b-3 promulgated by the SEC, as amended, or
any successor rule in effect from time to time.
(z) SEC. The Securities and Exchange Commission.
(aa) Share. A share of Common Stock.
(bb) Stock Options. Employee Stock Options and Non-Employee Stock
Options.
(cc) 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.
(dd) Successor-in-Interest. Is defined in Section 4.5(a)(ii).
(ee) 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 any Stock Option certificate may be
defined elsewhere in the Plan or in such Stock Option certificate.
3. SHARES SUBJECT TO PLAN
3.1 Number of Shares. The number of Shares for which Stock Options may
be granted under the Plan shall be (i) 29,000,000 Shares, plus (ii) the total
number of Shares with respect to which no options have been granted under
Motorola's Share Option Plan of 1991 on the Effective Date, plus (iii) the
number of Shares as to which options granted under Motorola's Share Option
Plan of 1991 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 Employee may receive Stock Options relating to more than 300,000 Shares in
any Plan Year (as adjusted pursuant to Section 3.3).
3.2 Reusage. If a Stock Option expires or is terminated, surrendered or
canceled without having been fully exercised, the Shares covered by such
Option shall again be available for use under the Plan.
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 the number of Shares to be automatically granted under Section 5.1
hereof and the number of Shares subject to outstanding Stock Options 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 the Company
and its Subsidiaries) shall not exceed $100,000.00.
(iii) Each ISO, by its terms, shall (1) not be exercisable after
the expiration often (10) years after the date it is granted and (2) not
be transferrable by the Optionee otherwise than by will or the applicable laws
of descent and distribution or by operation of a death beneficiary designation
made by the Optionee in accordance with rules established by the Committee and
shall be exercisable during the Optionee's lifetime only by the Optionee or
the Optionee's guardian or legal representative if the Optionee is legally
incompetent.
4.3 Exercise of Employee Stock Options; Payment.
(a) An Employee Stock Option may be exercised by the Optionee
submitting to Motorola such form(s) as are prescribed for such purpose.
Motorola may require the surrender of the Employee Stock Option certificate if
one has been issued. No Employee Stock Option shall be exercisable for less
than a minimum of fifty (50) Shares except in cases where the number of Shares
represented by the Employee Stock Option being exercised is less than fifty
(50), in which case, the Employee Stock Option shall not be exercisable for
less than all shares represented by such Option.
(b) Payment for Shares purchased upon exercise of an Employee
Stock Option shall be paid in full as permitted by Section 13 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 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 Employe
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. NON-EMPLOYEE STOCK OPTIONS
5.1 Automatic Grant of Non-Employee Stock Options. On June 1, 1996 and
on June 1 of each Plan Year after 1996 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 1,000 Shares (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 NSO's 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.
5.2 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.
5.3 Exercisability. A Non-Employee Stock Option granted under the Plan
shall become exercisable twelve months after the date of grant (except as
otherwise provided in Section 5.6 for retirement and Section 5.7 for death
which occurs during such period and in Article 11 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").
5.4 Payment. The Non-Employee Stock Option exercise price shall be paid
in full as permitted by Section 13 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.
5.5 Termination. Upon cessation of services as a Non-Employee Director
(for reasons other than retirement as defined in Section 5.6 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.
5.6 Retirement. As used in this Article 5, 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.
5.7 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.
5.8 Amendments. An amendment of this Article 5 amending provisions of
the kind described in Rule 16b-3(c)(2)(ii)(A) under the Exchange Act shall not
be made more frequently than once every six months unless necessary to comply
with the Code. 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.
5.9 Interpretation. The Chief Executive Officer of Motorola shall
administer, construe and interpret this Article 5, 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 5, 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 5.
Non-Employee Stock Options may be evidenced by certificates at the option of
the Chief Executive Officer of Motorola.
6. ELIGIBILITY
The Participants shall be determined by the Committee, except for Non-
Employee Stock Options which shall be automatically granted to Non-Employee
Directors under Article 5 and except to the extent authority has been
delegated under Section 7.1 hereof. In making its determinations, the
Committee shall consider past, present and expected future contributions of
Employees to Motorola and its Subsidiaries.
7. ADMINISTRATION
7.1 Committee. The Plan (except for Article 5 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).
No member of the Committee shall have within one year prior to his appointment
received awards under the Plan or under any other plan, program or arrangement
of the Company or any of its affiliates if such receipt would cause such
member to cease to be a "disinterested person" under Rule 16b-3; provided that
if at any time Rule 16b-3 so permits 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, one or more
members of the Committee may cease to be a "disinterested person."
7.2 Authority. Subject to the terms of the Plan, and except for the
Non-Employee Stock Options granted under Article 5 (over which the Committee
shall have no discretion), the Committee shall have complete power and
authority to:
(a) determine the individuals to whom Employee Stock Options are
granted, the type and amounts to be granted and the time of all such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Employee Stock Option granted;
(c) administer, interpret and construe the Plan and the Employee
Stock Options;
(d) prescribe, amend and revoke rules and regulations relating to
the Plan;
(e) maintain accounts, records and ledgers relating to the Plan;
(f) maintain records concerning its decisions and proceedings;
(g) employ agents, attorneys, accountants or other persons for such
purposes as the Committee considers necessary or desirable;
(h) take, at any time, any action permitted by Section 11.1
irrespective of whether any Change in Control has occurred or is imminent; and
(i) 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.
7.3 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.
8. 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 5 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 Stock Option 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.
9. TERM AND TERMINATION
9.1 Term. The Plan shall commence as of the Effective Date and, subject
to the terms of the Plan, including those in Section 14.7 requiring
stockholder approval for implementation or limiting the period over which ISOs
may be granted, shall continue in full force and effect until five (5) years
from the Effective Date, unless sooner terminated by the Board.
9.2 Termination. The Plan may be terminated at any time by the Board.
Termination shall not in any manner impair or adversely affect any Stock
Option outstanding at the time of termination.
10. MODIFICATION OR TERMINATION
10.1 General. Subject to the provisions of Section 10.2, the amendment
or termination of the Plan shall not impair or adversely affect a
Participant's right to any Stock Option granted prior to such amendment or
termination.
10.2 Committee's Right. Any Stock Option 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 Stock Option certificate or
with the consent of the Participant to whom such Stock Option was granted.
Subject to the limitations in the Plan, the Committee may grant Stock Options
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 of any foreign jurisdiction.
11. CHANGE IN CONTROL
11.1 Stock Option Vesting and Payment. 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.
11.2 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.
12. CERTIFICATES AND TRANSFER OF STOCK OPTIONS
12.1 Provisions of Stock Option Certificates. ISOs may be evidenced by
Incentive Stock Option certificates and NSOs may be evidenced by Non-Qualified
Stock Option certificates. Each certificate may include, but shall not be
limited to, the following: description of the type of Stock Option; the Stock
Option's duration; its transferability; the exercise price; the exercise
period; the Non-Exercise Period; the person or persons who may exercise the
Stock Option; the effect upon such Stock Option of the Participant's death or
other termination of employment; and the Stock Option's conditions.
12.2 Transfer of Stock Options. Except as set forth in the next
sentence of this Section 12.2, a Stock Option 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 Chief Executive
Officer of Motorola, in the case of Non-Employee Stock Options, and the
Committee, in the case of Employee Stock Options, 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, as
applicable, 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.
13. PAYMENT
Upon the exercise of a Stock Option, 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.
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 Stock Option certificate.
14. GENERAL
14.1 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 the exercise of any Stock Option, 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. With the consent of
Motorola, withholding tax obligations may be settled, in whole or in part,
with Common Stock. At any time when a Participant is required to pay to
Motorola an amount required to be withheld under applicable tax laws upon
exercise of a Stock Option, the Participant may, with the consent of Motorola,
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 or may
suspend, condition, restrict or terminate the right to make Elections. An
Election is irrevocable, unless revocation is approved by the Committee.
14.2 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 Stock Option or the
issuance of any Shares of Common Stock, require the recipient of the Stock
Option, 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 Stock Option 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 Stock Option 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 grant of any Stock Option or the issuance of Shares of
Common Stock pursuant thereto, such Stock Option shall not be granted or such
Shares of Common Stock shall not be issued, 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 Stock Option or terminate,
condition, restrict or limit the issuance or delivery of any Shares of Common
Stock if it determines that such Stock Option or delivery violates any
applicable laws, regulations or rules, including but not limited to, those of
any stock exchange or Rule 16b-3.
14.3 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 Motorola
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.
14.4 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.
14.5 Governing Law. The Plan 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.
14.6 Employment Rights. Nothing in the Plan or in any grant of any
Employee Stock Option 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.
14.7 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.
14.8 Implementation of the Plan and Grant of Employee Stock Options
Under 1991 Plan. If the Plan is implemented pursuant to Section 14.7, except
as herein provided, no further options will be granted under the Share Option
Plan of 1991. If the Board of Directors terminates this Plan after it has
been implemented, stock options may be granted under the Share Option Plan of
1991, but not as to any Shares issued or subject to Stock Options 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 3
3. SHARES SUBJECT TO PLAN 3
3.1 Number of Shares 3
3.2 Reusage 4
3.3 Adjustments 4
4. EMPLOYEE STOCK OPTIONS 4
4.1 Grant of Employee Stock Options 4
4.2 NSOs and ISOs 4
4.3 Exercise of Employee Stock Options; Payment 5
4.4 Non-Exercise Period 5
4.5 Effect of Termination of Employment on Employee
Stock Options 5
5. NON-EMPLOYEE STOCK OPTIONS 11
5.1 Automatic Grant of Non-Employee Stock Options 11
5.2 Price 11
5.3 Exercisability 11
5.4 Payment 12
5.5 Termination 12
5.6 Retirement 12
5.7 Death 12
5.8 Amendments 13
5.9 Interpretation 13
6. ELIGIBILITY 13
7. ADMINISTRATION 13
7.1 Committee 13
7.2 Authority 14
7.3 Determinations 14
8. AMENDMENT 14
9. TERM AND TERMINATION 15
9.1 Term 15
9.2 Termination 15
10. MODIFICATION OR TERMINATION 15
10.1 General 15
10.2 Committee's Right 15
11. CHANGE IN CONTROL 15
11.1 Stock Option Vesting and Payment 15
11.2 Change in Control 16
12. CERTIFICATES AND TRANSFER OF STOCK OPTIONS 16
12.1 Provisions of Stock Option Certificates 16
12.2 Transfer of Stock Options 17
13. PAYMENT 17
14. GENERAL 17
14.1 Tax Withholding 17
14.2 Compliance with Legal Requirements 18
14.3 Indemnification and Exculpation 19
14.4 Headings 19
14.5 Governing Law 19
14.6 Employment Rights 19
14.7 Approval by Stockholders 20
14.8 Implementation of the Plan and Grant of Employee
Stock Options Under 1991 Plan
20
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