Exhibit 10.27

 

EMPLOYMENT AGREEMENT

 

AGREEMENT by and between Motorola, Inc. (the “Company”), and Edward J. Zander
(the “Executive”) dated as of the 15th day of December 2003.

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
it is in the best interests of the Company and its shareholders to employ the
Executive as the Company’s Chief Executive Officer and to have the Executive
serve as Chairman of the Board;

 

WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment; and

 

WHEREAS, the Executive desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:

 

1. Effective Date. The “Effective Date” shall mean January 5, 2004.

 

2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to be employed by the Company, subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on the fifth anniversary thereof (the “Initial Term”), provided that,
on the fourth anniversary and each anniversary of the Effective Date thereafter,
the employment period shall be extended by one year unless at least 30 days
prior to such anniversary, the Company or the Executive delivers a written
notice (a “Notice of Non-Renewal”) to the other Party that the employment period
shall not be extended (the Initial Term as so extended, the “Employment
Period”).

 

3. Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, (A) the Executive shall serve as the Chief Executive Officer, with such
duties and responsibilities as are commensurate with such positions, reporting
directly to the Board, and (B) the Executive’s principal location of employment
shall be at the principal headquarters of the Company; provided, that the
Executive may be required under reasonable business circumstances to travel
outside of such location in connection with performing his duties under this
Agreement. In addition, the Company shall cause the Executive to be elected as
Chairman of the Board as of the Effective Date, and during the Employment
Period, the Executive shall remain on the Board and as Chairman of the Board,
subject to Section 4(g), and shall perform his duties as a director of the
Company conscientiously and faithfully.

 

(ii) The Executive agrees that during the Employment Period, he shall devote
substantially all of his business time, energies and talents to serving as the
Company’s Chief Executive Officer and Chairman of the Board, perform his duties
conscientiously and faithfully subject to the lawful directions of the Board,
and in accordance with each of the

 

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Company’s corporate governance and ethics guidelines, conflict of interests
policies and code of conduct (collectively, the “Company Policies”). During the
Employment Period, it shall not be a violation of this Agreement for the
Executive, subject to the requirements of Section 7, to (A) serve on corporate,
civic or charitable boards or committees, provided, that, without the written
approval of the Board, the Executive shall be permitted to serve on no more than
one such corporate board, (B) deliver lectures or fulfill speaking engagements
and (C) manage personal investments, so long as such activities do not interfere
with the performance of the Executive’s responsibilities as the Chief Executive
Officer or as Chairman of the Board of the Company or violate any Company
Policies.

 

(iii) The Executive acknowledges and agrees that he shall at all times during
his service with the Company be subject to the Motorola Stock Ownership
Requirements, as may be in effect from time to time, which currently require
that the Executive maintain holdings of the Company’s common stock (“Common
Stock”) in an amount at least equal to four times the Executive’s Annual Base
Salary (as defined below). In connection with such requirements, the Executive
shall purchase 100,000 shares of Common Stock on or prior to July 31, 2005,
provided, that, 25,000 of such shares shall be purchased on or prior to July 31,
2004 and another 25,000 of such shares shall be purchased on or prior to January
31, 2005.

 

(b) Compensation.

 

(i) Base Salary. During the Employment Period, the Executive shall receive an
annualized base salary (“Annual Base Salary”) of not less than $1,500,000,
payable pursuant to the Company’s normal payroll practices. During the
Employment Period, the current Annual Base Salary shall be reviewed for increase
only at such time as the salaries of senior officers of the Company are reviewed
generally, provided that, the Executive’s first such review shall occur no
earlier than calendar year 2005.

 

(ii) Annual Bonus. For each fiscal year completed during the Employment Period,
the Executive shall be eligible to receive an annual cash bonus (“Annual Bonus”)
based upon performance targets that are established by the Compensation and
Leadership Committee of the Board (the “Committee”), provided that, the
Executive’s target Annual Bonus shall be not less than 135% of his Annual Base
Salary (the “Target Bonus”). Payment of the Target Bonus shall be guaranteed for
fiscal year 2004 (the “Guaranteed Bonus”). The Executive has agreed to defer
receipt of the Guaranteed Bonus pursuant to the terms of the Company’s
Management Deferred Compensation Plan until after the Executive’s Date of
Termination (as defined below). However, notwithstanding the immediately
preceding sentence, the Executive shall not be required to defer receipt of the
Guaranteed Bonus beyond the first day on which the deductibility of the
Guaranteed Bonus by the Company is no longer precluded by the provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
and in no event shall the Executive be required to defer receipt beyond January
1 of the year following the year in which his Date of Termination (as defined
below) occurs.

 

(iii) Mid-Range Incentive Plan. For each multi-year period (as recommended by
management and determined by the Committee) completed during the Employment
Period, the Executive shall be eligible to receive an award (“Mid-Range
Incentive Plan Award”) based upon performance targets that are established by
the Committee, provided that, the

 

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Executive’s target Mid-Range Incentive Plan Award shall be not less than 250% of
his Annual Base Salary.

 

(iv) Long-Term Incentive Awards. As determined by the Committee, the Executive
shall be eligible for grants of equity compensation awards under the Company’s
long term incentive compensation arrangements in accordance with the Company’s
policies, as in effect from time to time. Except for grants with respect to
fiscal year 2004 as set forth below, all grants of equity compensation awards
shall be made in the discretion of the Committee based upon performance of the
Executive and the Company and the Company’s compensation philosophy.

 

A. 2004 Stock Option. In May 2004, the Executive shall be granted an option (the
“2004 Stock Option”) to purchase a number of shares of common stock of the
Company (the “Common Stock”) for fiscal year 2004 pursuant to the Company’s
Omnibus Incentive Plan of 2003 (the “Incentive Plan”) having an aggregate
Black-Scholes value of $6,250,000. The Black-Scholes value to be calculated
under this Section 3(b)(iv)(A) shall be determined on the 2004 Stock Option
grant date in a manner consistent with the methodology used by Hewitt Associates
for valuing stock options granted to employees of its publicly traded clients
during the year 2003. The 2004 Stock Option shall have a per share exercise
price equal to the closing price of a share of Common Stock on the last trading
day prior to the date of grant as reported in the Wall Street Journal (the “Fair
Market Value”), a ten-year term and a vesting schedule such that the 2004 Stock
Option will become exercisable in four equal annual installments commencing on
the first anniversary of the date of grant, provided that, the Executive remains
in the employ of the Company through each such date. Except as specifically
provided herein, the terms and conditions of the 2004 Stock Option shall be
subject to the terms of the Incentive Plan and the award agreement evidencing
the grant of the 2004 Stock Option, as provided to senior executives of the
Company generally.

 

B. 2004 Restricted Stock Units. In May 2004, the Executive shall be granted an
award of a number of restricted stock units (the “Restricted Stock Units”) based
on shares of Common Stock for fiscal year 2004 pursuant to the Incentive Plan
equal to the quotient obtained by dividing (i) $2,000,000 by (ii) the Fair
Market Value on the date of grant. The Restricted Stock Units shall vest 10% on
the first anniversary of the date of grant, 20% on the second anniversary of the
date of grant, 30% on the third anniversary of the date of grant and 40% on the
fourth anniversary of the date of grant, provided that, the Executive remains in
the employ of the Company through each such date. The Executive has agreed to
defer receipt of the settlement of any Restricted Stock Units until after the
Executive’s Date of Termination (as defined below). However, notwithstanding the
immediately preceding sentence, the Executive shall not be required to defer
receipt of the settlement of any Restricted Stock Units beyond the first day on
which the deductibility of such settlement by the Company is no longer precluded
by the provisions of Section 162(m) of the Code. Except as specifically provided
herein, the terms and conditions of the Restricted Stock Units shall be subject
to the terms of the Incentive Plan and the award agreement evidencing the grant
of the Restricted Stock Units, as provided to senior executives of the Company
generally, and in no event shall the Executive be required to defer receipt
beyond January 1 of the year following the year in

 

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which his Date of Termination occurs. Notwithstanding anything in this Section
3(b)(iv)(B) to the contrary, the Executive shall be entitled to immediate
settlement of any outstanding Restricted Stock Units to the extent the
Restricted Stock Units otherwise become taxable to the Executive.

 

C. Effective Date Stock Option. On the Effective Date, the Company shall grant
to the Executive a stock option pursuant to the Incentive Plan to purchase
1,350,000 shares of Common Stock (the “Effective Date Stock Option”). The
Effective Date Stock Option shall have a per share exercise price equal to the
Fair Market Value on the Effective Date, a ten-year term and will vest in four
equal annual installments commencing on the first anniversary of the date of
grant, provided that, the Executive remains in the employ of the Company through
each such date. Except as specifically provided herein, the terms and conditions
of the Effective Date Stock Option shall be subject to the terms of the
Incentive Plan and the award agreement evidencing the grant of the Effective
Date Stock Option, as provided to senior executives of the Company generally.

 

D. Effective Date Restricted Stock Units. On the Effective Date, the Company
shall grant to the Executive 400,000 Restricted Stock Units under the Incentive
Plan (the “Effective Date Restricted Stock Units”). The restrictions with
respect to the Effective Date Restricted Stock Units shall lapse 50% on the
second anniversary of the Effective Date and the remainder shall lapse on the
fourth anniversary of the Effective Date, provided that, the Executive remains
in the employ of the Company through each such date. The Executive has agreed to
defer receipt of the settlement of any Effective Date Restricted Stock Units
until after the Executive’s Date of Termination (as defined below). However, the
Executive shall not be required to defer receipt of the settlement of any
Effective Date Restricted Stock Units beyond the first day on which the
deductibility of such settlement by the Company is no longer precluded by the
provisions of Section 162(m) of the Code, and in no event shall the Executive be
required to defer receipt beyond January 1 of the year following the year in
which his Date of Termination occurs. Notwithstanding anything in this Section
3(b)(iv)(D) to the contrary, the Executive shall be entitled to immediate
settlement of any outstanding Effective Date Restricted Stock Units to the
extent the Effective Date Restricted Stock Units become taxable to the
Executive. Except as specifically provided herein, the terms and conditions of
the Effective Date Restricted Stock Units shall be subject to the terms of the
Incentive Plan and the award agreement evidencing the grant of the Effective
Date Restricted Stock Units, as provided to senior executives of the Company
generally.

 

(v) Pension Plans. During the Employment Period, the Executive shall be eligible
for participation in the qualified pension plans, practices, policies and
programs of the Company, as may be in effect from time to time, for senior
executives of the Company generally.

 

(vi) Other Benefits. During the Employment Period, the Executive shall be
eligible for participation in the welfare, perquisites, fringe benefit, and
other benefit plans, practices, policies and programs, as may be in effect from
time to time, for senior executives of the Company generally; provided, that,
any severance payments or benefits to be received under any severance benefit
plans, practices, policies and programs shall be offset and

 

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reduced by any severance benefits or payments received under this Agreement. The
fringe benefits and perquisites described in the preceding sentence shall
include: reasonable use of Company aircraft for personal and business purposes
(not less than 100 flight hours annually for personal use); participation in the
Company’s Elected Officer Life Insurance Program; relocation benefits on a
tax-neutral basis (including, but not limited to, providing a suitable,
furnished apartment to the Executive for transition housing for up to 12
months); and, at the level generally provided for the chief executive officer of
the Company, financial planning; an automobile allowance; personal security; and
a home security system.

 

(vii) Change in Control Benefits. The Executive shall be eligible for
participation in the Motorola, Inc. Senior Officer Change in Control Severance
Plan or any successor change in control plan or program (the “Change in Control
Plan”), as may be in effect from time to time, for senior executives of the
Company generally. At all times during the Employment Period, the Company will
maintain the Change in Control Plan as in effect on the Effective Date, or
provide the Executive with no less favorable benefits and protection under an
alternative program or arrangement. Additionally, upon a Change in Control (as
defined in Section 9(f)), all equity-based awards granted to the Executive on or
after the Effective Date (including, without limitation, the 2004 Stock Option,
the Restricted Stock Units, the Effective Date Stock Option and the Effective
Date Restricted Stock Units) shall become fully vested and exercisable (or, if
applicable, all restrictions shall lapse), all performance goals shall be deemed
achieved at target levels, all Performance Stock (as defined in the Incentive
Plan) shall be delivered as promptly as practicable and all performance units,
restricted stock units and other incentive awards shall be paid out as promptly
as practicable. Notwithstanding the foregoing, if the Company adopts an equity
incentive plan with Change in Control benefits more generous than the benefits
provided in this Section 3(b)(vii) or a Change in Control severance plan for
senior executives generally with more generous benefits than the Change in
Control Plan, the Executive will be entitled to those more generous benefits to
the extent Executive’s awards are granted under such plan or such Change in
Control severance plan is adopted, as applicable.

 

(viii) Expenses. During the Employment Period, the Executive shall be eligible
for prompt reimbursement for business expenses reasonably incurred by the
Executive in accordance with the Company’s policies, as may be in effect from
time to time, for its senior executives generally.

 

(ix) Vacation. During the Employment Period, the Executive shall be eligible for
paid vacation in accordance with the Company’s policies, as may be in effect
from time to time, for its senior executives generally.

 

(x) Signing Bonus. In connection with the replacement of outstanding amounts at
his current employer that will be forfeited, on the Effective Date, the Company
shall pay to the Executive a lump sum cash payment of $600,000. In addition, on
the Effective Date, the Company shall grant to the Executive the number of
restricted shares of Company Common Stock under the Incentive Plan (the
“Effective Date Restricted Stock”) determined by dividing (a) $1,400,000 by (b)
the per-share fair market value of Company Common Stock as of the close of
market on the Effective Date, rounded up to the nearest whole share. The
restrictions with respect to the Effective Date Restricted Stock shall lapse
100% on the second anniversary of the Effective Date, provided that, the
Executive remains in the employ of the Company through such

 

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date. Except as specifically provided herein, the terms and conditions of the
Effective Date Restricted Stock shall be subject to the terms of the Incentive
Plan and the award agreement evidencing the grant of the Effective Date
Restricted Stock, as provided to senior executives of the Company generally.

 

(c) Other Entities. The Executive agrees to serve, without additional
compensation, as an officer and director for each of the Company’s subsidiaries,
partnerships, joint ventures, limited liability companies and other affiliates,
including entities in which the Company has a significant investment
(collectively, the Company and such entities, the “Affiliated Group”), as
determined by the Company. As used in this Agreement, the term “affiliates”
shall include any entity controlled by, controlling, or under common control
with the Company.

 

4. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may provide the Executive with
written notice in accordance with Section 9(b) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30-day period after such receipt, the
Executive shall not have returned to full time performance of the Executive’s
duties. For purposes of this Agreement, “Disability” shall mean the inability of
the Executive to perform his duties with the Company on a full-time basis for
120 consecutive days or for 180 intermittent days in any one-year period as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a licensed physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive’s legal
representative. If the Parties cannot agree on a licensed physician, each Party
shall select a licensed physician and the two physicians shall select a third
who shall be the approved licensed physician for this purpose.

 

(b) Cause. The Company may terminate the Executive’s employment during the
Employment Period with or without Cause. For purposes of this Agreement, “Cause”
shall mean:

 

(i) the Executive’s willful and continued failure to substantially perform his
duties under this Agreement, other than any such failure resulting from
incapacity due to physical or mental illness, which failure has continued for a
period of at least 30 days following delivery to the Executive of a written
demand for substantial performance specifying the manner in which the Executive
has failed to substantially perform; or

 

(ii) the Executive’s willful engagement in (A) in any malfeasance, dishonesty or
fraud that is intended to or does result in the Executive’s substantial personal
enrichment or a material detrimental effect on the Company’s reputation or
business; or (B) gross misconduct;

 

(iii) the Executive’s indictment for, or plea of guilty or nolo contendere to
(A) a felony in the United States or (B) to a felony outside the United States,
which, regardless

 

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of where such felony occurs, the Board reasonably believes has had or will have
a detrimental effect on the Company’s reputation or business or the Executive’s
reputation; or

 

(iv) the Executive’s material breach of Section 7 or Section 12 of this
Agreement.

 

A termination of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board (not including the Executive) at a meeting of
the Board called and held for such purpose (after at least ten days’ written
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
one or more of the clauses of Section 4(b) above, and specifying the particulars
thereof in detail.

 

(c) Good Reason. The Executive’s employment may be terminated by the Executive
for Good Reason if (x) an event or circumstance set forth in the clauses of this
Section 4(c) below shall have occurred and the Executive provides the Company
with written notice thereof within 15 days after the Executive has knowledge of
the occurrence or existence of such event or circumstance, which notice shall
specifically identify the event or circumstance that the Executive believes
constitutes Good Reason, (y) the Company fails to correct the circumstance or
event so identified within 30 days after the receipt of such notice, and (z) the
Executive resigns within 90 days after the date of delivery of the notice
referred to in clause (x) above. For purposes of this Agreement, “Good Reason”
shall mean, in the absence of the Executive’s written consent (and except in
consequence of a prior termination of the Executive’s employment), the
occurrence of any of the following:

 

(i) a reduction by the Company in the Executive’s Annual Base Salary or a
reduction in the Executive’s Target Bonus as a percentage of the Executive’s
Annual Base Salary; or

 

(ii) a material reduction in the aggregate level of employee benefits made
available to the Executive when compared to the benefits made available to the
Executive at any time during the Employment Period, unless such reduction is
applicable to senior executives of the Company generally; or

 

(iii) the failure of the Executive to be appointed as Chief Executive Officer or
Chairman of the Board or, except as required by applicable law or regulation,
his removal from either of such positions (other than pursuant to Section 4(g)
or pursuant to a termination of the Executive’s employment for death, Disability
or Cause); or

 

(iv) the failure of the Company to elect or reelect the Executive to the Board;
or

 

(v) a material diminution in the Executive’s duties or responsibilities (other
than as required by applicable law or regulation or as a result of the
Executive’s physical or mental incapacity which impairs his ability to
materially perform his duties or responsibilities as confirmed by a doctor
reasonably acceptable to the Executive or his representative and such

 

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diminution lasts only for so long as such doctor determines such incapacity
impairs the Executive’s ability to materially perform his duties or
responsibilities) as Chief Executive Officer of the Company; or

 

(vi) except as required by applicable law or regulation, a material change in
the Executive’s reporting relationship so that the Executive no longer reports
solely to the Board in his position as Chief Executive Officer; or

 

(vii) the Company requiring the Executive’s principal location of employment to
be at any office or location more than 35 miles from the principal headquarters
of the Company (other than to the extent agreed to or requested by the
Executive).

 

(d) Voluntary Termination. The Executive may voluntarily terminate his
employment without Good Reason (other than due to death, Disability or
retirement), and such termination shall not be deemed to be a breach of this
Agreement.

 

(e) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other Party hereto given in accordance with Section 9(b) of this Agreement. For
purposes of this Agreement, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.

 

(f) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, or if the Executive voluntarily resigns without Good Reason, the
date on which the terminating Party notifies the other Party of such
termination, (iii) if the Executive’s employment is terminated by reason of
death, the date of death of the Executive, (iv) if the Executive’s employment is
terminated by the Company due to Disability, the Disability Effective Date, or
(v) if the Executive’s employment is terminated by the Executive or the Company
as a result of a Notice of Non-Renewal, the end of the applicable Employment
Period.

 

(g) Resignation from All Positions. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment for any reason,
unless otherwise requested by the Board, the Executive shall immediately resign
as of the Date of Termination from all positions that he holds or has ever held
with the Company and any other member of

 

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the Affiliated Group (and with any other entities with respect to which the
Company has requested the Executive to perform services), including, without
limitation, the Board and all boards of directors of any member of the
Affiliated Group. The Executive hereby agrees to execute any and all
documentation to effectuate such resignations upon request by the Company, but
he shall be treated for all purposes as having so resigned upon termination of
his employment, regardless of when or whether he executes any such
documentation.

 

5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause. If, during the Employment Period, (1) the Company shall terminate the
Executive’s employment other than for Cause, death or Disability, or (2) the
Executive shall terminate employment for Good Reason:

 

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days
(except as specifically provided in Section 5(a)(i)(A)(3)) after the Date of
Termination the aggregate of the following amounts:

 

A. the sum of (1) the Executive’s Annual Base Salary and any accrued vacation
pay through the Date of Termination, (2) the Executive’s business expenses that
are reimbursable pursuant to Section 3(b)(viii) but have not been reimbursed by
the Company as of the Date of Termination, and (3) the Executive’s Annual Bonus
for the fiscal year immediately preceding the fiscal year in which the Date of
Termination occurs if such bonus has been determined but not paid as of the Date
of Termination (at the time such Annual Bonus would otherwise have been paid);
and

 

B. the amount equal to the product of (x) two and (y) the sum of (I) the
Executive’s Annual Base Salary and (II) the Target Bonus; and

 

(ii) for two years after the Executive’s Date of Termination (the “Continuation
Period”), the Company shall continue medical and life insurance benefits to the
Executive and, if applicable, the Executive’s family at least equal to those
that would have been provided to them in accordance with the plans, programs,
practices and policies of the Company if the Executive’s employment had not been
terminated; provided, that the Executive continues to make all required
contributions; provided, however, that, if the Executive becomes re-employed
with another employer and is eligible to receive substantially equivalent health
or life insurance benefits under another employer-provided plan, the health
benefits or life insurance described herein, whichever is applicable, shall no
longer be provided by the Company; and

 

(iii) the 2004 Stock Option, the Effective Date Stock Option, the Restricted
Stock Units, the Effective Date Restricted Stock Units, the Effective Date
Restricted Stock and all other outstanding equity-based awards granted to the
Executive on or after the Effective Date shall continue to vest and, with
respect to stock options and other awards that are not immediately exercisable,
become exercisable pursuant to their respective terms on the applicable
scheduled vesting dates, so long as the Executive complies with the provisions
of Section 7 of this Agreement and any other applicable provisions of the
applicable award agreement and the Incentive Plan (other than continued
service). Subject to the immediately preceding sentence, all such awards shall
remain exercisable by the Executive following vesting until the earlier of (A)
eighteen months following the later to occur of (x) the applicable vesting date
of such award

 

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or (y) the Executive’s Date of Termination or (B) the expiration of the
scheduled term of such award, as applicable; and

 

(iv) to the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement (other than any severance
plan, program, policy or practice or contract or agreement) of the Company and
its affiliates (such amounts and benefits, the “Other Benefits”) in accordance
with the terms and normal procedures of each such plan, program, policy or
practice, based on accrued benefits through the Date of Termination.

 

Except with respect to payments and benefits under Sections 5(a)(i)(A)(1),
5(a)(i)(A)(2) and 5(a)(iv), all payments and benefits to be provided under this
Section 5(a) shall be subject to the Executive’s execution and non-revocation of
a release substantially in the form attached hereto as Exhibit A.

 

(b) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment without Good
Reason during the Employment Period, or the Executive’s employment terminates by
reason of either Party providing to the other Party a Notice of Non-Renewal,
this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay or provide to the Executive an amount equal to
the amount set forth in clauses (1), (2) and (3) of Section 5(a)(i)(A) above,
and the timely payment or provision of the Other Benefits, in each case to the
extent theretofore unpaid, and provide to the Executive the opportunity to
continue to exercise outstanding equity awards, granted on or after the
Effective Date, to the extent vested on the date of such termination, pursuant
to the provisions of the applicable award agreement.

 

(c) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than the obligation to pay or provide to the Executive’s
beneficiaries an amount equal to the amount set forth in clauses (1), (2) and
(3) of Section 5(a)(i)(A) above, the vesting of each stock option, restricted
share and restricted stock unit award that is outstanding as of the Date of
Termination and continued exercisability of each stock option by the Executive’s
beneficiaries until the earlier of (i) one year after the Date of Termination or
(ii) the end of the scheduled term of such option (the “Stock Benefits”).

 

(d) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than the
obligation to pay or provide to the Executive an amount equal to the amount set
forth in clauses (1), (2) and (3) of Section 5(a)(i)(A) above, the provision of
the Stock Benefits and the timely payment or provision of Other Benefits,
including any applicable disability benefits.

 

6. Full Settlement. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced as a

 

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result of a mitigation duty whether or not the Executive obtains other
employment. To the extent permitted by applicable law, the Company shall pay
directly to the Executive all reasonable legal fees and expenses reasonably
incurred by the Executive in connection with the negotiation and preparation of
this Agreement, subject to a maximum of $50,000, and the Company shall reimburse
the Executive for all legal costs and expenses reasonably incurred (and
documented in invoices) in connection with any dispute under this Agreement, so
long as the Executive prevails in such dispute on at least one material issue.
In addition, the Company shall indemnify and hold the Executive, harmless on an
after-tax basis, for any income tax, and all other applicable taxes imposed as a
result of the Company’s payment of any legal fees contemplated herein in
connection with the preparation and negotiation of this Agreement.

 

7. Covenants.

 

(a) Confidential Information. The Executive shall hold in a fiduciary capacity
for benefit of the Affiliated Group, all secret or confidential information,
knowledge or data relating to the Affiliated Group and its businesses
(including, without limitation, any proprietary and not publicly available
information concerning any processes, methods, trade secrets, research or secret
data, costs, names of users or purchasers of their respective products or
services, business methods, operating procedures or programs or methods of
promotion and sale) that the Executive obtains during the Executive’s employment
by the Affiliated Group that is not public knowledge (other than as a result of
the Executive’s violation of this Section 7(a)) (“Confidential Information”).
The Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive’s employment with the
Affiliated Group, except with prior written consent of the Company, or as
otherwise required by law or legal process or as such disclosure or use may be
required in the course of the Executive performing his duties and
responsibilities as the Chief Executive Officer and Chairman of the Board of the
Company. Notwithstanding the foregoing provisions, if the Executive is required
to disclose any such confidential or proprietary information pursuant to
applicable law or a subpoena or court order, the Executive shall promptly notify
the Company in writing of any such requirement so that the Company or the
appropriate member of the Affiliated Group may seek an appropriate protective
order or other appropriate remedy or waive compliance with the provisions
hereof. The Executive shall reasonably cooperate with the Affiliated Group to
obtain such a protective order or other remedy. If such order or other remedy is
not obtained prior to the time the Executive is required to make the disclosure,
or the Company waives compliance with the provisions hereof, the Executive shall
disclose only that portion of the confidential or proprietary information which
he is advised by counsel in writing (either his or the Company’s) that he is
legally required to so disclose. Upon his termination of employment with the
Company for any reason, the Executive shall promptly return to the Company, all
records, files, memoranda, correspondence, notebooks, notes, reports, customer
lists, drawings, plans, documents, and other documents and the like relating to
the business of the Affiliated Group or containing any trade secrets relating to
the Affiliated Group or that the Executive uses, prepares or comes into contact
with during the course of the Executive’s employment with the Company, and all
keys, credit cards and passes, and such materials shall remain the sole property
of the Company and/or the Affiliated Group, as applicable. For purposes of the
preceding sentence, the term “trade secrets” shall have the meaning ascribed to
it under the Illinois Trade Secrets Act or, if such act is repealed, the Uniform
Trade Secrets Act (on which the Illinois Trade Secrets Act is based). The
Executive

 

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agrees to represent in writing to the Company upon termination of employment
that he has complied with the foregoing provisions.

 

(b) Non-Recruitment of Affiliated Group Employees. The Executive shall not, at
any time during the Restricted Period (as defined in this Section 7(b)), without
the prior written consent of the Company, directly or indirectly, solicit,
recruit, or employ (whether as an employee, officer, agent, consultant or
independent contractor) any person who is or was at any time during the previous
120 days, an employee, representative, officer or director of any member of the
Affiliated Group. Further, during the Restricted Period, the Executive shall not
take any action that could reasonably be expected to have the effect of directly
encouraging or inducing any person to cease their relationship with any member
of the Affiliated Group for any reason, except for terminations of employment in
the ordinary course of business. This Section 7(b) shall not apply to (i)
recruitment of employees for the Affiliated Group, (ii) the Executive’s personal
administrative staff who perform secretarial-type functions or (iii) the hiring
of any person (in the absence of a solicitation or recruitment by the Executive)
unless (A) the person was one of the Executive’s direct reports, (B) the
Executive had material or frequent contact with such person in furtherance of
the performance of the duties of such person or the Executive, or (C) the
Executive, prior to the Date of Termination, actively participated in the
recruitment or hiring of such person at the Company other than merely approving
any of the terms of such person’s employment. Additionally, a general employment
advertisement by an entity of which the Executive is a part will not constitute
solicitation or recruitment. The “Restricted Period” shall mean the period of
the Executive’s employment with the Company and its subsidiaries through the
second anniversary of the Date of Termination.

 

(c) No Competition — Solicitation of Business. During the Restricted Period, the
Executive shall not, either directly or indirectly, compete with the business of
the Company by (i) becoming an officer, agent, employee, partner or director of
any other corporation, partnership or other entity, or otherwise render services
to or assist or hold an interest (except as a less than 3-percent shareholder of
a publicly traded corporation or as a less than 5-percent shareholder of a
corporation that is not publicly traded) in any Competitive Business (as defined
below), or (ii) soliciting, servicing, or accepting the business of (A) any
active customer of any member of the Affiliated Group, or (B) any person or
entity who is or was at any time during the previous twelve months a customer of
any member of the Affiliated Group, provided that such business is competitive
with any significant business of any member of the Affiliated Group.
“Competitive Business” shall mean any person or entity (including any joint
venture, partnership, firm, corporation, or limited liability company) that
engages in any principal or significant business of the Company or any of its
subsidiaries as of the Date of Termination (or any material or significant
business being actively pursued as of the Date of Termination that the Company
or any of its subsidiaries enter during the Restricted Period).

 

(d) Assistance. The Executive agrees that during and after his employment by the
Company, the Executive will assist the Affiliated Group in the defense of any
claims, or potential claims that may be made or threatened to be made against
any member of the Affiliated Group in any action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise (a “Proceeding”),
and will assist the Affiliated Group in the prosecution of any claims that may
be made by any member of the Affiliated Group in any Proceeding, to the extent
that such claims may relate to the Executive’s employment or the period of the
Executive’s employment

 

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by the Company. The Executive agrees, unless precluded by law, to promptly
inform the Company if the Executive is asked to participate (or otherwise become
involved) in any Proceeding involving such claims or potential claims. The
Executive also agrees, unless precluded by law, to promptly inform the Company
if the Executive is asked to assist in any investigation (whether governmental
or otherwise) of any member of the Affiliated Group (or their actions),
regardless of whether a lawsuit has then been filed against any member of the
Affiliated Group with respect to such investigation. The Company agrees to
reimburse the Executive for all of the Executive’s reasonable out-of-pocket
expenses associated with such assistance, including travel expenses and any
attorneys’ fees and shall pay a reasonable per diem fee for the Executive’s
service. In addition, the Executive agrees to provide such services as are
reasonably requested by the Company to assist any successor to the Executive in
the transition of duties and responsibilities to such successor. Any services or
assistance contemplated in this Section 7(d) shall be at mutually agreed to and
convenient times.

 

(e) Remedies. The Executive acknowledges and agrees that the terms of Section 7:
(i) are reasonable in geographic and temporal scope, (ii) are necessary to
protect legitimate proprietary and business interests of the Company in, inter
alia, near permanent customer relationships and confidential information. The
Executive further acknowledges and agrees that (x) the Executive’s breach of the
provisions of Section 7 will cause the Company irreparable harm, which cannot be
adequately compensated by money damages, and (y) if the Company elects to
prevent the Executive from breaching such provisions by obtaining an injunction
against the Executive, there is a reasonable probability of the Company’s
eventual success on the merits. The Executive consents and agrees that if the
Executive commits any such breach or threatens to commit any breach, the Company
shall be entitled to temporary and permanent injunctive relief from a court of
competent jurisdiction, in addition to, and not in lieu of, such other remedies
as may be available to the Company for such breach, including the recovery of
money damages. The Parties further acknowledge and agree that the provisions of
Section 7(a) below are accurate and necessary because (A) this Agreement is
entered into in the State of Illinois, (B) as of the Effective Date, Illinois
will have a substantial relationship to the Parties and to this transaction, (C)
as of the Effective Date, Illinois will be the headquarters state of the
Company, which has operations nationwide and has a compelling interest in having
its employees treated uniformly within the United States, (D) the use of
Illinois law provides certainty to the Parties in any covenant litigation in the
United States, and (E) enforcement of the provision of this Section 7 would not
violate any fundamental public policy of Illinois or any other jurisdiction. If
any of the provisions of Section 7 are determined to be wholly or partially
unenforceable, the Executive hereby agrees that this Agreement or any provision
hereof may be reformed so that it is enforceable to the maximum extent permitted
by law. If any of the provisions of this Section 7 are determined to be wholly
or partially unenforceable in any jurisdiction, such determination shall not be
a bar to or in any way diminish the Company’s right to enforce any such covenant
in any other jurisdiction.

 

8. Successors. (a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
other than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive’s legal
representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

 

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(b) The Company shall cause any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all or a
substantial portion of its business and/or assets to assume expressly and agree
to perform this Agreement immediately upon such succession in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

 

9. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without reference to
principles of conflict of laws. The Parties hereto irrevocably agree to submit
to the jurisdiction and venue of the courts of the State of Illinois, in any
action or proceeding brought with respect to or in connection with this
Agreement. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the Parties hereto or their
respective successors and legal representatives.

 

(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other Party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

At the most recent address on file for the Executive at the Company.

 

With a copy to:

 

Larry Sonsini, Esq.

John Aguirre, Esq.

Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, CA 94304

 

If to the Company:

 

Motorola, Inc.

1303 East Algonquin Road

Schaumberg, IL 60196

 

Attention: General Counsel

 

With a copy to:

 

Michael S. Katzke, Esq.

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

 

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or to such other address as either Party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.

 

(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from any amounts payable or benefits provided under this Agreement any
Federal, state, and local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

 

(e) Subject to the provisions of Section 4(c), the Executive’s or the Company’s
failure to insist upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

 

(f) From and after the Effective Date, this Agreement shall supersede any other
employment agreement or understanding between the Parties with respect to the
subject matter hereof, provided that, notwithstanding any other provision of
this Agreement to the contrary, in the event of a Change in Control (as defined
in the Change in Control Plan), the Change in Control Plan shall supersede this
Agreement; provided, that, the provisions in Section 3(b)(vii) will continue to
apply.

 

(g) The Company may not issue a press release or otherwise publicly disclose the
Executive’s employment or potential employment with the Company without
Executive’s consent as to the content and timing of such disclosure, which
approval shall not be unreasonably withheld.

 

10. Director’s and Officer’s Insurance. The Company shall provide the Executive
with reasonable Director’s and Officer’s insurance coverage that is at least as
favorable as the coverage provide to other directors and officers of the
Company. Such insurance coverage shall continue in effect both during the
Employment Period and, while potential liability exists, thereafter.

 

11. Indemnification. The Company shall indemnify the Executive and hold him
harmless to the fullest extent permitted by law and under the by-laws of the
Company against, and in respect to, any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including reasonable attorney
fees), losses and damages resulting from the Executive’s good faith performance
of his duties and obligations with the Company.

 

12. Representations. The Executive hereby represents and warrants to the Company
that the Executive is not party to any contract, understanding, agreement or
policy, whether or not written, with his current employer (or any other previous
employer) or otherwise, that would be breached by the Executive’s entering into,
or performing services under, this Agreement. The Executive further represents
that he has disclosed to the Company in writing all material threatened,
pending, or actual claims that are unresolved and still outstanding as of the
Effective Date, in each case, against the Executive of which he is aware, if
any, as a result of his employment with his current employer (or any other
previous employer) or his membership on any boards of directors.

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.

 

/s/ EDWARD J. ZANDER

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EXECUTIVE

 

MOTOROLA, INC.

By:

  /s/ GLENN A. GIENKO    

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Title:

  Executive Vice President—Human Resources    

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EXHIBIT A

 

Form of Release

 

(a) In consideration for the payment of the severance described in the Executive
employment agreement with the Company (the “Employment Agreement”), dated as of
[        ], the Executive for himself, and for his heirs, administrators,
representatives, executors, successors and assigns (collectively “Releasers”)
does hereby irrevocably and unconditionally release, acquit and forever
discharge the Company, its subsidiaries, affiliates and divisions and their
respective, current and former, trustees, officers, directors, partners,
shareholders, agents, employees, consultants, independent contractors and
representatives, including without limitation all persons acting by, through
under or in concert with any of them (collectively, “Releasees”), and each of
them from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, remedies, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether
in law or equity and whether arising under federal, state or local law and in
particular including any claim for discrimination based upon race, color,
ethnicity, sex, age (including the Age Discrimination in Employment Act of
1967), national origin, religion, disability, or any other unlawful criterion or
circumstance, which the Executive and Releasers had, now have, or may have in
the future against each or any of the Releasees, including under the Illinois
Law Against Discrimination (collectively “Executive/Releaser Actions”) from the
beginning of the world until the date hereof.

 

(b) The Executive acknowledges that: (i) this entire Release is written in a
manner calculated to be understood by him; (ii) he has been advised to consult
with an attorney before executing this Release; (iii) he was given a period of
twenty-one days within which to consider this Release; and (iv) to the extent he
executes this Release before the expiration of the twenty-one day period, he
does so knowingly and voluntarily and only after consulting his attorney. The
Executive shall have the right to cancel and revoke this Release by delivering
notice to the Company pursuant to the notice provision of Section 9 of the
Employment Agreement prior to the expiration of the seven-day period following
the date hereof, and the severance benefits under the Employment Agreement shall
not become effective, and no payments or benefits shall be made or provided
thereunder, until the day after the expiration of such seven-day period (the
“Revocation Date”). Upon such revocation, this Release and the severance
provisions of the Employment Agreement shall be null and void and of no further
force or effect.

 

(c) Notwithstanding anything herein to the contrary, the sole matters to which
the Release do not apply are: (i) the Executive’s rights of indemnification and
directors and officers liability insurance coverage to which he was entitled
immediately prior to              with regard to his service as an officer of
the Company; (ii) the Executive’s rights under any tax-qualified pension or
claims for accrued vested benefits or rights under any other employee benefit
plan, policy or arrangement (whether tax-qualified or not) maintained by the
Company or under COBRA; or (iii) the Executive’s rights under Section 5 of the
Employment Agreement which is intended to survive termination of employment.

 

(d) This Release is the complete understanding between the Executive and the
Company in respect of the subject matter of this Release and supersedes all
prior agreements relating

 

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to the same subject matter. The Executive has not relied upon any
representations, promises or agreements of any kind except those set forth
herein in signing this Release.

 

(e) In the event that any provision of this Release should be held to be invalid
or unenforceable, each and all of the other provisions of this Release shall
remain in full force and effect. If any provision of this Release is found to be
invalid or unenforceable, such provision shall be modified as necessary to
permit this Release to be upheld and enforced to the maximum extent permitted by
law.

 

(f) This Release shall be governed by and construed in accordance with the laws
of the State of Illinois, without reference to principles of conflict of laws.

 

(g) This Release inures to the benefit of the Company and its successors and
assigns.

 

 

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EXECUTIVE

 

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