10-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                      to                                     

Commission File number 1-7221

MOTOROLA, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State of Incorporation) 36-1115800
(I.R.S. Employer Identification No.)

1303 East Algonquin Road, Schaumburg, Illinois 60196
(Address of principal executive offices)

(847) 576-5000
(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $3 Par Value per Share	New York Stock Exchange Chicago Stock Exchange
Rights to Purchase Junior Participating Preferred Stock, Series B	New York Stock Exchange Chicago Stock Exchange
Liquid Yield Option Notes due 2009	New York Stock Exchange
Liquid Yield Option Notes due 2013	New York Stock Exchange
6.68% Trust Originated Preferred Securities (issued by Motorola Capital Trust I and guaranteed by Motorola, Inc.)	New York Stock Exchange
7.00% Equity Security Units	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     X  No         .

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of January 31, 2002 was approximately $30.0 billion (based on closing sale price of $13.31 per share as reported for the New York Stock Exchange-Composite Transactions).

        The number of shares of the registrant's Common Stock, $3 par value per share, outstanding as of January 31, 2002 was 2,270,366,816.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Location in Form 10-K
Portions of Registrant's Proxy Statement for 2001 Annual Meeting of Stockholders Including Management's Discussion and Analysis and Consolidated Financial Statements	Parts I, II, III and IV

Table of Contents

			Page
PART I			1
ITEM 1. BUSINESS			1
	General		1
	Industry Environment and Our Business		1
	Business Segments		2
		Personal Communications Segment	2
		Global Telecom Solutions Segment	5
		Commercial, Government and Industrial Solutions Segment	8
		Broadband Communications Segment	12
		Semiconductor Products Segment	15
		Integrated Electronic Systems Segment	18
		Other Products Segment	21
	Other Information		21
		Financial Information About Segments	21
		Customers	21
		Backlog	21
		Research and Development	22
		Patents and Trademarks	22
		Environmental Quality	23
		Employees	23
		Financial Information About Foreign and Domestic Operations and Export Sales	23
	Business Risk Factors		23
ITEM 2. PROPERTIES			31
ITEM 3. LEGAL PROCEEDINGS			31
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			34
EXECUTIVE OFFICERS OF THE REGISTRANT			35
PART II			37
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS			37
ITEM 6. SELECTED FINANCIAL DATA			37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			37
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			37
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			37
PART III			38
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT			38
ITEM 11. EXECUTIVE COMPENSATION			38
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			38
PART IV			39
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K			39
	14(a)(1) Financial Statements		39
	14(a)(2) Financial Statement Schedule and Independent Auditors' Report		39
	14(a)(3) Exhibits		39

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PART I

Throughout this 10-K report we "incorporate by reference" certain information in parts of other documents filed with the Securities and Exchange Commission (the "SEC"). The SEC allows us to disclose important information by referring to it in that manner. Please refer to such information.

"Motorola" (which may be referred to as "we", "us" or "our") means Motorola, Inc,. or Motorola, Inc. and its subsidiaries, or one of our segments, as the context requires. "Motorola" is a registered trademark of Motorola, Inc.

Item 1:    Business

General

        Motorola is a global leader in providing integrated communications solutions and embedded electronic solutions. Our Intelligence Everywhere™ solutions include:

•

Software-enhanced wireless telephone and messaging, two-way radio products and systems, as well as networking and Internet-access products, for consumers, network operators and commercial, government and industrial customers.



•

End-to-end systems for the delivery of interactive digital video, voice and high-speed data solutions for broadband operators.



•

Embedded semiconductor solutions for customers in wireless communications, networking and transportation markets.



•

Integrated electronic systems for automotive, telematics, industrial, telecommunications, computing and portable energy systems markets.

        Motorola is a corporation organized under the laws of the State of Delaware as the successor to an Illinois corporation organized in 1928. Motorola's principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196.

Industry Environment and Our Business

        2001 was a very difficult year for our industries and for our businesses. The downturn in the telecom industry and the semiconductor decline severely impacted our businesses. 2001 was the first year in the history of the cellular industry that sales of wireless handsets and infrastructure declined. Industry-wide sales of semiconductor products declined by more than 30%. Our sales decreased to $30 billion compared with $37.6 billon in 2000. We incurred a net loss of $3.9 billion compared with net earnings of $1.3 billion in the prior year.

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        Despite this difficult year, we continue to believe our markets will improve and that our businesses will return to profitability and growth. We have continued to reduce costs and focus our strategy. In 2001, we implemented a five-point strategy to improve performance. That plan involves the following: (1) revitalizing our management team; (2) stabilizing our balance sheet and improving financial flexibility; (3) reducing costs and manufacturing capacity; (4) producing innovative products, software applications and improving customer relationships; and (5) evaluating and re-evaluating our strategy as the high-tech environment changes. While we are not done, we are delivering on this plan. We implemented a world-class leadership supply system to ensure we have the right managers in the right positions. We also have hired new managers. We reduced our net debt and improved our working capital. We reduced costs throughout the Company. We describe our major cost-reduction programs by business segment below, but in summary we closed and consolidated manufacturing facilities to reduce our manufacturing capacity, we exited businesses that did not fit with our strategy, and we significantly reduced the number of employees. Our businesses are introducing new customer-driven products and solutions. Finally, we are continuously evaluating our strategies and adjusting our business to focus on the areas we believe will provide the opportunity for profitable growth and to take advantage of growth in our marketplaces.

Business Segments

        Our business is organized into six sectors and we report seven segments as described below. Our segments may be referred to as "we", "us" or "our."

Personal Communications Segment

        The Personal Communications Sector ("PCS" or the "segment") primarily designs, manufactures, sells and services wireless subscriber equipment.

Principal Products and Services

        Our wireless subscriber products include wireless handsets, iDEN® digital handsets, and personal 2-way radios, with related software and accessory products. We market our products worldwide through carriers, distributors, dealers, retailers, and, in certain markets, through licensees.

Our Industry

        2001 was the first year in the history of the cellular industry in which wireless handset sales declined. Consumer demand for new wireless handsets was much lower than the industry projected at the beginning of 2001. We believe the factors that impacted consumer demand were the economic recession and the slower than expected transition to next-generation data-rich services. We responded to this downturn in our market by implementing a cost-reduction program beginning late in 2000.

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Cost Reduction

        During 2001, we continued implementing major cost-reduction actions intended to improve the cost structure and competitiveness of the segment. We implemented a product platform design strategy that will enhance the cost competitiveness of handsets by reducing the number of parts used, increasing the commonality of both handset parts and software, lowering the number of unique handset designs and improving the cycle time of product development by creating greater standardization of processes. The reduction in the number of products manufactured and parts complexity of each product also makes it less expensive to manufacture our products and easier to change our products to meet rapidly-evolving customer demand. We implemented a new supply chain system to improve the efficiency of the manufacturing process and to reduce the costs. We introduced 24 new customer-driven products. We stopped selling all analog handsets and many 1^st-generation digital handsets in 2001, as sales of these products, which once comprised the majority of the PCS portfolio, had been rapidly declining over the years. We also improved relationships with wireless service providers in all regions. We announced that the segment would stop selling paging products, including Flex/Reflex subscriber units, in 2002. Sales of these products have been rapidly declining over the years and we concluded that they no longer complemented the segment's portfolio of products. However, we continue to use messaging technology to enhance the features of our wireless handsets.

        We substantially completed reducing the number of employees at PCS by 38% since the third quarter of 2000. We closed or consolidated manufacturing facilities and administrative facilities. The largest manufacturing closures were in Harvard, Illinois; Dublin, Ireland; Boynton Beach, Florida; Easter Inch, Scotland; and Bangalore, India. As a result, we lowered our operating costs.

Customers

        PCS has several customers, worldwide, the loss of which could have a negative impact on our results. Nextel Communications, Inc.'s purchases of iDEN® products comprise approximately 15% of our segment's sales. In China, we sell our products to many distributors and retailers. These distributors and retailers in turn primarily sell our products for use on mobile systems operated by China Mobile and China Unicom, the two largest wireless operators in China. While we do not sell directly to these operators, approximately 20% of our wireless handsets sales are to the China market and are primarily used on these systems. The largest of our other customers are Verizon, Voicestream, Alltel and Telcel Mexico.

Competition

        The segment has the second-largest worldwide market share of wireless handsets. The segment experiences intense competition in worldwide markets from numerous global competitors, including some of the world's largest companies. The segment's primary competitors are European and Asian manufacturers, and it experiences significant competition in the market for digital wireless products. Major competitors include Nokia, Ericsson/Sony, Siemens and Samsung.

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        Within the digital wireless products market, the introduction of the first GPRS, or 2.5G, products began in 2001. The 2.5G products represent a transition to digital products with a broader range of capabilities, such as enhanced high-speed Internet access, messaging and video capabilities, and are important to future growth. Motorola was the first-to-market with handsets supporting this technology and currently has the broadest portfolio of GPRS products available. The segment is also investing heavily in the next generation of wireless handset technology called 3G (3^rd-generation) technology. 3G technology will provide an even broader range of capabilities than 2.5G and is expected to drive growth in the next several years depending on when wireless service providers introduce 3G services. We are expecting to ship our first 3G handset during the second half of 2002 as part of our contract with Hutchison Whampoa Ltd. The estimated total value of the Hutchison Whampoa contract for 3G wireless handsets is over $700 million. Hutchison named Motorola a preferred supplier in its key markets, including Australia, Austria, Italy, Sweden and the UK. Competition in both the 2.5G and 3G growth areas will be intense.

        General competitive factors in the market for the segment's products include: brand; technology offered; price; product performance, features, design, quality, delivery and warranty; the quality and availability of service; company image; relationship with key customers; and time-to-market.

Payment Terms

        Generally, PCS does not grant extended payment terms.

Regulatory Matters

        Radio frequencies are required to provide wireless services. The allocation of frequencies is regulated in the U.S. and other countries throughout the world and limited spectrum space is allocated to wireless services. The growth of the wireless and personal communications industry may be affected if adequate frequencies are not allocated or, alternatively, if new technologies are not developed to better utilize the frequencies currently allocated for such use. Industry growth may also be affected by the cost of the new licenses required to use frequencies. Typically, governments sell these licenses at auctions. Over the last several years, the cost of these licenses has increased significantly, particularly for frequencies used in connection with 3G technology. The significant cost for licenses has slowed and may continue to slow the growth of the industry. Growth is slowed because some operators have funding constraints limiting their ability to purchase new licenses or purchase new technology to upgrade their systems. Such occurrences might continue to have an effect on the segment's results.

Backlog

        The segment's backlog amounted to $2.5 billion at December 31, 2001 and $2.1 billion at December 31, 2000. The 2001 order backlog is believed to be generally firm and 100% of that amount is expected to be shipped in 2002. The forward-looking estimates of the firmness of such orders is subject to future events which may cause the percentage of the 2001 backlog actually shipped to change.

Intellectual Property Matters

        Patent protection is extremely important to the segment's operations. The segment has an extensive portfolio of patents relating to its products, technologies and manufacturing processes. The segment licenses certain of its patents and generates revenues from these licenses. Motorola is also licensed to use certain patents owned by others. The protection of these licenses is also important to the segment's operations. Reference is made to the material under the heading "Other Information" for information relating to patents and trademarks and research and development activities with respect to this segment.

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Inventory, Raw Materials, Right of Return and Seasonality

        PCS's practice is to carry reasonable amounts of inventory in distribution centers, in order to meet customer delivery requirements in a manner consistent with industry standards. During 2001, inventory levels decreased by over 60% from inventory levels at year-end 2000. We reduced our inventory with process enhancements that included improved communications with regional distribution teams and customers; lowered finished goods inventory levels; and tighter controls on the management of part receipts from our suppliers. In addition, approximately a third of this inventory reduction was the result of writing off excess inventory or writing down the value of certain finished goods.

        Materials used in the segment's operations are generally second-sourced to ensure a continuity of supply. Occasionally, shortages or extended delivery periods have occurred in various component parts, the effects of which have generally been industry-wide and short in duration. These shortages are not expected to occur in 2002. Energy necessary for the segment's manufacturing facilities consists of electricity, natural gas and gasoline, all of which are currently in generally adequate supply. The segment's facilities are highly automated and, therefore, require a reliable source of electrical power. Labor is generally available in reasonable proximity to the segment's manufacturing facilities. Difficulties in obtaining any of the aforementioned items could affect the segment's results.

        Generally, the segment does not permit returns.

        The segment typically experiences increased sales in the fourth calendar quarter and lower sales in the first calendar quarter of each year. Sales of wireless handsets, two-way radios and related products increase during the year-end holiday season.

Our Facilities

        Our headquarters are located in Libertyville, Illinois. Our major facilities are located in Libertyville and Harvard, Illinois; Boynton Beach and Plantation, Florida; Flensburg, Germany; Tianjin, China; Singapore; Chihuahua, Mexico, and Jaguariuna, Brazil. We also maintain interests in two Korean cellular handset design and manufacturing firms; joint ventures in Hangzhou and Shanghai, China, and a manufacturing licensee in China. Additional engineering, software development and administration offices are located in San Diego, California; South Plainfield, New Jersey; Champaign, Illinois; Ft. Worth, Texas; Basingstoke, England; Tokyo, Japan; Toulouse, France; Milan, Italy; Beijing, China, and Seoul, Korea. We also share a facility in Penang, Malaysia with the Commercial, Government and Industrial Solutions Segment.

        We also use several original design-manufacturing contractors to enhance our ability to deliver products that meet consumer demands in rapidly-changing technological environment. These contractors manufacture products in non-Motorola facilities.

Global Telecom Solutions Segment

        The Global Telecom Solutions Sector ("GTSS" or the "segment") primarily designs, manufactures, sells, installs and services wireless infrastructure communication systems, including hardware and software.

Principal Products and Services

        Our wireless infrastructure product portfolio includes electronic exchanges, such as telephone switches, base site controllers and radio base stations for Code Division Multiple Access (CDMA), Global System for Mobile Communications (GSM), integrated digital enhanced network (iDEN®), and Personal Digital Cellular (PDC) technologies. We market our products to wireless service providers worldwide through a direct sales force, licensees or agents.

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Our Industry

        The wireless infrastructure industry experienced one of its most challenging years in 2001. Industry sales were slightly lower in 2001 compared to 23% growth in 2000, and 2001 was the first year that sales of wireless infrastructure equipment declined. Service providers spent less on new equipment because of the economic recession, severe pressure to keep their costs down, lower voice ARPUs (average revenue per user) and, for many, higher debt burdens. Also, the limited availability of handsets and lower than expected consumer demand for GPRS (General Packet Radio Service) caused lower than anticipated purchases of GPRS infrastructure equipment.

        In addition, service providers are slowing or postponing the build-out of the next generation 3G systems, particularly those known as UMTS (Universal Mobile Telecommunications System). UMTS systems are high-capacity wireless networks that are designed to provide enhanced data services, improved Internet access and increased voice capacity. Several factors are impacting this build-out, including: (i) that operators may have funding constraints limiting their ability to purchase 3G infrastructure equipment because of the very substantial fees paid by them for 3G licenses; (ii) issues associated with the introduction of very complex new technology; (iii) development of new data applications; and (iv) handset availability. We expect service providers to use GPRS to grow their data subscriber base and to build their business case for these next-generation systems and to broadly implement UMTS in large volumes around 2004, due to the need for expanded voice capacity and to support new data services.

Cost Reduction and Our Strategy

        In response to these challenging market conditions, we undertook a cost-reduction program that began in January 2001, while refocusing our business on basics and operational excellence. To reduce costs, we have reduced the number of employees at our business by approximately 20% since the end of 2000, and we are completing previously-announced actions that will further reduce the number of employees by an additional 5% by the end of March 2002. Also, we closed administrative facilities and consolidated manufacturing facilities. As a result, we lowered our operating costs and improved cash generated from operations in 2001. In line with these cost-reduction actions and to enhance manufacturing flexibility, we outsourced certain manufacturing operations, primarily for the assembly of printed circuit boards. We expect to continue to outsource certain manufacturing operations and expect outsourced manufacturing to represent in excess of 20% of the segment's manufacturing costs in 2002. As part of our strategy, we reprioritized our development engineering on radio access networks, while we maintained our investment in key growth areas—CDMA 1X, iDEN and UMTS. We began developing strategic alliances for network products, and partnered both externally and within Motorola to provide total wireless solutions for customers.

Customers

        The nature of our business is large, long-term contracts with major operators that require sizeable investments by our customers, often more than $100 million. In 2001, two customers represented approximately 35% of our sales (Nextel Communications, Inc. and KDDI, a service provider in Japan). In 2001, we announced major new infrastructure contracts with China Unicom and China Mobile totaling over $1.4 billion. We expect shipments under these contracts to be completed in 2002. The individual loss of any of our large customers could have a material adverse effect on the segment's business. Further, because our contracts are long-term, the loss of a major customer would impact performance in several quarters.

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        Nextel is an important customer, and we have been their primary supplier of network equipment for over ten years. Nextel uses Motorola's proprietary iDEN technology to support its Nextel Direct Connect ™ service. Our contracts with Nextel are non-exclusive. Although our relationship is strong, Nextel is free to evaluate other suppliers and technologies, and we cannot be assured of our supplier status as Nextel considers its options with respect to next-generation technology.

Competition

        We experience intense competition in worldwide markets from numerous competitors, ranging in size from some of the world's largest companies to small, specialized firms. Major competitors include Ericsson, Nokia, Lucent, Nortel, Siemens, Alcatel, NEC, Samsung and LG International. Based on annual sales in 2001, the segment is the third-largest global supplier of wireless infrastructure equipment and services.

        We have experienced significant competition in the market for digital products, especially as the industry transitions to 3G technology. GTSS is a supplier of 3G equipment for both CDMA 1X and UMTS technologies. We have a strong position in CDMA 1X, with 10 contract awards in 2001, bringing the total number of CDMA 1X awards to 15. The first wave of UMTS contracts has favored core network suppliers, and we did not maintain the number three position in terms of contract awards.

        Competitive factors in the market for the segment's products include: technology offered; price, payment terms; availability of vendor financing; product and system performance, product features, quality, delivery, availability and warranty; the quality and availability of service; company image; relationship with key customers; and time-to-market. Price is a major area of competition and often impacts margins for initial system bids. Time-to-market has also been an important competitive factor, especially for new systems and technologies.

Payment Terms

        Payment terms vary worldwide. Generally, contract payment terms range from net 30 to 60 days. Some contracts include a holdback of certain residual amounts due to Motorola upon system acceptance by the customer. As required for competitive reasons, we may provide or arrange for long-term financing in connection with equipment purchases. Financing may cover all or a portion of the purchase price, as well as working capital. We also assist customers in obtaining financing from banks or other sources. Our largest single infrastructure financing, which was provided by the Motorola Credit Corporation (a wholly-owned subsidiary of Motorola), was for $1.6 billion. During 2001, we significantly reduced the amount of outstanding financing commitments and outstanding financial guarantees to third-parties for customers. In 2002, we expect to provide financing support to our customers while continuing to limit our financing exposure.

Regulatory Matters

        Radio frequencies are required to provide wireless services. The allocation of frequencies is regulated in the U.S. and other countries throughout the world, and limited spectrum space is allocated to wireless services. The growth of the wireless and personal communications industry may be affected if adequate frequencies are not allocated or, alternatively, if new technologies are not developed to better utilize the frequencies currently allocated for such use. Industry growth may also be affected by the cost of the new licenses required to use frequencies. Typically, governments sell these licenses at auctions. Over the last several years, the cost of these licenses has increased significantly, particularly for frequencies used in connection with 3G technology. The significant cost for licenses has slowed and may continue to slow the growth of the industry. Growth is slowed because some operators have funding constraints limiting their ability to purchase new licenses or purchase new technology to upgrade their systems. Such occurrences might continue to have an effect on the segment's results.

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Backlog

        The segment's backlog amounted to $1.5 billion at December 31, 2001 and $2.1 billion at December 31, 2000. The 2001 order backlog is believed to be generally firm and 100% of that amount is expected to be shipped or earned under contract accounting during 2002. The forward-looking estimates of the firmness of such orders is subject to future events that may cause the percentage of the 2001 backlog actually shipped or earned under contract accounting to change.

Intellectual Property Matters

        Patent protection is extremely important to our operations. We have an extensive portfolio of patents relating to our products, systems, technologies and manufacturing processes. Motorola is also licensed to use certain patents owned by others. The protection of these licenses is also important to our operations. Reference is made to the material under the heading "Other Information" for information relating to patents and trademarks and research and development activities with respect to this segment.

Inventory, Raw Materials, Right of Return and Seasonality

        The segment's practice is to carry inventory to respond to customers' needs. In 2001, the segment reduced its inventory by 50% compared to 2000 levels. The reduction in inventory is in part due to outsourcing of certain manufacturing activities, streamlining of product offerings, and reducing the level of finished goods inventory.

        Materials used in the segment's operations are generally second-sourced to ensure a continuity of supply. Occasional shortages in purchased components do occur; however, these shortages have not had a large impact on our business. Energy necessary for the segment's manufacturing facilities consists of electricity, natural gas and gasoline, all of which are currently in generally adequate supply. The segment's facilities are highly automated and, therefore, require a reliable source of electrical power. Labor is generally available in reasonable proximity to the segment's manufacturing facilities. Difficulties in obtaining any of the aforementioned items could affect the segment's results.

        Generally, we do not permit customers to return products. Our business does not have seasonal patterns for sales.

Our Facilities

        Our headquarters are located in Arlington Heights, Illinois. Major design centers include Arlington Heights and Schaumburg, Illinois; Chandler, Arizona; Fort Worth, Texas; Cork, Ireland; Vancouver, British Columbia, and Swindon, England. We operate manufacturing facilities in Schaumburg, Illinois; Fort Worth, Texas; Hangzhou and Tianjin, China; Swindon, England, and Jaguariuna, Brazil. The segment has also recently opened offices in Deer Park, Illinois.

Commercial, Government and Industrial Solutions Segment

        The Commercial, Government and Industrial Solutions Sector ("CGISS" or the "segment") provides integrated communications and information solutions for commercial, government and industrial customers worldwide.

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Principal Products and Services

        We design, manufacture, sell, install and service analog and digital two-way radio voice and data communications products and systems to a wide range of public-safety, government, utility, transportation and other worldwide markets. In addition, the segment participates in the emerging market for integrated command and control solutions for public safety and enterprise customers. We also provide network services for two-way radio subscribers in international markets through joint ventures.

        Our products are sold directly through our own distribution force or through independent authorized distributors and dealers, commercial mobile radio service operators and independent commission sales representatives. The direct distribution force provides system engineering and installation and other technical and systems management services to meet the customer's particular needs. The customer may choose to install and maintain the equipment with its own employees, or may obtain installation, service and parts from a network of our authorized service stations (most of whom are also authorized dealers) or from other non-Motorola service stations. Subscriber units are sold directly and through indirect distribution channels.

Our Industry

        Significant events in the later part of 2001 have heightened the need for safety and security solutions worldwide. Public-safety, government and enterprise organizations are seeking a wide range of detection and prevention capabilities; communications interoperability and information sharing across many users, and integrated voice, data and video capabilities. We have been a leader in providing mission-critical communications and information solutions for more than 60 years, and our business is well positioned to participate in this emerging opportunity as customers solidify their funding for safety and security.

Cost Reduction

        During 2001, we implemented a series of cost-reduction actions designed to improve our financial performance. We completed the shut down of manufacturing operations in Mount Pleasant, Iowa with the outsourcing of our radio manufacturing operation. We also closed our Atlanta, Georgia distribution center and consolidated our U.S. distribution operations in Elgin, Illinois. We tightened controls over operating budgets and reduced the number of our employees at our business by 28% since year-end 2000.

Our Strategy

        During 2001, we also divested a number of non-strategic elements of our business portfolio. The largest of these was the sale of the Integrated Information Solutions Group (IISG), a supplier of advanced government electronics and communications solutions primarily for military and space applications in 2001. In addition, we also sold our RFID (radio frequency identification) business and interests in the ERG Smartcard Alliance. Other business exits included the BiStatix™ business, certain smart card businesses and a shared public trunk radio business. These portfolio changes have allowed us to intensify our focus on growth opportunities in integrated communications and information solutions.

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Customers

        The principal customers for two-way radio products and systems include public-safety agencies, such as police, fire, highway maintenance departments and forestry services; petroleum companies; gas, electric and water utilities; courier companies; telephone companies; diverse industrial companies; mining companies; transportation companies such as railroads, airlines, taxicab operations and trucking firms; institutions, such as schools and hospitals, and companies in the construction, vending machine and service businesses. Our products are also sold and leased to various federal agencies for many uses, including homeland security.

        We have a large number of worldwide customers. The combined sales from our top ten customers represent less than 9% of 2001 segment sales. A loss or reduction in purchasing levels by a single customer or a few customers would not have a material adverse effect on our results.

Competition

        Based on 2001 annual sales, we are the largest worldwide supplier of two-way radio communications solutions. We experience widespread, intense competition from numerous competitors ranging from some of the world's largest diversified companies to foreign, state-owned telecommunications companies to many small, specialized firms. Many competitors have their principal manufacturing operations located outside the U.S., which may serve to reduce their manufacturing costs and enhance their brand recognition in their locale. Major competitors include Tyco, M/A-Com, Nokia, Kenwood and E.F. Johnson.

        Competitive factors for our products, systems and solutions include: price; technology offered and standards compliance; features, performance, quality, availability, delivery and support, and the quality; and availability of service and systems engineering, with no one factor being dominant. An additional factor is the availability of vendor financing, as infrastructure customers continue to look to equipment vendors as an additional source of financing.

Payment Terms

        Payment terms vary worldwide. Generally, contract payment terms range from net 30 to 60 days. Some contracts include a holdback of certain residual amounts due to Motorola upon system acceptance by the customer. As required for competitive reasons, we may provide or arrange for long-term financing in connection with equipment purchases. Financing may cover all or a portion of the purchase price. We provide limited leasing and conditional sale arrangements for some of our customers. The leases range from one to 10 years. A conditional sale agreement ("CSA") is a sale of equipment to the customer where the customer's right to ownership is conditioned on his or her performance under the CSA—most notably making all the payments.

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Regulatory Matters

        Users of two-way radios are regulated by a variety of governmental and other regulatory agencies throughout the world. In the U.S., users of two-way radios are licensed by the FCC, which has broad authority to make rules and regulations and prescribe restrictions and conditions to carry out the provisions of the Communications Act of 1934. The FCC's authority includes, among other things, the power to classify radio stations, prescribe the nature of the service to be rendered by each class of station, assign frequencies to the various classes of stations and regulate the kinds of equipment that may be used. Regulatory agencies in other countries have similar types of authority. Consequently, the business and results of this segment could be affected by the rules and regulations adopted by the FCC or regulatory agencies in other countries from time to time. Motorola has developed products using trunking and data communications technologies to enhance spectral efficiencies. The growth and results of the two-way radio communications industry may be affected, however, by the regulations of the FCC or other regulatory agencies relating to the allocation of frequencies for land mobile communications users, especially in urban areas where such frequencies are heavily used.

Backlog

        This segment's backlog amounted to $1.7 billion at December 31, 2001 and $2.3 billion at December 31, 2000. The 2001 backlog amount is believed to be generally firm, and approximately 70-75% of that amount is expected to be shipped or earned under contract accounting during 2002. This forward-looking estimate of the firmness of such orders is subject to future events that may cause the percentage of the 2001 backlog actually shipped or earned under contract accounting to change.

Intellectual Property Matters

        Patent protection is very important to the segment's business. Reference is made to the material under the heading "Other Information" for information relating to patents and trademarks, and research and development activities with respect to this segment.

Inventory, Raw Materials, Right of Return and Seasonality

        Our business includes providing custom products based on assembling basic units into a large variety of models or combinations. This requires the stocking of inventories and large varieties of piece parts and replacement parts, as well as a variety of basic level assemblies in order to meet short delivery requirements.

        Availability of the materials and components required by the segment is relatively dependable and certain, but normal fluctuations in market demand and supply could cause temporary, selective shortages and affect results. Direct sourcing of materials and components from foreign suppliers is becoming more extensive. We operate certain offshore subassembly plants, the loss of one or more of which could constrain our production capabilities and affect results. Natural gas, electricity and, to a lesser extent, oil are the primary sources of energy. Current supplies of these forms of energy are generally considered to be adequate for this segment's U.S. and foreign operations. Labor is generally available in reasonable proximity to the segment's manufacturing facilities. However, difficulties in obtaining any of these items could affect the segment's results.

        Generally, we do not permit customers to return products. Our business does not have seasonal patterns for sales.

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Our Facilities

        Our headquarters are located in Schaumburg, Illinois, and we have major manufacturing/assembly facilities in Elgin and Schaumburg, Illinois; Plantation, Florida; Tianjin, China; Penang, Malaysia; Jaguariuna, Brazil; Berlin, Germany, and Arad, Israel.

Broadband Communications Segment

        The Broadband Communications Sector ("BCS" or the "segment") designs, manufactures and sells digital systems and set-top terminals for broadband cable and satellite television networks; high speed data products, including cable modems and cable modem termination systems (CMTS), as well as Internet Protocol (IP)-based telephony products; hybrid fiber/coaxial network transmission systems used by cable television operators; digital satellite television systems for programmers; direct-to-home (DTH) satellite networks and private networks for business communications, and digital broadcast products for the cable and broadcast industries.

Principal Products and Services

        Our products include the DCT2000 and DCT5000 series interactive digital set-top terminals, which enable advanced interactive entertainment and informational services including video-on-demand, interactive program guides, Internet access and more. Our DVi series of interactive digital set-top terminals delivers advanced interactive services focused on the DVB-compliant market around the world. We also provide system control equipment, encoders, access control equipment and a wide range of satellite receivers.

        Our Surfboard® family of high-speed cable modems delivers Internet access to cable subscribers. In addition, we provide cable telephony and home networking solutions. To complete the end-to-end broadband network solution, we design and manufacture a diverse family of broadband infrastructure access solutions for broadband services including video, voice, and data communications.

        Our products are marketed primarily to cable television operators, satellite television programmers, and other communications providers worldwide and are sold primarily through our sales personnel who are skilled in the technology of these systems.

Our Industry

        Demand for our products depends primarily on (i) capital spending by providers of cable services, satellite services and other communications services for constructing, rebuilding or upgrading their communications systems, and (ii) the marketing of advanced communications services by those providers. The amount of spending, and therefore a majority of our sales and profitability, are affected by a variety of factors, including: general economic conditions; the continuing trend of consolidation within the cable industry; the financial condition of cable television system operators and alternative communications providers, including their access to financing; technological developments; standardization efforts that impact the deployment of new equipment; and new legislation and regulations affecting the equipment sold by the segment. Due in part to the economic recession in 2001, our customers significantly reduced their capital spending from 2000 levels.

Our Strategy

        Although the majority of our sales were made in North America, we believe there are significant opportunities for growth outside North America. We have placed increased focus on the European region as cable operators in this market begin to upgrade their systems to offer "triple-play" broadband services of video, voice and data communications.

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        In late 2001 and early 2002 we continued our strategy of enhancing our end-to-end infrastructure product portfolio to address the emerging needs of broadband operators. In October 2001, we completed the acquisition of RiverDelta Networks, Inc., a leading provider of carrier-class broadband routing, switching, cable modem termination system (CMTS), and service management solutions. The addition of RiverDelta has increased our technical expertise and product offerings, with products ranging from high-density solutions for operators who want to support advanced services, to modular configurations for small/distributed networks. In January 2002, we completed the acquisition of Synchronous, Inc., a leading provider of fiber optic systems for video, data and voice transmission. The addition of the Synchronous technical staff and optical networking technology expands our infrastructure product suite to provide broadband network operators with the solutions they require to deliver an increasing number of data-intensive services.

Cost Reduction

        As a result of overall economic conditions and reduced cable operator spending, we took actions during 2001 to reduce manufacturing, selling, general and administrative costs. Consistent with existing business conditions, we reduced manufacturing headcount and consolidated two manufacturing locations to reduce manufacturing costs. In addition, we reduced selling, general and administrative spending in all areas and reduced employees in this area by approximately 20% since the end of 2000.

Customers

        Because of continuing consolidation within the cable industry worldwide, a small number of operators own a majority of cable television systems and account for a significant portion of the capital spending made by cable television system operators. Last year, sales to our two largest customers, AT&T Broadband and Charter Communications, represented 32% of total sales. The loss of business from either of these customers or any other significant operator could have a material adverse effect on the segment's business. The segment does not have any material long-term contracts with its customers.

Competition

        The businesses in which we operate are highly competitive. We compete worldwide in the market for digital set-top terminals for cable and satellite networks. Based on 2001 annual sales, we believe we are the leading provider of digital cable set-top terminals in North America. In North America, we primarily compete with Scientific Atlanta, Pioneer and Sony. Outside of North America, where we have a smaller market position, we compete with many equipment suppliers including most consumer electronics companies. We also compete worldwide in the market for broadband data products, which includes both cable and DSL modems. Based on 2001 annual sales, we believe that we are the leading provider of cable modems worldwide, competing primarily with Thomson/RCA, Toshiba, Terayon, COM21 and a number of smaller manufacturers. The rapid technological changes occurring in each of the markets in which we compete are expected to lead to the entry of many new competitors.

        Competitive factors for our products, systems and solutions include: technology offered; product and system performance, features, quality, delivery and availability, and price. We believe that we enjoy a strong competitive position because of our large installed cable television equipment base, strong relationships with major communication systems operators worldwide, technological leadership and new product development capabilities.

Payment Terms

        Extended payment terms are provided to customers from time to time on a case-by-case basis. Such extended terms are isolated in nature and we do not expect large changes in our receivable days from existing levels.

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Regulatory Matters

        Many of our products are subject to regulation by the FCC or other communications regulatory agencies. In addition, our customers and their networks, into which our products are incorporated, are subject to government regulation. Government regulatory policies affecting either the willingness or the ability of cable operators to offer certain services, or the terms on which the companies offer the services and conduct their business, may affect the segment's results.

Backlog

        The segment's backlog amounted to $755 million at December 31, 2001 and $1.0 billion at December 31, 2000. The 2001 order backlog is believed to be firm and 100% of that amount is expected to be shipped in 2002. The forward-looking estimates of the firmness of such orders is subject to future events, which may cause the percentage of the 2001 backlog actually shipped to change.

Intellectual Property Matters

        We seek to build upon our core enabling technologies such as digital compression, encryption and conditional access systems, in order to lead the worldwide growth in the market for broadband communications networks. Our policy is to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications to protect technology and improvements that we consider important to the development of our business. Although we believe that our patents provide a competitive advantage, we also rely on our proprietary knowledge and ongoing technological innovation to develop and maintain our competitive position, and will periodically seek to include our proprietary technologies in certain patent pools that support the implementation of standards. We are a founder of MPEG LA, the patent licensing authority established to foster broad deployment of MPEG-2 compliant systems. We have also licensed our digital conditional access technology, DigiCipher® II/MPEG-2, to other equipment suppliers. We also enter into other license agreements, both as licensor and licensee, covering certain products and processes with various companies. These license agreements require the payment of certain royalties that are not expected to be material to the segment's financial results.

Inventory, Raw Materials, Right of Return and Seasonality

        Substantially all of our products are manufactured at our facilities. Inventory levels are managed in line with existing business conditions and have declined in 2001 consistent with decreased sales levels.

        We source our raw materials primarily from large multinational corporations supplying the electronics and telecommunications industries. In general, we have access to several sources of supply for each component in our major products; however we have some components that are currently available only from single sources. We have inventory controls and other policies intended to minimize the effect of any interruption in the supply of components. We currently sole source certain parts from Broadcom Corporation for our digital set-top terminals and cable modems. Any material disruption in supply from Broadcom for certain products would have a material adverse impact on our operations. Electricity is the primary source of energy required for our manufacturing operations. These operations do not have significant risk relating to the availability of this energy source; however, possible shortages in the supply of electricity would affect the segment's operations. Labor is generally available in reasonable proximity to the segment's manufacturing facilities.

        Generally, we do not permit customers to return products. We have not experienced seasonal buying patterns for our products recently. However, as our retail cable modem sales increase, we may have increased sales during the holiday season at the end of each year.

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Our Facilities

        Our headquarters are located in Horsham, Pennsylvania. We also have research and development and administrative offices in: San Diego and San Jose, California; Tewksbury, Massachusetts; Deer Park, Illinois, and Lawrenceville, Georgia. We have several sales offices throughout North America, Europe, Latin America and the Far East, and we operate manufacturing facilities in Taipei, Taiwan; Nogales, Mexico; Singapore; Germany; Fort Worth, Texas, San Jose, California, and Tewksbury, Massachusetts.

Semiconductor Products Segment

        The Semiconductor Products Sector ("SPS" or the "segment") designs, produces and sells embedded processors for the networking and computing, transportation and standard product, and wireless/broadband markets. SPS offers multiple technologies enabling customers to develop smarter, faster and synchronized products for the person, work team, home and automobile.

Principal Products and Services

        SPS embedded processors are integrated semiconductor and software solutions. Semiconductors control and amplify electrical signals and are used in a broad range of electronic products, including consumer electronic products, computers, communications equipment, solid-state ignition systems and other automotive electronic products, major home appliances, industrial controls, robotics, aircraft, space vehicles and automatic controls. Embedded software increases application flexibility and shortens the cycle time of adapting our hardware with changing customer requirements. In the networking and computing market, SPS provides communication solutions for wireless and wireline networking infrastructure, and computing solutions for PCs and servers. In the emerging portfolio of wireless and broadband consumer communications, SPS products focus on connectivity, audio, video, imaging, graphics and RF embedded solutions. In the transportation and standard product market, SPS products include MCUs (microcontrollers), DSPs (digital signal processors), embedded MPUs (microprocessors), sensors and analog.

        We market our products through a global network of sales offices and operations. Our sales teams are augmented by a network of distributors, who extend the reach of products and services around the world.

Our Industry

        The semiconductor industry, which traditionally has had volatile sales cycles, had its worst decline in history in 2001. Industry-wide sales declined more than 30%. Average selling prices for semiconductor products declined as manufacturers aggressively priced their products in response to declining demand. The industry was negatively impacted by excess manufacturing capacity in a declining market. Over the past several years and throughout the industry, manufacturers have been increasing capacity, much of which was not needed as demand for semiconductor products began to decline in the second half of 2000 and continued through 2001.

Cost Reduction and Our Strategy

        In response to the decline in the industry, we implemented a cost-reduction program as part of our new business model. Our strategy is to focus our internal manufacturing capacity on leading edge and specialty technologies, while supplementing our internal manufacturing capacity with joint venture manufacturing facilities and purchases of products from outside vendors, primarily foundries.

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        The new business model has three primary components. First, focusing on providing silicon-to-software solutions to the wireless communications, networking and transportation markets because we believe that these are growth markets. The personal computer market is maturing, and is dominated by a single well-entrenched competitor, providing little opportunity for us. Although the transportation market grows more slowly than other semiconductor product areas, we have an excellent market share position and this is a relatively stable market. The wireless communications and networking markets are expected to grow more rapidly than the overall industry because the current penetration level is much lower than in other segments, and the continual increase in the number of wireless applications will add additional value for end-customers.

        A key strategy to support this first element is creating proprietary, higher-value products to increase penetration of targeted embedded markets. We launched a new merchant market strategy in wireless to provide complete, embedded wireless 2.5G and 3G silicon-to-software solutions for global handset original equipment manufacturers (OEMs) and original equipment designers (ODMs). Our first 2.5G platform for the merchant market was introduced in September 2001. The Innovative Convergence™ i.250-silicon-to-software wireless handset solution addresses GSM and GPRS standards and a large part of the $26 billion wireless semiconductor market projected for 2004 by Gartner Dataquest. We are also expanding our offering of higher-margin System-on-a-Chip (SoC) solutions and have design wins with 20 leading auto industry suppliers over the next five years for the advanced 16-bit HCS-12 embedded Flash MCU family. In addition to migrating automotive customers from older, 8-bit architectures to this higher performance, higher-market 16-bit line, we are marketing the HCS-12 family through the distribution channel. Our programmable C-Port Network Processors (C-5) helps network and communications equipment vendors get to market faster by enabling them to program key features in C-level software rather than the traditional hardware (ASIC) approach. This greatly improves Time-to-Market and Time-in-Market for network equipment vendors by leveraging the power of standard high-level software for use in a wide range of high-performance network products.

        The second element of the new business model is to substantially reduce fixed asset expenditures and increase utilization rates. This includes sizing the organization to reflect the current business environment, closing older less efficient factories and moving production into remaining facilities. Employment reductions completed in 2001 totaled approximately 4,000, with an additional 6,000 reductions announced for completion during 2002, representing 28% of our workforce at December 2000 year end. The announced manufacturing closures and phase-outs will decrease the number of operating fabrication and high-volume assembly/test sites from 22 in 2000 to 10 at year-end 2002. In 2002 we will completely or partially shut-down manufacturing facilities in Sendai, Japan; Hong Kong; South Queensferry, Scotland; Austin, Texas; and Mesa, Arizona. When economically feasible, we plan to resume using foundries for a larger percentage of standard manufacturing, while using our facilities primarily to produce leading-edge and specialty technologies. We also will rely increasingly on joint ventures and partnerships to share the costs of funding major capital projects and research and development.

        The final element of the business model is to license more of our intellectual property to increase royalty revenues over the next several years. Included in this initiative are patent cross-licenses and process technology licenses and agreements with partners to commercialize manufacturing invention and know-how the segment created in the course of conducting business.

        Available capacity, cyclical customer demands, new product introductions and aggressive pricing have and could continue to impact our business and results. However, our new business model is intended to reduce our costs and improve our performance.

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Customers

        SPS sells its products worldwide to OEMs and a network of industrial distributors through its own sales force, agents and distributors. The segment generally targets as customers the leaders in the market segments in which its products are used as well as the companies we believe will be future leaders in these segments. Our top ten end-customers accounted for approximately 50% of segment revenue in 2001, and were: Apple, Bosch, Delphi, Hewlett Packard, Lucent, Motorola, Qualcomm, Siemens, Sony and Visteon. The volume of purchases by these customers has affected, and could continue to affect, segment results.

        Products manufactured by us and supplied to other operating units of Motorola collectively constitute the segment's largest customer at 22% of 2001 revenue (2000, 25%; 1999, 22%). No other customer accounted for 10% or more of our revenue in 2001.

Competition

        We experience intense competition from numerous competitors ranging from large companies offering a full range of products to small companies specializing in certain segments of the market. The competitive environment also is changing as a result of increased alliances between competitors. Our top ten competitors in the semiconductor industry comprised half of the total market in 2001, based on estimates published by Gartner-Dataquest. At 16%, Intel's share was three times the size of its nearest competitor, due to its major penetration in the desktop PC market. The next nine largest semiconductor suppliers had market shares ranging from 3% to 5%; seven of the nine are headquartered outside the U.S. In 2001, based on sales, the segment had the 7^th largest market share in the overall semiconductor market, with an estimated 3.5% share. However, the segment's shares of its targeted sub-markets are much higher both in percentages and relative positions.

        Important factors in competition include: price; technology offered; product features, quality, availability and warranty; the quality and availability of service; time-to-market; and company image. The ability to develop new products to meet customer requirements and to meet customer delivery schedules are also competitive factors.

Payment Terms

        Generally, we do not provide extended payment terms.

Backlog

        The segment's backlog amounted to $900 million at December 31, 2001 and $1.6 billion at December 31, 2000. Orders may be and are placed by customers for delivery up to 12 months in the future, but for purposes of calculating backlog, only the next 13 weeks requirements are reported. In the semiconductor industry, backlog quantities and shipment schedules under outstanding purchase orders are frequently revised to reflect changes in customer needs. Typically, binding agreements calling for the sale of specific quantities at specific prices are contractually subject to price or quantity revisions and are, as a matter of industry practice, rarely formally enforced. Therefore, the segment believes that most of its order backlog is cancelable. For these reasons, the amount of backlog as of any particular date may not be an accurate indicator of future results.

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Intellectual Property Matters

        Patent protection is very important to our operations and has become even more important under our new business model discussed above. We intend to license more of our intellectual property over the next several years. In addition, Motorola is licensed to use certain patents owned by others and we benefit from those licenses. The protection of these licenses is also important to our operations. Reference is made to the material under the heading "Other Information" for information relating to patents and trademarks and research and development activities.

Inventory, Raw Materials, Right of Return and Seasonality

        A majority of our products are built-to-order for our customers. We can have sizeable amounts of inventory on hand from time to time. The level of inventory reflects the long manufacturing process that is a feature of the semiconductor industry.

        The segment is not currently experiencing any shortages in obtaining raw materials. We purchase a substantial portion of certain supplies from Taiwan and contract with companies to test and assemble certain products in Taiwan. With respect to these and other supplies, the segment is constantly evaluating additional sources of supply to minimize the risk of obtaining materials from only a few sources. Electricity, oil and natural gas are used extensively in the segment's operations. All of these energy sources are available in adequate quantities for current needs. Electricity and oil are the primary energy sources for the segment's foreign operations, and, presently, there are no shortages of these sources; although the reliability of electrical power has been a problem from time to time at certain facilities outside of the U.S. Labor is generally available in reasonable proximity to the segment's manufacturing facilities. Difficulties in obtaining any of the aforementioned items could affect SPS' results.

        We permit distribution customers to return products under a return program that limits the period for return and the quantity that can be returned. Our OEM customers can return products for up to 30 days. Our business does not have seasonal patterns for sales, although our results are affected by the cyclical nature of the semiconductor industry.

Our Facilities

        Our headquarters are located in Austin, Texas. Our major facilities are located in Austin, Texas; Chandler, Mesa, Phoenix and Tempe, Arizona; Tianjin, China; Toulouse, France; Munich, Germany; Kwai Chung and Tai Po, Hong Kong; Sendai and Tokyo, Japan; Tel Aviv, Israel; Kuala Lumpur, Malaysia; Singapore, and East Kilbride and South Queensferry, Scotland. SPS is consolidating its production network into fewer integrated "anchor" sites for economies of scale and improved efficiency.

Integrated Electronic Systems Segment

        The Integrated Electronic Systems Sector ("IESS" or the "segment") designs, manufactures and sells automotive and industrial electronics systems and solutions, telematics products and solutions, portable energy storage products and systems, and multi-function embedded board and computer system products.

Principal Products and Services

        The Automotive and Industrial Electronics Group ("AIEG") uses its high-quality application and engineering expertise to design and sell custom electronic solutions for original equipment manufacturers ("OEMs"), including foreign and domestic automobile manufacturers, heavy vehicle manufacturers, farm equipment manufacturers and industrial customers.

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        The Telematics Communications Group ("TCG") provides automotive customers with integrated wireless handsets and a variety of wireless Internet systems, including navigation and driver safety, and hands-free Internet access.

        During 2001, a strategic reorganization occurred by combining AIEG with TCG to form the Automotive Communications and Electronic Systems ("ACES") Group. ACES was formed to bring greater focus to customer needs and to offer a broader automotive communications solutions portfolio.

        The Energy Systems Group ("ESG") delivers complete portable energy system solutions for many of today's leading brand-name wireless handsets, notebooks, palm computers, and other portable electronic products. A significant portion of ESG sales is to other businesses within Motorola, primarily the personal communications segment business.

        The Motorola Computer Group ("MCG") specializes in embedded computing technology that is integrated by OEMs into a wide variety of products, including: products and solutions utilized in telecommunications infrastructures; CAT scanners and MRI medical systems; flight simulators, and semiconductor manufacturing equipment.

        We market our products through a direct sales force, channel distributors and strategic distribution partners.

Our Industry

        We participate in three industries. We provide products and systems used in cars, portable energy systems such as batteries used in wireless devices, and embedded computing technology used in a wide variety of products and equipment. Demand for most of our products is linked to consumer demand for cars and wireless devices. All of the industries in which we participate have been impacted by the economic recession.

Cost Reduction

        During 2001, we continued implementing major cost-reduction actions intended to improve our cost structure, refocus our long-term strategies and improve the competitiveness of the segment. We moved production from Dublin, Ireland; Harvard, Illinois and Lawrenceville, Georgia to Nogales, Mexico; Penang, Malaysia and Tianjin, China; as a result we stopped manufacturing at the three manufacturing facilities mentioned above. We are also in the process of moving the auto body production from Elma, New York to Nogales, Mexico, and, as a result, we have significantly downsized the Elma manufacturing facility. Based upon a re-assessment of the ACES cost structure, we exited the facility in Stotfold, UK and are in the process of establishing the regional automotive headquarters in Munich, Germany. We exited several businesses to re-align our long-term business strategies; as a result we consolidated and closed several sales, distribution and administration facilities. In addition, as part of the programs mentioned above, we reduced the number of our employees by 21% since the end of 2000.

Customers

        A large part of our business is dependent upon other Motorola businesses, collectively, and three external automotive manufacturers. We sold 52% of our products to four customers: 25% to Motorola, 10% to Ford (including Jaguar), 9% to Daimler-Chrysler and 8% to GM (including OnStar). Each of these key customers is served by more than one group within the segment and with multiple products from the groups. The loss of a significant portion of these customers' business could have a material adverse effect upon the segment.

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        During 2001, all business groups have experienced a decrease in product demand, mainly due to weakened economic conditions. Both sales and orders were down for ACES, due largely to a decrease in vehicle production in the U.S. and Europe. ESG sales and orders were down due to the decrease in wireless handset demand throughout the industry. Both revenue and orders were down significantly for MCG, due to a significant market downturn in the telecommunication industry.

Competition

        Demand for the products of ACES is linked to automobile sales in the U.S. and other countries. Demand for ESG products is substantially linked to the sales of other industry segments within Motorola. Demand for MCG products is linked to demands for manufacturing systems, imaging, and telecommunications products in the U.S. and other countries. The segment experiences competition from numerous global competitors, including automobile manufacturers' internal or affiliated electronic control suppliers.

        ACES is the market leader for Telematics and pressure sensor systems and products; key competitors include Delphi and Visteon. ESG is currently the third-largest provider of portable energy system solutions; key competitors include Sony, Panasonic, Sanyo and Toshiba. MCG is the market leader for VME technology (a flexible open-ended business system used in Europe) and one of the top three providers for CompactPCI Board products; key competitors include Intel, Sun Microsystems and Radisys.

        Competitive factors in the sale of our products include: price; product quality, performance and delivery; supply integrity; quality reputation; responsiveness; and design and manufacturing technology. An additional factor for MCG products is the availability of compatible software.

Payment Terms

        Generally, contract payment terms range from net 30 to 60 days.

Backlog

        The segment's backlog amounted to $261 million at December 31, 2001 and $407 million at December 31, 2000. Our 2001 backlog is believed to be generally firm, and approximately 100% of that amount is expected to be shipped during 2002. This forward looking estimate of the firmness of such orders is subject to future events that may cause the percentage of the 2001 backlog actually shipped to change.

Intellectual Property Matters

        Patent protection is important to our business. Reference is made to the material under the heading "Other Information" for information relating to patents and trademarks and research and development activities with respect to this segment.

Inventory, Raw Materials, Right of Return and Seasonality

        The segment does not carry significant amounts of inventory.

        All materials used by our operations are readily available at this time. We use electricity and gas in our operations, which are currently adequate in supply. Labor is generally available in reasonable proximity to the segment's manufacturing facilities. However, difficulties in obtaining any of the aforementioned items could affect our results.

        In certain circumstances, and primarily in our MCG business, we permit customers to return products. We believe that the return policies in all businesses conform to standard industry practices. We have not experienced seasonal buying patterns for our products.

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Our Facilities

        Our headquarters are located in Northbrook, Illinois. We also have major facilities located in Tempe, Arizona; Lawrenceville, Georgia; Elk Grove, Illinois; Farmington Hills, Michigan; Elma, New York; Seguin, Texas; Nogales, Mexico; Tianjin, China; Angers, France, and Penang, Malaysia. We stopped manufacturing in Lawrenceville, Georgia; Harvard, Illinois; Stotfold, England; and Dublin, Ireland during 2001.

Other Products Segment

        The Other Products segment includes: (i) various corporate programs representing developmental businesses and research and development projects, (ii) the Company's holdings in cellular operating companies outside the U.S., (iii) the Internet Software and Content Group, which provides end-to-end application services to the Company's segments, and (iv) Next Level Communications, Inc., a publicly-traded subsidiary in which Motorola has a controlling interest.

Other Information

        Financial Information About Segments.    The response to this section of Item 1 incorporates by reference Note 9, "Information by Segment and Geographic Region," of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

        Customers.    While Motorola does not sell 10% or more of its products and services to any one customer, it does have several large customers, the loss of one or more of which would have a material adverse effect on Motorola. Based on 2001 annual sales, important Motorola customers include Nextel Communications, Inc., China Mobile, China Unicom and KDDI.

        Approximately 2.3% of Motorola's total sales and revenues in 2001 were received from various branches and agencies, including the armed services, of the U.S. Government. This included sales from our Integrated Information Solutions Group, which we sold at the end of the third quarter 2001. A substantial portion of our sales in 2001 to the U.S. Government were from this business. All contracts with the U.S. Government are subject to cancellation at the convenience of the Government.

        Government contractors, including Motorola, are routinely subjected to numerous audits and investigations, which may be either civil or criminal in nature. The consequences of these audits and investigations may include administrative action to suspend business dealings with the contractor and to exclude it from receiving new business. In addition, Motorola, like other contractors, is internally reviewing aspects of its government contracting operations, and, where appropriate, taking corrective actions and making voluntary disclosures to the Government. These audits and investigations could adversely affect Motorola's ability to get new business from the U.S. Government.

        Backlog.    Motorola's aggregate backlog position, including the backlog position of subsidiaries through which some of its business units operate, as of the end of the last two fiscal years, was approximately as follows:

December 31, 2001	$	7.53 billion
December 31, 2000	$	9.62 billion

        Except as previously discussed in this Item 1, the orders supporting the 2001 backlog amounts shown in the foregoing table are believed to be generally firm, and approximately 93% of orders on hand at December 31, 2001 are expected to be shipped or earned with respect to contracts accounted for under percentage-of-completion of accounting during 2002. However, this is a forward-looking estimate of the amount expected to be shipped, and future events may cause the percentage actually shipped to change.

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        Generally, Motorola recognizes revenue for product sales when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable, and collection of the related receivable is probable which is generally at the time of shipment. Accruals are established for price protection, returns and cooperative marketing programs with distributors related to these sales. For long-term contracts, Motorola uses the percentage-of-completion method to recognize revenues and costs based on the percentage of costs incurred to date compared to the total estimated contract costs. For contracts involving new unproven technologies, revenues and profits or parts thereof are deferred until technological feasibility is established, customer acceptance is obtained and other contract-specific terms have been completed. Provisions for losses are recognized during the period in which the loss first becomes apparent. Revenue for services is recognized ratably over the contract term or as services are performed.

        Research and Development.    Motorola's business segments participate in very competitive industries with constant changes in technology. Throughout its history, Motorola has relied, and continues to rely, primarily on its research and development programs for the development of new products, and on its production engineering capabilities for the improvement of existing products. Technical data and product application ideas are exchanged among Motorola's business segments on a regular basis. Management believes, looking forward, that Motorola's commitment to research and development programs, both to improve existing products and services and to develop new products and services, together with its utilization of state-of-the-art technology, should allow each of its segments to remain competitive.

        Research and development expenditures relating to new product development or product improvement, other than customer-sponsored contracts, were approximately $4.3 billion in 2001, $4.4 billion in 2000 and $3.6 billion in 1999 representing a 3% decline in 2001 as compared to 2000 and a 25% increase in research and development activity in 2000 in comparison to 1999, primarily related to initiatives in the Global Telecom Solutions segment. In addition, research funded under customer-sponsored contracts amounted to approximately $239 million in 2001, $155 million in 2000 and $218 million in 1999. Motorola continues to believe that a strong commitment to research and development is required to drive long-term growth. Approximately 21,300 professional employees were engaged in such research activities (including customer-sponsored contracts) during 2001.

        Patents and Trademarks.    Motorola seeks to obtain patents and trademarks to protect our proprietary position whenever possible and practical.

        As of December 31, 2001, Motorola owned approximately 11,185 utility and design patents in the U.S. and 10,651 patents in foreign countries. These foreign patents are mostly counterparts of Motorola's U.S. patents, but an increasing number result from research conducted outside the U.S. and are originally filed in the country of origin. During 2001, Motorola was granted 808 U.S. utility and design patents. Many of the patents owned by Motorola are used in its operations or licensed for use by others, and Motorola is licensed to use certain patents owned by others. In some instances, certain of the patents licensed by Motorola to others have generated meaningful amounts of income to Motorola.

        Motorola has obtained registration of the "MOTOROLA" and "Stylized M Logo" trademarks and has adopted and made application for the "INTELLIGENCE EVERYWHERE" trademark throughout the world to designate its products and services across all businesses of the company. These marks are valuable corporate assets. Certain other trademarks and service marks of Motorola are registered in relevant markets. Motorola's increasing focus on marketing products directly to consumers is reflected in an increasing emphasis on brand equity creation and protection. The DIGITAL DNA™ brand remains a strong and highly visible presence in the semiconductor branding strategy.

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        Environmental Quality.    Motorola operations are from time to time the subjects of investigations, conferences, discussions and negotiations with various federal, state and local environmental agencies with respect to the discharge or cleanup of hazardous waste and compliance by those operations with environmental laws and regulations. The balance of the response to this section of Item 1 incorporates by reference the information contained under the captions "Environmental" and "Other" in Note 8, "Commitments and Contingencies" of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

        Employees.    At December 31, 2001, there were approximately 111,000 employees of Motorola and its subsidiaries other than the Next Level Communications as compared to approximately 147,000 employees at December 31, 2000.

        Financial Information About Foreign and Domestic Operations and Export Sales.    Domestic export sales to third parties were $2.20 billion, $1.91 billion and $2.58 billion for the years ended December 31, 2001, 2000 and 1999, respectively. Domestic export sales to affiliates and subsidiaries, which are eliminated in consolidation, were $2.93 billion, $7.28 billion and $6.72 billion for the years ended December 31, 2001, 2000 and 1999, respectively.

        The remainder of the response to this section of Item 1 incorporates by reference Note 8, "Commitments and Contingencies" of the Notes to Consolidated Financial Statements and the "2001 Compared to 2000" and "2000 Compared to 1999" sections of "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Business Risk Factors

        Except for historical matters, the matters discussed in this Form 10-K are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements under the following headings: (i) "Industry Environment and Our Business," about improvement in our market and opportunity for growth, (ii) "Personal Communications Segment," about the impact from the loss of key customers, expected shipments during 2002, the allocation and regulation of frequencies, the impact of the significant cost for 3G licenses, component shortages, and the availability of supplies and labor, and the seasonality of the business; (iii) "Global Telecom Solutions Segment," about the timing and volume of the build-out of next-generation infrastructure systems, planned employee reductions, the impact from the loss of key customers, competitiveness of products, expected shipments during 2002, vendor financing, the allocation and regulation of frequencies, the impact of the significant cost for 3G licenses, and the availability of supplies and labor; (iv) "Commercial, Government and Industrial Solutions Segment," about the new opportunities in the safety and security markets, the impact from the loss of key customers, allocation and regulation of frequencies, expected shipments during 2002 and the availability of supplies and labor; (v) "Broadband Communications Segment," about the impact from the loss of key customers, the impact of regulatory matters, expected shipments during 2002, the impact of licensing agreements, and the availability of supplies and labor; (vi) "Semiconductor Products Segment," about growth in markets, the use of foundries and partnerships, plans to license intellectual property, the impact from the loss of key customers, the impact of available capacity, cyclical customer demands, new product introductions and aggressive pricing, capital expenditures, opportunities outside the U.S., expected shipments during 2002, backlog and the availability of supplies and labor; (vii) "Integrated Electronic Systems Segment," about the impact from the loss of key customers, expected shipments during 2002, and the availability of supplies and labor; (viii) "Other Information," about expected shipments during 2002, large system orders and competitiveness through research and development and utilization of technology; (ix) "Item 2: Properties," about plans to sell or shut down currently operating facilities; and (x) "Item 3: Legal Proceedings," about the ultimate disposition of pending legal matters.

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        We wish to caution the reader that the following important business risks and factors, and those business risks and factors described elsewhere in this report or our other Securities and Exchange Commission filings, could cause our actual results to differ materially from those stated in the forward-looking statements.

Impact of the Economic Recession

•

Our business has been very negatively impacted by the economic recession that began in the latter part of 2000. We incurred a sizeable net loss in 2001 and expect to continue to incur a net loss in the first half of 2002. The success of ongoing changes in fiscal, monetary and regulatory policies worldwide will continue to influence the severity and the length of this recession. If these actions are not successful in spurring overall economic recovery, our business will continue to be negatively impacted as our customers buy fewer products and services from us.

Downturn in the Telecommunications Industry

•

The economic recession and "dot com" bust has had a materially negative impact on the worldwide telecommunications industry during late 2000 and throughout 2001. The rate at which the telecommunications industry improves is critical to our ability to improve our overall financial performance.

Uncertainty of Current Economic Conditions

•

Current conditions in the domestic and global economies are extremely uncertain. As a result, it is difficult to estimate the level of growth for the economy as a whole. It is even more difficult to estimate growth in various parts of the economy, including the markets in which we participate. Because all components of our budgeting and forecasting are dependent upon estimates of growth in the markets we serve and demand for our products, the prevailing economic uncertainties render estimates of future income and expenditures even more difficult than usual to make. The future direction of the overall domestic and global economies will have a significant impact on our overall performance.



•

The terrorist attacks in 2001 created many economic and political uncertainties that have severely impacted the global economy. We experienced a further decline in demand for our products after the attacks. The long-term effects of the attacks on our business and the global economy remain unknown. In addition, the potential for future terrorist attacks is creating worldwide uncertainties and makes it very difficult to estimate how quickly the economy will recover and our business will improve.

Impact of Cost-Reduction Efforts

•

During the second half of 2000 and throughout 2001, we implemented a strategic initiative to reduce costs and simplify our product portfolios in all of our businesses. We discontinued product lines, exited businesses, consolidated manufacturing operations and reduced our employee population by approximately 36,000. The impact of these cost-reduction efforts on our profitability may be influenced by:



•

Our ability to successfully complete these ongoing efforts.



•

The possibility that these efforts may not generate the level of cost savings we expect or enable us to effectively compete and return to profitability.



•

The risk that we may not be able to retain key employees.

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        Since these cost-reduction efforts involve all aspects of our business, they could adversely impact productivity to an extent we did not anticipate. Even if we successfully complete these efforts and generate the anticipated cost savings, there may be other factors that adversely impact our profitability.

Increasing Cost of Licenses to Use Radio Frequencies

•

Radio frequencies are required to provide wireless services. The allocation of frequencies is regulated in the United States and other countries throughout the world and limited spectrum space is allocated to wireless services. The growth of the wireless communications industry may be affected if adequate frequencies are not allocated or, alternatively, if new technologies are not developed to better utilize the frequencies currently allocated for such use.



•

Industry growth has been and may continue to be affected by the cost of new licenses required to use frequencies. Typically, governments sell these licenses at auctions. Over the last several years, the cost of these licenses has increased significantly, particularly for frequencies used in connection with 3G technology. The significant cost for licenses has slowed and may continue to slow the growth of the industry. Growth is slowed because some operators have funding constraints limiting their ability to purchase new licenses or technology to upgrade systems. The financial results for a number of our businesses have been and may continue to be affected by the cost of new licenses.

Adequate Supplies

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Our ability to meet customer demands depends, in part, on our ability to obtain timely and adequate delivery of materials, parts and components from our suppliers and internal manufacturing capacity. We have experienced shortages in the past, including components for wireless handsets, that have adversely affected our operations. Although we work closely with our suppliers to avoid these types of shortages, there can be no assurances that we will not encounter these problems in the future. A reduction or interruption in supplies or a significant increase in the price of one or more supplies could have a material adverse effect on our businesses.



•

We have developed outsourcing arrangements for the design and/or manufacture of certain products and components. If these third parties fail to deliver quality products and components on time and at a reasonable price, we could have difficulties fulfilling our orders and our sales and profits could decline.

Financial Flexibility

•

From time to time we access the capital markets to obtain long-term financing. Although we believe that we can continue to access the capital markets in 2002 on acceptable terms and conditions, our flexibility with regard to long-term financing activity could be limited by: (1) the significant amount of long-term financing we completed in late 2000 and throughout 2001, (2) our credit ratings, and (3) the health of the telecommunications industry. In addition, many of the factors that affect our ability to access the capital markets, such as the liquidity of the overall capital markets and the current state of the economy, are outside of our control. There can be no assurances that we will continue to have access to the capital markets on favorable terms.

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•

During 2001, our commercial paper credit ratings were downgraded from "A-1/P-1" to "A-2/P-2". Given the much smaller size of the market for commercial paper rated "A-2/P-2" and the number of large commercial paper issuers whose recent credit downgrades have placed them in this market, commercial paper or other short-term borrowings may be unavailable or of limited availability to participants in this market. Although we continue to issue commercial paper, we have greatly reduced it as a funding source. Outstanding commercial paper decreased from $6.2 billion at the end of 2000 to $514 million at the end of 2001. There can be no assurances that we will continue to have access to the commercial paper markets on favorable terms.

Ability to Draw Under Credit Facilities and Obtain New Credit Facilities

•

We view our existing one-year and five-year revolving domestic credit facilities as sources of available liquidity. These facilities contain various conditions, covenants and representations with which we must be in compliance in order to borrow funds. We have never borrowed under these facilities. If we wish to borrow under these facilities in the future, there can be no assurance that we will be in compliance with these conditions, covenants and representations. By their terms, these credit facilities expire in July and September of 2002. We plan on obtaining new domestic credit facilities to replace these expiring facilities. However, we anticipate that the terms on which we get this financing may be less favorable than the current terms because of our recent financial performance and current market conditions.

Rapid Technological Change

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The markets for our products are characterized by rapidly changing technologies, frequent new product introductions, short product life cycles and evolving industry standards. Our success depends, in substantial part, on the timely and successful introduction of new products and upgrades of current products to comply with emerging industry standards and to address competing technological and product developments carried out by our competitors. The development of new, technologically advanced products is a complex and uncertain process requiring high levels of innovation, as well as the accurate anticipation of technological and market trends. Products may contain defects or errors that are detected only after deployment. If our products are not competitive or do not work properly our business will suffer.

Strategic Acquisitions and the Integration of New Businesses

•

In order to position ourselves to take advantage of growth opportunities, we have made, and may continue to make, strategic acquisitions that involve significant risks and uncertainties. These risks and uncertainties include: (1) the difficulty in integrating newly-acquired businesses and operations in an efficient and effective manner; (2) the challenges in achieving strategic objectives, cost savings and other benefits from acquisitions; (3) the risk that our markets do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in those markets; (4) the potential loss of key employees of the acquired businesses; (5) the risk of diverting the attention of senior management from our operations; (6) the risks of entering new markets in which we have limited experience; and (7) difficulties in expanding our information technology systems to accommodate the acquired businesses.



•

Many acquisition candidates in the industries in which we participate carry higher relative valuations than we do. These candidates enjoy higher price to earnings or other valuation multiples than we do. This is particularly evident in software and services businesses. Acquiring a business that has a higher valuation than Motorola is dilutive to our earnings, especially when the acquired business has little or no revenue. We may not pursue opportunities that are highly dilutive to earnings and have, in the past, foregone such acquisitions.

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•

Key employees of acquired businesses may receive substantial value in connection with a transaction in the form of change-in-control agreements, acceleration of stock options and the lifting of restrictions on other equity-based compensation rights. To retain such employees and integrate the acquired business, we may offer additional, sometimes costly, retention incentives.



•

The impact of recently adopted accounting rules may further deter us from pursuing acquisition candidates whose value is largely attributable to goodwill. Under these new rules, we must record, rather than amortize, the value of goodwill acquired in connection with business combinations and perform an impairment test on the recorded goodwill at least annually. If the value of goodwill were impaired, we would be required to recognize a charge against our earnings. Uncertainty as to the timing and magnitude of any such charge would influence our decision to acquire businesses whose values far exceed their tangible assets.

Strategic Alliances

•

Our success is, in part, dependent upon our ability to effectively partner with other industry leaders to meet customer product and service requirements.

Fluctuations in the Fair Values of Portfolio Investments

•

We hold a portfolio of investments in various issuers. Since the majority of these securities represent investments in technology companies, the fair market values of these securities are subject to significant price volatility and, in general, have suffered severe declines in market value since mid-2000. In addition, the realizable value of these securities is subject to market and other conditions.



•

We also have invested in numerous privately held companies, many of which can still be considered in startup or developmental stages. These investments are inherently risky as the market for the technologies or products they have under development are typically in the early stages and may never materialize. We could lose all or substantially all of our investment in these companies and in some cases have.

Recruitment and Retention of Employees

•

Competition for key technical personnel in high-technology industries is intense. We believe that our future success depends in large part on our continued ability to hire, assimilate and retain qualified engineers and other highly skilled personnel needed to compete and develop successful new products. We may not be as successful at recruiting, assimilating and retaining these highly skilled personnel as our competitors, especially because of our recent employee reductions.

Changes in Government Policy or Economic Conditions

•

Our results may be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities of U.S. and non-U.S. governments, agencies and similar organizations. Our results may also be affected by social and economic conditions, which impact our operations, including in emerging markets in Asia and Latin America and in markets subject to ongoing political hostilities, including in regions of the Middle East.

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Risk Related to Our International Operations and Sales

•

Our customers are located throughout the world and more than half of our sales are outside of the U.S. In addition, we have many manufacturing, administrative and sales facilities outside the U.S. Approximately 52% of our employees are employed outside the U.S.



•

As with all companies that have sizeable sales and operations outside the U.S., we are exposed to risks, including from: (1) tariffs and trade barriers; (2) regulations related to customs and import/export matters; (3) longer payment cycles; (4) tax issues; (5) currency fluctuations; (6) challenges in collecting accounts receivable; (7) cultural and language differences; and (8) employment regulations.



•

We have sizeable operations in China, including manufacturing operations and 13% of our sales are made in China. The legal system in China is still developing and is subject to change. Accordingly, our operations and orders for products in China could be adversely impacted by changes to or interpretation of Chinese law.



•

We have operations, including manufacturing operations, in Israel and also sell our products there. The current political unrest could negatively impact our operations and sales in Israel.

Uncertainties of the Internet

•

There are currently few laws or regulations that apply directly to access to, or commerce on, the Internet. We could be adversely affected by any such regulation in any country where we operate. The adoption of such measures could decrease demand for our products and at the same time increase the cost of selling such products.

Outcome of Litigation; Protection of Patents

•

Our results could be materially adversely impacted by unfavorable outcomes to any pending or future litigation, including any relating to the Iridium project.



•

Our results may be affected by the outcome of pending and future litigation and the protection and validity of patents and other intellectual property rights. Our patent and other intellectual property rights are important competitive tools and many generate income under license agreements. There can be no assurances as to the favorable outcome of litigation or that intellectual property rights will not be challenged, invalidated or circumvented in one or more countries.

Development of New Products and Technologies

•

Our results are subject to risks related to our significant investment in developing and introducing new products, such as: (1) advanced digital wireless handsets; (2) CDMA and other technologies for 3G wireless networks; (3) products for transmission of telephony and high-speed data over hybrid fiber coaxial cable systems; (4) integrated digital radios; and (5) advanced semiconductor products. These risks include: (i) difficulties and delays in the development, production, testing and marketing of products; (ii) customer acceptance of products, particularly as our focus on the consumer market increases; (iii) the development of industry standards; (iv) the significant amount of resources we must devote to the development of new technology; and (v) the ability to differentiate our products and compete with other companies in the same markets.

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Transition to Newer Digital Technologies

•

Our success, in part, will be affected by the ability of our wireless businesses to continue our transition to newer digital technologies, particularly 3G technology, and successfully compete in that business and gain market share. We face intense competition in these markets from both established companies and new entrants. Product life cycles can be short and new products are expensive to develop and bring to market.

Demand for Customer Financing

•

The competitive environment in which we operate may require us to provide significant amounts of long-term customer financing. Customer financing arrangements may include all or a portion of the purchase price for our products and services, as well as working capital. In some circumstances these loans can be very large. We may also assist customers in obtaining financing from banks and other sources. Our success, particularly in our infrastructure businesses, may be dependent, in part, upon our ability to provide customer financing on competitive terms.

Customer Credit Risk

•

While we have generally been able to place a portion of our customer financings with third-party lenders, a portion of these financings are supported directly by us. There can be higher risks associated with some of these financings, particularly when provided to start-up operations such as local network providers, to customers in developing countries, or to customers in specific financing-intensive areas of the industry (such as 3G wireless operators). In 2001, we had to establish reserves for over $1.5 billion of our finance receivables due to customer defaults. Should additional customers fail to meet their obligations, losses could be incurred and such losses could have an adverse effect on us.

Risks from Large System Contracts

•

We are exposed to risks due to large system contracts for infrastructure equipment and the resulting reliance on large customers. These include: (1) the technological risks of such contracts, especially when the contracts involve new technology, and (2) the financial risks to us under these contracts, including the estimates inherent in projecting costs associated with large contracts and the related impact on operating results.

Renewed Growth in the Cable Industry

•

The cable industry is a major customer of our Broadband Communications segment. The ability of that segment to grow is dependent, in part, on growth in the cable industry and that industry's ability to compete with other entertainment providers. Due to the economic recession in 2001 cable operators significantly reduced their capital spending.

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Impact of Consolidations in the Telecommunications and Cable Industries

•

The telecommunications and cable industries have experienced significant consolidation and this trend is expected to continue. We and one or more of our competitors may each supply products to the companies that have merged or will merge. This consolidation could result in delays in purchasing decisions by the merged companies and/or Motorola playing a lesser role in the supply of communications products to the merged companies.



•

Because of continuing consolidation within the cable industry worldwide, a small number of operators own a majority of cable television systems and account for a significant portion of the capital spending made by cable television system operators. Last year, sales to BCS's two largest customers, AT&T Broadband and Charter Communications, represented 32% of BCS's total sales.

Recovery from Semiconductor Market Recession

•

Semiconductor industry-wide sales declined by 30% in 2001. Our results will be impacted by the current recession in the semiconductor market and our participation in any recovery. We refocused our semiconductor business to participate in some of the semiconductor markets with the best growth potential. There can be no assurances that this strategy will be successful.

Ability to Compete in Semiconductor Market

•

Our success is dependent, in part, on the ability of our semiconductor business to compete in the highly competitive semiconductor market. Factors that could adversely affect our ability to compete include: (1) production inefficiencies and higher costs related to underutilized facilities; (2) shortage of manufacturing capacity for some products; (3) competitive factors, such as rival chip architectures, mix of products, acceptance of new products and price pressures; (4) risk of inventory obsolescence due to shifts in market demand; (5) renewed growth of embedded technologies and systems and our ability to compete in that market; and (6) the effect of orders from our equipment businesses.

Success and Impact of Increased Use of Foundry Manufacturing Capacity and Partnerships

•

The success of our semiconductor business may be dependent on its ability to increase utilization of foundry manufacturing capacity and partner with other manufacturers to share costs of funding major capital projects. These efforts may impact our capital expenditures, production costs and ability to satisfy delivery requirements.

Renewed Growth in the Automobile Industry

•

Demand for our automotive products is linked to consumer demand for automobiles. The automobile industry has been adversely impacted by the economic recession. Renewed growth for automotive products is partially dependent on increased vehicle production in the U.S. and Europe.

Additional Risk Factors Included In Proxy Statement

        Certain portions of Motorola's Proxy Statement for the 2002 annual meeting of stockholders with Management's Discussion and Analysis and Consolidated Financial Statements are incorporated by reference into this Form 10-K. There are additional important factors included therein, including those beginning on page F-35 of the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

        ® Reg. U.S. Patent & Trademark Office.

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        MOTOROLA and the Stylized M Logo are registered in the U.S. Patent and Trademark office. All other products or service names are the property of their respective owners.

Item 2:    Properties

        Motorola's principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196. Its other major facilities in the U.S. are located in Arlington Heights, Deer Park, Elgin, Elk Grove, Harvard, Libertyville, Northbrook and Schaumburg, Illinois; Chandler, Mesa, Phoenix and Tempe, Arizona; Boynton Beach and Plantation, Florida; Lawrenceville, Georgia; Horsham, Pennsylvania; Austin, Ft. Worth and Seguin, Texas; South Plainfield, New Jersey; Tewksburg, Massachusetts; Farmington Hills, Michigan, and San Diego, California. Motorola also operates manufacturing facilities and sales offices in many other countries. (See "Item 1: Business" for information regarding the location of the principal manufacturing facilities for each industry segment.) Motorola owns 90 facilities (manufacturing, sales, service and office), 49 of which are located in North America and 41 of which are located in other countries. Motorola leases 490 facilities, 205 of which are located in North America and 285 of which are located in other countries. Through acquisitions of various businesses throughout 2001, Motorola acquired 14 additional sites, which are included in the preceding totals. In 2001, development of sites located in Deer Park and Elgin, Illinois, and Markham, Ontario was completed and the sites were occupied. Development of these sites was part of a program to consolidate facilities and allowed Motorola to vacate a number of leased facilities.

        Motorola generally considers the productive capacity of the plants operated by each of its industry segments adequate and sufficient for the requirements of each business group.

        As part of Motorola's overall strategy to reduce operating costs and improve the financial performance of the corporation, a number of businesses and facilities have either been sold or are currently for sale. In connection with the sale of the IISG business in Scottsdale, Arizona, Motorola sold three facilities totaling 1.5 million square feet and leased back 191 thousand square feet. A facility in Mansfield, Massachusetts and a training facility used by Motorola University in Tempe, Arizona were sold. The Dublin, Ireland facility was sold. Facilities in Mesa, Arizona; Irvine, California; Boynton Beach, Florida; Sendai, Japan, and South Queensferry, Scotland are currently up for sale.

        The extent of utilization of such manufacturing facilities varies from plant to plant and from time to time during the year.

Item 3:    Legal Proceedings

Environmental Cases

        Motorola was a named defendant in seven cases arising out of alleged groundwater, soil and air pollution in Phoenix and Scottsdale, Arizona. McIntire et al. v. Motorola was pending in the U.S. District Court for the District of Arizona, while Baker et al. v. Motorola et al., Lofgren et al. v. Motorola et al., Bentancourt et al. v. Motorola et al., Ford et al. v. Motorola et al., Wilkins et al. v. Motorola et al. and Dawson et al. v. Motorola, et al. were pending in the Arizona Superior Court, Maricopa County. Motorola has settled all the cases, received court approvals of the settlements and the cases are concluded.

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Personal Injury Cases

        Motorola has been a defendant in several cases arising out of its manufacture and sale of portable cellular telephones. Jerald P. Busse, et al. v. Motorola, Inc. et al., filed October 26, 1995 in the Circuit Court of Cook County, Illinois, Chancery Division, is a class action alleging that defendants have failed to adequately warn consumers of the alleged dangers of cellular telephones and challenging ongoing safety studies as invasions of privacy. Kane, et al., v. Motorola, Inc., et al., filed December 13, 1993 in the Circuit Court of Cook County, Illinois, alleges that plaintiffs' brain cancer was caused or aggravated by a prototype communication device. On May 11, 2000, the Court entered summary judgment in Motorola's favor holding that there was no evidence to support plaintiffs' theory of causation. Plaintiffs' appeal is pending. Medica et al., v. Motorola, Inc., et al., filed September 7, 1999, in the District Court of Clark County, Nevada; Newman et al., v. Motorola, Inc., et al., filed August 1, 2000, in the Circuit Court for Baltimore City, Maryland, and subsequently removed to the U.S. District Court; Murray v. Motorola, Inc., et al., filed November 15, 2001, in the Superior Court of the District of Columbia and subsequently removed to the U.S. District Court; Brower v. Motorola, Inc., et al., filed April 19, 2001, in the Superior Court of the State of California, County of San Diego, and subsequently removed to the U.S. District Court; Agro et. al., v. Motorola, Inc., et al., filed February 26, 2002, in the Superior Court of the District of Columbia; Cochran et. al., v. Audiovox Corporation, et al., filed February 26, 2002, in the Superior Court of the District of Columbia, and Schofield et. al., v. Matsushita Electric Corporation of America, et al., filed February 26, 2002, in the Superior Court of the District of Columbia all allege that use of a cellular phone caused a malignant brain tumor. The Brower complaint also seeks relief on behalf of a class of all persons who purchased cellular phones in the state of California since 1994. Plaintiffs' specified actual and punitive damages aggregate approximately $950 million; some cases do not specify damages.

        On May 26, 2000, a purported nationwide class action suit, Naquin, et al., v. Nokia Mobile Phones, et al., was filed against Motorola and several other cellular phone manufacturers and carriers in the Civil District Court for the Parish of Orleans, State of Louisiana, claiming that the failure to incorporate a remote headset into cellular phones rendered the phones defective and, by later amendment, that cellular phones cause undisclosed injury to cells and other health risk. The defendants have removed the case to the U.S. District Court. Similar state class action suits were filed on April 19, 2001, in the Circuit Court for Baltimore City, Maryland, Pinney and Colonell v. Nokia, Inc., et al., in the Pennsylvania Court of Common Pleas, Philadelphia County, Farina v. Nokia, Inc., et al., on April 20, 2001, in the Supreme Court of the State of New York, County of Bronx, Gillian et al., v. Nokia, Inc., et al., and on June 8, 2001, in the Superior Court of Fulton County, State of Georgia, Gimpelson v. Nokia Inc, et. al. The defendants removed all of the cases to federal court and plaintiffs have moved to remand the cases to state court. On October 31, 2001, the Judicial Panel on Multidistrict Litigation ruled that four of the cases, Naquin, et al. v. Nokia Mobile Phones, et al.; Pinney, M.D., et al. v. Nokia Inc., et al.; Gilliam, et al. v. Nokia Inc, et al; and Farina v. Nokia Inc, et al. should be transferred to the Federal District Court for the District of Maryland for coordinated or consolidated pretrial proceedings in the matter called In re Wireless Telephone Radio Frequency Emissions Products Liability Litigation (MDL Proceeding). On December 14, 2001, the panel transferred Gimpelson v. Nokia, Inc., et. al. to the MDL Proceeding. On January 9, 2002 defendants sought transfer and consolidation of the Brower complaint with the MDL Proceeding, and on January 31, 2002, the panel entered a conditional transfer order.    The plaintiffs seek compensatory damages, declaratory and injunctive relief.

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Iridium Cases

        Motorola has been named as one of several defendants in putative class action securities lawsuits pending in the District of Columbia arising out of alleged misrepresentations or omissions regarding the Iridium satellite communications business.    On March 15, 2001, the federal district court judge consolidated the various securities cases under Freeland v. Iridium World Communications, Inc., et al., originally filed on April 22, 1999. The plaintiffs seek an unspecified amount of damages. In addition, Motorola has been named as a defendant in Andrews, et al. v. Iridium World Communications, LTD, et al., in the Superior Court of California (San Diego) in June 2000; the 42 plaintiffs were purchasers of Iridium securities and allege violations of California law relating to securities and are seeking an unspecified amount of damages.

        Motorola has been sued by the Official Committee of the Unsecured Creditors of Iridium in the Bankruptcy Court for the Southern District of New York on July 19, 2001. In re Iridium Operating LLC, et al. v. Motorola asserts claims for breach of contract, warranty, fiduciary duty, and fraudulent transfer and preferences. The plaintiffs seek in excess of $4 billion in damages.

        Motorola is also a defendant in three lawsuits relating to Iridium filed by The Chase Manhattan Bank. During November and December 2001, a bench trial was held on Chase's claims in The Chase Manhattan Bank v. Motorola, pending in the Southern District of New York. The court found in favor of the plaintiff on its claim that Motorola breached its commitment to provide a $300 million loan guarantee relating to Iridium's debt. Motorola's counterclaim, that Chase acted in bad faith when it loaned Iridium additional funds prior to Iridium's bankruptcy, is still pending. Chase has also brought suit in the District of Delaware against Motorola and seventeen other parties captioned The Chase Manhattan Bank v. Iridium Africa Corp., et al. In that lawsuit, Chase alleges that Motorola and other investors in Iridium LLC are obligated to pay Chase certain amounts allegedly due under the Iridium LLC Agreement as a Reserve Capital Call. In Motorola's case, this could require an additional equity investment of approximately $50 million. In October 2001, Chase, along with seventeen other lenders of Iridium Operating LLC, filed a complaint against Motorola in the Supreme Court of New York, The Chase Manhattan Bank, et al. v. Motorola, Inc., alleging that they were fraudulently induced to enter into a December 1998 $800 million credit agreement with Iridium Operating LLC. The plaintiffs seek recovery of the unpaid portion of the loan. Mr. Douglas A. Warner, III a director nominee served as Chairman of the Board and Co-Chairman of the Executive Committee of J.P. Morgan Chase from December 2000 until he retired in November 2001.

        Motorola, and certain of its current and former officers and directors, have been named as defendants in a private criminal complaint filed by Iridium India Telecom Ltd. ("Iridium India") in October 2001 in the Court of the Extra Judicial Magistrate, First Class, Khadki, Pune, India. Iridium India is the purchaser of certain rights from Iridium LLC ("Iridium") to set up, develop and operate a gateway for the Iridium system in South Asia. The Iridium India Telecom Ltd. v. Motorola, Inc. et al. complaint alleges that the defendants conspired to, and did, commit the criminal offense of "cheating" by fraudulently inducing Iridium India to purchase gateway equipment from Motorola, acquire Iridium stock, and attempt to develop a market for Iridium services in India. Under the Indian penal code, "cheating" is punishable by imprisonment for up to 7 years and a fine of any amount. The court may also require the defendants to compensate the victim for its losses suffered as a result of the offense, which the complaint estimates at about $100 million.

        An unfavorable outcome of one or more of these cases could have a material adverse effect on our consolidated financial position, liquidity or results of operations.

33

Shareholder Derivative Case

M&C Partners III v. Galvin, et al., filed January 10, 2002, in the Circuit Court of Cook County, Illinois, is a shareholder derivative suit filed derivatively on behalf of Motorola against fifteen current and former members of the Motorola Board of Directors and Motorola as a nominal defendant. The lawsuit alleges that the Motorola directors breached their fiduciary duty to the company and/or committed gross mismanagement of Motorola's business and assets by allowing Motorola to engage in improper practices with respect to Iridium. The suit seeks an unspecified amount of damages.

Telsim Cases

        On January 28, 2002, Motorola Credit Corporation ("MCC") initiated a civil action with Nokia Corporation ("Nokia"), Motorola Credit Corporation and Nokia Corporation v. Kemal Uzan, et al., against several members of the Uzan family, as well as some of their employees and controlled companies, alleging that the defendants engaged in a pattern of racketeering activity and violated various state and federal laws. In their complaint, MCC and Nokia allege, among other things, that the defendants defrauded MCC and Nokia in an amount exceeding $2 billion from MCC and an amount exceeding $719 million from Nokia regarding obligations owing by Telsim Mobil Telekomunikasyon Hizmetleri A.S. ("Telsim"), a Turkish telecommunications company controlled by the Uzan family. MCC also alleges that the defendants defrauded MCC and Nokia by diluting the value of Telsim stock pledged to Motorola and Nokia. MCC and Nokia have sought and obtained certain prejudgment relief, the exact nature and extent of which is currently being litigated. The suit is pending in the Southern District of New York, and no trial date has been set.

        In connection with MCC's and Nokia's civil racketeering suit against members of the Uzan family, on January 29, 2002, MCC filed an action in the United Kingdom before the High Court of Justice, Queen's Bench Division, Motorola Credit Corporation v. Cem Cengiz Uzan, seeking an order freezing up to $50 million in assets of defendant Cem Uzan located in England and Wales. On January 30, 2002, the Court granted MCC's request for an immediate freezing injunction. Mr. Uzan is contesting the freezing injunction and a hearing is scheduled for April 26, 2002.

        On February 5, 2002, Telsim initiated an arbitration against MCC in the Zurich Chamber of Commerce, In the Matter of Telsim v. MCC, regarding the more than $2 billion in vendor financing provided by MCC to Telsim. In Telsim's request for arbitration, Telsim acknowledged its debt, but has alleged that the disruption in the Turkish economy during 2001 should excuse Telsim's failure to make payments on the MCC loans as required under the agreements between the parties. Telsim seeks a ruling excusing its failure to adhere to the payment schedule and establishing a new schedule for repayment of Telsim's debt to MCC. MCC filed a motion in the Southern District of New York proceeding to stay this arbitration given the pending New York proceeding.

        The information contained under the captions "Environmental", "Iridium Program", and "Other" in Note 8, "Commitments and Contingencies," of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders is incorporated herein by reference.

        Motorola is a defendant in various other suits, claims and investigations that arise in the normal course of business. In the opinion of management, and other than discussed above with respect to the Iridium cases, the ultimate disposition of the Company's pending legal proceedings will not have a material adverse effect on the consolidated financial position, liquidity or results of operations.

Item 4:    Submission of Matters to a Vote of Security Holders

        Not applicable.

34

Executive Officers of the Registrant

        Following are the persons who were the executive officers of Motorola as of February 28, 2002, their ages as of January 1, 2002, their current titles and positions they have held during the last five years:

        Christopher B. Galvin; age 51; Chairman of the Board and Chief Executive Officer since June 1999; Chief Executive Officer from January 1997 to June 1999; President and Chief Operating Officer from December 1993 to January 1997.

        Keith J. Bane; age 62; Executive Vice President and President, Global Strategy and Corporate Development since August 1999; Executive Vice President and President, Americas Region from March 1997 to August 1999; Executive Vice President and Chief Corporate Staff Officer from February 1995 to March 1997.

        Robert L. Barnett; age 61; Executive Vice President and President, Commercial, Government and Industrial Solutions Sector since July 1998; Executive Vice President and President, Land Mobile Products Sector from March 1997 to July 1998; Senior Vice President and President, Land Mobile Products Sector from March 1996 to March 1997.

        Edward Breen; age 45; President and Chief Operating Officer since January 2002; Executive Vice President and President, Networks Sector from January 2001 to January 2002; Executive Vice President and President, Broadband Communications Sector from January 2000 to January 2001; Chairman of the Board, President and Chief Executive Officer of General Instrument Corporation from December 1997 to January 2000; President, Broadband Networks Group of General Instrument Corporation from February 1996 to October 1997.

        Glenn A. Gienko; age 49; Executive Vice President and Motorola Director of Human Resources since May 1996.

        Robert L. Growney; age 59; Vice Chairman of the Board since January 2002; President and Chief Operating Officer from January 1997 to January 2002; Executive Vice President and President and General Manager, Messaging, Information and Media Sector from January 1994 to January 1997.

        Joseph M. Guglielmi; age 60; Executive Vice President and President, Global Customer Solutions Operations since January 2001; Executive Vice President and President, Integrated Electronics Systems Sector ("IESS") from December 1998 to January 2001; Senior Vice President and President, IESS from October 1998 to December 1998; Senior Vice President and Office of the President, IESS from August 1998 to October 1998; Corporate Vice President and Office of the President, IESS from July 1998 to August 1998; Corporate Vice President and General Manager, Motorola Computer Group from September 1995 to July 1998; Chairman and Chief Executive Officer of Taligent, Inc., a software development company, from March 1992 to August 1995; Corporate Vice President, International Business Machines from April 1987 to February 1992.

        Carl F. Koenemann; age 63; Executive Vice President and Chief Financial Officer since December 1991.

        A. Peter Lawson; age 55; Executive Vice President, General Counsel and Secretary since May 1998; Senior Vice President, General Counsel and Secretary from November 1996 to May 1998.

        Thomas J. Lynch; age 47; Executive Vice President and President, Integrated Electronic Systems Sector since January 2001; Senior Vice President and General Manager, Satellite & Broadcast Network Systems, Broadband Communications Sector from February 2000 to January 2001; Senior Vice President and General Manager, Satellite & Broadcast Network Systems, General Instrument Corporation from May 1998 to February 2000; Vice President and General Manager, Transmission Network Systems, General Instrument Corporation from August 1995 to May 1998.

35

        Adrian R. Nemcek; age 54; Senior Vice President and President, Global Telecom Solutions Sector since September 2001; Senior Vice President and General Manager, Office of Strategy, Global Telecom Solutions Sector from August 2000 to September 2001; Senior Vice President and General Manager, Customer Solutions Group, Network Solutions Sector from January 1999 to August 2000; Corporate Vice President and General Manager, EMEA Group, Cellular Infrastructure Group from March 1998 to January 1999; Corporate Vice President and General Manager, GSM Products Division from June 1996 to March 1998.

        Dennis A. Roberson; age 53; Executive Vice President and Chief Technology Officer since November 2001; Senior Vice President and Chief Technology Officer from February 1999 to November 2001; Corporate Vice President and Chief Technology Officer from August 1998 to February 1999; Vice President and Chief Technology Officer from April 1998 to August 1998; and Senior Vice President and Chief Technical Officer of NCR Corporation from January 1997 to April 1998.

        David E. Robinson; age 42; Executive Vice President and President, Broadband Communications Sector since January 2001; Senior Vice President and General Manager, Digital Network Systems, Broadband Communications Sector from January 2000 to January 2001; Senior Vice President and General Manager, Digital Network Systems, General Instrument Corporation from April 1998 to January 2000; Vice President and General Manager, Digital Network Systems, General Instrument Corporation from November 1995 to April 1998.

        Fred (Theodore) A. Shlapak; age 58; Executive Vice President and President, Semiconductor Products Sector ("SPS") since September 2000; Senior Vice President and Assistant to the President, SPS from December 1998 to September 2000; Senior Vice President and General Manager, SPS Wireless Subscriber Systems Group from June 1997 to December 1998; Senior Vice President and General Manager, SPS Communications and Consumer Technologies Group from May 1996 to June 1997.

        Mike S. Zafirovski; age 48; Executive Vice President and President, Personal Communications Sector since June 2000; President and Chief Executive Officer of GE Lighting, General Electric Company from July 1999 to May 2000; President of GE Lighting, Europe, Middle East and Africa, General Electric Company from April 1996 to June 1999.

        The above executive officers, other than Mr. Growney, Mr. Koenemann and Mr. Guglielmi, will serve as executive officers of Motorola until the regular meeting of the Board of Directors in May 2002 or until their respective successors shall have been elected. Mr. Growney, Mr. Koenemann and Mr. Guglielmi will cease to be executive officers on March 31, 2002, April 17, 2002 and April 30, 2002, respectively. There is no family relationship between any of the executive officers listed above. We have made no loans to any of our executive officers to purchase the Company's common stock or derivative securities related to the Company's common stock.

36

PART II

Item 5:    Market for Registrant's Common Equity and Related Stockholder Matters

        Motorola's common stock is listed on the New York, Chicago and Tokyo Stock Exchanges. The number of stockholders of record of Motorola common stock on January 31, 2002 was 54,836. The remainder of the response to this Item incorporates by reference Note 13, "Quarterly and Other Financial Data" of Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

        During 2001, Motorola issued an aggregate of 15,319,917 shares of common stock (for an aggregate sales price of approximately $126 million) to 6 holders of warrants issued by General Instrument Corporation ("GI") prior to the merger of Motorola and GI, which was consummated on January 5, 2000. Warrants issued by GI for an aggregate of an additional 20,250,165 shares of Motorola common stock remained outstanding as of December 31, 2001. Motorola has filed a Registration Statement on Form S-3 (File No. 333-36320) covering the resale of all such shares of common stock by the holders thereof. The issuances of these shares to the warrant holders were deemed exempt from registration under the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as transactions not involving a public offering.

Item 6:    Selected Financial Data

        The response to this Item incorporates by reference the information under the caption "Five Year Financial Summary" contained on page F-76 in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 7:    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The response to this Item incorporates by reference the information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page F-1 in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 7A:    Quantitative and Qualitative Disclosures About Market Risk

        The response to this Item incorporates by reference the information under the caption "Market Risk Factors" contained on page F-29 in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 8:    Financial Statements and Supplementary Data

        The response to this Item incorporates by reference the information under the captions "Management's Responsibility For Financial Statements," "Independent Auditors' Report," "Consolidated Statements of Operations," "Consolidated Balance Sheets," "Consolidated Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements," and "Five-Year Financial Summary" of Motorola's Consolidated Financial Statements beginning on page F-42 in the appendix to Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 9:    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

        None.

37

PART III

Item 10:    Directors and Executive Officers of the Registrant

        The response to this Item required by Item 401 of Regulation S-K, with respect to directors, incorporates by reference the information under the caption "Nominees" beginning on page 3 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders and, with respect to executive officers, is contained in Part I hereof under the caption "Executive Officers of the Registrant". The response to this Item required by Item 405 of Regulation S-K incorporates by reference the information under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" on page 29 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 11:    Executive Compensation

        The response to this Item incorporates by reference the information under the caption "Director Compensation and Related Transactions" beginning on page 7 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders and "Summary Compensation Table," "Stock Option Grants in 2001," "Aggregated Option Exercises in 2001 and 2001 Year-End Option Values," "Long-Term Incentive Plans—Awards in 2001," "Retirement Plans," and "Employment Contracts, Termination of Employment and Change in Control Arrangements" beginning on page 19 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 12:    Security Ownership of Certain Beneficial Owners and Management

        The response to this Item incorporates by reference the information under the caption "Ownership of Securities" beginning on page 17 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

Item 13:    Certain Relationships and Related Transactions

        The response to this Item incorporates by reference the relevant information under the caption "Director Compensation and Related Transactions" beginning on page 7 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders.

© Motorola, Inc. 2002.

38

PART IV

Item 14:    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)

1. Financial Statements

See Part II, Item 8 hereof.

2.

Financial Statement Schedule and Independent Auditors' Report

Title	Schedule
Valuation and Qualifying Accounts	II

All schedules omitted are inapplicable or the information required is shown in the Consolidated Financial Statements or notes thereto. The independent auditors' report of KPMG LLP with respect to the Financial Statement Schedule is located at page 40.

3.

Exhibits

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Exhibit Index attached hereto, which is incorporated herein by this reference. Following is a list of management contracts and compensatory plans and arrangements required to be filed as exhibits to this form by Item 14(c) hereof:

Motorola Performance Excellence Equals Rewards Plan ("PE=R")
Motorola Long Range Incentive Plan of 1994
Motorola Long Range Incentive Plan of 2000
Share Option Plan of 1991
Share Option Plan of 1996
Motorola Amended and Restated Incentive Plan of 1998
Motorola Omnibus Incentive Plan of 2000
Form of Motorola, Inc. Award Document—Terms and Conditions Related to
    Employee Nonqualified Stock Options
Form of Motorola, Inc. Restricted Stock Agreement
Form of Motorola, Inc. Restricted Stock Unit Agreement
Motorola Elected Officers Supplementary Retirement Plan
Executive Health Plan
Accidental Death and Dismemberment Insurance for PE=R Participants
Motorola, Inc. Management Deferred Compensation Plan
Officers' Group Life Insurance Policy
Motorola, Inc. Senior Officer Change in Control Severance Plan
Arrangement for directors' fees and retirement plan for non-employee directors
Motorola Non-Employee Directors Stock Plan
Insurance Policy for Non-Employee Directors
Employment Agreement with Edward D. Breen

(b)

Reports on Form 8-K.

Motorola filed current reports on Form 8-K on October 22, 2001 and November 2, 2001.

(c)

Exhibits:

See Item 14(a)3 above.

39

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Motorola, Inc.:

        Under date of January 18, 2002, we reported on the consolidated balance sheets of Motorola, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2001, as contained in Motorola's proxy statement for the 2002 annual meeting of stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended December 31, 2001. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in Part IV, Item 14(a)2. The financial statement schedule is the responsibility of Motorola's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.

        In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Chicago, Illinois
January 18, 2002

40

SCHEDULE II

MOTOROLA, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended December 31, 2001
(In millions)

Column A	Column B		Column C					Column D		Column E
			Additions
	Balance at beginning of period		Charged to costs & expenses		Charged to other accounts(1)			Deductions(2)		Balance at end of Period
2001
Reorganization of Businesses	$	263	$	1,524	$	(15	)	$	857	$	915
Allowance for Doubtful Accounts	$	243	$	141	$	—		$	162	$	222
Allowance for Losses on Finance Receivables	$	239	$	1,501	$	—		$	93	$	1,647
Warranties	$	368	$	253	$	—		$	308	$	313
Customer Reserves	$	262	$	546	$	—		$	406	$	402
Iridium Reserves	$	529	$	365	$	—		$	97	$	797
2000
Reorganization of Businesses	$	27	$	314	$	—		$	78	$	263
Allowance for Doubtful Accounts	$	295	$	87	$	—		$	139	$	243
Allowance for Losses on Finance Receivables	$	292	$	114	$	(123	)	$	44	$	239
Warranties	$	379	$	265	$	—		$	276	$	368
Customer Reserves	$	410	$	324	$	—		$	472	$	262
Iridium Reserves	$	1,955	$	—	$	—		$	1,426	$	529
1999
Reorganization of Businesses	$	640	$	—	$	(226	)	$	387	$	27
Allowance for Doubtful Accounts	$	224	$	200	$	—		$	129	$	295
Allowance for Losses on Finance Receivables	$	167	$	125	$	—		$	—	$	292
Warranties	$	382	$	282	$	—		$	285	$	379
Customer Reserves	$	422	$	500	$	—		$	512	$	410
Iridium Reserves	$	649	$	2,069	$	—		$	763	$	1,955

(1)

Reversal into income

(2)

Accrual usage

41

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Motorola, Inc.:

        We consent to incorporation by reference in the registration statements on Form S-8 (Nos. 33-59285, 333-03681, 333-51847, 333-65941, 333-88735, 333-36308, 333-37114, 333-53120, 333-60560, 333-60612 and 333-60976) and on Form S-3 (Nos. 333-75940, 333-76637 and 333-36320) of Motorola, Inc. of our reports dated January 18, 2002, with respect to the consolidated balance sheets of Motorola, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows and the related financial statement schedule for each of the years in the three-year period ended December 31, 2001, which reports appear in or are incorporated by reference in the annual report on Form 10-K of Motorola, Inc. for the year ended December 31, 2001.

/s/ KPMG LLP

Chicago, Illinois
March 28, 2002

42

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Motorola, Inc. has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

MOTOROLA, INC.
By:	/s/  CHRISTOPHER B. GALVIN Christopher B. Galvin Chairman of the Board and Chief Executive Officer

March 28, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this amended report has been signed below by the following persons on behalf of Motorola, Inc. and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  CHRISTOPHER B. GALVIN Christopher B. Galvin	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	3/28/02
/s/  CARL F. KOENEMANN Carl F. Koenemann	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	3/28/02
/s/  ANTHONY M. KNAPP Anthony M. Knapp	Senior Vice President and Controller (Principal Accounting Officer)	3/28/02
/s/  EDWARD D. BREEN Edward D. Breen	Director	3/28/02
/s/  FRANCESCO CAIO Francesco Caio	Director	3/28/02
/s/  RONNIE C. CHAN Ronnie C. Chan	Director	3/28/02

43

/s/  H. LAURANCE FULLER H. Laurance Fuller	Director	3/28/02
/s/  ROBERT L. GROWNEY Robert L. Growney	Director	3/28/02
/s/  ANNE P. JONES Anne P. Jones	Director	3/28/02
/s/  JUDY C. LEWENT Judy C. Lewent	Director	3/28/02
/s/  DR. WALTER E. MASSEY Dr. Walter E. Massey	Director	3/28/02
/s/  NICHOLAS NEGROPONTE Nicholas Negroponte	Director	3/28/02
/s/  JOHN E. PEPPER, JR. John E. Pepper, Jr.	Director	3/28/02
/s/  SAMUEL C. SCOTT III Samuel C. Scott III	Director	3/28/02
/s/  B. KENNETH WEST B. Kenneth West	Director	3/28/02
/s/  DR. JOHN A. WHITE Dr. John A. White	Director	3/28/02

44

EXHIBIT INDEX

Exhibit No.		Exhibit
3.1		Restated Certificate of Incorporation of Motorola, Inc., as amended through May 3, 2000 (incorporated by reference to Exhibit 3(i)(b) to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2000) (File No. 1-7221) ).
3.2		Certificate of Designations, Preferences and Rights of Junior Participating Preferred Stock, Series B (incorporated by reference to Exhibit 3.3 to Motorola's Registration Statement on Form S-3 dated January 20, 1999 (Registration No. 333-70827) ).
*3.3		By-Laws of Motorola, Inc., as amended through November 8, 2001.
4.1		Rights Agreement dated as of November 5, 1998 between Motorola, Inc., and Harris Trust and Savings Bank, as Rights Agent (incorporated by reference to Exhibit 1.1 to Amendment No. 1 to Motorola's Registration Statement on Form 8-A/A dated March 16, 1999 (File No. 1-7221)).
4.2	(a)	Senior Indenture, dated as of May 1, 1995, between Harris Trust and Savings Bank and Motorola, Inc. (incorporated by reference to Exhibit 4(d) of the Registrant's Registration Statement on Form S-3 dated September 25, 1995 (Registration No. 33-62911)).
4.2	(b)	Instrument of Resignation, Appointment and Acceptance, dated as of January 22, 2001, among Motorola, Inc., Bank One Trust Company, N.A. and BNY Midwest Trust Company (as successor in interest to Harris Trust and Savings Bank) (incorporated by reference to Exhibit 4.2(b) to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)).
		Certain instruments defining the rights of holders of long-term debt of Motorola and of all its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed are being omitted pursuant to paragraph (4)(iii)(A) of Item 601 of Regulation S-K. Motorola agrees to furnish a copy of any such instrument to the Commission upon request.
4.3		Purchase Contract Agreement, dated as of October 31, 2001, between Motorola, Inc. and First Union Trust Company, National Association, as Purchase Contract Agent (incorporated by reference to Exhibit 99 of Motorola's Quarterly Report on Form 10-Q for the period ending September 30, 2001 (File No. 1-7221)), as supplemented by Supplemental Agreement No. 1, dated as of December 21, 2001, to Purchase Contract Agreement dated as of October 31, 2001, between Motorola, Inc. and First Union Trust Company, National Association, as Purchase Contract Agent (incorporated by reference to Exhibit 4.15B of Motorola's Registration Statement on Form S-3 dated December 26, 2001 (File No. 333-75940)).
10.1		Motorola Performance Excellence Equals Rewards ("PE=R"), as amended, effective on January 1, 2000 (incorporated by reference to Exhibit 10.1 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)).
10.2		Motorola Long Range Incentive Plan of 1994, as amended through February 4, 1998 (incorporated by reference to Exhibit 10.2 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 1998 (File No. 1-7221)).

45

10.3	Motorola Long Range Incentive Plan of 2000 (incorporated by reference to Exhibit 10.2 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000(File No. 1-7221)).
10.4	Share Option Plan of 1991, as amended through August 7, 1995 (incorporated by reference to Exhibit 10.4 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and Exhibit 10.4 to Motorola's Report on Form 10-K for the fiscal year ended December 31, 1995 (File No. 1-7221)).
10.5	Resolutions Amending Sections 7 and 9(b) of the Share Option Plan of 1991, effective August 15, 1996 (incorporated by reference to Exhibit 10.5 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 1-7221)).
10.6	Share Option Plan of 1996, as amended through May 7, 1997 (incorporated by reference to Exhibit 10 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997 (File No. 1-7221)).
*10.7	Motorola Amended and Restated Incentive Plan of 1998, amended and restated as of July 31, 2001.
10.8	Motorola Omnibus Incentive Plan of 2000, as amended through June 2, 2000 (incorporated by reference to Exhibit 10.1 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000 (File No. 1-7221)).
10.9	Form of Motorola, Inc. Award Document — Terms and Conditions Related to Employee Nonqualified Stock Options, as of March 2001, relating to the Motorola Omnibus Incentive Plan of 2000 and Motorola Amended and Restated Incentive Plan of 1998 (incorporated by reference to Exhibit 10.21(b) to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)).
*10.10	Form of Motorola, Inc. Restricted Stock Agreement as of December 6, 2001, relating to the Motorola Omnibus Incentive Plan of 2000 and Motorola Amended and Restated Incentive Plan of 1998.
*10.11	Form of Motorola, Inc. Restricted Stock Unit Agreement as of December 6, 2001, relating to the Motorola Omnibus Incentive Plan of 2000 and Motorola Amended and Restated Incentive Plan of 1998
10.12	Motorola Elected Officers Supplementary Retirement Plan, as amended through May 1, 2000 (incorporated by reference to Exhibit 10.7 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)).
10.13	Executive Health Plan (incorporated by reference to Exhibit 10.8 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 1-7221)).
10.14	Accidental death and dismemberment insurance for PE=R participants (incorporated by reference to Exhibit 10.7 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (File No. 1-7221)).
10.15	Motorola Management Deferred Compensation Plan, effective as of January 1, 2001(incorporated by reference to Exhibit 10.11 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-7221)).
10.16	Officers' Group Life Insurance Policy (incorporated by reference to Exhibit 10.10 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (File No. 1-7221)).

46

*10.17		Motorola, Inc. Senior Officer Change in Control Severance Plan
10.18		Arrangement for directors' fees and retirement plan for non-employee directors (description incorporated by reference from pages 7 and 8 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders).
10.19		Motorola Non-Employee Directors Stock Plan, as amended and restated on February 4, 1998 (incorporated by reference to Exhibit 10.12 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 1998 (File No. 1-7221)).
10.20		Insurance policy covering non-employee directors (incorporated by reference to the description on pages 7 and 8 of Motorola's Proxy Statement for the 2002 annual meeting of stockholders and to Exhibit 10.16 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 1-7221)).
10.21	(a)	Employment Agreement between Edward D. Breen and General Instrument Corporation dated as of April 2, 1999 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 filed by General Instrument Corporation (File No. 001-12925)).
*10.21	(b)	Amendment to the Employment Agreement dated as of December 22, 1999 among Motorola, Inc., General Instrument Corporation and Edward D. Breen.
*12		Statement regarding Computation of Ratio of Earnings to Fixed Charges.
*21		Subsidiaries of Motorola.
23		Consent of KPMG LLP. See page 42 of the Annual Report on Form 10-K of which this Exhibit Index is a part.

*

Filed herewith

47

QuickLinks

Table of Contents
PART I
PART II
PART III
PART IV
INDEPENDENT AUDITORS' REPORT
MOTOROLA, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Three Years Ended December 31, 2001 (In millions)
CONSENT OF INDEPENDENT AUDITORS
SIGNATURES
EXHIBIT INDEX

EX-3.3

                                                                     Exhibit 3.3


                                                  Revised as of November 8, 2001


                                 MOTOROLA, INC.

                                     BYLAWS


                                    ARTICLE I

                           OFFICES AND CORPORATE SEAL

     The registered office of the Corporation required by the Delaware General
Corporation Law shall be 1209 Orange Street, Wilmington, Delaware, 19801, and
the address of the registered office may be changed from time to time by the
Board of Directors.

     The principal business office of the Corporation shall be located in the
Village of Schaumburg, County of Cook, State of Illinois. The Corporation may
have such other offices, either within or without the State of Illinois, as the
Board of Directors may designate or as the business of the Corporation may
require from time to time.

     The registered office of the Corporation required by the Illinois Business
Corporation Act may be, but need not be, the same as its place of business in
the State of Illinois, and the address of the registered office may be changed
from time to time by the Board of Directors.

     The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal".


                                   ARTICLE II

                               BOARD OF DIRECTORS

     SECTION 1.  GENERAL POWERS. The business and affairs of the Corporation
shall be managed by, or under the direction of, its Board of Directors.

     SECTION 2.  NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the Corporation shall be sixteen (16), or such other number fixed from time to



time by the Board of Directors. Each director shall hold office until his
successor shall have been elected and qualified, or until his earlier death or
resignation.

     SECTION 3.  VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled for the remainder of the unexpired term by the affirmative vote of a
majority of the directors then in office although less than a quorum.

     SECTION 4.  COMPENSATION. Directors who also are employees of the
Corporation shall not receive any additional compensation for services on the
Board of Directors. By resolution of the Board of Directors, a fixed sum may be
allowed directors who are not employees of the Corporation for attendance at
each regular or special meeting of the Board of Directors or any committee of
the Board of Directors, and by resolution of the Board of Directors an
additional fixed fee may be allowed directors who are not employees of the
Corporation in consideration of other services and continuous interest and study
of the affairs of the Corporation. Travel and other expenses actually incurred
may be allowed all directors for attendance at each regular or special meeting
of the Board of Directors or at any meeting of a committee of the Board of
Directors or in connection with their other services to the Corporation. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.


     SECTION 5.  COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees. Each committee shall consist of one or more of the directors of the
Corporation, as selected by the Board of Directors, and the Board of Directors
shall also designate a chairman of each committee and the members of each
committee shall designate a person to act as secretary of the committee to keep
the minutes of, and serve the notices for, all meetings of the committee and
perform such other duties as the committee may direct. Such person may, but need
not be a member of the committee. Each committee, except as otherwise provided
in this section, shall have and may exercise such powers of the Board of
Directors as may be provided by resolution or resolutions of the Board of
Directors, however, no committee shall have the power of authority: (1) to



approve or adopt, or recommend to the stockholders, any action or matter
expressly required by the General Corporation Law to be submitted to the
stockholders for approval; or (2) to adopt, amend or repeal the By-laws of the
Corporation. Any committee may be granted by the Board of Directors power to
authorize the seal of the Corporation to be affixed to any or all papers that
may require it. Each committee of the Board of Directors may establish its own
rules of procedure. Except as otherwise specified in a resolution designating a
committee, one-third of the members of a committee shall be necessary to
constitute a quorum of that committee for the transaction of business and the
act of a majority of committee members present at a meeting at which a quorum is
present shall be the act of the committee.


     SECTION 6.  VALIDITY OF CONTRACTS. No contract or other transaction entered
into by the Corporation shall be affected by the fact that a director or officer
of the Corporation is in any way interested in or connected with any party to
such contract or transaction, or himself is a party to such contract or
transaction, even though in the case of a director the vote of the director
having such interest or connection shall have been necessary to obligate the
Corporation upon such contract or transaction; provided, however, that in any
such case (i) the material facts of such interest are known or disclosed to the
directors or shareholders and the contract or transaction is authorized or
approved in good faith by the shareholders or by the Board of Directors or a
committee thereof through the affirmative vote of a majority of the
disinterested directors (even though not a quorum), or (ii) the contract or
transaction is fair to the Corporation as of the time it is authorized, approved
or ratified by the shareholders, or by the Board of Directors, or by a committee
thereof.


                                   ARTICLE III

                             SHAREHOLDERS' MEETINGS

     SECTION 1.  PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of



meeting shall be the principal business office of the Corporation in the State
of Illinois.

     SECTION 2.  ANNUAL MEETINGS. The annual meeting of the shareholders shall
be held on the first Tuesday in the month of May in each year, at the hour of
5:00 o'clock P.M., or at such other day and hour as may be fixed by or under the
authority of the Board of Directors, for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the state where
the meeting is to be held, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on the day
designated herein for the annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as is convenient.

     SECTION 3.  SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Chairman of the Board or by the Board of Directors.

     SECTION 4.  VOTING - QUORUM. Each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of any class or
classes are enlarged, limited or denied by the Certificate of Incorporation or
in the manner therein provided. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, except that directors shall be elected by
a plurality of the votes of the shares represented at the meeting and entitled
to vote on the election of directors, except as otherwise required by Delaware
law, the Certificate of Incorporation, or these Bylaws. No matter shall be
considered at a meeting of shareholders except upon a motion duly made and
seconded. If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or



represented, any business may be transacted which might have been transacted at
the meeting as originally called.

     SECTION 5.  ADJOURNMENT OF MEETINGS. If less than a majority of the
outstanding shares are represented at a meeting of the shareholders, a majority
of the shares so represented may adjourn the meeting from time to time without
further notice. The chairman of a meeting of the shareholders may adjourn the
meeting from time to time without further notice, whether or not less than a
majority of the outstanding shares are represented at the meeting. No notice of
the time and place of adjourned meetings need be given except as required by
law. In no event shall the public announcement of an adjournment of any meeting
of the shareholders commence a new time period for the giving of shareholder
notice of nominations or proposals for other business as described in Section 13
of Article III. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.

     SECTION 6.  PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing or submitted by electronic transmission by the
shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid
after three years from the date of its execution, unless otherwise provided in
the proxy.

     SECTION 7.  NOTICE OF MEETINGS. Written notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
days (twenty days if the shareholders are to approve a merger or consolidation
or a sale, lease or exchange of all or substantially all the Corporation's
assets) nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, or
the Secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. The notice provisions of
Article IX, Section 1 of these Bylaws shall apply to notices given under this
Section 7.

     SECTION 8.  POSTPONEMENT OF MEETINGS. Any previously scheduled meeting of
the shareholders may be postponed by resolution of the Board of Directors



upon public notice given prior to the time previously scheduled for such meeting
of the shareholders. In no event shall the public announcement of a postponement
of any previously scheduled meeting of the shareholders commence a new time
period for the giving of shareholder notice of nominations or proposals for
other business as described in Section 13 of Article III.

     SECTION 9.  CANCELLATION OF MEETINGS. Any special meeting of the
shareholders may be canceled by resolution of the Board of Directors upon public
notice given prior to the time previously scheduled for such meeting of the
shareholders.

     SECTION 10. VOTING LISTS. The officer or agent having charge of the stock
ledger of the Corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each; which list, for a period of
ten days prior to such meeting, shall be kept at the place where the meeting is
to be held, or at another place within the city where the meeting is to be held,
which other place shall be specified in the notice of meeting and the list shall
be subject to inspection by any shareholder for any purpose germane to the
meeting, at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock ledger shall be prima facie evidence as to who are the
shareholders entitled to examine such list or ledger or to vote at any meeting
of shareholders.

     SECTION 11. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors of the Corporation may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than sixty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of



shareholders entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the close of business on
the date next preceding the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof; provided, however, that
the Board of Directors may fix a new record date for the adjourned meeting.

     SECTION 12. VOTING OF SHARES BY CERTAIN HOLDERS. Neither treasury shares
nor shares of the Corporation held by another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall be entitled to vote
or to be counted for quorum purposes. Nothing in this paragraph shall be
construed as limiting the right of the Corporation to vote its own stock held by
it in a fiduciary capacity.

     Shares standing in the name of another corporation, domestic or foreign,
may be voted in the name of such corporation by any officer thereof or pursuant
to any proxy executed in the name of such corporation by any officer of such
corporation in the absence of express written notice filed with the Secretary
that such officer has no authority to vote such shares.

     Shares held by an administrator, executor, guardian, conservator, trustee
in bankruptcy, receiver or assignee for creditors may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a fiduciary may be voted by him, either in person or by
proxy.

     A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer by the pledgor on the books of the Corporation the
pledgor has expressly empowered the pledgee to vote thereon, in which case only
the pledgee, or his proxy, may represent such stock and vote thereon.

     SECTION 13. ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS AND PROPOSALS FOR
OTHER BUSINESS. Nominations of persons for election to the Board of Directors



and the proposal of business to be transacted by the shareholders may be made at
an annual or special meeting of the shareholders only (a) pursuant to the
Corporation's notice with respect to such meeting, (b) by or at the direction of
the Board of Directors or (c) by any shareholder of the Corporation who was a
shareholder of record on the record date set with respect to such meeting (as
provided for in Section 11 of Article III), who is entitled to vote at the
meeting and who has complied with the notice procedures set forth in this
Section 13. For nominations or proposals for other business to be properly
brought before an annual or special meeting by a shareholder pursuant to clause
(c) above, the shareholder must give timely notice thereof in writing to the
Secretary of the Corporation and such business must be a proper matter for
shareholder action under the Delaware General Corporation Law and a proper
matter for consideration at such meeting under the Certificate of Incorporation
and these Bylaws. For such notice to be timely, it must be delivered to the
Secretary at the principal business office of the Corporation not earlier than
the 120th day prior to the date of such meeting and (a) in the case of an annual
meeting of shareholders, at least 45 days before the date on which the
Corporation first mailed its proxy materials for the prior year's annual meeting
of shareholders and (b) in the case of a special meeting, not later than the
close of business on the later of (i) the 60th day prior to the date of such
meeting or (ii) the 10th day following the day on which public announcement of
the date of such meeting is first made. If such shareholder notice relates to a
proposal by such shareholder to nominate one or more persons for election or
re-election as a director, it shall set forth all information relating to each
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including, if and to the extent so required, such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected). If such shareholder notice relates to any
other business that the shareholder proposes to bring before the meeting, it
shall set forth a brief description of such business, the reasons for conducting
such business at the meeting and any material



interest in such business of such shareholder and the beneficial owner, if any,
on whose behalf the proposal is made. Each such notice shall also set forth as
to the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the class and number of shares of capital stock of the
Corporation which are owned beneficially and of record by such shareholder and
such beneficial owner. Persons nominated by shareholders to serve as directors
of the Corporation who have not been nominated in accordance with this Section
13 shall not be eligible to serve as directors. Only such business shall be
conducted at an annual or special meeting of shareholders as shall have been
brought before the meeting in accordance with this Section 13. The chairman of
the meeting shall determine whether a nomination or any business proposed to be
transacted by the shareholders has been properly brought before the meeting and,
if any proposed nomination or business has not been properly brought before the
meeting, the chairman shall declare that such proposed business or nomination
shall not be presented for shareholder action at the meeting. For purposes of
this Section 13, "public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or a comparable
national news service. Notwithstanding any provision in this Section 13 to the
contrary, requests for inclusion of proposals in the Corporation's proxy
statement made pursuant to Rule 14a-8 under the Exchange Act shall be deemed to
have been delivered in a timely manner if delivered in accordance with such
Rule. Notwithstanding compliance with the requirements of this Section 13, the
chairman presiding at any meeting of the shareholders may, in his sole
discretion, refuse to allow a shareholder or shareholder representative to
present any proposal which the Corporation would not be required to include in a
proxy statement under any rule promulgated by the Securities and Exchange
Commission.



                                   ARTICLE IV

                          BOARD OF DIRECTORS' MEETINGS

     SECTION 1.  ANNUAL MEETINGS.  An annual meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of shareholders.

     SECTION 2.  SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them.

     SECTION 3.  NOTICE. Except as set forth in the next sentence, notice of any
special meeting shall be given at least 24 hours prior to the meeting by written
notice delivered or given personally (including by phone) or by mail or telegram
or other written communication to each director at his business address or
residence. If, however, the meeting is called by or at the request of the
Chairman of the Board and if the Chairman of the Board decides that unusual and
urgent business is to be transacted at the meeting (which decision shall be
conclusively demonstrated by his giving notice of the meeting less than 24 hours
prior to the meeting), then at least 2 hours' prior notice shall be given. If
notice is given by telegram or courier, such notice shall be deemed to be given
when the telegram is delivered to the telegraph company or courier company and
any personal notice shall be deemed given when given. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting and objects thereat to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.

     SECTION 4.  QUORUM. One-third of the number of directors fixed by, or
pursuant to, Section 2 of Article II shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such one-third



is present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.

     SECTION 5. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.

     SECTION 6.  PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent is entered in the minutes of the meeting or unless he files his
written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or forwards such dissent by registered
mail to the Secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.

     SECTION 7.  ACTION BY DIRECTORS WITHOUT A MEETING. Any action required to
be taken at a meeting of directors, or at a meeting of a committee of directors,
or any other action which may be taken at a meeting, may be taken without a
meeting if a consent in writing setting forth the action so taken shall be
signed by all of the directors or members of the committee thereof entitled to
vote with respect to the subject matter thereof and filed with the minutes of
proceedings of the Board of Directors or committee and such consent shall have
the same force and effect as a unanimous vote.

     SECTION 8.  PARTICIPATION IN A MEETING BY TELEPHONE. Members of the Board
of Directors or any committee of directors may participate in a meeting of such
Board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participating in a meeting pursuant to this Section 8 shall
constitute presence in person at such meeting.



                                    ARTICLE V

                       OFFICERS AND CHAIRMAN OF THE BOARD

     SECTION 1.  ELECTED OFFICERS. As determined by the Board of Directors, the
elected officers of the Company shall include a Chairman of the Board, a Chief
Executive Officer (the Chairman of the Board and the Chief Executive Officer may
be one person), a President and Chief Operating Officer, one or more Vice
Presidents, a Chief Financial Officer, a Treasurer, a Secretary and a
Controller, each of whom shall be elected by the Board of Directors. The Board
of Directors may elect such other officers as may be necessary, including one or
more Vice Chairmen of the Board, one or more other Officers of the Board and a
Chairman of the Executive Committee. The elected officers of the Company shall
be elected annually by the Board of Directors and shall have such powers and
duties as generally pertain to their respective offices, subject to these
Bylaws. Any two or more offices may be held by the same person. Each elected
officer shall hold office until his successor shall have been duly elected or
until his death or until he shall resign or shall have been removed. Any officer
elected by the Board of Directors serves at the pleasure of the Board of
Directors and may be removed by the Board of Directors for any reason. Any
elected officer other than the Chief Executive Officer, the President and Chief
Operating Officer, the Chief Financial Officer, the Treasurer, the Secretary or
the Controller may be removed by the Chairman of the Board for any reason.

     SECTION 2.  THE CHAIRMAN OF THE BOARD OF DIRECTORS. The Board of Directors
shall annually elect one of its own members to be the Chairman of the Board of
Directors ("Chairman of the Board"). The Chairman of the Board shall preside at
all meetings of the Board of Directors and the shareholders, and may at any time
call any meeting of the Board of Directors. He may also at his discretion call
or attend any meeting of any committee of the Board of Directors, whether or not
a member of such committee. The Chairman of the Board may designate one or more
other directors to exercise the functions and to have the authority of the
Chairman of the Board during the absence or disability of the Chairman of the
Board and prior to any action by the Board of Directors to fill any vacancy.
Absent any such election, a Vice Chairman of the Board shall assume



the duties of the Chairman of the Board. The Board of Directors may remove or
replace the Chairman of the Board at any time.

     SECTION 3.  THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The Vice Chairman
of the Board of Directors ("Vice Chairman of the Board"), shall perform such
duties as may be prescribed by the Board of Directors or the Chairman of the
Board, from time to time. If there are two or more Vice Chairmen of the Board,
they shall preside at meetings as prescribed by the Board of Directors or
Chairman of the Board from time to time.

     SECTION 4.  THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
("CEO") shall be the senior executive officer of the Company and shall in
general supervise and control all the business and affairs of the Company. He
shall direct the policy of the Company, including the appointment and removal of
all officers and employees of the Company for whose election or appointment no
other provision is made in these Bylaws or by the Board of Directors and shall
perform all other duties appropriate to the office or as may be prescribed by
the Board of Directors by resolution from time to time. He may delegate powers
to any other officer of the Company.

     SECTION 5.  THE PRESIDENT AND CHIEF OPERATING OFFICER. The President and
Chief Operating Officer shall have such duties as may be prescribed by the Board
of Directors by resolution from time to time. Prior to any action by the Board
of Directors, in the absence or disability of the CEO, the President and Chief
Operating Officer shall exercise the functions of the CEO and shall have the
authority of the CEO.

     SECTION 6.  VICE PRESIDENTS. A Vice President may be designated as an
Executive Vice President, a Senior Vice President, a Corporate Vice President or
such other designation as may be determined by the Board of Directors. Vice
Presidents shall have such duties as may be prescribed by the Board of Directors
by resolution from time to time.

     SECTION 7.  THE SECRETARY. The Secretary shall give notice of, and keep the
minutes of, all meetings of the Board of Directors and the shareholders. He
shall in general perform all of the duties which are incident to the office of
secretary of a company, subject at all times to the direction and control of the



Board of Directors, and shall have such other duties as may be prescribed by the
Board of Directors by resolution from time to time.

     The Secretary may appoint one or more Assistant Secretaries, each of whom
shall have the power to affix and attest the corporate seal of the Company, and
to attest to the execution of documents on behalf of the Company and perform
such duties as may be assigned by the Secretary.

     SECTION 8.  THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
be the senior financial officer of the Company and shall have such duties as may
be prescribed by the Board of Directors by resolution from time to time.

     SECTION 9.  THE TREASURER. The Treasurer shall have the custody of all of
the funds and securities of the Company and shall have such duties as may be
prescribed by the Board of Directors by resolution from time to time. The
Treasurer may appoint one or more Assistant Treasurers to perform such duties as
may be assigned by the Treasurer.

     SECTION 10. THE CONTROLLER. The Controller shall be the Chief Accounting
Officer of the Company and shall have such duties as may be prescribed by the
Board of Directors by resolution from time to time.

     SECTION 11. STATUTORY DUTIES. Each respective officer shall discharge any
and all duties pertaining to his respective office, which is imposed on such
officer by the provisions of any present or future statute of the State of
Delaware.

     SECTION 12. DELEGATION OF DUTIES. In case of the absence of any officer of
the Company, the Chairman of the Board or the Board of Directors may delegate,
for the time being, the duties of such officer to any other officer or to any
director.


                                   ARTICLE VI

                   CERTIFICATES FOR SHARES AND THEIR TRANSFER

     SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the CEO or President, and by the
Treasurer or the Secretary. Any or all of the signatures on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased



to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
stock ledger of the Corporation.

     SECTION 2. TRANSFER OF CERTIFICATE. Transfer of shares of the Corporation
shall be made only upon the records of the Transfer Agent appointed for this
purpose, by the owner in person or by the legal representative of such owner
and, upon such transfer being made, the old certificates shall be surrendered to
the Transfer Agent who shall cancel the same and thereupon issue a new
certificate or certificates therefor. Whenever a transfer is made for collateral
security, and not absolutely, the fact shall be so expressed in the recording of
the transfer.

     SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint
a transfer agent and registrar of transfers and thereafter may require all stock
certificates to bear the signature of such transfer agent and such registrar of
transfers. The signature of either the transfer agent or the registrar, but not
both, may be a facsimile.

     SECTION 4. REGISTERED HOLDER. The Corporation shall be entitled to treat
the registered holder of any shares as the absolute owner thereof and,
accordingly, shall not be bound to recognize any equitable or other claim
thereto, or interest therein, on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
statutes of the State of Delaware.

     SECTION 5. RULES OF TRANSFER. The Board of Directors also shall have the
power and authority to make all such rules and regulations as they may deem
expedient concerning the issue, transfer and registration of the certificates
for the shares of the Corporation.

     SECTION 6. LOST CERTIFICATES. Any person claiming a certificate for shares
of this Corporation to be lost or destroyed, shall make affidavit of the fact
and lodge the same with the Secretary of the Corporation, accompanied by a
signed



application for a new certificate. Such person shall give to the Corporation, to
the extent deemed necessary by the Secretary or Treasurer, a bond of indemnity
with one or more sureties satisfactory to the Secretary, and in an amount which,
in his judgment, shall be sufficient to save the Corporation from loss, and
thereupon the proper officer or officers may cause to be issued a new
certificate of like tenor with the one alleged to be lost or destroyed. But the
Secretary may recommend to the Board of Directors that it refuse the issuance of
such new certificate in the event that the applicable provisions of the Uniform
Commercial Code are not met.


                                   ARTICLE VII

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

     SECTION 1. CONTRACTS. The Board of Directors may authorize, by these Bylaws
or any resolution, any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances.

     SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by these Bylaws or a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.

     SECTION 3. CHECKS, DRAFTS, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents,
of the Corporation and in such manner as shall from time to time be determined
by these Bylaws or a resolution of the Board of Directors.

     SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.



                                  ARTICLE VIII

                                BOOKS AND RECORDS

     SECTION 1. LOCATION. Complete books and records of account together with
minutes of the proceedings of the meetings of the shareholders and Board of
Directors shall be kept. A record of shareholders, giving the names and
addresses of all shareholders, and the number and class of the shares held by
each, shall be kept by the Corporation at its registered office or principal
place of business in the State of Illinois or at the office of a Transfer Agent
or Registrar.


                                   ARTICLE IX

                                     NOTICES

     SECTION 1. MANNER OF NOTICE. Whenever, under the provisions of the
Certificate of Incorporation or of the Bylaws of the Corporation or of the
statutes of the State of Delaware, notice is required to be given to a
shareholder, to a director or to an officer, it shall not be construed to mean
personal notice, unless expressly stated so to be. And any notice so required
(other than notice by publication) may be given in writing by depositing the
same in the United States mail, postage prepaid, directed to the shareholder,
director or officer, at his, or her, address as the same appears on the records
of the Corporation, and the time when the same is mailed shall be deemed the
time of the giving of such notice. Any such notices required to be given to
shareholders may also be given in the form of electronic transmission consented
to by the shareholder. Such notice shall be deemed to be given: (1) if by
facsimile, when directed to a number at which the shareholder has consented to
receive notice; (2) if by electronic mail, when directed to an electronic mail
address at which the shareholder has consented to receive notice; (3) if by
posting on an electronic network together with separate notice to the
shareholder of specific posting, upon the later of such posting and the giving
of the separate notice, and (4) if by any other form of electronic transmission,
when directed by the shareholder.


     SECTION 2. WAIVER OF NOTICE. Any shareholder, director or officer may, in
writing or electronic transmission, waive the giving and the mailing of any
notice



required to be given or mailed either by and under the statutes of the State of
Delaware or by and under the Bylaws.


                                    ARTICLE X

                                   FISCAL YEAR

     SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall begin on
the 1st day of January and terminate on the 31st day of December.


                                   ARTICLE XI

                                EMERGENCY BYLAWS

     The Emergency Bylaws provided in this Article XI shall be operative upon
(a) the declaration of a civil defense emergency by the President of the United
States or by concurrent resolution of the Congress of the United States pursuant
to Title 50, Appendix, Section 2291 of the United States Code, or any amendment
thereof, or (b) upon a proclamation of a civil defense emergency by the Governor
of the State of Illinois which relates to an attack or imminent attack on the
United States or any of its possessions. Such Emergency Bylaws, or any
amendments to these Bylaws adopted during such emergency, shall cease to be
effective and shall be suspended upon any proclamation by the President of the
United States, or the passage by the Congress of a concurrent resolution, or any
declaration by the Governor of Illinois that such civil defense emergency no
longer exists.

     SECTION 1. BOARD OF DIRECTORS' MEETINGS. During any such emergency, any
meeting of the Board of Directors may be called by any officer of the
Corporation or by any director. Notice shall be given by such person or by any
officer of the Corporation. The notice shall specify the place of the meeting,
which shall be at the head office of the Corporation at the time if feasible,
and otherwise, any other place specified in the notice. The notice shall also
specify the time of the meeting. Notice may be given only to such of the
directors as it may be feasible to reach at the time and by such means as may be
feasible at the time, including publication or radio. If given by mail,
messenger, telephone, or telegram, the notice shall be addressed to the director
at his residence or



business address, or such other place as the person giving the notice shall deem
most suitable. Notice shall be similarly given, to the extent feasible in the
judgment of the person giving the notice, to the other directors. Notice shall
be given at least two days before the meeting, if feasible in the judgment of
the person giving the notice, and otherwise on any shorter time he may deem
necessary.

     SECTION 2. CHANGE OF HEAD OFFICE. The Board of Directors, during any such
emergency may, effective in the emergency, change the head office or designate
several alternative head offices, or regional offices or authorize the officers
to do so.


                                  ARTICLE XII

                                DIRECTOR EMERITUS

     SECTION 1. DIRECTOR EMERITUS. The Board of Directors may at any time and
from time to time award to former members of the Board of Directors in
recognition of their past distinguished service and contribution rendered to the
Corporation the honorary title "Director Emeritus." The award of this title
shall not constitute an election or appointment to the Board of Directors, nor
to any office of the Corporation, nor the bestowal of any duties,
responsibilities or privileges associated therewith; and accordingly no
"Director Emeritus" shall be deemed a "Director" as that term is used in these
Bylaws. The title "Director Emeritus" shall carry no compensation, and holders
thereof shall not attend any meetings of the Board of Directors or committees of
the Board of Directors, except by written invitation, nor shall they be
specially privy to any confidential information arising from such meeting.


                                  ARTICLE XIII

                               AMENDMENT OF BYLAWS

     SECTION 1. AMENDMENT OF BYLAWS. These Bylaws may be altered, amended or
repealed and new Bylaws may be adopted at any meeting of the Board of Directors
by a majority vote of the directors present at the meeting.

EX-10.7

                                                                    Exhibit 10.7

              MOTOROLA AMENDED AND RESTATED INCENTIVE PLAN OF 1998
                   (AMENDED AND RESTATED AS OF JULY 31, 2001)

1.   NAME AND PURPOSE

     1.1  NAME. The name of this plan is the Amended and Restated Motorola
     Incentive Plan of 1998 (the "Plan"). The Effective Date was May 4, 1998,
     the date the Plan was approved by the stockholders of Motorola.

     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 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.   ADMINISTRATION

     The Plan will be administered by a Committee (the "Committee") of the
     Motorola Board of Directors consisting of two or more directors as the
     Board may designate from time to time, each of whom shall qualify as a
     "Non-Employee Director" within the meaning set forth in Rule 16b-3
     promulgated under the Securities Exchange Act of 1934, as amended (the
     "Exchange Act") or any successor legislation. The Committee shall have the
     authority to construe and interpret the Plan and any benefits granted
     thereunder, to establish and amend rules for Plan administration, to change
     the terms and conditions of options and other benefits at or after grant,
     and to make all other determinations which it deems necessary or advisable
     for the administration of the Plan. The determinations of the Committee
     shall be made in accordance with their judgment as to the best interests of
     Motorola and its stockholders and in accordance with the purposes of the
     Plan. A majority of the members of the Committee shall constitute a quorum,
     and all determinations of the Committee shall be made by a majority of its
     members. Any determination of the Committee under the Plan may be made
     without notice or meeting of the Committee, in writing signed by all the
     Committee members. The Committee may delegate the administration of the
     Plan, in whole or in part, on such terms and conditions as it may impose,
     to such other person or persons as it may determine in its discretion.

3.   SHARES AVAILABLE UNDER THE PLAN

     The number of shares which may be issued or sold or for which Stock Options
     and Stock Appreciation Right may be granted or received under the Plan,
     shall be (i) 37,500,000 shares (as adjusted for the 3-for-1 stock split
     effective June 1, 2000), plus (ii) the total number of shares with respect
     to which no options have been granted under Motorola's Share Option Plan of
     1996 on the Effective Date, plus (iii) the number of shares as to which
     options granted under Motorola's Share Option Plan of 1996 terminate or
     expire without being fully exercised. If



     there is a lapse, expiration, termination or cancellation of any stock
     option issued under the Plan prior to the issuance of shares thereunder or
     if shares of common stock are issued under the Plan and thereafter are
     reacquired by Motorola, the shares subject to those options and the
     reacquired shares shall be added to the shares available for benefits under
     the Plan. In addition, any shares of common stock exchanged by an optionee
     as full or partial payment to Motorola of the exercise price under any
     stock option exercised under the Plan, any shares retained by Motorola
     pursuant to a participant's tax withholding election, and any shares
     covered by a benefit which is settled in cash shall be added to the shares
     available for benefits under the Plan. Shares issued under the Plan may be
     either authorized and unissued shares or issued shares reacquired by
     Motorola. No Participant may receive (i) Stock Options relating to more
     than 900,000 Shares (reflecting adjustment for the 3-for-1 stock split
     effective June 1, 2000) in any Plan Year and (ii) Stock Appreciation Rights
     relating to more than 150,000 shares (reflecting adjustment for the 3-for-1
     stock split effective June 1, 2000) in any calendar year. The shares
     reserved for issuance and the limitations set forth above shall be subject
     to adjustment in accordance with Section 8 hereof. All of the available
     shares may, but need not, be issued pursuant to the exercise of Incentive
     Stock Options.

4.   TYPES OF BENEFITS

     Benefits under the Plan shall consist of Stock Options and Stock
     Appreciation Rights as described below.

5.   STOCK OPTIONS

     Subject to the terms of the Plan, Stock Options may be granted to
     participants, at any time as determined by the Committee. The Committee
     shall determine the number of shares subject to each option and whether the
     option is an Incentive Stock Option. The option price for each option shall
     be determined by the Committee but shall not be less than 100% of the fair
     market value of Motorola's common stock on the date the option is granted.
     Each option shall expire at such time as the Committee shall determine at
     the time of grant. Options shall be exercisable at such time and subject to
     such terms and conditions as the Committee shall determine; provided,
     however, that no option shall be exercisable later than the tenth
     anniversary of its grant. The option price, upon exercise of any option,
     shall be payable to Motorola in full by (a) cash payment or its equivalent,
     (b) tendering previously acquired shares (held for at least six months)
     having a fair market value at the time of exercise equal to the option
     price, (c) certification of ownership of such previously-acquired shares,
     (d) delivery of a properly executed exercise notice, together with
     irrevocable instructions to a broker to promptly deliver to Motorola the
     amount of sale proceeds from the option shares or loan proceeds to pay the
     exercise price and any withholding taxes due to Motorola, and (e) such
     other methods of payment as the Committee, at its discretion, deems
     appropriate. In no event shall the Committee cancel any outstanding Stock
     Option for the purpose of reissuing the option to the participant at a
     lower exercise price or reduce the option price of an outstanding option.



6.   STOCK APPRECIATION RIGHTS

     Subject to the terms of the Plan, Stock Appreciation Rights ("SARs") may be
     granted to participants at any time as determined by the Committee. An SAR
     may be granted in tandem with a Stock Option granted under this Plan or on
     a free-standing basis. The grant price of a tandem SAR shall be equal to
     the option price of the related option. The grant price of a free-standing
     SAR shall be equal to the fair market value of Motorola's common stock on
     the date of its grant. An SAR may be exercised upon such terms and
     conditions and for the term as the Committee in its sole discretion
     determines; provided, however, that the term shall not exceed the option
     term in the case of a tandem SAR or ten years in the case of a free
     standing SAR. Upon exercise of an SAR, the participant shall be entitled to
     receive payment from Motorola in cash or stock, at the discretion of the
     Committee, in an amount determined by multiplying the excess of the fair
     market value of a share of common stock on the date of exercise over the
     grant price of the SAR by the number of shares with respect to which the
     SAR is exercised.

7.   CHANGE IN CONTROL

     Except as otherwise determined by the Committee at the time of grant of an
     award, upon a Change in Control of Motorola, all outstanding benefits,
     including Stock Options and SARs shall become vested and exercisable. 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 or
          exchanged for 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 a 65% 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
          other than any such transaction with entities in which the holders of
          Motorola Common Stock, directly or indirectly, have at least a 65%
          ownership interest, (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.

8    ADJUSTMENT PROVISIONS

          (a)  If Motorola shall at any time change the number of issued shares
          of common stock by stock dividend or stock split, the total number of
          shares reserved for issuance under the Plan, the maximum number of
          shares which may be made subject to an award in any calendar year, and
          the number of shares covered by each outstanding award and the price
          therefore, if any, shall be equitably adjusted by the Committee, in
          its sole discretion.

          (b)  Subject to the provisions of Section 7, without affecting the
          number of shares reserved or available hereunder the Board of
          Directors or the Committee may authorize the issuance or assumption of
          benefits under this Plan in connection with any merger, consolidation,
          acquisition of property or stock, or reorganization upon such terms
          and conditions as it may deem appropriate.

          (c)  In the event of any merger, consolidation or reorganization of
          Motorola with or into another corporation, other than a merger,
          consolidation or reorganization in which Motorola is the continuing
          corporation and which does not result in the outstanding common stock
          being converted into or exchanged for different securities, cash or
          other property, or any combination thereof, there shall be
          substituted, on an equitable basis as determined by the Committee in
          its discretion, for each share of common stock then subject to a
          benefit granted under the Plan, the number and kind of shares of
          stock, other securities, cash or other property to which holders of
          common stock of Motorola will be entitled pursuant to the transaction.

9.   NONTRANSFERABILITY

          Each benefit granted under the Plan shall not be transferable
          otherwise than by will or the laws of descent and distribution and
          each Stock Option and SAR shall be exercisable during the
          participant's lifetime only by the participant or, in the event of
          disability, by the participant's personal representative. In the event
          of the death of a participant, exercise of any benefit or payment with
          respect to any benefit shall be made only by or to the executor or
          administrator of the estate of the deceased participant or the person
          or persons to whom the deceased participant's rights under the benefit
          shall pass by will or the laws of descent and distribution.
          Notwithstanding the foregoing, at its discretion, the Committee may



          permit the transfer of a Stock Option by the participant, subject to
          such terms and conditions as may be established by the Committee.

10.  TAXES

     Motorola shall be entitled to withhold the amount of any tax attributable
     to any amounts payable or shares deliverable under the Plan, after giving
     the person entitled to receive such payment or delivery notice and Motorola
     may defer making payment or delivery as to any award, if any such tax is
     payable until indemnified to its satisfaction. The Committee may, in its
     discretion, subject to such rules as it may adopt, permit a participant to
     pay all or a portion of any required withholding taxes arising in
     connection with the exercise of a Stock Option or SAR by electing to have
     Motorola withhold shares of common stock, having a fair market value equal
     to the amount to be withheld.

11.  DURATION, AMENDMENT AND TERMINATION

     No Incentive Stock Option or other benefit shall be granted more than ten
     years after the date of original adoption of this Plan by the Board of
     Directors; provided, however, that the terms and conditions applicable to
     any benefit granted on or before such date may thereafter be amended or
     modified by mutual agreement between Motorola and the participant, or such
     other person as may then have an interest therein. The Board of Directors
     or the Committee may amend the Plan from time to time or terminate the Plan
     at any time. However, no such action shall reduce the amount of any
     existing award or change the terms and conditions thereof without the
     participant's consent. No amendment of the Plan shall be made without
     stockholder approval if stockholder approval is required by law,
     regulation, or stock exchange rule.

12.  FAIR MARKET VALUE

     The fair market value of Motorola's common stock at any time shall be
     determined in such manner as the Committee may deem equitable, or as
     required by applicable law or regulation.

13.  OTHER PROVISIONS

     (a)  The award of any benefit under the Plan may also be subject to other
     provisions (whether or not applicable to the benefit awarded to any other
     participant) as the Committee determines appropriate, including provisions
     intended to comply with federal or state securities laws and stock exchange
     requirements, understandings or conditions as to the participant's
     employment, requirements or inducements for continued ownership of common
     stock after exercise or vesting of benefits, forfeiture of awards in the
     event of termination of employment shortly after exercise or vesting, or
     breach of noncompetition or confidentiality agreements following
     termination of employment, or provisions permitting the deferral of the
     receipt of a benefit for such period and upon such terms as the Committee
     shall determine.

     (b ) In the event any benefit under this Plan is granted to an employee who
     is employed or providing services outside the United States and who is not



          compensated from a payroll maintained in the United States, the
          Committee may, in its sole discretion, modify the provisions of the
          Plan as they pertain to such individuals to comply with applicable
          law, regulation or accounting rules.

14.  GOVERNING LAW

     The Plan and any actions taken in connection herewith shall be governed by
     and construed in accordance with the laws of the state of Delaware (without
     regard to applicable Delaware principles of conflict of laws).

EX-10.10

                                                                   Exhibit 10.10

  [Standard Agreement for Restricted Stock as of 12-6-01]

                                   RESTRICTED
                              STOCK AWARD AGREEMENT

     This Restricted Stock Award ("AWARD") is made this ___ day of ______ 2002
("DATE OF GRANT"), by Motorola, Inc. (the "COMPANY" or "MOTOROLA") to
_____________________ (the "GRANTEE").

     WHEREAS, Grantee is receiving the Award under the Motorola Omnibus
Incentive Plan of 2000, as amended (the "2000 OMNIBUS PLAN");

     WHEREAS, the Award is a special grant of Motorola Restricted Stock; and

     WHEREAS, it is a condition to Grantee receiving the Award that Grantee
execute and deliver to Motorola an agreement evidencing the terms, conditions
and restrictions applicable to the restricted stock.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the Company hereby awards
restricted stock to Grantee on the following terms and conditions:

     1. AWARD OF RESTRICTED STOCK. The Company hereby grants to Grantee a total
of ______________________ (______) shares of Motorola Restricted Stock (the
"RESTRICTED STOCK") subject to the terms and conditions set forth below.

     2. RESTRICTIONS. The Restricted Stock is being awarded to Grantee subject
to the transfer and forfeiture conditions set forth below (the "RESTRICTIONS")
which shall lapse, if at all, as described in Section 3 below. For purposes of
this Award, the term Restricted Stock includes any additional shares of
Restricted Stock or stock granted to the Grantee with respect to the Restricted
Stock, still subject to the Restrictions.

          a. Grantee may not directly or indirectly, by operation of law or
     otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber,
     charge or otherwise transfer any of the Restricted Stock still subject to
     Restrictions. The Restricted Stock shall be forfeited if Grantee violates
     or attempts to violate these transfer restrictions.

          b. Any Restricted Stock still subject to the Restrictions shall be
     automatically forfeited upon the Grantee's termination of employment with
     Motorola or a Motorola Subsidiary for any reason, other than death, Total
     and Permanent Disability, as defined in Section 3(a) below, and Retirement,
     as defined in Section 3(c). For purposes of this Agreement, a "MOTOROLA
     SUBSIDIARY" is any corporation or other entity in which a 50 percent or
     greater interest is held directly or indirectly by Motorola and which is
     consolidated for financial reporting purposes.

          c. If Grantee engages, directly or indirectly, in any activity which
     is in competition with any activity of Motorola or any Motorola 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 Motorola Subsidiary, all
     Restricted Stock shall be forfeited. This determination shall be made by
     the Compensation Committee of the Company's Board of Directors (the
     "Compensation Committee").

The Company will not be obligated to pay Grantee any consideration whatsoever
for forfeited Restricted Stock.

                                       1



3.   LAPSE OF RESTRICTIONS.

          a. Other than in the case of Retirement, the Restrictions applicable
     to the Restricted Stock shall lapse, as long as the Restricted Stock has
     not been forfeited as described in Section 2 above, as follows:

             (i)   years from the Date of Grant (the "RESTRICTED PERIOD");

             (ii)  Upon a Change in Control of the Company (as defined by the
                    2000 Omnibus Plan);

             (iii) If the Grantee becomes Totally and Permanently Disabled. A
                   "TOTAL AND PERMANENT DISABILITY" means for (x) U.S.
                   employees, entitlement to long term disability benefits
                   under the Motorola Disability Income Plan, as amended and
                   (y) non-U.S. employees, as established by applicable
                   Motorola policy or as required by local regulations; or

             (iv)  If the Grantee dies.

          b. In the case of Retirement (as defined below) before the expiration
     of the Restricted Period, the Restrictions shall lapse upon Retirement, as
     long as the Restricted Stock has not been forfeited as described in Section
     2 above, as follows:

             (i)   If the Grantee Retires after the first year of the
                   Restricted Period has expired, the Restrictions will lapse
                   as to [20%] of the Restricted Stock;

             (ii)  If the Grantee Retires after the second year of the
                   Restricted Period has expired, the Restrictions will lapse
                   as to [40%] of the Restricted Stock;

             (iii) If the Grantee Retires after the third year of the
                   Restricted Period has expired, the Restrictions will lapse
                   as to [60%] of the Restricted Stock; and

             (iv)  If the Grantee Retires after the fourth year of the
                   Restricted Period has expired, the Restrictions will lapse
                   as to [80%] of the Restricted Stock.

     [CHANGE BASED ON VESTING SCHEDULE]

          c. "RETIREMENT" for purposes of this Agreement means:

             (i)   Retiring at or after age 55 with 20 years of service,

             (ii)  Retiring at or after age 60 with 10 years of service; and

             (iii) Retiring at or after age 65, without regard to service.

          d. If during the Restricted Period the Grantee takes a Leave of
     Absence from Motorola or a Motorola Subsidiary and the Grantee's employment
     from Motorola or a Motorola Subsidiary is not terminated for any reason
     (other than death, Total and Permanent Disability, or Retirement), the
     Restricted Stock will continue to be subject to this Agreement. If the
     Restricted Period expires while the Grantee is on a Leave of Absence the
     Grantee will be entitled to the Restricted Stock even if the Grantee has
     not returned to active employment. "LEAVE OF ABSENCE" means a leave of
     absence from Motorola or a Motorola Subsidiary that is not a termination of
     employment, as determined by Motorola.

                                       2



          e. To the extent the Restrictions lapse under this Section 3 with
     respect to the Restricted Stock, it will be free of the terms and
     conditions of this Award.

     4. ADJUSTMENTS. If the number of outstanding shares of Common Stock of the
Company is changed as a result of stock dividend, stock split or the like
without additional consideration to the Company, the number of Restricted Stock
subject to this Award shall be adjusted to correspond to the change in the
outstanding shares of Motorola Common Stock ("COMMON STOCK").

     5. VOTING AND DIVIDENDS. Subject to the restrictions contained in Section 3
hereof, Grantee shall have all rights of a stockholder of Motorola with respect
to the Restricted Stock, including the right to vote the shares of Restricted
Stock and the right to receive any cash or stock dividends, including dividends
of stock of a company other than Motorola. Stock dividends issued with respect
to the Restricted Stock shall be treated as additional shares of Restricted
Stock (even if they are shares of a company other than Motorola) that are
subject to the same restrictions and other terms and conditions that apply to
the shares with respect to which such dividends are issued. If a dividend is
paid in other property, the Grantee will be credited with the amount of property
which would have been received had the Grantee owned a number of shares of
Common Stock equal to the number of Restricted Stock credited to his or her
account. The property so credited will be subject to the same Restrictions and
other terms and conditions applicable to the Restricted Stock and will be paid
out in kind at the time the Restrictions lapse.

     6. DELIVERY OF CERTIFICATES OR EQUIVALENT. Upon the lapse of Restrictions
applicable to the Restricted Stock, the Company shall, at its election, either
deliver to the Grantee (i) a certificate representing a number of shares of
Common Stock equal to the number of shares of Restricted Stock upon which such
Restrictions have lapsed, plus, a cash payment equal to the value of any
fractional shares or (ii) establish a brokerage account for the Grantee and
credit to that account the number of shares of Common Stock equal to the number
of shares of Restricted Stock upon which such Restrictions have lapsed.

     7. WITHHOLDING TAXES. The Company is entitled to withhold an amount equal
to Motorola's required minimum statutory withholdings taxes for the respective
tax jurisdiction attributable to any share of Common Stock or property
deliverable in connection with the Restricted Stock. Grantee may satisfy any
withholding obligation in whole or in part by electing to have Motorola retain
shares of the Restricted Stock having a Fair Market Value on the date the
Restrictions lapse equal to the minimum amount to be withheld. Fair Market Value
for this purpose shall be the closing price for a share of Motorola common stock
on the last trading day before the date the Restrictions lapse. The official
source for the closing price is the New York Stock Exchange Composite
Transaction as reported in the Wall Street Journal, Midwest edition.

     8. OTHER RIGHTS. The grant of Restricted Stock does not confer upon Grantee
any right to continue in the employ of the Company or a Motorola Subsidiary or
to interfere with the right of the Company or a Motorola Subsidiary, to
terminate Grantee's employment at any time.

     9. NOTICES. Any written notice under this Award shall be deemed given on
the date that is two business days after it is sent by registered or certified
mail, postage prepaid, addressed either to the Grantee at his address set forth
below or to the Attention: Executive Rewards, Motorola, Inc., 1303 East
Algonquin Rd, Schaumburg, IL 60196 (847) 576-5000. Any notice may be sent using
any other means (including personal delivery, expedited courier, messenger
service, telecopy, ordinary mail or electronic mail) but no such notice shall be
deemed to have been duly given unless and until it is actually received by the
intended recipient. The Grantee and the Company may change the address to which
notices are to be delivered by giving the other party notice in the manner set
forth herein.

                                       3



     10. GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Award shall be governed by and construed according to the
internal law and not the law of conflicts of the State of Illinois.

     11. WAIVER. The failure of the Company to enforce at any time any provision
of this Award shall in no way be construed to be a waiver of such provision or
any other provision hereof.

     12. ACTIONS OF THE COMPENSATION COMMITTEE. The Compensation Committee may
delegate its authority to administer this Award. The actions and determinations
of the Compensation Committee or its delegate shall be binding upon all parties.

     13. PLAN DOCUMENTS. The 2000 Omnibus Plan and the Prospectus for the 2000
Omnibus Plan are available at http://hr2.mot.com/stockadmin or from Executive
Rewards, 1303 East Algonquin Road Schaumburg, IL 60196 (847) 576-5000.

         IN WITNESS WHEREOF, the Company has executed this Agreement in
duplicate as of day and year first above written.

                                    --------------------------------------------
                                    MOTOROLA, INC.

                                    By:    /s/ Glen Gienko
                                           ---------------------------
                                           Glenn Gienko
                                    Its:

                                           Executive Vice President and Motorola
                                           Director of Human Resources
                                           -------------------------------------

     The undersigned Grantee hereby accepts, and agrees to, all terms and
provisions of the foregoing Award. If you do not sign and return this Award you
will not be entitled to the Restricted Stock.

- --------------------------------
Signature

- --------------------------------
Print Name

- --------------------------------
Social Security Number or
Commerce ID Number

- --------------------------------
Address

- --------------------------------

- --------------------------------

                                       4

EX-10.11

                                                                   Exhibit 10.11

               [Standard Agreement for RSUs as of 12-6-01]

                                RESTRICTED STOCK
                              UNIT AWARD AGREEMENT

     This Restricted Stock Unit Award ("AWARD") is made this __ day of ______
2002 ("DATE OF GRANT"), by Motorola, Inc. (the "COMPANY" or "MOTOROLA") to
_____________________ (the "GRANTEE").

     WHEREAS, Grantee is receiving the Award under the Motorola Omnibus
Incentive Plan of 2000, as amended (the "2000 OMNIBUS PLAN");

     WHEREAS, the Award is a special grant of Motorola restricted stock units;
and

     WHEREAS, it is a condition to Grantee receiving the Award that Grantee
execute and deliver to Motorola an agreement evidencing the terms, conditions
and restrictions applicable to the restricted units.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the Company hereby awards
restricted stock units to Grantee on the following terms and conditions:

     1. AWARD OF RESTRICTED STOCK UNITS. The Company hereby grants to Grantee a
total of ______________________ (______) Motorola restricted stock units (the
"UNITS") subject to the terms and conditions set forth below.

     2. RESTRICTIONS. The Units are being awarded to Grantee subject to the
transfer and forfeiture conditions set forth below (the "RESTRICTIONS") which
shall lapse, if at all, as described in Section 3 below. For purposes of this
Award, the term Units includes any additional Units granted to the Grantee with
respect to Units, still subject to the Restrictions.

               a. Grantee may not directly or indirectly, by operation of law or
          otherwise, voluntarily or involuntarily, sell, assign, pledge,
          encumber, charge or otherwise transfer any of the Units still subject
          to Restrictions. The Units shall be forfeited if Grantee violates or
          attempts to violate these transfer restrictions.

               b. Any Units still subject to the Restrictions shall be
          automatically forfeited upon the Grantee's termination of employment
          with Motorola or a Motorola Subsidiary for any reason, other than
          death, Total and Permanent Disability, as defined in Section 3(a)
          below, and Retirement, as defined in Section 3(c). For purposes of
          this Agreement, a "MOTOROLA SUBSIDIARY" is any corporation or other
          entity in which a 50 percent or greater interest is held directly or
          indirectly by Motorola and which is consolidated for financial
          reporting purposes.

               c. If Grantee engages, directly or indirectly, in any activity
          which is in competition with any activity of Motorola or any Motorola
          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 Motorola
          Subsidiary, all Units shall be forfeited. This determination shall be
          made by the Compensation Committee of the Company's Board of Directors
          (the "Compensation Committee").

The Company will not be obligated to pay Grantee any consideration whatsoever
for forfeited Units.

     3. LAPSE OF RESTRICTIONS.

               a. Other than in the case of Retirement, the Restrictions
          applicable to the Units shall lapse, as long as the Units have not
          been forfeited as described in Section 2 above, as follows:

                                       1


                   (i)   Four (4) years from the Date of Grant (the "RESTRICTED
                         PERIOD");

                   (ii)  Upon a Change in Control of the Company (as defined by
                         the 2000 Omnibus Plan);

                   (iii) If the Grantee becomes Totally and Permanently
                         Disabled. A "TOTAL AND PERMANENT DISABILITY" means for
                         (x) U.S. employees, entitlement to long term disability
                         benefits under the Motorola Disability Income Plan, as
                         amended and (y) non-U.S. employees, as established by
                         applicable Motorola policy or as required by local
                         regulations; or

                   (iv)  If the Grantee dies.

               b. In the case of Retirement (as defined below) before the
          expiration of the Restricted Period, the Restrictions shall lapse upon
          Retirement, as long as the Units have not been forfeited as described
          in Section 2 above, as follows:

                   (i)   If the Grantee Retires after the first year of the
                         Restricted Period has expired, the Restrictions will
                         lapse as to 25% of the Units;

                   (ii)  If the Grantee Retires after the second year of the
                         Restricted Period has expired, the Restrictions will
                         lapse as to 50% of the Units;

                   (iii) If the Grantee Retires after the third year of the
                         Restricted Period has expired, the Restrictions will
                         lapse as to 75% of the Units.

         [CHANGE BASED ON VESTING SCHEDULE]

               c. "RETIREMENT" for purposes of this Agreement means: ----------

                   (i)   Retiring at or after age 55 with 20 years of service,

                   (ii)  Retiring at or after age 60 with 10 years of service;
                         and

                   (iii) Retiring at or after age 65, without regard to
                         service.

               d. If during the Restricted Period the Grantee takes a Leave of
          Absence from Motorola or a Motorola Subsidiary and the Grantee's
          employment from Motorola or a Motorola Subsidiary is not terminated
          for any reason (other than death, Total and Permanent Disability, or
          Retirement), the Units will continue to be subject to this Agreement.
          If the Restricted Period expires while the Grantee is on a Leave of
          Absence the Grantee will be entitled to the Units even if the Grantee
          has not returned to active employment. "LEAVE OF ABSENCE" means a
          leave of absence from Motorola or a Motorola Subsidiary that is not a
          termination of employment, as determined by Motorola.

               e. To the extent the Restrictions lapse under this Section 3 with
          respect to the Units, they will be free of the terms and conditions of
          this Award.

     4. ADJUSTMENTS. If the number of outstanding shares of Common Stock of the
Company is changed as a result of stock dividend, stock split or the like
without additional consideration to the Company, the number of Units subject to
this Award shall be adjusted to correspond to the change in the outstanding
shares of Motorola Common Stock ("COMMON STOCK").

                                       2


     5. DIVIDEND EQUIVALENTS. Upon the Company's payment of a cash dividend with
respect to its Common Stock, the number of Units shall be increased by dividing
the amount of dividend the Grantee would have received had the Grantee owned a
number of shares of Common Stock equal to the number of Units then credited to
his or her account by the closing price of the Company's Common Stock on the
last trading day before the date of the dividend payment, as reported for the
New York Stock Exchange - Composite Transaction in the Wall Street Journal,
Midwest edition. If a dividend is paid in shares of stock of another company or
in other property, the Grantee will be credited with the number of shares of
that company or the amount of property which would have been received had the
Grantee owned a number of shares of Common Stock equal to the number of Units
credited to his or her account. The shares or property so credited will be
subject to the same Restrictions and other terms and conditions applicable to
Units and will be paid out in kind at the time the Restrictions lapse.

     6. DELIVERY OF CERTIFICATES OR EQUIVALENT. Upon the lapse of Restrictions
applicable to the Units, the Company shall, at its election, either deliver to
the Grantee (i) a certificate representing a number of shares of Common Stock
equal to the number of Units upon which such Restrictions have lapsed, plus, a
cash payment equal to the value of any fractional unit then credited to the
Grantee or (ii) establish a brokerage account for the Grantee and credit to that
account the number of shares of Common Stock of the Company equal to the number
of Units upon which such Restrictions have lapsed.

     7. WITHHOLDING TAXES. The Company is entitled to withhold an amount equal
to Motorola's required minimum statutory withholdings taxes for the respective
tax jurisdiction attributable to any share of Common Stock or property
deliverable in connection with the Units. Grantee may satisfy any withholding
obligation in whole or in part by electing to have Motorola retain shares of
Common Stock deliverable in connection with the Units having a Fair Market Value
on the date the Restrictions applicable to the Units lapse equal to the minimum
amount required to be withheld. "Fair Market Value" for this purpose shall be
the closing price for a share of Motorola common stock on the last trading day
before the date the Restrictions applicable to the Units lapse. The official
source for the closing price is the New York Stock Exchange Composite
Transaction as reported in the Wall Street Journal, Midwest edition.


          8.   VOTING AND OTHER RIGHTS.

               a. Grantee shall have no rights as a stockholder of the Company
          in respect of the Units, including the right to vote and to receive
          dividends and other distributions, until delivery of certificates
          representing shares of Common Stock in satisfaction of the Units.

               b. The grant of Units does not confer upon Grantee any right to
          continue in the employ of the Company or a Motorola Subsidiary or to
          interfere with the right of the Company or a Motorola Subsidiary, to
          terminate Grantee's employment at any time.

     9. FUNDING. No assets or shares of Common Stock shall be segregated or
earmarked by the Company in respect of any Units awarded hereunder. The grant of
Units hereunder shall not constitute a trust and shall be solely for the purpose
of recording an unsecured contractual obligation of the Company.

     10. NOTICES. Any written notice under this Award shall be deemed given on
the date that is two business days after it is sent by registered or certified
mail, postage prepaid, addressed either to the Grantee at his address set forth
below or to the Attention: Executive Rewards, Motorola, Inc., 1303 East
Algonquin Rd, Schaumburg, IL 60196 (847) 576-5000. Any notice may be sent using
any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail) but no such notice
shall be deemed to have been duly given unless and until it is actually

                                       3


received by the intended recipient. The Grantee and the Company may change the
address to which notices are to be delivered by giving the other party notice in
the manner set forth herein.

     11. GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Award shall be governed by and construed according to the
internal law and not the law of conflicts of the State of Illinois.

     12. WAIVER. The failure of the Company to enforce at any time any provision
of this Award shall in no way be construed to be a waiver of such provision or
any other provision hereof.

     13. ACTIONS BY THE COMPENSATION COMMITTEE. The Compensation Committee may
delegate its authority to administer this Agreement. The actions and
determinations of the Compensation Committee or delegate shall be binding upon
the parties.

     14. PLAN DOCUMENTS. The 2000 Omnibus Plan and the Prospectus for the 2000
Omnibus Plan are available at http://hr2.mot.com/stockadmin or from Executive
Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 (847) 576-5000.

         IN WITNESS WHEREOF, the Company has executed this Agreement in
duplicate as of day and year first above written.

                                                    ----------------------------
                                                    MOTOROLA, INC.

                                                    By:
                                                       -------------------------
                                                    Its:
                                                       -------------------------

     The undersigned Grantee hereby accepts, and agrees to, all terms and
provisions of the foregoing Award. If you do not sign and return this Award you
will not be entitled to the Units.

- ---------------------------------------------
Signature

- ---------------------------------------------
Print Name

- ---------------------------------------------
Social Security Number or
Commerce ID Number

Address

- ---------------------------------------------

- ---------------------------------------------

EX-10.17

                                                                   Exhibit 10.17

                         MOTOROLA, INC. SENIOR OFFICER
                        CHANGE IN CONTROL SEVERANCE PLAN

                                  INTRODUCTION

          The Board of Directors of Motorola, INC. considers the maintenance of
a sound management to be essential to protecting and enhancing the best
interests of the Company (as hereinafter defined) and its stockholders. In this
connection, the Company recognizes that the possibility of a Change in Control
(as hereinafter defined) may exist from time to time, and that this possibility,
and the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders. Accordingly, the Board (as hereinafter defined)
has determined that appropriate steps should be taken to encourage the continued
attention and dedication of members of the Company's management to their
assigned duties without the distraction which may arise from the possibility of
a Change in Control of the Company.

          This Plan does not alter the status of Participants (as hereinafter
defined) as at-will employees of the Company. Just as Participants remain free
to leave the employ of the Company at any time, so too does the Company retain
its right to terminate the employment of Participants without notice, at any
time, for any reason. However, the Company believes that, both prior to and at
the time a Change in Control is anticipated or occurring, it is necessary to
have the continued attention and dedication of Participants to their assigned
duties without distraction, and this Plan is intended as an inducement for
Participants' willingness to continue to serve as employees of the Company
(subject, however, to either party's right to terminate such employment at any
time). Therefore, should a Participant still be an employee of the Company at
such time, the Company agrees that such Participant shall receive the severance
benefits hereinafter set forth in the event the Participant's employment with
the Company terminates subsequent to a Change in Control under the circumstances
described below.

          Notwithstanding the foregoing and Section 4.2(d), however, in the
event that the Participant is terminated by the Company (other than for Cause
(as hereinafter defined)) prior to a Change in Control, but subsequent to such
time as negotiations or discussions which ultimately lead to a Change in Control
have commenced, then such termination shall be deemed to be a termination which
entitles such Participant to the severance benefits hereinafter set forth.

                                   ARTICLE I
                             ESTABLISHMENT OF PLAN

          As of the Effective Date (as hereinafter defined), the Company hereby
establishes a separation compensation plan known as the Motorola, Inc. Senior
Officer Change in Control Severance Plan, as set forth in this document.



                                   ARTICLE II
                                  DEFINITIONS

          As used herein the following words and phrases shall have the
following respective meanings unless the context clearly indicates otherwise.

          (a) AFFILIATE. Any entity which controls, is controlled by or is under
common control with the Company.

          (b) BOARD. The Board of Directors of the Company.

          (c) CAUSE. With respect to any Participant: (i) the Participant's
conviction of any criminal violation involving dishonesty, fraud or breach of
trust or (ii) the Participant's willful engagement in gross misconduct in the
performance of the Participant's duties that materially injures the Company.

          (d) CHANGE IN CONTROL. The occurrence of any of the following events:
a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provision thereto, whether or not the Company is then subject to such reporting
requirement; PROVIDED that, without limitation, such a Change in Control shall
be deemed to have occurred if (i) any "person" or "group" (as such terms are
used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities (other than
the Company or any employee benefit plan of the Company; and, for purposes of
the Plan, no Change in Control shall be deemed to have occurred as a result of
the "beneficial ownership," or changes therein, of the Company's securities by
either of the foregoing), (ii) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the surviving or continuing
corporation or pursuant to which shares of common stock would be converted into
or exchanged for cash, securities or other property, other than a merger of the
Company in which the holders of common stock immediately prior to the merger
have, directly or indirectly, at least a 65% ownership interest in the
outstanding common stock of the surviving corporation immediately after the
merger, or (B) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of the Company other than any such transaction with entities in which the
holders of the Company's common stock, directly or indirectly, have at least a
65% ownership interest, (iii) the shareholders of the Company approve any plan
or proposal for the liquidation or dissolution of the Company, or (iv) 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.

                                       -2-


          (e) CODE. The Internal Revenue Code of 1986, as amended from time to
time.

          (f) COMPANY. Motorola, INC. and any successor thereto.

          (g) DATE OF TERMINATION. The effective date specified in the Notice of
Termination as of which the Participant's employment terminates (which shall be
not less than thirty (30) days nor more than sixty (60) days after the date such
Notice of Termination is given).

          (h) DISABILITY. A condition such that the Participant by reason of
physical or mental disability becomes unable to perform his normal duties for
more than one-hundred eighty (180) days in the aggregate (excluding infrequent
or temporary absence due to ordinary transitory illness) during any twelve-month
period.

          (i) EFFECTIVE DATE. The Effective Date shall be May 9, 2001.

          (j) EMPLOYEE. Any full-time, regular-benefit, non-bargaining employee
of the Company.

          (k) ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time.

          (l) GOOD REASON. With respect to any Participant, without such
Participant's written consent, (i) the Participant is assigned duties materially
inconsistent with his position, duties, responsibilities and status with the
Company during the 90-day period immediately preceding a Change in Control, or
the Participant's position, authority, duties or responsibilities are materially
diminished from those in effect during the 90-day period immediately preceding a
Change in Control (whether or not occurring solely as a result of the Company
ceasing to be a publicly traded entity), (ii) the Company reduces the
Participant's annual base salary or target incentive opportunity under the
Company's annual incentive plan, or reduces the Participant's target incentive
opportunity under any cash-based long-term incentive plan maintained by the
Company, each such target incentive opportunity as in effect during the 90-day
period immediately prior to the Change in Control, or as the same may be
increased from time to time, unless such target incentive opportunity is
replaced by a substantially equivalent substitute opportunity, (iii) the Company
requires the Participant regularly to perform his duties of employment beyond a
fifty (50) mile radius from the location of the Participant's employment
immediately prior to the Change in Control, (iv) the Company fails to obtain a
satisfactory agreement from any successor to assume and perform this Plan, as
contemplated by Article VI hereof, or (v) the Company purports to terminate the
Participant's employment other than pursuant to a Notice of Termination which
satisfies the requirements of Section 4.1 (and, for purposes of this Plan, no
such purported termination shall be effective).

                                       -3-


          (m) NOTICE OF TERMINATION. Notice that shall indicate the specific
termination provision in this Plan (if any) relied upon and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Participant's employment.

          (n) PARTICIPANT. An individual who qualifies as such pursuant to
Section 3.1.

          (o) PLAN. The Motorola, INC. Senior Officer Change in Control
Severance Plan.

          (p) SEPARATION BENEFITS. The benefits described in Section 4.2 that
are provided to qualifying Participants under the Plan.

          (q) SUBSIDIARY. Any corporation in which the Company, directly or
indirectly, holds a majority of the voting power of such corporation's
outstanding shares of capital stock.

                                   ARTICLE III
                                   ELIGIBILITY

          3.1 PARTICIPATION. Participants in the Plan are Senior Vice Presidents
of the Company; PROVIDED that such Participants will not be entitled to
Separation Benefits if they are not Senior Vice Presidents at the time of the
Change in Control; PROVIDED, FURTHER that any reduction of a Participant's
position prior to, but in connection with, a Change in Control shall be of no
effect for purposes of this Section 3.1. Notwithstanding the foregoing, a
Participant shall not be entitled to receive Separation Benefits (or any other
benefits under the Plan), if the Participant has entered into a change in
control letter agreement with the Company which has not been waived by the
Participant or terminated by the Company.

          3.2 DURATION OF PARTICIPATION. A Participant shall only cease to be a
Participant in the Plan as a result of an amendment or termination of the Plan
complying with Article VI of the Plan, or when he ceases to be an Employee or no
longer qualifies as a Participant under Section 3.1, unless, at the time he
ceases to be an Employee or no longer qualifies as a Participant under Section
3.1, such Participant is entitled to payment of a Separation Benefit as provided
in the Plan or there has been an event or occurrence constituting Good Reason
that would enable the Participant to terminate his employment and receive a
Separation Benefit. A Participant entitled to payment of a Separation Benefit or
any other amounts under the Plan shall remain a Participant in the Plan until
the full amount of the Separation Benefit and any other amounts payable under
the Plan have been paid to the Participant.

                                       -4-


                                   ARTICLE IV
                              SEPARATION BENEFITS

          4.1 TERMINATIONS OF EMPLOYMENT WHICH GIVE RISE TO SEPARATION BENEFITS
UNDER THIS PLAN. A Participant shall be entitled to Separation Benefits as set
forth in Section 4.2 below if, at any time following a Change in Control and
prior to the second anniversary of the Change in Control, the Participant's
employment is terminated (a) involuntarily for any reason other than Cause,
death, Disability or retirement under a mandatory retirement policy of the
Company or any of its Subsidiaries or (b) by the Participant after the
occurrence of an event giving rise to Good Reason. For purposes of this Plan,
any purported termination by the Company or by the Participant shall be
communicated by written Notice of Termination to the other in accordance with
Section 7.5 hereof.

          4.2 SEPARATION BENEFITS.

          (a) If a Participant's employment is terminated under circumstances
which entitle the Participant to Separation Benefits under this Section 4.2,
then the Company shall pay to the Participant, in a lump sum in cash within ten
(10) days after the Date of Termination, the aggregate of the following amounts
which benefits, except as provided in Section 7.4 below, shall be in addition to
any other benefits to which the Participant is entitled other than by reason of
this Plan: (i) unpaid salary with respect to any vacation days accrued but not
taken as of the Date of Termination; (ii) accrued but unpaid salary through the
Date of Termination, (iii) any earned but unpaid annual incentive bonuses from
the fiscal year immediately preceding the year in which the Date of Termination
occurs; (iv) the product of (A) the Participant's target bonus for the fiscal
year in which the Date of Termination occurs (which for purposes of this Section
4.2 in no event shall be less than the Participant's target bonus for the fiscal
year in which the Change in Control occurs) and (B) a fraction, the numerator of
which is the number of days in the then current fiscal year through the Date of
Termination and the denominator of which is 365; (v) an amount equal to three
(3) times the greater of (x) the Participant's highest annual base salary in
effect at any time during the period commencing three (3) years preceding the
date the Change in Control occurs and ending on the date the Change in Control
occurs, and (y) the Participant's annual base salary in effect on the Date of
Termination, and (vi) an amount equal to three (3) times the highest annual
bonus, including any bonus or portion thereof that has been earned but deferred
(and annualized for any fiscal year consisting of less than twelve (12) full
months or during which the Participant was employed for less than twelve (12)
full months), the Participant received from the Company during the five (5) full
fiscal years of the Company immediately preceding the Date of Termination.

          (b) If the Participant's employment is terminated under
circumstances which entitle the Participant to Separation Benefits under this
Section 4.2, for three (3) years after the Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue health, medical, life and
long-term disability insurance benefits to the Participant and/or the
Participant's family at least equal to those that would have been provided in
accordance with the health, medical, life and long-term disability insurance
plans, programs,

                                      -5-


practices and policies of the Company immediately prior to the Change in Control
if the Participant's employment had not been terminated on the same terms and
conditions (including any applicable required employee contributions), PROVIDED,
HOWEVER, that, if the Participant becomes reemployed with another employer and
becomes eligible to receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility.  If the terms of the applicable plan, program,
practice or policy do not permit the participation of the Participant or the
Participant's family, the Company shall continue to provide the benefits
described above on the same after-tax basis as if such benefits were provided
under such plan, program, practice or policy.  For purposes of determining
eligibility (but not the time of commencement of benefits) of the Participant
for retiree medical benefits pursuant to such plans, practices, programs and
policies, the Participant shall be considered to have remained employed until
three (3) years after the Date of Termination and to have retired on the last
day of such period (and to have attained three (3) additional years of age), and
such benefits (and the terms and conditions of such benefits) shall be no less
favorable than as in effect immediately prior to the Change in Control.
Following the end of the period during which medical benefits are provided to
the Participant under this Section 4.2(b), the Participant shall be eligible for
continued health coverage as required by Section 4980B of the Code or other
applicable law, as if the Participant's employment with the Company had
terminated as of the end of such period.

          (c) Except as provided in Section 4.2(b), the Participant shall not be
required to mitigate the amount of any payment provided for in this Section 4.2
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4.2 be reduced by any compensation earned
by the Participant as the result of employment by another employer or by
retirement benefits after the Date of Termination, or otherwise, or by any
set-off, counterclaim, recoupment, or other claim right or action the Company
may have against the Participant or others.

          (d) The provisions of this Article IV shall be applicable after a
Change in Control has occurred, but not prior thereto.

          4.3 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

          (a) Anything in this Plan to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any Payment (as
hereinafter defined) would be subject to the Excise Tax (as hereinafter
defined), then the Participant shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that, after payment by the
Participant of all taxes (and any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto), employment taxes and Excise Tax
imposed upon the Gross-Up Payment, the Participant retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 4.3(a), if it shall be
determined that the Participant is entitled to the Gross-Up Payment, but that
the Parachute Value (as hereinafter defined) of all Payments do not exceed 110%
of

                                       -6-


the Safe Harbor Amount (as hereinafter defined), then no Gross-Up Payment shall
be made to the Participant and the amounts payable under this Agreement shall be
reduced so that the Parachute Value of all Payments, in the aggregate, equals
the Safe Harbor Amount.  The reduction of the amounts payable hereunder, if
applicable, shall be made by first reducing the payments under Section
4.2(a)(iv), unless an alternative method of reduction is elected by the
Participant, and in any event shall be made in such a manner as to maximize the
Value (as hereinafter defined) of all Payments actually made to the Participant.
For purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Plan (and no other Payments) shall be reduced.  If the
reduction of the amount payable under this Plan would not result in a reduction
of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts
payable under the Plan shall be reduced pursuant to this Section 4.3(a).  The
Company's obligation to make Gross-Up Payments under this Section 4.3(a) shall
not be conditioned upon the Participant's termination of employment.

          (b) Subject to the provisions of Section 4.3(c), all determinations
required to be made under this Section 4.3, including whether and when a
Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
KPMG LLP (the "Accounting Firm"). The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Participant within fifteen
(15) business days of the receipt of notice from the Participant that there has
been a Payment or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 4.3, shall be paid by the Company to the Participant within ten
(10) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Participant. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (the "Underpayment"), consistent with the
calculations required to be made hereunder. In the event the Company exhausts
its remedies pursuant to Section 4.3(c) and the Participant thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Participant.

          (c) The Participant shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten (10) business days after the Participant
is informed in writing of such claim. The Participant shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Participant shall not pay such claim prior to the expiration of the
30-day period following the date on which the Participant gives such notice to
the Company (or such shorter period ending on the date that

                                       -7-


any payment of taxes with respect to such claim is due). If the Company notifies
the Participant in writing prior to the expiration of such period that the
Company desires to contest such claim, the Participant shall:

        (1) give the Company any information reasonably requested by the Company
            relating to such claim,

        (2) take such action in connection with contesting such claim as the
            Company shall reasonably request in writing from time to time,
            including, without limitation, accepting legal representation with
            respect to such claim by an attorney reasonably selected by the
            Company,

        (3) cooperate with the Company in good faith in order effectively to
            contest such claim, and

        (4) permit the Company to participate in any proceedings relating to
            such claim;

PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 4.3(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either
direct the Participant to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and the Participant agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one (1) or more appellate courts, as the Company
shall determine; PROVIDED, HOWEVER, that, if the Company directs the Participant
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Participant, on an interest-free basis, and shall indemnify
and hold the Participant harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties) imposed with respect to such
advance or with respect to any imputed income in connection with such advance;
and PROVIDED, FURTHER, that any extension of the statute of limitations relating
to payment of taxes for the Participant's taxable year with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which the Gross-Up Payment would be payable hereunder,
and the Participant shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.

          (d) If, after the receipt by the Participant of an amount advanced by
the Company pursuant to Section 4.3(c), the Participant becomes entitled to
receive any refund with respect to such claim, the Participant shall (subject to
the Company's complying with the requirements of Section 4.3(c)) promptly pay to
the Company the amount of such refund (together with any interest paid

                                      -8-


or credited thereon after taxes applicable thereto).  If, after the receipt by
the Participant of an amount advanced by the Company pursuant to Section 4.3(c),
a determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

          (e) Notwithstanding any other provision of this Section 4.3, the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of the
Participant, all or any portion of the Gross-Up Payment, and the Participant
hereby consents to such withholding; PROVIDED, that, such withholding and
payment shall in no event place the Participant in a less favorable tax position
than had such payments been made to the Participant by the Company.

          (f) DEFINITIONS. The following terms shall have the following meanings
for purposes of this Section 4.3.

              (i)   "Excise Tax" shall mean the excise tax imposed by Section
4999 of the Code, together with any interest or penalties imposed with respect
to such excise tax.

              (ii)  The "Net After-Tax Amount" of a Payment shall mean the Value
of a Payment net of all taxes imposed on the Participant with respect thereto
under Sections 1 and 4999 of the Code and applicable state and local law,
determined by applying the highest marginal rates that are expected to apply to
your taxable income for the taxable year in which the Payment is made.

              (iii) "Parachute Value" of a Payment shall mean the present value
as of the date of the change of control for purposes of Section 280G of the Code
of the portion of such Payment that constitutes a "parachute payment" under
Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such
Payment.

              (iv)  A "Payment" shall mean any payment or distribution in the
nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to
or for the benefit of the Participant, whether paid or payable pursuant to this
Agreement or otherwise.

              (v)   The "Safe Harbor Amount" means the maximum Parachute Value
of all Payments that the Participant can receive without any Payments being
subject to the Excise Tax.

              (vi)  "Value" of a Payment shall mean the economic present value
of a Payment as of the date of the change of control for purposes of Section
280G of the Code, as determined by the Accounting Firm using the discount rate
required by Section 280G(d)(4) of the Code.

                                      -9-


                                    ARTICLE V
                              SUCCESSOR TO COMPANY

          This Plan shall bind any successor of the Company, its assets or its
businesses (whether direct or indirect, by purchase, merger, consolidation or
otherwise), in the same manner and to the same extent that the Company would be
obligated under this Plan if no succession had taken place. In the case of any
transaction in which a successor would not by the foregoing provision or by
operation of law be bound by this Plan, the Company shall require such successor
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Plan, in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. The
term "Company," as used in this Plan, shall mean the Company as hereinbefore
defined and any successor or assignee to the business or assets which by reason
hereof becomes bound by this Plan.

                                      -10-


                                   ARTICLE VI
                       DURATION, AMENDMENT AND TERMINATION

          6.1 DURATION. If a Change in Control has not occurred, this Plan shall
expire three (3) years from the Effective Date; PROVIDED, that upon each annual
anniversary of the Effective Date (each such annual anniversary a "Renewal
Date"), the Plan shall be extended for an additional year, unless pursuant to a
resolution adopted by the Board prior to the Renewal Date the Company determines
not to so extend the Plan. If a Change in Control occurs while this Plan is in
effect, this Plan shall continue in full force and effect for at least two (2)
years following such Change in Control, and shall not terminate or expire until
after all Participants who become entitled to any payments hereunder shall have
received such payments in full.

          6.2 AMENDMENT OR TERMINATION. The Board may amend or terminate this
Plan at any time, including amending the eligibility to participate in the Plan
of Employees who are not existing Participants; PROVIDED, that this Plan may not
be amended or terminated in a manner adverse to Participants as of the date of
the amendment or termination without three (3) years' advance written notice of
such amendment or termination (including modifying the eligibility of Employees
who are already Participants to participate in the Plan).

          6.3 PROCEDURE FOR EXTENSION, AMENDMENT OR TERMINATION. Any extension,
amendment or termination of this Plan by the Board in accordance with this
Article VI shall be made by action of the Board in accordance with the Company's
charter and by-laws and applicable law.

                                   ARTICLE VII
                                  MISCELLANEOUS

          7.1 DEFAULT IN PAYMENT. Any payment not made within ten (10) days
after it is due in accordance with this Plan shall thereafter bear interest,
compounded annually, at the prime rate from time to time in effect at the First
National Bank of Chicago or any successor thereto.

          7.2 NO ASSIGNMENT. No interest of any Participant or spouse of any
Participant or any other beneficiary under this Plan, or any right to receive
payment hereunder, shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any kind,
nor may such interest or right to receive a payment or distribution be taken,
voluntarily or involuntarily, for the satisfaction of the obligations or debts
of, or other claims against, a Participant or spouse of a Participant or other
beneficiary, including for alimony.

          7.3 DISPUTES. The Company shall upon request pay from time to time a
Participant's reasonable out-of-pocket expenses, including legal fees and
expenses, incurred by the Participant or on the Participant's behalf in
connection with any action taken by the Participant or on the

                                      -11-


Participant's behalf (including any judicial proceeding) to enforce this Plan or
to construe, or to determine or defend the validity of, this Plan or otherwise
in connection herewith; PROVIDED, HOWEVER, that, in the case of any judicial
proceeding in which a Participant and the Company are adverse parties or any
dispute under Section 4.3 hereof, the Company shall not be required to pay such
expenses (and shall have the right to recover such expenses from the Participant
if previously advanced) with respect to any position or claim on which the
Company ultimately prevails against the Participant in all material respects. In
any judicial or other proceeding in which the Participant's rights to, or the
amount of, benefits hereunder is disputed, the ultimate burden of proof shall be
on the Company.

          7.4 EFFECT ON OTHER PLANS, AGREEMENTS AND BENEFITS. Except to the
extent expressly set forth herein, any benefit or compensation to which a
Participant is entitled under any agreement between the Participant and the
Company or any of its Subsidiaries or under any plan maintained by the Company
or any of its Subsidiaries in which the Participant participates or participated
shall not be modified or lessened in any way, but shall be payable according to
the terms of the applicable plan or agreement. Notwithstanding the foregoing,
any benefits received by a Participant pursuant to this Plan shall be in lieu of
any severance benefits to which the Participant would otherwise be entitled
under any general severance policy or other severance plan maintained by the
Company for its management personnel. In the event of a Participant's
termination of employment entitling the Participant to Separation Benefits under
Section 4.2, any non-competition or non-solicitation provisions applicable to
the Participant with respect to the Company or any of its Affiliates shall cease
to apply as of the Participant's Date of Termination.

          7.5 NOTICE. For the purpose of this Plan, notices and all other
communications provided for in this Plan shall be in writing and shall be deemed
to have been duly given when actually delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Company at its corporate headquarters address, and to the Participant (at the
last address of the Participant on the Company's books and records), PROVIDED,
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary.

          7.6 EMPLOYMENT STATUS. This Plan does not constitute a contract of
employment or impose on the Participant or the Company any obligation for the
Participant to remain an Employee or change the status of the Participant's
employment or the policies of the Company and its Affiliates regarding
termination of employment.

          7.7 NAMED FIDUCIARY; ADMINISTRATION. The Company is the named
fiduciary of the Plan, and shall administer the Plan, acting through the
Compensation Committee of the Board, or its delegatee.

          7.8 UNFUNDED PLAN STATUS. This Plan is intended to be an unfunded plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, within the meaning
of Section 401 of ERISA. All payments pursuant to

                                      -12-


the Plan shall be made from the general funds of the Company and no special or
separate fund shall be established or other segregation of assets made to assure
payment.  No Participant or other person shall have under any circumstances any
interest in any particular property or assets of the Company as a result of
participating in the Plan.  Notwithstanding the foregoing, the Company may (but
shall not be obligated to) create one (1) or more grantor trusts, the assets of
which are subject to the claims of the Company's creditors, to assist it in
accumulating funds to pay its obligations under the Plan.

          7.9 VALIDITY AND SEVERABILITY. The invalidity or unenforceability of
any provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          7.10 GOVERNING LAW. The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of
Delaware, without reference to principles of conflict of law, except to the
extent pre-empted by Federal law.

                                      -13-

EX-10.21

                                                                  Exhibit 10.21

                        AMENDMENT TO EMPLOYMENT AGREEMENT

                  This Amendment to the Employment Agreement entered into as of
April 2, 1999, by and between General Instrument Corporation, a Delaware
Corporation (the "Company"), and Edward D. Breen ("Executive") (such agreement,
the "Employment Agreement") is among the Company, Executive, and Motorola, Inc.
("Motorola") and is dated as of 12/22, 1999.

                  WHEREAS, the Company, Motorola and Lucerne Acquisition Corp.
have entered into an Agreement and Plan of Merger dated as of September 14, 1999
(such agreement, as amended from time to time, the "Merger Agreement"), pursuant
to which the Company will become a wholly owned subsidiary of Motorola in a
merger (the "Merger"); and

                  WHEREAS, Executive is employed by the Company as its Chief
Executive Officer pursuant to the Employment Agreement; and

                  WHEREAS, the Company and Motorola wish to ensure that they
will continue to receive the benefit of Executive's services following the
Merger, and to provide for the terms and conditions of Executive's employment by
Motorola following the Merger, and Executive is willing to remain so employed on
such terms and conditions;

                  NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:

                  1. RETENTION PROGRAM. (a) As soon as practicable after the
Effective Time (as defined in the Merger Agreement), but in no event later than
the end of the first fiscal quarter of Motorola that ends after the Effective
Time, Motorola shall grant Executive stock options with respect to 225,000
shares (the "Closing Options") with an exercise price equal to the fair market
value of the underlying shares on the date of grant, and 25,000 shares of
restricted stock (the "Closing Shares"), in each case pursuant to the Motorola
Incentive Plan of 1998 (the "Motorola Incentive Plan"), subject to appropriate
adjustment as to the number of shares if an event described in Section 3.3 of
the Motorola Incentive Plan (an "Adjustment Event") occurs on or before the date
of grant. The Closing Options shall be scheduled to vest in four equal
installments on each of the first four anniversaries of the date of grant, and
all of the Closing Shares shall vest on the second anniversary of the day on
which the Effective Time occurs, in each case subject to Executive's continued
employment, and the Closing Options and the Closing Shares shall otherwise be
subject to the terms and conditions of the Motorola Incentive Plan.

                  (b)      At the time when Motorola makes its annual stock
option grants to executives for the fiscal year following the fiscal year in
which the Effective Time occurs, Motorola shall grant Executive stock options
with respect to 100,000 shares pursuant to the Motorola Incentive Plan, or any
successor thereto, subject to appropriate adjustment as to the number of shares
if an Adjustment Event occurs on or before the date of grant. Such options shall
have an exercise price equal to the fair market value of the underlying shares
on the date of grant, and shall otherwise be subject to the terms and conditions
of the Motorola Incentive Plan.





                  (c)      If Executive remains employed by Motorola or one of
its Affiliates from the date on which the Effective Time occurs through the
second anniversary thereof, Executive shall receive a one-time Retention Cash
Bonus equal to $1,196,000.

                  (d)      Except as specifically provided below, the foregoing
compensation shall be in addition to the compensation to which Executive is
entitled pursuant to the Employment Agreement, as amended hereby.

                  2.       EMPLOYMENT TRANSFER. It is acknowledged and agreed
that Executive may, at and/or from time to time after the Effective Time, be
transferred to the employment of Motorola or a Subsidiary of Motorola, and that
in connection with any such transfer, the Company may assign to the employing
entity its rights, and cause the employing entity to assume its obligations,
under the Employment Agreement and this Amendment. In such event, references to
the Company in the Employment Agreement and this Amendment shall be deemed to
refer to such employing entity.

                  3.       AMENDMENTS TO EMPLOYMENT AGREEMENT. The following
amendments to the Employment Agreement shall be effective as of the Effective
Time.

                  (a)      EMPLOYMENT TERM. Notwithstanding Section 1.1 of the
Employment Agreement, the "Employment Term" shall mean the period ending on the
second anniversary of the date on which the Effective Time occurs, and shall not
be further renewed or extended except by written agreement among the parties
hereto.

                  (b)      DUTIES AND RESPONSIBILITIES. Section 1.2 of the
Employment Agreement shall be amended to read in its entirety as follows:

                  During the Employment Term, Executive shall serve as Executive
                  Vice President and President, Broadband Communications Sector,
                  with overall responsibilities for the strategic, tactical and
                  operational success of the Broadband Communications Sector,
                  and such other duties and responsibilities appropriate to such
                  position as may be assigned to him from time to time by the
                  Executive Vice President and President, Motorola
                  Communications Enterprise, to whom Executive shall report.
                  Executive shall also serve in such other senior positions with
                  Motorola, the Company and their affiliates to which he may be
                  elected or appointed from time to time during the Employment
                  Term.

                  (c)      BASE SALARY. Notwithstanding Section 1.4 of the
Employment Agreement, Executive's Base Salary shall be not less than $650,000
annually.

                  (d)      RETIREMENT AND WELFARE PLANS. Section 1.5(b) of the
Employment Agreement shall not apply after the Effective Time; provided that
Motorola shall provide, or cause one of its Subsidiaries to provide, Executive
with life insurance coverage in the amount of $7.5 million from the Effective
Time until his employment with Motorola and its Subsidiaries terminates.

                  (e)      VACATION. It shall not be considered a violation of
Section 1.6 of the Employment Agreement if Executive's vacation, holiday and
other pay for time not worked is governed by the terms of the policies of
Motorola rather than those of the Company.

                                       -2-



                  (f)      ANNUAL INCENTIVE COMPENSATION. Notwithstanding
Section 1.7 of the Employment Agreement, beginning with the fiscal year 2001,
Executive shall participate in the short-term incentive compensation program of
Motorola for senior-level executives of Motorola generally, rather than in such
programs of the Company, and he shall have opportunities thereunder commensurate
with the opportunities provided to such other senior executives, and the target
for determining his annual bonus under such program shall be established in
accordance with Motorola's policy.

                  (g)      LONG-TERM INCENTIVE COMPENSATION. In recognition of
the specific long-term incentive compensation provided pursuant to Section 1 of
this Amendment, Section 1.8 of the Employment Agreement shall not apply after
the Effective Time. Effective January 1, 2000, Executive shall be entitled to
participate in the Motorola Long-Range Incentive Program.

                  (h)      RELEASE. It is acknowledged that the Release required
to be executed pursuant to Section 3 of the Employment Agreement shall extend to
Motorola and all of its Subsidiaries and Affiliates, and that the form thereof
attached to the Employment Agreement as Annex I shall be amended to the extent
necessary or appropriate to reflect such extension.

                  (i)      TERMINATION BENEFITS. The references in Sections
3.1(b) and (c), 3.2, 3.3 and 3.4 of the Employment Agreement to plans of the
Company shall include any plans of Motorola in which Executive may participate,
but Executive shall not be entitled to duplicate benefits under plans of the
Company and Motorola.

                  (j)      COORDINATION WITH MOTOROLA CHANGE OF CONTROL
AGREEMENT. Section 3.1(d) of the Employment Agreement is hereby amended by
adding a new sentence at the end thereof, reading in its entirety as follows:
"Notwithstanding any other provision of this Agreement, if Executive hereafter
becomes a party to any agreement with Motorola or any of its Subsidiaries
providing for severance pay and/or benefits upon termination of employment upon,
after or in connection with a change of control (however defined), then the
severance pay and benefits due under such agreement shall first be determined as
if Executive were not a party to this Agreement (the "Subsequent Severance"),
and the payments and benefits to which Executive would otherwise be entitled
pursuant to this Section 3 shall be offset by the Subsequent Severance so that
there is no duplication thereof."

                  (k)      CHANGE OF CONTROL. It is acknowledged and agreed that
the approval of the Merger by the Company's stockholders will be a "Change of
Control" as defined in Section 3.7, and that if such approval occurs, no
subsequent event shall be deemed to be a Change of Control for purposes of the
Employment Agreement. In no event shall Executive be entitled to the $9 million
payment described in Section 3.1(c)(iii) of the Employment Agreement.

                  (l)      GOOD REASON. Notwithstanding Section 3.7(f) of the
Employment Agreement, no change in Executive's terms and conditions of
employment that is provided for in this Amendment shall be considered to be
"Good Reason." Without limiting the generality of the foregoing, Section
3.7(f)(i) of the Employment Agreement is hereby amended to read in its entirety
as follows:

                                      -3-



                  an adverse change in Executive's duties and responsibilities,
                  including reporting responsibilities, that is inconsistent
                  with the provisions of Section 1.2 hereof, as amended by
                  Section 2(b) of the Amendment dated _______, 1999, except in
                  connection with the termination of his employment for
                  Disability, Cause, as a result of his death or by Executive
                  other than for Good Reason;

In addition, Executive expressly acknowledges and agrees that the Company has
complied with the requirements of Section 10(b) of the Employment Agreement in
connection with the Merger.

                  (m)      CERTAIN REFERENCES. All references to the "Board" in
the Employment Agreement, other than in Section 3.7(c), shall be deemed to be
references to the Board of Directors of Motorola or a committee of such Board of
Directors with the authority of the Board to act with respect to the matters
described. The references to "the Company" (as opposed to plans of the Company)
in Sections 4.2(b), 4.2(c), 4.2(d), 4.2(e), 8 and 13 shall be deemed to be
references to "Motorola." The references to "the Company" in Sections 1.3,
1.5(a), 2, 3.7(b), 4.2(a), 5, 10(b) and 15 shall be deemed to be references to
"the Company and/or Motorola."

                  (n)      NOTICES. Whenever a notice is given pursuant to the
Employment Agreement to the Company, a copy of such notice shall be given to
Motorola. All notices to Motorola pursuant to the Employment Agreement of this
Amendment shall be given to it at:

                           Motorola, Inc.
                           1303 East Algonquin Road
                           Schaumberg, Illinois  60196
                           Telecopier No.:  (847) 576-3628
                           Attention:  General Counsel

or to such other names or addresses as Motorola shall designate by notice
pursuant to Section 9 of the Employment Agreement.

                  (o)      DEFINED TERMS. The term "Subsidiary" as used herein
means any entity in an unbroken chain of entities beginning with Motorola and
ending with such entity, with each entity in such chain, beginning with
Motorola, and other than the last entity in the chain, owning an equity interest
representing at least fifty percent of the voting power or value of the next
entity in such chain. Capitalized terms used and not defined in this Amendment
shall have the meanings given to them in the Severance Protection Agreement.

                  4.       This Amendment, together with the Employment
Agreement as amended hereby, set forth the entire understanding among the
parties hereto with respect to the subject matter hereof. Without limiting the
generality of the foregoing, this Amendment supersedes the Memorandum to
Executive from Keith Bane and Merle Gilmore dated October 8, 1999.

                  5.       This Amendment shall be null and void and of no
further effect if the Merger Agreement is terminated without consummation of the
Merger

                                      -4-



                  IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of the date first above written.

                                         GENERAL INSTRUMENT CORPORATION



                                         By:
                                             ---------------------------------



                                         MOTOROLA, INC.



                                         By:
                                             ---------------------------------



                                         -------------------------------------
                                         Edward D. Breen


                                      -5-

EX-12

                                                                      Exhibit 12



                                                                      YEARS ENDED DECEMBER 31,
(In Millions)                                   2001            2000            1999            1998            1997
                                          --------------------------------------------------------------------------------
                                                                                              
Pretax income (loss)(1)                   $      (5,449)   $       2,328    $      1,434    $       (1,230)  $       1,814

Capitalized interest                      $         (13)   $         (18)   $          0    $            0   $           0

Fixed charges (as calculated below)       $         945    $         806    $        568    $          460   $         342
                                          -------------    -------------    ------------    --------------   -------------

Earnings(2)                               $      (4,517)   $       3,116    $      2,002    $         (770)  $       2,156
                                          =============   ==============    ============    ==============   =============
FIXED CHARGES:

Interest expense                          $         806    $         680    $        399(3) $          348   $         234

Rent expense interest factor              $         139    $         126    $        169    $          112   $         108
                                          -------------    -------------    ------------    --------------   -------------
Total fixed charges(2)                    $         945    $         806    $        568    $          460   $         342
                                          =============   ==============    ============    ==============   =============
RATIO OF EARNINGS TO FIXED CHARGES                    -(4)           3.9             3.5                -(4)          6.3
                                          =============   ==============    ============    ==============   =============


     (1)  After adjustments required by Item 503(d) of SEC Regulation S-K.

     (2)  As defined in Item 503(d) of SEC Regulation S-K.

     (3)  The Company was a guarantor of Iridium's $750 million guaranteed
          credit agreement. On November 5, 1999, the Company satisfied its
          guarantee obligations under this agreement by paying approximately
          $743 million to the banks providing loans under the agreement.
          Included with this payment was approximately $3 million in interest
          charges which have been aggregated in the 1999 total interest expense
          used for the calculation of total fixed charges.

     (4)  Earnings were inadequate to cover fixed charges for the year ended
          December 31, 2001 by $5.4 billion and for the year ended December 31,
          1998 by $1.2 billion.

EX-21

                                 MOTOROLA, INC.                       EXHIBIT 21
                          LISTING OF MAJOR SUBSIDIARIES
                                   12/31/2001



                                                      
MOTOROLA DO BRASIL LTDA.                                 Brazil
MOTOROLA INDUSTRIAL LTDA.                                Brazil
MOTOROLA CANADA LIMITED                                  Canada
MOTOROLA (CHINA) ELECTRONICS LTD.                        China
MOTOROLA (CHINA) INVESTMENT LTD.                         China
C-PORT CORPORATION                                       Delaware
GENERAL INSTRUMENT CORPORATION                           Delaware
MOTOROLA CREDIT COPORATION                               Delaware
NEXT LEVEL COMMUNICATIONS, INC.                          Delaware
MOTOROLA LIMITED                                         England
MOTOROLA SEMICONDUCTEURS S.A.                            France
MOTOROLA G.M.B.H.                                        Germany
MOTOROLA ASIA LIMITED                                    Hong Kong
MOTOROLA SEMICONDUCTOR HONG KONG LIMITED                 Hong Kong
MOTOROLA COMMUNICATIONS ISRAEL LIMITED                   Israel
MOTOROLA JAPAN LIMITED                                   Japan
MOTOROLA MALAYSIA SDN. BHD.                              Malaysia
MOTOROLA MALAYSIA SDN. LIMITED                           Malaysia
MOTOROLA ASIA TREASURY PTE. LTD                          Singapore
MOTOROLA ELECTRONICS PTE. LIMITED                        Singapore
MOTOROLA ELECTRONICS TAIWAN, LIMITED                     Taiwan