10-K

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UNITED STATES
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, 2002
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. Yes ý    No o.

        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. ý

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý    No o.

        The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2002 was approximately $33.5 billion (based on closing sale price of $14.59 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, 2003 was 2,315,531,433.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Location in Form 10-K
Portions of Registrant's Proxy Statement for 2003 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
		Semiconductor Products Segment		6
		Global Telecom Solutions Segment		10
		Commercial, Government and Industrial Solutions Segment		13
		Broadband Communications Segment		16
		Integrated Electronic Systems Segment		21
		Other Products Segment		23
	Other Information			23
		Financial Information About Segments		23
		Customers		24
		Backlog		24
		Research and Development		24
		Patents and Trademarks		25
		Environmental Quality		25
		Employees		25
		Financial Information About Foreign and Domestic Operations and Export Sales		25
	Business Risk Factors			26
	Available Information			34
ITEM 2.			PROPERTIES	34
ITEM 3.			LEGAL PROCEEDINGS	35
ITEM 4.			SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	40
EXECUTIVE OFFICERS OF THE REGISTRANT				40
PART II				43
ITEM 5.			MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	43
ITEM 6.			SELECTED FINANCIAL DATA	43
ITEM 7.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				43
ITEM 8.			FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	43
ITEM 9.			CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	43
PART III				44
ITEM 10.			DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	44
ITEM 11.			EXECUTIVE COMPENSATION	44
ITEM 12.			SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	44
ITEM 13.			CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	44
ITEM 14.			CONTROLS AND PROCEDURES	44
PART IV				45
ITEM 15.			EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	45
	15(a)(1) Financial Statements			45
	15(a)(2) Financial Statement Schedule and Independent Auditors' Report			45
	15(a)(3) Exhibits			45
	15(b) Reports on Form 8-K			45
	15(c) Exhibits			45

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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 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

        2002 was another very difficult year for our industries and for our businesses. The continued recession in the telecom and semiconductor industries severely impacted our businesses. Our sales decreased to $26.7 billion compared with $29.9 billion in 2001. We incurred a smaller net loss of $2.5 billion compared with a net loss of $3.9 billion in the prior year. Despite the difficult environment and declining sales, in the second half of 2002 we returned to profitability. We continue to believe our markets will improve and that our businesses will grow.

        During 2002, we continued to reduce costs and focus our strategy. The five-point plan we introduced in 2001 has helped us focus on critical priorities and drive growth. That plan involves the following: (1) focusing on the balance sheet to continue to strengthen it; (2) lowering our break-even sales levels by reducing costs; (3) continually strengthening our management team; (4) pursuing growth through innovative products, software applications and customer relationships; and (5) constantly evaluating our strategic options and business portfolio. While we are not done, our plan is working. At the end of 2002, our balance sheet was stronger—we had positive operating cash flow for eight quarters in a row; we reduced accounts receivable, net debt, and our ratio of net debt to net debt plus equity; and at the end of 2002 we held more than $6.5 billion in cash, cash equivalents and short-term investments worldwide. We reduced our break-even sales level during 2002. We strengthened our management team by adding key new talent and retaining existing talent. During 2002, we continued to invest in research and development to fund ongoing innovation in new products and software applications. As a result of our continued evaluation of strategic options and business portfolio, we

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acquired six businesses and divested six businesses and made investments in 40 other companies. Finally, we reevaluated the five-point plan and enhanced it.

        In 2002, our Commercial, Government and Industrial Solutions Sector—our Homeland Security business—won the Malcolm Baldridge National Quality Award. This award, established by the U.S. Congress in 1987, recognizes excellence in business. Motorola was the inaugural winner of the award in 1988.

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 segment ("PCS" or the "segment") designs, manufactures, sells and services wireless subscriber equipment.

Principal Products and Services

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

Our Industry

        After declining in 2001 for the first time in industry history, demand for wireless handsets increased in 2002 by approximately 7% to an estimated 400 million units, but remained significantly lower than historical rates of 40% to 60% unit growth. Demand in emerging markets was strong, but demand in regions with relatively high penetration rates of wireless handset usage such as North America and Europe was not as strong. The industry continued offering handsets with new and attractive features such as color displays, expanded software applications, messaging functionality and opportunities for personalization based on 2.5G (generation) technology and CDMA 1X (Code Division Multiple Access Technology). The industry continues to expect improved growth over the next several years as the transition to next-generation data-rich services, such as point-to-point video and higher speed data, based on Universal Mobile Telecommunications Systems (UMTS) 3G technology begins.

Our Strategy

        PCS is focused on profitable and sustainable growth through product leadership and innovation and total cost competitiveness. We are investing in the development of industry-leading TDMA, GSM, CDMA, CDMA 1X and UMTS 3G products, with an emphasis on winning the next-generation youth market through "must have" designs and "must do" experiences. These include color screens and handsets with cameras. Emerging markets are important to our business and we strive to understand our customers' requirements in these markets.

        We are focused on enhanced partnerships with our customers by aligning with their business strategies and objectives. A core component of our customer-partnership strategy is the expansion of opportunities for customers to increase Average Revenue per User (ARPU). By utilizing customizable platforms, we can enable our customers to go to market with handsets that feature differentiated user interfaces such as consumer personalization to help operators build consumer loyalty. These platforms also generate revenue opportunities by supporting signature experiences such as data productivity applications, gaming and music and other entertainment offerings and customized content.

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        As a part of improving our brand, we are developing youth-driven brand partnerships that will support a consumer-centric design philosophy and further reinforce the brand strength generated by our MOTO marketing activities.

        The success of these strategies is evidenced by our year-over-year market-share improvements in the Americas and Europe and by continued leadership in China. Additionally, PCS has played a key role in reinvigorating the Motorola brand among consumers worldwide, which we expect will help fuel demand for new products and experiences during 2003.

Cost Reduction

        During 2002, we continued executing on the major cost-reduction actions started in late 2000 to improve our cost structure and competitiveness. We introduced several products based on our platform design strategy. This strategy enhances the cost competitiveness of our 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. In 2002, we reduced the number of products manufactured and parts complexity of each product making it less expensive to manufacture our products and easier to change our products to meet rapidly evolving customer demand. We utilized a substantially improved supply- chain process to increase the efficiency of manufacturing activities, thereby reducing costs. The improved supply chain process also enables short-cycle ordering by customers and reduces the amount of required inventory. In 2002, we completed the exit of the paging product business, including Flex/Reflex subscriber units. We will continue to invest in our next generation supply chain initiatives and drive these cost competitiveness strategies that will remain an area of emphasis for us in the future.

Customers

        The PCS customer strategy continues to focus on strengthening relationships with our top customers. Accordingly, PCS has several customers, worldwide, the loss of which could have a negative impact on our results. Nextel Communications, Inc.'s (and its affiliates) 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 19% of our wireless handsets sales are to the China market and are primarily used on these systems. The largest of our other customers are AT&T, Cingular, Orange, Telcel Mexico, Telefonica, T-Mobile (Voicestream), Verizon and Vodafone. Many of our customers and a significant portion of our sales are outside the United States.

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, Samsung, Siemens and Sony-Ericsson.

        In Asia, which is our largest market, an increasing number of smaller companies have entered the market. Competition from these new entrants is greatest in China. Despite the heightened competition, the segment maintained market share leadership in China.

        In 2002, the segment continued to introduce new and feature-rich handsets featuring General Packet Radio Service (GPRS), or 2.5G. 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

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supporting this technology and continues to offer a broad portfolio of GPRS products. The segment also introduced handsets based on CDMA 1X. The segment continued to invest heavily in UMTS 3G wireless handset technology. This 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. Introduction of our UMTS 3G products expected in 2002 was delayed as a result of the significant technical challenges associated with the new technology for both the handset manufacturers and operators. We are expecting to ship our first UMTS 3G handsets during 2003 as part of our contract with Hutchison Whampoa Ltd. Competition in both the 2.5G and 3G growth areas is and will continue to be intense.

        As competition increases, the ability to differentiate and add value will be realized more and more through digital feature enhancements. Consumer experiences will be shaped by the user interface, software applications and solutions that can be delivered on handsets at point of purchase and beyond. The segment has chosen to leverage Java™ technology to better leverage the largest wireless developer community in the world, and has recently announced the adoption of the Linux operating system to augment the strategy of driving a more open and global software development platform. Other software platforms will be leveraged as needed, such as Symbian OS, to support key customer needs.

        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 and the related frequency relocation costs. Typically, governments sell these licenses at auctions. Over the last several years, the cost of these licenses and related frequency relocation costs have increased significantly, particularly for frequencies used in connection with UMTS 3G technology. These significant costs have 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, pay the relocation costs 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 was $1.1 billion at December 31, 2002 and $2.2 billion at December 31, 2001. The 2002 order backlog is believed to be generally firm and 100% of that amount is expected to be shipped in 2003. The forward-looking estimates of the firmness of such orders is subject to future events which may cause the percentage of the 2002 backlog actually shipped to change. Orders declined primarily as a result of PCS's efforts in assisting their customers to implement an improved shorter-cycle ordering process which enabled PCS's customers to reduce inventory lead-times and, in turn, inventory levels.

        The backlog amount reported for 2001 reflects a decrease of $0.3 billion from the previously reported figure. The adjustment reflects a revision to the realizable dollar value of the handset units in backlog. The number of handset units in backlog at December 31, 2001 has not been adjusted.

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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.

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. At the end of 2002, the segment had a higher inventory balance than at the end of 2001, reflecting the revenue growth of the business in the fourth quarter of 2002 relative to the fourth quarter of 2001 and expected higher level of revenues in the first quarter of 2003 relative to the first quarter of 2002.

        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 2003. 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 contain automation 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/Manufacturing

        Our headquarters are located in Libertyville, Illinois. Our major facilities are located in Libertyville, Illinois; 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; and joint ventures in Hangzhou and Shanghai, China. Additional engineering, software development and administration offices are located in San Diego, California; South Plainfield, New Jersey; Champaign, Illinois; Ft. Worth, Texas; Boynton Beach, Florida; 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 the rapidly-changing technological environment. These contractors design and manufacture products in non-Motorola facilities.

        In 2003, over two-thirds of our handsets will be manufactured in Asia. Our largest manufacturing facilities are located in China, Singapore, Malaysia, Korea, Brazil, Mexico and Germany. Each of these facilities serve multiple countries and regions of the world. In 2003, approximately 10% of our handsets will be manufactured by contractors, who primarily manufacture in Asia.

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Semiconductor Products Segment

        The Semiconductor Products segment ("SPS" or the "segment") designs, produces and sells embedded processors for customers serving the wireless, networking and automotive markets and for standard products. The segment offers multiple technologies enabling customers to develop smarter, simpler, safer 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, and automatic controls. Embedded software increases application flexibility and shortens the cycle time of adapting our hardware with changing customer requirements. In the networking market, the segment provides communication solutions for wireless and wireline networking infrastructure, and computing solutions for personal computers and servers. In the wireless market, SPS products focus on connectivity, audio, video, security, imaging, graphics and radio frequency embedded solutions. In the automotive market and standard products, SPS products include MCUs (microcontrollers), DSPs (digital signal processors), embedded MPUs (microprocessors), sensors and analog integrated circuits.

        The segment markets its products through a global network of sales offices and operations. The 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, in 2001 had its worst decline in history with industry-wide sales down more than 30% over 2000. In 2001, 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 came on line as demand for semiconductor products declined. Industry sales in 2002 were essentially flat with 2001 because the industry decline plateaued. Average selling prices in 2002 continued to decline, with the overall rate of decline higher in 2002 than 2001, but the rate of decline slowed towards the end of 2002 as the market appeared to begin to recover. The segment was directly and significantly affected by these market events.

Our Strategy

        The segment is focusing on providing silicon-to-software embedded solutions to the wireless, networking and automotive markets and standard products because industry research confirms each of these markets is projected for long term growth. Although the automotive market grows more slowly than other semiconductor product markets, the segment has the leading market share position in this relatively stable market. The wireless and networking markets are expected to grow more rapidly than the overall industry because the current penetration level is much lower than in other markets, and the expected continual increase in the number of wireless applications and new mobile devices will add additional value for end-customers.

        In response to the changing industry dynamics, the segment continued to implement the three key elements of a business model introduced in 2001:

1.

The timely introduction of proprietary, high-value products;

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2.

Executing on the "asset light" strategy to reduce capital expenditures in manufacturing, while leveraging partnerships for research and development; and



3.

Expanding sources of revenue from intellectual property licensing.

        The first element of the new model is creating proprietary, higher-value products to increase penetration of targeted embedded markets. The segment introduced 181 new products in 2002. In wireless, momentum continued to build for the segment's Innovative Convergence™ solution that trims development time for OEMs (Original Equipment Manufacturers) to get their 2.0G, 2.5G and 3G mobile subscriber devices to market. By the end of 2002 the segment had 10 merchant market customers for Innovative Convergence™ semiconductors in addition to Motorola's Personal Communications segment. The market success of this solution is very important to our overall strategy. In automotive, the segment's microcontroller architecture for powertrain management continued to be the market leader for this application and the segment's microprocessors dominated telematic control units that give vehicles the ability to communicate with the outside world. In the networking market, the segment introduced a new integrated circuit designed to replace relays and fuses in numerous power management applications, and developed next-generation communication processors for use in networking equipment.

        The second element of this business model is the "asset light" strategy for manufacturing and research and development. The segment's strategy is to focus its internal manufacturing capacity on leading edge and specialty technologies, while replacing internal manufacturing capacity with purchases of material and services from foundries and contract houses. In 2002, the segment expanded its partnership with TSMC, the industry's largest semiconductor foundry headquartered in Taiwan. Our agreement with TSMC provides for long-term capacity based on fully compatible process technologies. The "asset light" strategy required restructuring of the internal manufacturing capacity. At the end of 2002, SPS had reduced its total manufacturing facilities to 12, as compared to 22 manufacturing facilities at the end of 2000. Of the 12 manufacturing facilities at the end of 2002, 9 were wafer fabrication facilities, as compared to 16 wafer fabrication facilities at the end of 2000. By mid-2003, SPS expects to reduce its total manufacturing facilities to 10, of which 8 will be wafer fabrication facilities. The closure of manufacturing facilities has been the primary driver in reducing the number of employees at the segment by 14.1% from December 31, 2001.

        As part of the "asset light" strategy, the segment seeks strategic partnerships to share the cost of developing future generation process technologies. An example of this in 2002 was the segment entering into a five year jointly funded alliance with Philips and STMicroelectronics to share the cost of developing advanced CMOS (Complementary Metal Oxide Semiconductor) process technology down to the 32 nanometer node.

        The third element of the business model is the expansion of royalty income from intellectual property licensing. Royalty income was $182 million in 2002 and $161 million in 2001.

        The segment believes momentum attained through our three-pronged business model of higher value products, greater returns on our investment in research and development and manufacturing capacity, and higher royalty revenue from IP licensing will revitalize the segment and place it on track to achieve profitability. We must also manage our outsourcing arrangements and design and manufacturing partnerships to ensure that we have the products our customers want in a timely manner.

Customers

        The segment 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 that we believe will be

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future leaders in these segments. The top ten end-customers in 2002 were Solectron, Delphi, Visteon, Siemens, Flextronics, Qualcomm, Bosch, Celestica, Quanta Computer and Hewlett Packard. For products sold through distributors, the top 3 distributors, Avnet, Arrow and Future, account for over 50% of our sales to distributors. The volume of purchases by these customers has affected, and could continue to affect, segment results.

        Products manufactured by the segment and supplied to other operating units of Motorola collectively constitute the segment's largest customer at 24% of 2002 revenue (2001, 22%; 2000, 25%). Our largest customer within Motorola is the Personal Communications segment. No other customer accounted for 10% or more of the segment's revenue in 2002.

Competition

        The segment experiences 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 five competitors in the semiconductor industry comprised 36% of the total market in 2002, based on estimates published by the Semiconductor Industry Association and Gartner Dataquest. At 17%, Intel's share was almost three times the size of its nearest competitor, due to its major penetration in the desktop PC market. Intel is also a competitor in the wireless market. The next four largest semiconductor suppliers had market shares ranging from 4% to 6%. In 2002, based on sales, the segment had an estimated 3.4% share of the semiconductor market. 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 critical factors. New products represent the most important opportunity to overcome the pricing pressure inherent in the industry.

Payment Terms

        Generally, the segment does not provide extended payment terms.

Backlog

        The segment's backlog was $1.1 billion at December 31, 2002 and $882 million at December 31, 2001. Orders may be and are placed by customers for delivery up to as much as 12 months in the future, but for purposes of calculating backlog, only the next 13 weeks requirements are reported. An order is removed from the backlog only when the product is shipped, the order is cancelled or the order is rescheduled beyond the 13-week delivery window used for backlog reporting. 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. However, the segment expects most of its backlog at December 31, 2002 to be shipped in 2003 because the history of the segment indicates a relatively small amount of backlog is cancelled or rescheduled once it falls within the 13-week delivery period.

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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. The segment has a broad portfolio of patents and licenses, covering manufacturing processes, packaging technology, software systems and electrical circuit design. The patent portfolio evolves over time as older patents expire and new patents are obtained. There are no patents the segment regards as critical to its business which expire in the next 12 months. In addition, Motorola is licensed to use certain patents owned by others and the segment benefits from those licenses. The protection of these licenses is also important to our operations.

Inventory, Raw Materials, Right of Return and Seasonality

        A majority of the segment's products are built-to-order for our customers. The segment 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 primary raw materials used by the segment are raw silicon and piece parts, which are largely sourced from the U.S., Japan and Singapore. 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. 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.

        The segment permits distribution customers to return products under a warranty return program that limits the period for return and the quantity that can be returned. OEM and distribution customers can return products under warranty for a period of up to 3 years after purchase except unpackaged die and probed wafers, which have a warranty period of only 90 days.

        The segment as a whole does not have seasonal patterns for sales. However, at a business group level within the segment there are some seasonal patterns. Transportation and Standard Products Group are typically weak during the third quarter because of shutdowns at automakers, while strong consumer sales in fourth quarter drive higher sales for the Wireless and Broadband Systems Group. In addition, the segment results are affected by the cyclical nature of the semiconductor industry.

Our Facilities/Manufacturing

        The segment headquarters are located in Austin, Texas. The major manufacturing facilities are located in or around Austin, Texas; Phoenix, Arizona; Tianjin, China; Toulouse, France; East Kilbride and South Queensferry, Scotland; Sendai, Japan and Kuala Lumpur, Malaysia. In addition to its manufacturing locations there are research and development centers in several countries in Asia, Europe and the Americas, and a network of sales offices around the world. The segment is continuing the consolidation of its production network into fewer integrated "anchor" sites for economies of scale and improved efficiency. Facilities in Texas and Scotland will be closed in 2003 as previously announced. A majority of our products are manufactured in Asia, primarily Taiwan.

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Global Telecom Solutions Segment

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

Principal Products and Services

        GTSS provides end-to-end wireless networks, including radio base stations, base site controllers, associated software and service, and third-party switching for Code Division Multiple Access (CDMA), Global System for Mobile Communications (GSM), iDEN® (integrated digital enhanced network), and Universal Mobile Telecommunications Systems (UMTS) technologies. We market our products to wireless service providers worldwide through a direct sales force, licensees or agents.

Our Industry

        The wireless infrastructure industry experienced its most challenging years during 2001 and 2002. Industry sales were down approximately 18% in 2002 compared to flat growth in 2001. Service providers spent less on new equipment because of the difficult economic environment, severe pressure to reduce costs, deteriorating voice ARPUs (average revenue per user) and, for many, higher debt burdens. In addition, technology enhancements have greatly improved network capacity without corresponding increases in costs to the operators. Network capacity can be increased by deploying software upgrades, which tend to be less costly compared to hardware expansion.

        The industry's migration to 3G systems, which are high-capacity wireless networks that are designed to provide enhanced data services, improved Internet access and increased voice capacity, is currently focused primarily on two technologies—CDMA 1X and UMTS. GTSS is a supplier for both of these technologies. Service providers are continuing to slow-roll or have postponed the build-out of the next generation 3G UMTS systems. Several factors are impacting this build-out, including: (i) operator funding constraints 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 continue to use 2.5G technology, GPRS (General Packet Radio Service) to grow their data subscriber base and to build their business case for these next-generation systems. We expect them to broadly implement UMTS in large volumes around 2005-06 to expanded voice capacity and to support new data services. In North America and other global markets, operators are now also giving serious consideration to deployment of EDGE technology, which is a GSM derivative technology. EDGE provides data bandwidths higher than GPRS in the existing GSM spectrum assignments. GTSS has included future EDGE capability in the GSM product portfolio.

Our Strategy

        GTSS continues to maintain its investment in key radio access growth technologies: CDMA1X, iDEN, EDGE and UMTS. In addition, we are executing on a strategy to enhance our position as a total systems supplier. GTSS has developed strategic alliances with key vendors to supply a complete family of network products. One of the most significant alliances is the recently announced agreement to supply a Motorola branded softswitch, which positions GTSS as a leader in the evolution to next generation IP networks. Softswitch is a new software-based technology that is used by carriers to route call traffic on networks. It is currently in pre-commercial trials with commercial deployments expected to begin in early 2004. The market for wireless softswitch is still developing but network operators in emerging markets are considering the new technology as well as some service providers in mature markets. As with all new disruptive technologies, there are risks, including performance and market acceptance. GTSS has also introduced a Global Applications Management Architecture (GAMA)

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platform, which enables operators to rapidly deploy new revenue generating features using software applications.

        Our network products are further enhanced by a portfolio of services which reduce operator capital expenditure requirements, increase network capacity and improve system quality. These quality improvements benefit operators through increased customer satisfaction, greater usage and lower churn; all of which can have a positive impact on operator revenue. This total systems solution strategy represents an improved value proposition to operators and improves GTSS' competitive position in the marketplace.

Cost Reduction

        In response to challenging market conditions, we continued the cost-reduction programs that began in January 2001. In 2002, we reduced the number of employees in our business by 18%. By the end of 2003, we will have completed previously announced actions that will further reduce the number of employees by an additional 5%. We completed the outsourcing of certain manufacturing operation, primarily for the assembly of printed circuit boards and equipment repair. Also, we consolidated sales and administrative facilities. As a result, we lowered our break-even sales level.

Customers

        The nature of our business is long-term contracts with major operators that require sizeable investments by our customers, often more than $100 million. In 2002, three customers represented approximately 43% of our sales (Nextel Communications Inc. and its affiliates, KDDI, a service provider in Japan, and China Unicom). The loss of any of our large customers, in particular these customers, could have a material adverse effect on the segment's business. Further, because contracts are long-term, the loss of a major customer would impact revenue over several quarters.

        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, Siemens, Lucent, Nortel, Alcatel, NEC, and Samsung. Ericsson has maintained its' market leadership position, while five vendors, including GTSS, vie for number two in the total aggregate market.

        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 11 major contracts. GTSS has recently been awarded a UMTS contract in the Asia/Pacific region, although we continue to be behind some of our competitors on UMTS contract awards. A pre-commercial trial with this UMTS customer is currently underway.

        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,

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especially for new systems and technologies. Increasingly, some of our foreign competitors receive more political support from their governments than we receive from the U.S. government when pursuing contracts. This increased support can give them a competitive advantage.

Payment Terms

        GTSS contracts for large system installations typically have implementation milestones, such as delivery, installation and system acceptance. Generally, these milestones can take anywhere from 30 days to 180 days to complete. Customer payments are typically tied to the completion of these milestones. Once a milestone is reached, payment terms are generally 30 days to 60 days. As required for competitive reasons, we may provide or arrange for extended payment terms or long-term financing in connection with equipment purchases. In limited situations, financing may include working capital. We provided much less financing to our customers in 2002 than in the previous two years. In 2002, we financed approximately $86 million to 4 customers. In 2001, we financed approximately $156 million to 7 customers, and in 2000, we financed approximately $1.2 billion to 12 customers. Our largest single infrastructure financing, which was provided by the Motorola Credit Corporation (a wholly-owned subsidiary of Motorola), was for $1.6 billion.

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 and the related frequency relocation costs. Typically, governments sell these licenses at auctions. Over the last several years, the cost of these licenses and related frequency relocation costs have increased significantly, particularly for frequencies used in connection with 3G technology. These significant costs have 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, pay the relocation costs or purchase new technology to upgrade their systems. We expect that this will continue to have an effect on the segment's results.

Backlog

        The segment's backlog was $1.2 billion at December 31, 2002 and $1.5 billion at December 31, 2001. The 2002 order backlog is believed to be generally firm and 100% of that amount is expected to be shipped or to be earned under contract accounting during 2003. The forward-looking estimates of the firmness of such orders is subject to future events that may cause the percentage of the 2002 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.

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Inventory, Raw Materials, Right of Return and Seasonality

        The segment's practice is to carry inventory to respond to customers' needs. In 2002, the segment reduced its inventory by 33% compared to 2001 levels. The reduction in inventory is in part due to reduced volume and continued outsourcing of certain manufacturing activities.

        Materials used in the segment's operations are second-sourced where feasible 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, our contracts do not include a right of return other than for standard warranty provisions. Our business does not have seasonal patterns for sales.

Our Facilities/Manufacturing

        Our headquarters are located in Arlington Heights, Illinois. Major design centers include Arlington Heights and Schaumburg, Illinois; Chandler, Arizona; Fort Worth, Texas; Cork, Ireland, and Swindon, England. We operate manufacturing facilities in Schaumburg, Illinois; Fort Worth, Texas; Hangzhou and Tianjin, China; Swindon, England, and Jaguariuna, Brazil. A majority of our manufacturing is conducted in China, in facilities we operate or that firms we outsource our manufacturing to operate.

Commercial, Government and Industrial Solutions Segment

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

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 information solutions for public safety and enterprise customers.

        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 since 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; interoperable communications and information sharing across many users; and integrated voice, data and video capabilities. However, delays in federal, state and local government funding for new homeland security projects have impacted the industry. In addition,

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the worldwide economic slowdown has created budget deficits at the local level, which has slowed government spending globally.

        The scope and size of systems that some of our customers want are increasing. Some customers want large systems, including country-wide and statewide systems. These larger systems or "mega-systems" are more complex and include a wide range of capabilities. Mega-system projects will impact how contracts are bid, which companies compete for bids and how companies partner on projects.

        With the recent formation of the U.S. Department of Homeland Security, we expect over time greater clarity to develop regarding funding for projects. At the same time, we face potential new challenges in dealing with a new federal agency that is a consolidation of many smaller agencies. We have been a leader in providing mission-critical communications and information solutions for more than 65 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 2002, we continued to implement a series of cost-reduction actions designed to improve our financial performance. We completed the final phases of a series of improvements to supply chain management and manufacturing processes begun in 2001, which included the outsourcing and/or consolidations of various manufacturing operations as well as the consolidation of distribution operations. These actions further improved inventory levels through the end of 2002. We also continued tight controls over operating budgets and reduced the number of our employees at our business by nearly 10% since year-end 2001.

Our Strategy

        During 2001, we divested a number of non-strategic elements of our business portfolio. Over the past year, these portfolio changes have allowed us to intensify our focus on growth opportunities in integrated communications and information solutions.

        Moving forward, key elements in our growth platform include the renewed pursuit of integrated voice, data and broadband wireless systems at the local, state and national government levels; continued migration from analog to digital radio systems; and the accelerated implementation of interoperable communications and information solutions especially related to Homeland Security. Through our Integrated Solutions Division (ISD) we are providing essential integrated software applications. These applications, which have been the result of internal development and acquisitions, significantly enhance our customer's business processes, enabling them to fulfill their missions in public safety, criminal justice and public service. Our product lines include computer-aided dispatch, records management systems, automated fingerprint identification systems, mobile data applications and devices, corrections management systems, customer service request solutions as well as other related products.

Customers

        The principal customers for two-way radio products and systems include public-safety agencies, such as police, fire, emergency management 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 local, state and province, and national agencies for many uses, including homeland security. Over a majority of our sales are to customers in North America.

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        We have a large number of customers worldwide. The combined sales from our top 10 customers worldwide represent less than 9% of 2002 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 2002 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 M/A-Com (Tyco), Nokia, Kenwood, Icom, Siemens and EADS Telecommunications (a venture including Matra and Nortel).

        As demand for large system solutions increase, we may face increased competition from large system integrators in the defense and technology industries. CGISS may also act as subcontractor to large integrators.

        Competitive factors for our products, systems and solutions include: price; technology offered and standards compliance; features, performance, quality, availability, delivery and support; and the support, quality and availability of services 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. Increasingly, some of our foreign competitors receive more political support from their governments than we receive from the U.S. government when pursuing contracts. This increased support can give them a competitive advantage.

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 with lease terms of from 1 to 10 years.

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. 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 by the regulations of the FCC or other regulatory agencies relating to access to allocated frequencies for land mobile communications users, especially in urban areas where such frequencies are heavily used.

Backlog

        This segment's backlog was $1.7 billion at December 31, 2002 and $1.7 billion at December 31, 2001. The 2002 backlog amount is believed to be generally firm, and approximately 70-75% of that

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amount is expected to be shipped or earned under contract accounting during 2003. This forward-looking estimate of the firmness of such orders is subject to future events that may cause the percentage of the year-end 2002 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. Relatively short delivery requirements determine the amounts to be stocked. To the extent suppliers' product life cycles are shorter than ours, stocking of lifetime buy inventories is required. In addition, replacement parts are stocked for delivery on customer demand within a short delivery cycle, including radios that have been canceled from the published book within the last 10 years.

        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. We typically have stronger sales in the fourth quarter of the year because of government and commercial spending patterns as well as the timing of new product releases.

Our Facilities/Manufacturing

        Our headquarters are located in Schaumburg, Illinois, and we have major manufacturing/assembly facilities in Tianjin, China; Jaguariuna, Brazil; Berlin, Germany; Arad, Israel; Penang, Malaysia; and Elgin and Schaumburg, Illinois, in the U.S. The majority of sales from manufactured products are sourced from our U.S. manufacturing sites.

Broadband Communications Segment

        The Broadband Communications segment ("BCS" or the "segment") designs, manufactures and sells a wide variety of broadband products for the cable television industry, including digital systems and set-top terminals for cable 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.

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Principal Products and Services

        We are the leading provider of end-to-end networks used in the cable television industry for the delivery of video, voice and data services over hybrid fiber coaxial networks. These broadband networks include product to transport programming by broadcasters, product used at the cable operator's headend (central office) and at its outside transmission plant. We also sell a suite of interactive digital set-top terminals for the customer's home that enable advanced interactive entertainment and informational services such as video-on-demand, Internet access, e-mail, e-commerce, chat rooms, impulse pay-per view, other IP services, decoding and processing of high definition television (HDTV) and more to be transmitted over networks using our technology. Our interactive digital set-top terminals also deliver advanced interactive services focused on the digital video broadcast-compliant (DVB-compliant) markets around the world. We also provide digital system control equipment, encoders, access control equipment and a wide range of digital satellite receivers. Our digital business accounted for greater than 70% of our revenue in 2002 and is expected to account for a substantial portion of our revenues for the foreseeable future.

        Our Surfboard® family of cable modems delivers high speed Internet access to subscribers over cable networks. These Surfboard® products also include wireless networking devices with high-speed Internet access to produce a complete home, small office or small to medium enterprise communications solution.

        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. These products include cable modem termination systems, headend products, amplifiers, taps, passives and optoelectronics.

        Our products are marketed primarily to cable television operators, satellite television programmers, and other communications providers worldwide and are sold primarily by our sales personnel who are skilled in the technology of these systems. We have also expanded our traditional distribution channels by selling direct to consumers in a variety of retail markets. Through retail, we market and sell cable modems, home networking products and advanced digital set-top terminals.

Our Industry

        Demand for our products depends primarily on (i) capital spending by providers of cable 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; the rate of digital penetration; technological developments; standardization efforts that impact the deployment of new equipment; and new legislation and regulations affecting the equipment sold by the segment. Primarily due to the economic recession in 2002, and in an effort to improve their cash flow and lower their cost structure, our customers significantly reduced their capital spending compared to 2001.

        Also during the past year, many in the investment community shifted their focus on measuring cable operators' performance from earnings before interest, taxes, depreciation and amortization to positive free cash flow, which is generally defined as operating cash flow less capital expenditures. As a result, we expect cable operators to continue to reduce their capital expenditures during 2003 to improve free cash flow. Additionally, the debt ratings of several of the largest cable operators have also been downgraded, in part due to significant debt levels. These conditions have impacted and may continue to impact our customer's ability to make new capital expenditures or raise additional capital in the near term to fund capital expenditures.

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Our Strategy

        We continue our strategy to innovate and enhance our end-to-end network solutions. We are focused on accelerating the rate of digital penetration in the North American region through the introduction of an enhanced suite of digital set-top terminals, including more cost effective solutions designed to increase the number of set-tops per household, as well as higher end solutions for premium service, including HDTV solutions. We continue to focus on opportunities outside North America including the development of digital video products designed to be compliant with technology required in these regions. However, growth has been slow in these regions.

        We also are focused on enhancing and expanding our infrastructure solutions, including next generation solutions. During late 2001 and early 2002, we acquired two infrastructure businesses, which we expect will allow us to establish a leading next generation CMTS market position and expand our fiber optic network capabilities. We also intend to expand our data solutions beyond the traditional cable modem business. We are focused on providing home networking solutions including wireless networking devices with high-speed Internet access to produce a complete home, small office or small to medium enterprise communications solution.

Cost Reduction

        As a result of overall economic conditions and reduced cable operator spending, we took actions during 2002 to reduce manufacturing, research and development, selling, general and administrative costs. Consistent with existing business conditions, we reduced manufacturing headcount in 2002 by approximately 27% to reduce manufacturing costs. In addition, we reduced selling, general and administrative and research and development spending in all areas and reduced employees in these areas by approximately 13% in 2002.

Customers

        We are dependent upon a small number of customers for a significant amount of our sales. A small number of large cable television multiple system operators (MSO's) own a large portion of the cable systems and account for a significant portion of the total capital spending in the industry. Consolidation of these MSO's continued in 2002 with Comcast Corporation acquiring AT&T Broadband, making it the largest MSO in North America with more than 21 million subscribers. Our combined sales to Comcast and AT&T Broadband in 2002 approximated 40%. The loss of business in the future from Comcast or any of the major MSO's could have a material adverse effect on the segment's business.

        One of our customers, Adelphia Communications, filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in June 2002. Our sales to Adelphia in 2002 were approximately 4% of the segment's sales. All uninsured amounts due from Adelphia at the time of their bankruptcy filing are fully reserved. Subsequent to the Chapter 11 filing, we have renegotiated terms and conditions for shipping future products that include payment for product in 30 days. Payments have been received in accordance with these terms.

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 2002 annual sales, we believe we are the leading provider of digital cable set-top terminals in North America. In North America, our largest competitor is Scientific Atlanta. Outside of North America, where we have a smaller market position, we compete with many equipment suppliers, including several consumer electronics companies.

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        The traditional competitive environment in the North American cable market is changing for several reasons. First, we have begun and will continue to license some of our technology to several competitors, based on our customers' requirements. We expect that, beginning in 2003, these licensees will sell digital set-top terminals in markets where we have sizable market share.

        Currently, reception of digital television programming from the cable broadband network requires a set-top terminal with certain security technology compatible with the network. This security technology has limited the availability of set-top terminals to those manufactured by a few cable network manufacturers, including Motorola. The FCC has enacted regulations requiring separation of security functionality from set-top terminals by January 1, 2005. To meet this requirement, we have developed security modules for sale to cable operators for use with our own and third party set-top terminals. Current FCC regulations require that all cable operators purchase these security modules and separate set-top terminals by January 1, 2005. These changes are expected to increase competition and encourage the sale of set-top terminals to consumers in the retail market. Traditionally, cable service providers leased the set-top terminal to their customers.

        The FCC also has mandated recently that digital tuners be incorporated into television sets by 2006. As a result of these actions, television manufacturers may integrate technology that is available in our set-top terminals into their products in the future and by-pass the need for a set-top terminal for certain applications.

        In December 2002, fourteen consumer electronics companies and seven major cable operators announced that they had agreed to a memorandum of understanding to establish a national plug and play standard between digital set-top terminals and digital cable systems. If implemented, this could enable consumers to receive certain cable services without a set-top terminal through the use of the security module described above and a digital cable ready television.

        All of these changes could impact the strength of our competitive position and our sales and profitability. Most of our sales and profits arise from the sale of our set-top terminals.

        We also compete worldwide in the market for broadband data products. We believe that we are the leading provider of cable modems worldwide, competing primarily with Thomson/RCA, Toshiba, 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, 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 system 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 historically have not been significant.

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

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services and conduct their business, may affect the segment's results. Regulatory actions also have impacted competition, as discussed above.

Backlog

        The segment's backlog was $324 million at December 31, 2002 and $716 million at December 31, 2001. The reduction in backlog and related orders reflects a shorter cycle time required for customer fulfillment and reduced sales. The 2002 order backlog is believed to be firm and 100% of that amount is expected to be shipped during the first six months of 2003. The forward-looking estimates of the firmness of such orders is subject to future events, which may cause the percentage of the 2002 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, 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 2002 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 a couple of sources. We have inventory controls and other policies intended to minimize the effect of any interruption in the supply of components. We currently source certain parts from Broadcom Corporation and Texas Instruments Corporation for our digital set-top terminals and cable modems. Any material disruption in supply from Broadcom or Texas Instruments 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 and digital set-top terminal sales increase, we may have increased sales during the holiday season at the end of each year.

Our Facilities/Manufacturing

        Our headquarters are located in Horsham, Pennsylvania. We also have research and development and administrative offices in: San Diego and San Jose, California; Mansfield and Tewksbury,

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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; Nuremburg, Germany; San Jose, California, and Tewksbury, Massachusetts. Substantially all of our manufacturing is in Taiwan and Mexico.

Integrated Electronic Systems Segment

        The Integrated Electronic Systems segment ("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 computing system products.

Principal Products and Services

        The Automotive Communications and Electronic Systems ("ACES") Group consists of two businesses, the Powertrain Chassis and Systems Group ("PCSG") and the Telematics Communications Group ("TCG"). PCSG 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, as well as first tier suppliers to such manufacturers. TCG provides automotive customers with embedded telematics control units, integrated wireless handsets, navigation and driver safety products and systems, as well as various electronic controls for automotive vehicles.

        The Energy Systems Group ("ESG") delivers complete portable energy system solutions for many of today's leading brand-name wireless handsets, notebook computers, hand-held computers, and other portable electronic products. A significant portion of ESG sales is to other businesses within Motorola, including the Personal Communications and the Commercial, Government, and Industrial Solutions segments.

        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; medical systems such as CAT scanners and MRI diagnostic equipment; aerospace systems such as 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 automotive vehicles, 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 and industrial demand for computing systems.

        During 2002, MCG and ESG experienced a decrease in product demand, mainly due to weakened economic conditions. Both sales and orders were down slightly for ESG, due primarily to reductions in the price of batteries for wireless handsets and flat unit demand in the wireless handset market during the year. MCG sales and orders were down very substantially due to a continued market downturn in the telecommunication industry which significantly reduced the outsourcing by OEMs of the design of computing platforms. Both sales and orders were up substantially for ACES due to increased North America automotive production, new launches of electronic controls and other products, and previously awarded business.

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Our Strategy

        Our primary strategy is to accelerate growth by increasing market share in existing markets and expanding into related market segments. We expect that increasing market share in existing markets is expected to account for 60%-70% of our growth. As an example of this element of our strategy, the segment's ACES business continues to grow as automotive OEMs expand vehicle electronic content of the types currently sold by the segment, such as Telematics systems, that enable automated roadside assistance, navigation and advanced safety features. This market for Telematics systems is expected to grow at a rate substantially above the growth rate for the automobile industry.

        We also expect to expand in related markets to help us grow. An example of this is MCG expansion into the faster-growing medical equipment and aerospace segments, where customers can decrease development and production costs by purchasing pre-integrated platforms that allow them to focus on their own product differentiation. In the past, MCG's major focus was on telecommunications. We are also improving the high-value content of our platform solutions through technology acquisitions, such as NetPlane Systems Inc.

Cost Reduction

        During 2002, 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 are currently moving the auto body production from Elma, New York to Nogales, Mexico, and, as a result, we have significantly downsized the Elma manufacturing facility. We are also in the process of moving the IESS and ACES headquarters from Northbrook and Elk Grove Village, Illinois to Deer Park, Illinois. The move will consolidate two facilities into one. Based upon a re-assessment of the ACES cost structure, we have established a regional automotive headquarters in Munich, Germany and are in the process of exiting the Wiesbaden, Germany facility. We are outsourcing MCG's Tempe, Arizona manufacturing activity to a contract manufacturer in Shanghai, China, resulting in a significant downsizing of MCG's Tempe facility. In addition, partly due to the programs mentioned above, we reduced the number of our employees by 5% during 2002.

Customers

        In 2002, we sold 63% of our products to four customers: 19% to Motorola, 16% to General Motors, 14% to Ford and 14% to Daimler Chrysler. Each of these key customers is served by more than one group within the segment and with multiple products from the groups. Our largest customer within Motorola is the Personal Communications segment. The loss of a significant portion of these customers' business could have a material adverse effect upon the segment.

Competition

        Demand for the products of ACES is linked to automobile sales in the U.S. and other countries and the level of electronic content per vehicle. Demand for ESG products is significantly linked to the sales of other Motorola businesses. Demand for MCG products is linked to demands for telecommunications, manufacturing, and other infrastructure systems 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 embedded telematics systems and products, as well as 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.

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        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 and design services.

Payment Terms

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

Backlog

        The segment's backlog was $308 million at December 31, 2002 and $261 million at December 31, 2001. Our 2002 backlog is believed to be generally firm, and approximately 100% of that amount is expected to be shipped during 2003. This forward-looking estimate of the firmness of such orders is subject to future events that may cause the percentage of the 2002 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.

Our Facilities/Manufacturing

        Our headquarters are located in Northbrook, Illinois. We also have major facilities located in Tempe, Arizona; Lawrenceville, Georgia; Farmington Hills, Michigan; Elma, New York; Seguin, Texas; Nogales, Mexico; Tianjin, China; Angers, France, and Penang, Malaysia. Most of our ACES products are manufactured in our Seguin, Texas facility. We manufacture all of our ESG products in Asia, primarily in two of our facilities in China and Malaysia. We are in the process of transferring manufacturing of MCG products from our facility in Tempe, Arizona to a contract manufacturer in Shanghai, China.

Other Products Segment

        The Other Products segment includes: (i) Next Level Communications, Inc., a publicly-traded subsidiary in which Motorola has a controlling interest, (ii) various corporate programs representing developmental businesses and research and development projects, which are not included in any major segment and, (iii) Motorola's holdings in cellular operating companies outside the U.S.

Other Information

        Financial Information About Segments.    The response to this section of Item 1 incorporates by reference Note 10, "Information by Segment and Geographic Region," of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

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        Customers.    Motorola sells approximately 9.6% of our products and services to Nextel Communications, Inc. and its affiliates. In addition to Nextel, Motorola has several other large customers, the loss of one or more of these customers would have a material adverse effect on Motorola. Based on 2002 annual sales, in addition to Nextel, other large Motorola customers include China Mobile and China Unicom.

        Approximately 1.6% of Motorola's total sales in 2002 were received from various branches and agencies, including the armed services, of the U.S. Government. 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, reviews aspects of its government contracting operations, and, where appropriate, takes corrective actions and makes 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, 2002	$5.8 billion
December 31, 2001	$7.2 billion

        Except as previously discussed in this Item 1, the orders supporting the 2002 backlog amounts shown in the foregoing table are believed to be generally firm, and approximately 93% of orders on hand at December 31, 2002 are expected to be shipped or earned with respect to contracts accounted for under percentage-of-completion of accounting during 2003. 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.

        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.

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        Research and development expenditures relating to new product development or product improvement, other than customer-sponsored contracts, were approximately $3.8 billion in 2002, $4.3 billion in 2001 and $4.4 billion in 2000 representing a 13% decline in 2002 as compared to 2001 and a 3% decline in research and development activity in 2001 as compared to 2000. In addition, research funded under customer-sponsored contracts amounted to approximately $156 million in 2002, $239 million in 2001 and $155 million in 2000. Motorola continues to believe that a strong commitment to research and development is required to drive long-term growth. Approximately 24,700 professional employees were engaged in such research activities (including customer-sponsored contracts) during 2002.

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

        As of December 31, 2002, Motorola owned approximately 11,794 utility and design patents in the U.S. and 12,924 patents in foreign countries. These foreign patents are mostly counterparts of Motorola's U.S. patents, but a number result from research conducted outside the U.S. and are originally filed in the country of origin. During 2002, Motorola was granted 794 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" and "Stylized M Logo" are registered trademarks of Motorola, Inc. throughout the world. Motorola has adopted, registered, or is seeking registration of the "INTELLIGENCE EVERYWHERE" trademark in all major markets 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 Motorola's semiconductor branding strategy.

        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 9, "Commitments and Contingencies" of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

        Employees.    At December 31, 2002, there were approximately 97,000 employees of Motorola and its subsidiaries, as compared to approximately 111,000 employees at December 31, 2001, a 13% decline.

        Financial Information About Foreign and Domestic Operations and Export Sales.    Domestic export sales to third parties were $1.4 billion, $2.2 billion and $1.9 billion for the years ended December 31, 2002, 2001 and 2000, respectively. Domestic export sales to affiliates and subsidiaries, which are eliminated in consolidation, were $4.7 billion, $4.9 billion and $7.3 billion for the years ended December 31, 2002, 2001 and 2000, respectively.

        The remainder of the response to this section of Item 1 incorporates by reference Note 9, "Commitments and Contingencies" of the Notes to Consolidated Financial Statements and the "Results of Operations—2002 Compared to 2001" and "Results of Operations—2001 Compared to 2000" 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 2003 annual meeting of stockholders.

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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 markets and opportunity for growth; (ii) "Personal Communications Segment," about growth opportunity with the transition to 3G technologies, the impact of our strategy, continued focus on cost competitive strategies, the impact from the loss of key customers, the timing and impact of new product introductions, our software strategy, expected shipments during 2003, the allocation and regulation of frequencies, the impact of the significant cost for 3G licenses, component shortages, the availability of supplies and labor, the seasonality of the business and location of product manufacturing; (iii) "Semiconductor Products Segment," about growth in markets, establishing new partnerships to supplement internal manufacturing capacity and to share the cost of developing next generation technologies, facility closures, impact of our new business model, plans to license intellectual property, impact from the loss of key customers, expected shipments during 2003, backlog and the availability of supplies and labor; (iv) "Global Telecom Solutions Segment," about the timing and volume of the build-out of next-generation infrastructure systems, our strategy to become a total system supplier, planned employee reductions, the impact from the loss of key customers, vendor financing, the impact of the significant cost for 3G licenses and the availability of supplies and labor; (v) "Commercial, Government and Industrial Solutions Segment," about the new opportunities in the safety and security markets, the impact of mega-systems, including on our competitive position, the impact of the formation of the U.S. Homeland Security Department, our growth platform, the impact from the loss of key customers, allocation and regulation of frequencies, expected shipments during 2003 and the availability of supplies and labor; (vi) "Broadband Communications Segment," about the impact from the loss of key customers, the impact of competitive changes, the impact of regulatory matters, expected shipments during 2003, and the availability of supplies and labor; (vii) "Integrated Electronic Systems Segment," about the impact from the loss of key customers, expected shipments during 2003, and the availability of supplies and labor; (viii) "Other Information," about the impact from the loss of key customers, expected shipments during 2003, competitiveness through research and development and utilization of technology; and (ix) "Item 3: Legal Proceedings," about the ultimate disposition of pending legal matters.

        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 sizeable net losses in 2001 and 2002. The success of ongoing changes in fiscal, monetary and regulatory policies worldwide and the duration of the war in Iraq will continue to influence the economy's rate of recovery. If these actions are not successful, and/or the war is longer than currently anticipated, the economic recovery could slow and 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 over the last 2 years. The rate at which the telecommunications industry improves is critical to our ability to improve our overall financial performance.

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Uncertainty of Current Economic and Political 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 war in Iraq and other global conflicts, including in the Middle East and North Korea, are creating many economic and political uncertainties that are impacting the global economy. A longer than anticipated war in Iraq or continued escalation of other conflicts could severely impact demand for our products. In addition, because of the uncertainties caused by these conflicts it is very difficult to determine the impact on the struggling economy and how our business will perform.

        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 potential for future terrorist attacks is creating worldwide uncertainties and makes it very difficult to determine the impact on the struggling economy and how our business will perform.

Impact of Cost-Reduction Efforts

        Since the second half of 2000, we have been reducing costs and simplifying our product portfolios in all of our businesses. We discontinued product lines, exited businesses, consolidated manufacturing operations and reduced our employee population by approximately 50,000.

        The impact of these cost-reduction efforts on our sales and profitability may be influenced by:

        Our ability to successfully complete these ongoing efforts;

        Our ability to generate the level of cost savings we expect and/or that are necessary to enable us to effectively compete;

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

        Our manufacturing capacity; and

        The performance of other parties under outsourcing arrangements.

        An important cost-reduction action is to reduce the number of our facilities, including manufacturing facilities. All of our businesses have exited facilities and/or consolidated facilities. As a result, our products are manufactured in fewer facilities. While we have business continuity and risk management plans in place in case capacity is significantly reduced or eliminated at a given facility, with fewer alternative facilities manufacturing could be disrupted for longer periods of time. As a result, we could have difficulties fulfilling our orders and our sales and profits could decline.

        Another cost-reduction action has been to develop 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 reasonable prices, we could have difficulties fulfilling our orders and our sales and profits could decline.

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

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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 and the related frequency relocation costs. Typically, governments sell these licenses at auctions. Over the last several years, the costs of these licenses and the related frequency relocation costs have increased significantly, particularly for frequencies used in connection with 3G technology. The significant cost for licenses and related frequency relocation costs have 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, pay the relocation costs or technology to upgrade systems and the financial results for a number of our business have been affected by the industry's rate of growth.

Adequate Supplies

        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.

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 2003 on acceptable terms and conditions, our flexibility with regard to long-term financing activity could be limited by the Company's current levels of outstanding debt and our credit ratings. 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, including in particular the health of the telecommunications and semiconductor industries are outside of our control. There can be no assurances that we will continue to have access to the capital markets on favorable terms.

        Our credit ratings have been downgraded several times over the last two years, most recently on June 14, 2002. While we remain an investment grade credit, if our ratings were to decline two levels from the current ratings we would no longer be considered investment grade. Our financial flexibility would be reduced and our cost of borrowing would increase. Some of the factors that impact our credit ratings, including the overall economic heath of the telecommunications and semiconductor industries, are outside of our control. There can be no assurances that our current credit ratings will continue.

        Our commercial paper is rated "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 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. 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 Renew One-Year Facility

        We view our existing one-year and three-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

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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 its terms, the one-year credit facility expires on May 29, 2003. We anticipate renewing the facility on terms at least as favorable as the existing facility, but there can be no assurances of renewal or the terms on which we renew.

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; (7) difficulties in expanding information technology systems and other business processes to accommodate the acquired businesses; and (8) future impairments of goodwill of an acquired business.

        Many acquisition candidates in the industries in which we participate carry higher relative valuations 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. In addition, we may not pursue opportunities that are highly dilutive to earnings and have, in the past, foregone such acquisitions.

        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 generally accepted accounting principles ("GAAP") effective in 2002 may further deter us from pursuing acquisition candidates the value of which is largely attributable to goodwill. Under GAAP, the recorded goodwill acquired in connection with business combinations is no longer amortized. An impairment test of the recorded goodwill must be performed 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 and our design and technology innovations.

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

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never materialize. We could lose all or substantially all of our investments in these companies, and in some cases have.

Future Possible Impairment of Certain Assets

        Under GAAP, effective in 2002, we recorded goodwill acquired in connection with business combinations and performed an impairment test on the recorded goodwill, as it is no longer amortized, at least annually. If the value of goodwill is impaired, we are required to recognize a charge against our earnings. As of December 31, 2002, the net book value of goodwill was $1.4 billion. If all or a portion of this goodwill became impaired, it would negatively impact our earnings.

        Under GAAP, the Company also must assess the value of its property, plant and equipment to evaluate whether those assets are impaired. If the value of those assets is impaired, we are required to recognize a charge against our earnings. As of December 31, 2002, the net book value of those assets was $6.1 billion. In 2002, the Company recorded fixed asset impairment charges of $1.4 billion, primarily related to manufacturing facilities. Additional impairment charges would negatively impact our earnings.

        Under GAAP, the Company also must assess the value of its investment portfolio to evaluate whether those assets are impaired. If the value of those assets is impaired, we are required to recognize a charge against our earnings. As of December 31, 2002, the net book value of those assets was $2.1 billion. In 2002, the Company recorded investment portfolio impairment charges of $1.3 billion. Additional impairment charges would negatively impact our earnings.

Deferred Tax Assets

        If the Company continues to operate at a loss or is unable to generate sufficient future taxable income in certain jurisdictions, or if there is a significant change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, the Company could be required to increase its valuation allowance against its deferred tax assets resulting in an increase in its effective tax rate and an adverse impact on future operating results.

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 and war, including the Middle East.

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., more than half of our products are manufactured outside the U.S. and, approximately 54% of our employees are employed outside the U.S.

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        As with all companies that have sizeable sales and operations outside the U.S., we are exposed to risks that could negatively impact sales and/or profitability, 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.

        Many of our products that are manufactured outside of the U.S. are manufactured in Asia. In particular, we have sizeable operations in China, including manufacturing operations and 14% 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. Further, if manufacturing in the region was disrupted, our overall capacity could be significantly reduced and sales and/or profitability could be negatively impacted.

        We have operations, including manufacturing operations, in Israel and also sell our products there. The current hostilities in the region could negatively impact our operations in Israel and our sales in the whole region.

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.

Uncertainties Related to Insurance

        The Company has many types of insurance coverage. Since the terrorist attacks on September 11, 2001, the cost of insurance has increased, deductibles have increased, and in some cases, insurance has not been available. Motorola also self insures for some risks and obligations. As insurance becomes more expensive or unavailable, we may have to self insure for more matters. If there are large losses related to self insured matters our financial performance will be impacted.

Rapid Technological Change

        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.

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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 1X, UMTS 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; (5) integrated public safety solutions and (6) advanced semiconductor products. These risks include: (i) difficulties and delays in the development, production, testing and marketing of products; (ii) customer acceptance of products; (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.

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 long-term customer financing to win a contract. 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 and may also provide financial guarantys on behalf of our customers. 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). At the end of 2002, we had reserves of $2.3 billion relating to our finance receivables primarily due to customer defaults. Should additional customers fail to meet their obligations on new or existing loans, 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. We are also facing increasing competition from traditional system integrators and the defense industry as system contracts get larger and more complicated. Political developments can impact the nature and timing of these large contracts.

Renewed Growth in the Cable Industry

        The cable industry is a major customer of our Broadband Communications segment. Primarily due to the economic recession that began in 2001 and in an effort to improve their cash flow and lower their cost structure, cable operators significantly reduced their capital spending in 2001 and 2002. The

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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.

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 the Broadband Communications segment's largest customer, Comcast, which merged with AT&T Broadband in 2002, represented approximately 40% of the Broadband Communications segment's total sales.

Regulatory and other Changes Impacting our Cable Products

        Currently, reception of digital television programming from the cable broadband network requires a set-top terminal with certain technology. This security technology has limited the availability of set-top terminals to those manufactured by a few cable network manufacturers, including Motorola. The FCC enacted regulations requiring separation of security functionality from set-top terminals to increase competition and encourage the sale of set-top terminals in the retail market. Traditionally, cable service providers sold or leased the set-top terminal to their customer. As the retail market develops for set-top terminals, sales of our set-top terminals may be negatively impacted.

        The FCC has mandated that digital tuners to enable access to cable networks be incorporated into television sets by 2006. As a result, sales of set-top terminals may be negatively impacted.

Recovery from Semiconductor Market Recession

        During the second half of 2002, the semiconductor industry appeared to be beginning to recover from the recent industry-wide recession. There can be no assurances that this recovery will continue or the rate of any such recovery.

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 Semiconductor Foundry and Contract House Manufacturing Capacity and Partnerships

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

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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 2003 annual meeting of stockholders including 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-33 of the appendix to Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

Available Information

        We make available free of charge through our website, www.motorola.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. These reports may also be obtained without charge by contacting Investor Relations, Motorola, Inc., Corporate Offices, 1303 East Algonquin Road, Schaumburg, Illinois 60196, E-mail: investors@motorola.com, phone: 1-800-262-8509. Our Internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K.

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

        MOTOROLA and the Stylized M Logo are registered in the U.S. Patent and Trademark office. JAVA is a registered trademark of Sun Microsystems, Inc. in the U.S. and other countries. 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. Motorola also operates manufacturing facilities and sales offices in the U.S. and many other countries. (See "Item 1: Business" for information regarding the location of the principal manufacturing facilities for each industry segment.) Motorola owns 79 facilities (manufacturing, sales, service and office), 43 of which are located in North America and 36 of which are located in other countries. Motorola leases 357 facilities, 140 of which are located in North America and 217 of which are located in other countries.

        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. During 2002, facilities in Easterinch, Scotland; Stotfold, U.K; Boynton Beach, Florida; Schaumburg, Illinois and Ft. Worth Texas were sold with partial leasebacks of the facilities in Ft. Worth Texas and Boynton Beach, Florida. In February, 2003, a facility in Irvine, California that was not occupied by Motorola was sold. Facilities, (or portions thereof), in Mesa, Arizona; Tempe, Arizona; Harvard, Illinois; Northbrook, Illinois; Austin, Texas; Penang, Malaysia; Swindon, U.K.; Sendai, Japan, and South Queensferry, Scotland are currently up for sale.

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

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        A substantial portion of Motorola's products are manufactured in Asia, primarily China, either in our own facilities or the facilities of others who manufacture and assemble products for Motorola. If manufacturing in the region was disrupted, Motorola's overall productive capacity could be significantly reduced.

Item 3: Legal Proceedings

Personal Injury Cases

        Motorola has been a defendant in several cases arising out of its manufacture and sale of wireless 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. On October 9, 2002, the Circuit Court entered summary judgment in defendants' favor. Plaintiffs have appealed the judgment. 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. On September 26, 2002, the Illinois Appellate Court affirmed the entry of summary judgment for Motorola and denied plaintiffs' appeal. Plaintiffs have sought leave to appeal the decision to the Illinois Supreme Court. Medica et al., v. Motorola, Inc., et al.,filed September 7, 1999 in the District Court of Clark County, Nevada, alleges that use of a cellular phone caused a malignant brain tumor. 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, alleges that use of a cellular phone caused a malignant brain tumor. On September 30, 2002, the district court in Newman ruled that plaintiffs' expert testimony did not meet the standards of admissibility in the federal courts. With no admissible expert evidence to establish causation, the court subsequently entered summary judgment for defendants. Plaintiffs have appealed the judgment.

        During 2001, the Judicial Panel on Multidistrict Litigation ruled that five cases, Naquin, et al., v. Nokia Mobile Phones, et al., Pinney and Colonell v. Nokia, Inc., et al., Gillian et al., v. Nokia, Inc., et al., Farina v. Nokia, Inc., et al., and Gimpelson v. Nokia Inc, et. al., which allege that the failure to incorporate a remote headset into cellular phones rendered the phones defective and that cellular phones cause undisclosed injury to cells and other health risks, be transferred to the United States 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 (the "MDL Proceeding").

        During 2002, the MDL panel transferred and consolidated seven additional cases, Horn v. Motorola, Inc., et. al., Murray v. Motorola, Inc., et al., Agro et. al., v. Motorola, Inc., et al., Cochran et. al., v. Audiovox Corporation, et al., Schofield et. al., v. Matsushita Electric Corporation of America, et al., each of which alleges that use of a cellular phone caused a malignant brain tumor, Dahlgren v. Motorola, Inc., et.al., which alleges that defendants manufactured and sold cell phones that increase the risk of adverse cellular reaction and or cellular dysfunction and failed to disclose biological effects, and Brower v. Motorola, Inc., et al., which contains allegations similar to Horn and Dahlgren, with the MDL Proceeding.

        On March 5, 2003, the MDL Court dismissed with prejudice the five cases consolidated during 2001. In doing so, the Court stated that the subject matter is preempted and not appropriate for litigation, but is entrusted by Congress to federal agencies.

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Iridium-Related Cases

Class Action Securities Lawsuits

        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. The plaintiffs seek an unspecified amount of damages. 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. Motorola moved to dismiss the plaintiffs' complaint on July 15, 2002, and that motion has not yet been decided.

        In addition, Motorola has been named as a defendant in Andrews, et al. v. Iridium World Communications, LTD, et al., filed in the Superior Court of California (San Diego), by 42 plaintiff purchasers of Iridium securities who allege violations of California securities laws. The parties reached a settlement in December 2002, which is proceeding to finalization.

Bankruptcy Court Lawsuit

        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, and seeks in excess of $4 billion in damages.

Iridium India Lawsuits

        Motorola, and certain of its current and former officers and directors, including Mr. Christopher B. Galvin, Chairman of the Board and Chief Executive Officer, were 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 approximately $100 million.

        In September 2002, Iridium India also filed a civil suit in the Bombay High Court against Motorola and Iridium LLC. The suit alleges fraud, intentional misrepresentation and negligent misrepresentation by Motorola and Iridium LLC in inducing Iridium India to purchase gateway equipment from Motorola, acquire Iridium stock, and invest in developing a market for Iridium services in India. Iridium India claims in excess of $200 million in damages and interest.

Chase Manhattan Lawsuits

        Motorola was sued in four lawsuits relating to the Iridium satellite communications business filed by The Chase Manhattan Bank, as agent for Iridium's secured lenders, under a December 1998 $800 million secured credit agreement. In March 2003, Motorola reached a settlement agreement with Chase covering the four cases, including Motorola's counterclaim. Under the settlement agreement, the four cases were dismissed with prejudice, and Motorola released its claim to the approximately

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$371 million paid to an escrow account in April 2002 and made an additional payment of approximately $12 million. A description of these four cases follows:

(1)

In early 2002 in The Chase Manhattan Bank v. Motorola, the United States District Court for the Southern District of New York found in favor of Chase on its claim that Motorola breached its commitment to provide a $300 million loan guarantee relating to Iridium's debt. On April 5, 2002, Motorola paid $371 million to an escrow account, representing the amount of the judgment plus interest, but excluding attorneys' fees. That payment was subject to return pending a potential appeal. Motorola also filed a counterclaim in that action, alleging that Chase acted in bad faith when it loaned Iridium approximately $260 million of Motorola-guaranteed money shortly before Iridium's bankruptcy filing.



(2)

Chase brought suit in the District of Delaware against Motorola and seventeen other parties in The Chase Manhattan Bank v. Iridium Africa Corp., et al. In that lawsuit, Chase alleged 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 have required an additional equity investment of approximately $50 million.



(3)

On August 9, 2002, Chase filed a related lawsuit, The Chase Manhattan Bank v. BCE Mobile Communications, Inc., et al.,against Motorola Canada Limited and six other defendants in the United States District Court for the District of Delaware, alleging that Motorola Canada is required to guarantee one-third of Iridium Canada's Reserve Capital Call obligation of $10 million.



(4)

In October 2001, Chase and the other secured 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 the lenders were fraudulently induced to enter into the secured credit facility and seeking recovery of the unpaid portion of the loan.

        Mr. Douglas A. Warner, III, a director of Motorola, served as Chairman of the Board and Co-Chairman of the Executive Committee of J.P. Morgan Chase, the parent of The Chase Manhattan Bank, from December 2000 until he retired in November 2001.

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. In November 2002, the court dismissed the plaintiffs' complaint in its entirety without prejudice. Plaintiffs filed their amended complaint on March 14, 2003.

        An unfavorable outcome in one or more of the Iridium-related cases still pending could have a material adverse effect on Motorola's consolidated financial position, liquidity or results of operations.

Telsim-Related Cases

        Motorola is owed approximately $2 billion dollars under loans to a wireless telephone operator in Turkey, Telsim Mobil Telekomunikasyon Hizmetleri A.S. ("Telsim"). Telsim defaulted in April 2001. The Company fully reserved the carrying value of the Telsim loans in the second quarter of 2002. The Company is involved in the following legal proceedings related to Telsim. The Uzan family controls Telsim.

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U.S. Case

        On January 28, 2002, Motorola Credit Corporation ("MCC"), a wholly-owned subsidiary of Motorola, 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. The suit alleges 13 separate counts of wrongdoing, including (i) three counts alleging violations of Illinois fraud and conspiracy laws; (ii) three federal statutory counts alleging computer hacking; (iii) one count alleging violations of the Illinois Trade Secrets Act; (iv) one count seeking imposition of an equitable lien and constructive trust; (v) one count seeking declaratory relief; and (vi) four counts of criminal activity in violation of the Racketeer Influenced and Corrupt Organizations Act, commonly known as "RICO". The suit is pending in the United States District Court for the Southern District of New York (the "U.S. Court").

        Upon filing the action, MCC and Nokia were able to attach various Uzan-owned real estate in New York. Subsequently, this attachment order was expanded to include a number of bank accounts, including those owned indirectly by the Uzans. These attachments remain in place as of March 26, 2003.

        On May 9, 2002, the U.S. Court entered a Preliminary Injunction confirming the prejudgment relief it previously granted and further ordering the defendants to deposit the stock that was pledged to MCC (including improperly issued new shares (the "Diluted Stock"), that effectively diluted MCC's pledge from the contractually mandated 66% interest to a 22% interest) into the registry of the U.S. Court. This preliminary injunction is referred to as the "May 2002 Preliminary Injunction". Due to the defendants' failure to deposit the stock into the registry of the U.S. Court by the U.S. Court-imposed deadline of May 24, 2002 set forth in the May 2002 Preliminary Injunction, the defendants were found to be in contempt of the U.S. Court. Defendants' request to stay the May 2002 Preliminary Injunction as to the deposit of the stock into the U.S. Court's registry was denied by the U.S. Court and the United States Court of Appeals for the Second Circuit (the "Appellate Court").

        The U.S. Court tried the case without a jury to conclusion on February 19, 2003. There has been no final ruling in this case, however the Appellate Court decision below will impact the court's decision.

        On March 7, 2003, the Appellate Court issued an opinion regarding a series of appeals filed by the Uzans from the District Court's earlier rulings. The Appellate Court:

•

Upheld the May 2002 Preliminary Injunction, finding it was sufficiently supported by the fraud claims under Illinois law;



•

Found that the RICO claims were premature and dismissed each claim without prejudice. It acknowledged that the Company may refile the RICO claims after it attempts to foreclose on any available collateral and pursues whatever other remedies it has against Telsim;



•

Remanded the case back to the District Court to reconsider whether that court should retain jurisdiction to decide the merits of the Illinois claims.

        The Appellate Court did not rule on the merits of the Uzan's claim that this matter may only be resolved through arbitration in Switzerland. A discussion of the arbitration in Switzerland can be found in the section below entitled "Foreign Proceedings."

        The Company continues its recovery efforts, however, the Company currently believes that the litigation, collection and/or settlement processes will be very lengthy in light of the Uzans' decision to violate various courts' orders.

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Foreign Proceedings

        On January 29, 2002, MCC filed an action in the United Kingdom before the High Court of Justice, Queen's Bench Division ("the UK Court") against Cem Uzan seeking an order freezing up to $50 million of his assets located in England and Wales. MCC filed a further action on May 29, 2002 before the UK Court, against Cem Uzan, Hakan Uzan, Kemal Uzan and Aysegul Akay, seeking a worldwide freezing injunction against each of their assets up to a value of $200 million. The UK Court granted the injunctions, denied defendants' requests to set aside the freezing orders, ordered that the defendants were required to make further disclosures concerning their worldwide assets, and denied their application for leave to appeal the decisions. Subsequently, the Uzans' disclosures were found to be inadequate and the Uzans were ordered to appear for cross-examination. They refused to appear and were held in contempt of court. They were each ordered to be imprisoned for periods up to 15 months. They have appealed the orders. Permission to appeal was granted on some aspects of the order. The appeals were heard in February 2003 and a ruling is pending.

        On February 5, 2002, Telsim initiated arbitration against MCC in Switzerland at the Zurich Chamber of Commerce.    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. On June 7, 2002, Rumeli Telfon ("Rumeli") initiated arbitration against MCC in the Zurich Chamber of Commerce requiring that MCC consent to Rumeli's request to place the Diluted Stock into an escrow account into Switzerland. Both of these arbitrations are proceeding.

        On June 19, 2002, Telsim initiated arbitration against Motorola, Ltd. and Motorola Komünikasyon Ticaret ve Servis Ltd. Sti., both wholly-owned subsidiaries of Motorola, before the International Chamber of Commerce in Zurich, Switzerland, seeking approximately 179 million pounds (approximately US$280.5 million) as damages for the defendants' alleged sale of defective products to Telsim. We have denied the claims and have filed a counterclaim. Hearings have been scheduled for November 2003 and January 2004.

        Motorola has also filed attachment proceedings in several foreign jurisdictions resulting in the preliminary seizure of assets owned by the Uzans and various entities within their control.

Class Action Securities Lawsuits

        A purported class action lawsuit was filed against the former Chief Financial Officer of Motorola, Inc. on December 24, 2002 in the United States District Court for the Southern District of New York, alleging breach of fiduciary duty and violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, Barry Family LP v. Carl F. Koenemann. Plaintiff claims that the price of Motorola's stock was artificially inflated by a failure to disclose vendor financing to Telsim Mobil Telekomunikasyon Hizmetleri A.S. (Telsim), in connection with the sale of telecommunications equipment by Motorola. Plaintiff proposes a class period of February 3, 2000 through May 14, 2001, and seeks an unspecified amount of damages.

        Subsequent to the filing of the Barry lawsuit, 17 additional putative class action complaints have been filed in federal court, both in the Southern District of New York and in the Northern District of Illinois, alleging the same or similar violations of the federal securities laws arising out of the failure to disclose vendor financing in connection with the sale of equipment to Telsim, but naming additional defendants, including Motorola, Inc., as well as former and current officers and directors of the company. It is Motorola's expectation that a lead plaintiff will be appointed and all of the complaints will be consolidated into one case. Following the consolidation, a new complaint will be filed.

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        The information contained under the captions "Environmental", "Iridium Program", and "Other" in Note 9, "Commitments and Contingencies," of the Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2003 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.

Executive Officers of the Registrant

        Following are the persons who were the executive officers of Motorola as of February 28, 2003, their ages as of January 1, 2003, their current titles and positions they have held during the last five years:

        Christopher B. Galvin; age 52; Chairman of the Board and Chief Executive Officer since June 1999; Chief Executive Officer from January 1997 to June 1999.

        Robert L. Barnett; age 62; Executive Vice President since January 2003; Executive Vice President, President and Chief Executive Officer, Commercial, Government and Industrial Solutions Sector ("CGISS") from October 2002 to January 2003; Executive Vice President and President, CGISS from July 1998 to October 2002; Executive Vice President and President, Land Mobile Products Sector from March 1997 to July 1998.

        Gregory Q. Brown; age 42; Executive Vice President, President and Chief Executive Officer, Commercial, Government and Industrial Solutions Sector since January 2003; Chairman of the Board and Chief Executive Officer of Micromuse, Inc. from February 1999 to January 2003; President, Ameritech Customer Business Services from September 1996 to February 1999.

        Dennis J. Carey; age 56; Executive Vice President, President and Chief Executive Officer, Integrated Electronic Systems Sector since November 2002; Executive Vice President, Business Development, Strategy and Corporate Operations of The Home Depot, Inc. from May 2001 to March 2002; Executive Vice President and Chief Financial Officer of The Home Depot, Inc. from May 1998 to May 2001; Vice President and General Manager—Corporate Productivity and Mergers and Acquisitions, AT&T Corp. from April 1997 to May 1998.

        Eugene A. Delaney; age 46; Executive Vice President and President, Global Relations and Resources Organization since July 2002; Senior Vice President and President, Global Relations and Resources Organization from February 2002 to July 2002; Senior Vice President and General Manager, Global Customer Solutions Operations Asia/Pacific from October 2001 to February 2002; Senior Vice President and General Manager, Telecom Carrier Solutions Group, Global Telecom Solutions Sector from August 2000 to October 2001; Senior Vice President and General Manager, Global Telecom Solutions Group, Communications Enterprise from April 1999 to August 2000; Senior Vice President and General Manager, Network Solutions Sector from May 1998 to April 1999; Corporate Vice President and General Manager, Cellular Infrastructure Group, Network Solutions Sector from September 1997 to May 1998.

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        David W. Devonshire; age 57; Executive Vice President and Chief Financial Officer since April 2002; Executive Vice President and Chief Financial Officer of Ingersoll-Rand Company from January 2000 to January 2002; Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company from January 1998 to January 2000.

        Glenn A. Gienko; age 50; Executive Vice President and Motorola Director of Human Resources since May 1996.

        A. Peter Lawson; age 56; 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 48; Executive Vice President, President and Chief Executive Officer, Personal Communications Sector ("PCS") since October 2002; Executive Vice President and President, PCS from August 2002 to October 2002; Executive Vice President and President, Integrated Electronic Systems Sector from January 2001 to August 2002; 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.

        Daniel M. Moloney; age 43; Executive Vice President, President and Chief Executive Officer, Broadband Communications Sector ("BCS") since October 2002; Executive Vice President and President, BCS from June 2002 to October 2002; Senior Vice President and General Manager, IP Systems Group, BCS from February 2000 to June 2002; Senior Vice President and General Manager, Advanced Networks and Telecom Business Unit, General Instrument Corporation from July 1998 to January 2000; Vice President and General Manager, Analog Network Systems Business Unit, General Instrument Corporation from June 1995 to June 1998.

        Adrian R. Nemcek: age 55; Executive Vice President, President and Chief Executive Officer, Global Telecom Solutions Sector ("GTSS") since October 2002; Executive Vice President and President, GTSS from August 2002 to October 2002; Senior Vice President and President, GTSS from September 2001 to August 2002; Senior Vice President and General Manager, Office of Strategy, GTSS 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.

        Fred (Theodore) A. Shlapak; age 59; Executive Vice President, President and Chief Executive Officer, Semiconductor Products Sector ("SPS") since October 2002; Executive Vice President and President, SPS from September 2000 to October 2002; 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.

        Leif G. Soderberg; age 48; Senior Vice President and Director, Global Strategy and Corporate Development since November 2002; Senior Vice President and Director, Corporate Strategy from April 2002 to November 2002; Senior Vice President and General Manager, Strategy, Corporate Development and Industry Relations, Personal Communications Sector from September 2000 to April 2002; Senior Vice President and General Manager, Systems Solutions Group, Commercial, Government and Industrial Solutions Sector from December 1998 to September 2000; Corporate Vice President and Director, Strategy and Business Development, Communications Enterprise from March 1998 to December 1998; Corporate Vice President and General Manager, RPG Americas Group from December 1996 to March 1998.

41

        Padmasree Warrior; age 42; Senior Vice President and Chief Technology Officer since January 2003; Corporate Vice President and General Manager, Energy Systems Group, Integrated Electronic Systems Sector from April 2002 to January 2003; Corporate Vice President and General Manager, Thoughtbeam, Inc., a wholly owned subsidiary of Motorola, Inc., from October 2001 to April 2002; Corporate Vice President, Chief Technology Officer and Director, DigitalDNA Laboratories, Semiconductor Products Sector ("SPS") from December 2000 to October 2001; Vice President, Chief Technology Officer and Director, DigitalDNA Laboratories, SPS from July 2000 to December 2000; Vice President and Assistant Director, DigitalDNA Laboratories, SPS from August 1999 to July 2000; Vice President and Director HiPerMOS and RFLDMOS Device Center of Excellence, SPS from February 1999 to August 1999; Director HiPerMOS and RFLDMOS Device Center of Excellence, SPS from June 1997 to February 1999.

        Mike S. Zafirovski; age 49; President and Chief Operating Officer since July 2002; Executive Vice President and President, Personal Communications Sector from June 2000 to July 2002. Prior to joining Motorola, Mr. Zafirovski was at the General Electric Company for more than 24 years in several senior positions, including 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 will serve as executive officers of Motorola until the regular meeting of the Board of Directors in May 2003 or until their respective successors shall have been elected. 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.

42

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, 2003 was 106,807. The remainder of the response to this Item incorporates by reference Note 14, "Quarterly and Other Financial Data" of Notes to Consolidated Financial Statements contained in the appendix to Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

        During 2002, Motorola issued an aggregate of 20,250,165 shares of common stock (for an aggregate sales price of approximately $167.3 million) to 5 holders of warrants issued by General Instrument Corporation ("GI") prior to the merger of Motorola and GI, which was consummated on January 5, 2000. As a result of these warrant exercises, all such warrants issued by GI have now been exercised and no warrants issued by GI to purchase Motorola common stock remain outstanding as of June 29, 2002. 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-77 in the appendix to Motorola's Proxy Statement for the 2003 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 2003 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-31 in the appendix to Motorola's Proxy Statement for the 2003 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 2003 annual meeting of stockholders.

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

        None.

43

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 2003 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 31 of Motorola's Proxy Statement for the 2003 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 8 of Motorola's Proxy Statement for the 2003 annual meeting of stockholders and under the captions "Summary Compensation Table," "Stock Option Grants in 2002," "Aggregated Option Exercises in 2002 and 2002 Year-End Option Values," "Long-Term Incentive Plans—No Awards in 2002," "Retirement Plans," and "Employment Contracts, Termination of Employment and Change in Control Arrangements" beginning on page 19 of Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

Item 12:    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

        The response to this Item incorporates by reference the information under the captions "Equity Compensation Plan Information" and "Ownership of Securities" beginning on page 15 of Motorola's Proxy Statement for the 2003 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 8 of Motorola's Proxy Statement for the 2003 annual meeting of stockholders.

Item 14:    Controls and Procedures

        (a)    Evaluation of disclosure controls and procedures.    Our Chief Executive Officer and our Chief Financial Officer have concluded, based on their evaluation within 90 days before the filing date of this annual report, that Motorola's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

        (b)    Changes in internal controls.    There have been no significant changes in our internal controls or in other factors that could significantly affect our disclosure controls and procedures subsequent to the date of the previously mentioned evaluation.

© Motorola, Inc. 2003.

44

PART IV

Item 15:    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 46.

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 Omnibus Incentive Plan of 2002

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

Motorola Compensation/Acquisition Plan of 2000

Form of Motorola, Inc. Award Document—Terms and Conditions Related to Non-Employee Director Nonqualified Stock Options

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

Accidental Death and Dismemberment Insurance for officers

Motorola Management Deferred Compensation Plan

Description of insurance program for Elected Officers of Motorola, Inc.

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

Description of Future Compensation Arrangements between Motorola, Inc. and Mike Zafirovski

Description of Future Compensation Arrangements between Motorola, Inc. and David Devonshire

Severance Protection Agreement dated as of April 23, 1998 between General Instrument Corporation and Thomas J. Lynch

Amendment to Severance Protection Agreement dated as of December 21, 1999 among Motorola, Inc., General Instrument Corporation and Thomas J. Lynch

December 21, 1999 Acknowledgement Letter signed by Thomas J. Lynch

February 4, 2002 Relocation Letter for Thomas J. Lynch

Motorola Incentive Plan of 2002

(b)

Reports on Form 8-K.

Motorola filed a current report on Form 8-K on December 18, 2002.

(c)

Exhibits:

See Item 14(a)3 above.

45

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Motorola, Inc.:

        Under date of January 21, 2003, except as to the fifth paragraph of Note 9, which is as of March 4, 2003, we reported on the consolidated balance sheets of Motorola, Inc. and Subsidiaries as of December 31, 2002 and 2001, 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, 2002, as contained in Motorola's proxy statement for the 2003 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, 2002. 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 15(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 21, 2003, except as to the fifth paragraph of Note 9, which is as of March 4, 2003

46

MOTOROLA, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended December 31, 2002
(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
2002
Reorganization of Businesses	$	915	$	658	$	(218	)	$	719	$	636
Allowance for Doubtful Accounts	$	222	$	83	$	—		$	67	$	238
Allowance for Losses on Finance Receivables	$	1,647	$	642	$	—		$	38	$	2,251
Product and Service Warranties	$	313	$	324	$	—		$	315	$	322
Customer Reserves	$	402	$	603	$	—		$	599	$	406
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
Product and Service Warranties	$	368	$	253	$	—		$	308	$	313
Customer Reserves	$	262	$	546	$	—		$	406	$	402
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
Product and Service Warranties	$	379	$	265	$	—		$	276	$	368
Customer Reserves	$	410	$	324	$	—		$	472	$	262

(1)

Reversal into income

(2)

Accrual usage

47

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, 333-51847, 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 21, 2003, except as to the fifth paragraph of Note 9, which is as of March 4, 2003, with respect to the consolidated balance sheets of Motorola, Inc. and Subsidiaries as of December 31, 2002 and 2001, 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, 2002, 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, 2002. Our report on the consolidated financial statements refers to the adoption of the provisions of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" on January 1, 2002.

	/s/  KPMG LLP
Chicago, Illinois March 27, 2003

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Motorola, Inc. has duly caused this 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 27, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this 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)	March 27, 2003
/s/  DAVID W. DEVONSHIRE David W. Devonshire	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 27, 2003
/s/  ANTHONY M. KNAPP Anthony M. Knapp	Senior Vice President and Controller (Principal Accounting Officer)	March 27, 2003
/s/  FRANCESCO CAIO Francesco Caio	Director	March 27, 2003
/s/  H. LAURANCE FULLER H. Laurance Fuller	Director	March 27, 2003
/s/  ANNE P. JONES Anne P. Jones	Director	March 27, 2003
/s/  JUDY C. LEWENT Judy C. Lewent	Director	March 27, 2003

49

/s/  DR. WALTER E. MASSEY Dr. Walter E. Massey	Director	March 27, 2003
/s/  NICHOLAS NEGROPONTE Nicholas Negroponte	Director	March 27, 2003
/s/  INDRA K. NOOYI Indra K. Nooyi	Director	March 27, 2003
/s/  JOHN E. PEPPER, JR. John E. Pepper, Jr.	Director	March 27, 2003
/s/  SAMUEL C. SCOTT III Samuel C. Scott III	Director	March 27, 2003
/s/  DOUGLAS A. WARNER III Douglas A. Warner III	Director	March 27, 2003
/s/  B. KENNETH WEST B. Kenneth West	Director	March 27, 2003
/s/  DR. JOHN A. WHITE Dr. John A. White	Director	March 27, 2003
/s/  MIKE S. ZAFIROVSKI Mike S. Zafirovski	Director	March 27, 2003

50

CERTIFICATION

        I, Christopher B. Galvin, Chairman of the Board and Chief Executive Officer of Motorola, Inc., certify that:

        1.    I have reviewed this annual report on Form 10-K of Motorola, Inc.;

        2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

        3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

        4.    The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

        b)    evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

        c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.    The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

        a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

        b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.    The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/  CHRISTOPHER B. GALVIN Christopher B. Galvin
Chairman of the Board
and Chief Executive Officer

51

CERTIFICATION

        I, David W. Devonshire, Executive Vice President and Chief Financial Officer of Motorola, Inc., certify that:

        1.    I have reviewed this annual report on Form 10-K of Motorola, Inc.;

        2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

        3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

        4.    The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

        b)    evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

        c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.    The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

        a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

        b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.    The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/  DAVID W. DEVONSHIRE David W. Devonshire
Executive Vice President
and Chief Financial Officer

52

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 (incorporated by reference to Exhibit 3.3 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-7221)).
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 Omnibus Incentive Plan of 2002 (incorporated by reference to Exhibit 10.1 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2002 (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)).

53

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.
*10.5	Resolutions Amending Sections 7 and 9(b) of the Share Option Plan of 1991, effective August 15, 1996.
*10.6	Share Option Plan of 1996, as amended through May 7, 1997.
10.7	Motorola Amended and Restated Incentive Plan of 1998, amended and restated as of July 31, 2001 (incorporated by reference to Exhibit 10.7 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-7221)).
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	Motorola Compensation/Acquisition Plan of 2000, as amended through November 8, 2001.
10.10	Form of Motorola, Inc. Award Document—Terms and Conditions Related to Non-Employee Director Nonqualified Stock Options relating to the Motorola Omnibus Incentive Plan of 2002 and the Motorola Omnibus 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 March 30, 2002 (File No. 1-7221)).
10.11	Form of Motorola, Inc. Award Document—Terms and Conditions Related to Employee Nonqualified Stock Options, relating to the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000, the Motorola Amended and Restated Incentive Plan of 1998, and the Motorola Compensation/Acquisition Plan of 2000 (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)).
10.12	Form of Motorola, Inc. Restricted Stock Agreement, relating to the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000 (incorporated by reference to Exhibit 10.10 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-7221)).
10.13	Form of Motorola, Inc. Restricted Stock Unit Agreement, relating to the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000 (incorporated by reference to Exhibit 10.11 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-7221)).
10.14	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)).
10.15	Accidental death and dismemberment insurance for officers (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)).
*10.16	Motorola Management Deferred Compensation Plan, as amended through November 5, 2002.

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*10.17	Description of insurance program for Elected Officers of Motorola, Inc.
10.18	Motorola, Inc. Senior Officer Change in Control Severance Plan (incorporated by reference to Exhibit 10.17 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-7221)).
10.19	Arrangement for directors' fees and retirement plan for non-employee directors (description incorporated by reference from pages 8 and 9 of Motorola's Proxy Statement for the 2003 annual meeting of stockholders).
10.20	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)).
10.21	Insurance policy covering non-employee directors (incorporated by reference to the description on page 9 of Motorola's Proxy Statement for the 2003 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)).
10.22	Description of Future Compensation Arrangements between Motorola, Inc. and Mike Zafirovski, President and Chief Operating Officer of the Company, as of July 2002 (incorporated by reference to Exhibit 10.1 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2002 (File No. 1-7221)).
10.23	Description of Future Compensation Arrangements between Motorola, Inc. and David Devonshire, Executive Vice President and Chief Financial Officer of the Company, as of March 2002 (incorporated by reference to Exhibit 10.2 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2002 (File No. 1-7221)).
*10.24	Severance Protection Agreement dated as of April 23, 1998 between General Instrument Corporation and Thomas J. Lynch.
*10.25	Amendment to Severance Protection Agreement dated as of December 21, 1999 among Motorola, Inc., General Instrument Corporation and Thomas J. Lynch.
*10.26	December 21, 1999 Acknowledgement Letter signed by Thomas J. Lynch.
*10.27	February 4, 2002 Relocation Letter for Thomas J. Lynch
10.28	Motorola Incentive Plan of 2002 (incorporated by reference to Exhibit 10.1 to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2002 (File No. 1-7221)).
*12	Statement regarding Computation of Ratio of Earnings to Fixed Charges.
*21	Subsidiaries of Motorola.
23	Consent of KPMG LLP. See page 48 of the Annual Report on Form 10-K of which this Exhibit Index is a part.
*99.1	Certification of Christopher B. Galvin pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*99.2	Certification of David W. Devonshire pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*

Filed herewith

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QuickLinks

Table of Contents
PART I

Item 1: Business

Item 2: Properties
Item 3: Legal Proceedings

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

PART II

Item 5: Market for Registrant's Common Equity and Related Stockholder Matters
Item 6: Selected Financial Data
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Item 8: Financial Statements and Supplementary Data
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

PART III

Item 10: Directors and Executive Officers of the Registrant
Item 11: Executive Compensation
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13: Certain Relationships and Related Transactions
Item 14: Controls and Procedures

PART IV

Item 15: Exhibits, Financial Statement Schedules and Reports on Form 8-K

INDEPENDENT AUDITORS' REPORT
MOTOROLA, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Three Years Ended December 31, 2002 (In millions)
CONSENT OF INDEPENDENT AUDITORS
SIGNATURES
EXHIBIT INDEX

EX-10.4

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Exhibit 10.4

Adopted May 13, 1991, As Amended
Through December 16, 1993

MOTOROLA, INC.
SHARE OPTION PLAN OF 1991

1.    Purpose:

        This Plan shall be known as the "Share Option Plan of 1991" (hereinafter referred to as the "Plan"). The purpose of the Plan is to provide certain key employees of Motorola, Inc. (the "Company") and its subsidiaries with additional incentive to increase their efforts on the Company's behalf and to remain in the employ of the Company or any of its subsidiaries by granting key employees from time to time options to purchase shares of Common Stock of the Company. The options granted under this Plan may, but need not, constitute "incentive stock options" (referred to herein as "Incentive" options) within the meaning of Section 422, or any successor section, of the Internal Revenue Code of 1986, as amended (the "Code"). An option granted which does not constitute an Incentive option shall for purposes of the Plan constitute a "Non-Qualified" option. The terms "subsidiary" and "subsidiaries" mean and include any corporation, partnership, joint venture or other business entity or organization in which a fifty percent (50%) or greater interest is, at the time, directly or indirectly, owned by the Company or by one or more subsidiaries or by the Company and one or more subsidiaries, except that with respect to any key employee who is subject to Section 16 of the Securities Exchange Act of 1934, as amended, (the "1934 Act"), the terms "subsidiary" or "subsidiaries" mean and include any corporation or other entity at least a majority of the outstanding voting shares of which (other than directors' qualifying shares) is, at the time, directly or indirectly owned by the Company or by one or more subsidiaries. Notwithstanding the foregoing definitions, with respect to Incentive options, "subsidiary" shall mean "subsidiary corporation" as defined in Section 424(f) of the Code.

2.    Administration:

        The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board of Directors"), or such other committee as may be designated by the Board of Directors. The Committee shall have full authority to act in all matters pertaining to the Plan. Without limiting the generality of the foregoing provision, the Committee is authorized and shall have full power and authority, subject to the provisions of the Plan, from time to time, to establish such rules and regulations as it may deem appropriate for the proper administration and operation of the Plan, and to make such determinations under, and such interpretations of, and to take such steps in connection with the Plan and the options granted thereunder as it may deem necessary or advisable. All determinations of the Committee shall be final, conclusive and binding upon all persons.

3.    Shares:

        The shares to be optioned under the Plan shall be shares of the Company's Common Stock, $3 par value (the "Shares"), which Shares may either be authorized but unissued or treasury Shares. The aggregate number of Shares for which options may be granted under the Plan shall (subject to the provisions of paragraph 11 hereof) be (i) 8,000,000 Shares, plus (ii) the total number of Shares with respect to which no options have been granted under the Company's Share Option Plan of 1982 on the date the Plan is implemented as hereinafter provided in paragraph 17, plus (iii) the total number of Shares as to which options granted under the Share Option Plan of 1982 terminate or expire without being wholly exercised. New options may be granted under this Plan covering the number of Shares to which such termination or expiration relates.

4.    Granting of Options:

        Subject to the approval of this Plan by the affirmative votes of the holders of a majority of the Shares of the Company present or represented and entitled to vote at a meeting duly held in accordance with the applicable laws of the State of Delaware, and subject to the provisions of this paragraph and paragraph 3 hereof, the Committee may at any time and from time to time after May 13, 1991, and prior to the expiration of five (5) years from the date on which this Plan is approved by the stockholders of the Company, grant options to such key employees of the Company or any subsidiary, and for such numbers of Shares, as the Committee shall designate.

        An individual optionee may be granted (i) an Incentive option, (ii) a Non-Qualified option, or (iii) an Incentive option and a Non-Qualified option at the same time.

        Incentive options shall be evidenced by Incentive option certificates and Non-Qualified options shall be evidenced by Non-Qualified option certificates. Each option certificate shall be in such form as the Committee shall, from time to time, designate, and shall include, by reference, the terms of the Plan as a condition under which the option is issued and received.

        The following terms and conditions shall apply to Incentive options:

        (a)  No Incentive option shall be granted to any participant who, at the time the option is granted, would own (within the meaning of Section 422(b) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company.

        (b)  The aggregate Fair Market Value, as defined in paragraph 9 hereof, (determined as of the time the option is granted) of the Shares of Common Stock with respect to which one or more Incentive options are exercisable for the first time by any individual optionee during any calendar year (under all plans of the Company and its subsidiaries) shall not exceed $100,000.00.

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        (c)  Each Incentive option, by its terms, shall (i) not be exercisable after the expiration of ten (10) years after the date it is granted and (ii) not be transferable by the optionee otherwise than by will or the applicable laws of descent and distribution or by operation of a death beneficiary designation made by the optionee in accordance with rules established by the Committee and shall be exercisable during the optionee's lifetime only by the optionee or the optionee's guardian or legal representative if the optionee is legally incompetent.

5.    Price:

        The option price per Share ("Option Price") for options granted hereunder shall be determined by the Committee. No option granted under the Plan shall have an Option Price less than the Fair Market Value of a Share on the date of grant of such option as determined by the Committee.

6.    Term and Exercise of Options:

        Except as provided herein for optionees who die while in the employ of the Company or any subsidiary or for a Change in Control, as hereinafter defined, no option granted under this Plan may be exercised prior to the expiration of twelve (12) months from the date it is granted (hereinafter referred to as the "non-exercise period"). In the event of a Change in Control, on the date of the Change in Control, the following shall apply to every option then outstanding which has a non-exercise period in effect: (a) the non-exercise period shall automatically terminate and have no further force or effect and (b) each such option shall be immediately exercisable for the entire amount of Shares subject to each such option. For purposes hereof, 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 1934 Act whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the 1934 Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (other than the Company, any employee benefit plan of the Company, any "person" who is a natural person and who was shown as the "beneficial owner," directly or indirectly, of securities of the Company representing more than 5% of the combined voting power of the Company's securities in the Company's Proxy Statement dated earlier than, but closest to, the date the Plan is approved by the Company's stockholders, and, for purposes of the Plan, no change in control shall be deemed to have occurred as a result of the "beneficial ownership," or changes therein, of the Company's securities by any of the foregoing), (B) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the surviving or continuing corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior

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to the merger have (directly or indirectly) at least 80% ownership interest in the outstanding Common Stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company, (C) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, or (D) as the result of, or in connection with, any cash tender offer, exchange offer, merger or other business combination, sale of assets, proxy or consent solicitation (other than by the Board of Directors), contested election or substantial stock accumulation (a "Control Transaction"), the members of the Board of Directors immediately prior to the first public announcement relating to such Control Transaction shall thereafter cease to constitute a majority of the Board of Directors.

        No option shall be exercisable for less than a minimum of fifty (50) Shares except in cases where the number of Shares represented by the option being exercised is less than fifty (50), in which case, the option shall not be exercisable for less than all Shares represented by the option.

        Anything in the Plan to the contrary notwithstanding, no option granted under the Plan shall be exercisable in any amount after a date ten (10) years from the date the option was granted.

        Subject to the specific provisions of this paragraph 6 and of paragraph 8 of the Plan with respect to the exercise and termination of options granted under the Plan, each such option shall be exercisable in such manner (including any installments), at such time or times and subject to such terms, conditions or limitations as shall be fixed by the Committee, in its sole discretion, at the time such option is granted.

7.    Non-Transferability of Option Rights:

        No option shall be transferable by an optionee otherwise than by operation of a death beneficiary designation made by the optionee in accordance with rules established by the Committee, by will or by the applicable laws of descent and distribution, nor shall any optionee pledge, hypothecate, or otherwise create any lien thereon. During the lifetime of any optionee, an option shall be exercisable only by the optionee or by the optionee's guardian or legal representative if the optionee is legally incompetent.

8.    Effect of Termination of Employment:

        Notwithstanding any time period specified in this paragraph 8 or elsewhere in the Plan for exercise of an option, no option may be exercised after expiration of its stated term.

        (a)  Termination of Employment During the Non-Exercise Period.

          (i)  If, during the non-exercise period, the optionee's employment with the Company and its subsidiaries shall terminate for any reason (including

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retirement) other than death, transfer to an Affiliate, as herein defined, or Total or Permanent Disability (as that term is defined in the Motorola Employees' Savings and Profit Sharing Plan) of the optionee, as determined by the Committee or its designee, the optionee's right to exercise the option shall terminate and all rights thereunder shall cease; provided, however, if the optionee's employment terminates by reason of the transfer of such optionee to a corporation, partnership, joint venture or other business entity in which the Company or a subsidiary of the Company has an ownership interest (an "Affiliate"), the Committee shall have the power and authority, in its discretion, to determine whether or not any or all of the options held by the optionee shall terminate or shall continue in effect. Any option which the Committee permits to continue in effect shall be subject to all of the terms and conditions of the Plan, including this paragraph 8 (with "termination of employment", "employment shall terminate", "terminates employment", "employment is terminated" or "employment shall have been terminated" or words of like import or intent meaning termination of employment with the Affiliate).

        (ii)  If, during the non-exercise period, an optionee dies while in the employ of the Company or any subsidiary, the deceased optionee's Successor-in-Interest, as hereinafter defined, shall have the right to exercise, in whole or in part, at any time during the remainder of the term of the option, the entire amount of the Shares subject to such option (without regard to any installment limitation on the exercise of the option). For purposes of the Plan, the term "Successor-in-Interest" shall mean the deceased optionee's death beneficiary, personal representative, or any person who acquired the right to exercise such option by bequest or inheritance or by reason of the laws of descent and distribution.

        (iii)  If an optionee's employment with the Company and its subsidiaries shall terminate because of the Total and Permanent Disability of the optionee or if the optionee shall be put on disability leave of absence status because of Total and Permanent Disability of the optionee, each option held by such an optionee which has a non-exercise period in effect at the time of termination of employment or commencement of the disability leave of absence shall become exercisable at the time the applicable non-exercise period elapses, and the optionee shall then have the right to exercise, in whole or in part, each such option for the entire amount of Shares subject to each such option (without regard to any installment limitation on exercise of the option) at any time during the remainder of the term of the option. The unexercised portion of each option shall terminate upon expiration of the term of each such option, and any unexercised portion shall terminate immediately if and when the optionee is employed by a competitor of the Company or any subsidiary without written consent of the Committee.

        (b)  Termination of Employment After the Non-Exercise Period.

          (i)  By Termination of Employment Without Cause.

        If the non-exercise period shall have elapsed and the optionee's employment with the Company and its subsidiaries shall have been terminated

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thereafter by the Company or any subsidiary without cause, the optionee shall have the right to exercise the then presently exercisable unexercised portion of the option at any time during a period of twelve (12) months after the date of termination of employment. The unexercised portion of the option may be exercised, in whole or in part, for the number of Shares which were or would have become exercisable under and pursuant to paragraph 6 of the Plan to the extent the optionee could have exercised such option had the optionee remained in the employ of the Company or any subsidiary during the twelve (12) month period immediately following the date of termination of employment. The unexercised and/or unexercisable portion of each option shall terminate twelve (12) months after an optionee's employment with the Company and its subsidiaries shall have been so terminated, and any unexercised and/or unexercisable portion shall terminate immediately if and when the optionee is employed by a competitor of the Company or any subsidiary without the written consent of the Committee.

        (ii)  By Termination of Employment for Cause.

        If an optionee's employment is terminated by the Company or any subsidiary for cause, any unexercised portion of any option granted to the optionee shall terminate with the optionee's termination of employment. As used herein, the term "cause" means (a) the failure of the optionee to carry out the duties assigned to the optionee as a result of incompetence or willful neglect, as determined by the Committee, or (b) such other reasons, including the existence of a conflict of interest, as the Committee may determine.

        (iii)  By Voluntary Termination of Employment.

        If an optionee voluntarily terminates employment with the Company or any subsidiary for reasons other than the retirement of the optionee, any unexercised portion of the optionee's option shall terminate with the optionee's termination of employment.

        (iv)  By Retirement.

        If the non-exercise period shall have elapsed or terminated and the optionee's employment with the Company or any subsidiary shall have been terminated because of the retirement of the optionee from the Company or any subsidiary at age 55 or older, the optionee shall have the right to exercise, in whole or in part, the unexercised portion of any Incentive or Non-Qualified option held by such optionee for the entire amount of Shares subject to such option (without regard to any installment limitation on exercise of the option) at any time during the remainder of the term of the option. The unexercised portion of each option shall terminate upon expiration of the term applicable to each such option, and any unexercised portion shall terminate immediately if and when the optionee is employed by a competitor of the Company or any subsidiary without written consent of the Committee.

        For purposes of the Plan, if the optionee is a participant in the Company's pension plan or the pension plan of any subsidiary, the term "retirement" shall mean the optionee's retirement as provided for in the

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applicable pension plan. If the optionee is not a participant in the Company's pension plan or the pension plan of any subsidiary, "retirement" of an optionee shall be determined by the Committee. In no event can retirement take place prior to age 55 even if permitted under the applicable pension plan.

        (v)  By Total and Permanent Disability.

        If the non-exercise period shall have elapsed and the optionee's employment with the Company and its subsidiaries shall have been terminated because of the Total and Permanent Disability of the optionee or if the optionee shall be put on disability leave of absence status because of the Total and Permanent Disability of the optionee, the optionee shall have the right to exercise, in whole or in part, the unexercised portion of any Incentive or Non-Qualified option held by such optionee for the entire amount of Shares subject to such option (without regard to any installment limitation on exercise of the option) at any time during the remainder of the term of the option. The unexercised portion of each option shall terminate upon expiration of the term of each such option, and any unexercised portion shall terminate immediately if and when the optionee is employed by a competitor of the Company or any subsidiary without written consent of the Committee.

        (vi)  By Death.

        If an optionee dies while in the employ of the Company or any subsidiary, the unexercised portion of the option may be exercised, in whole or in part, at any time during the remainder of the term of the option by the optionee's Successor-in-Interest for the entire number of Shares subject to the option (without regard to any installment limitation on exercise of the option).

      (vii)  Effect of Death After Termination of Employment Without Cause or Retirement.

        If an optionee dies during the twelve (12) month period immediately following the optionee's termination of employment without cause and at the time of death such optionee is not employed by a competitor of the Company or any subsidiary (or while employed by a competitor of the Company or any subsidiary with the written consent of the Committee), the unexercised portion of the option may be exercised by the optionee's Successor-in-Interest at any time during the remainder of the term of the option, in whole or in part, for the number of Shares which were or would have become exercisable under and pursuant to paragraph 6 of the Plan had the optionee survived for the remainder of the terms of the option, without regard to the requirement of exercise within twelve (12) months after termination of employment without cause.

        If an optionee dies after retirement prior to the expiration of the term of the option, and if at the time of death such optionee is not employed by a competitor of the Company or any subsidiary (or while employed by a competitor of the Company or any subsidiary with the written consent of the Committee),

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the unexercised portion of the option may be exercised for the entire number of Shares subject to such option (without regard to any installment limitation on exercise of the option), by the optionee's Successor-in-Interest at any time during the remainder of the term of the option.

      (viii)  By Transfer of Optionee to an Affiliate.

        If the non-exercise period shall have elapsed and the optionee's employment with the Company and its subsidiaries shall terminate by reason of the transfer of such optionee to an Affiliate, as defined in this paragraph 8, the Committee shall have the power and authority, in its discretion, to determine whether or not any or all of the options held by the optionee shall continue in effect for the remainder of the term of the option or for the period otherwise applicable under the provisions of the Plan. Any option which the Committee permits to continue in effect beyond the period otherwise applicable under the Plan shall be subject to all of the terms and conditions of the Plan, including this paragraph 8 (with "termination of employment", "employment shall terminate", "terminates employment", "employment is terminated" or "employment shall have been terminated" or words of like import or intent meaning termination of employment with the Affiliate).

        (c)  Procedure on Death.

        No transfer of an option to a Successor-in-Interest pursuant to sub-paragraphs (a)(ii), (b)(vi) and (b)(vii) above, by will or by the laws of descent and distribution, shall be effective unless the Company shall have been furnished with written notice of the optionee's death and a copy of the will (if the optionee had a will) and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the Successor-in-Interest or Successors-in-Interest of the terms and conditions of the option, and under no circumstances shall the right of any such Successor-in-Interest to exercise any such option extend beyond the expiration of the term of such option.

        (d)  Leaves of Absence and Lay-offs.

        If an optionee is placed on leave of absence status by the Company or any subsidiary, any then exercisable option shall be suspended at such time. If an optionee is placed on lay-off status by the Company or any subsidiary, any then exercisable option may be exercised during the following period of twelve (12) months and shall be suspended thereafter. In either case, the unexercised portion of the option shall either (i) terminate upon the optionee's termination of employment with the Company and its subsidiaries or (ii) be reinstated upon such optionee being re-employed from leave of absence or lay-off status by the Company or any subsidiary.

        (e)  Meaning of Termination of Employment.

        Wherever in this paragraph 8 or elsewhere in the Plan the words "termination of employment, employment is terminated, employment shall terminate or employment shall have been terminated" or words of like import or

8

intent are used, they shall mean the last day worked by the optionee rather than the last day the optionee is on the payroll of the Company or any of its subsidiaries.

9.    Payment for Shares; Withholding Tax:

        (a)  Payment for Shares purchased upon exercise of an option granted hereunder shall be made in full for all Shares purchased at the time of purchase. An optionee may pay the option price (a) in cash, (b) by transferring to the Company Shares owned by the optionee equal in Fair Market Value, as herein defined, to all or part of the aggregate option price of the Shares being purchased, or (c) by a combination of the means specified in (a) or (b). No fractional Shares may be purchased. For purposes of this paragraph and paragraph 4 hereof, the Fair Market Value of Shares shall be determined as follows: (i) if the New York Stock Exchange is open for trading on the date of the purchase or grant and Shares trade on the New York Stock Exchange on that day, the Fair Market Value shall be the average of the high and low prices for Shares as reported on the Composite Tape, or (ii) if the New York Stock Exchange is not open for trading on the date of the purchase or grant or if Shares do not trade on the New York Stock Exchange on that day, the Fair Market Value shall be the closing price for Shares as reported on the Composite Tape for the last previous day on which Shares did so trade.

        (b)  If the Company is required to withhold any tax for Federal Insurance Contribution Act ("FICA") purposes and/or any federal, state or local income tax or taxes in connection with the exercise of a Non-Qualified option by an optionee, the Committee may permit the optionee, subject to the restrictions herein contained, to satisfy, in whole or in part, the optionee's obligation to pay to the Company the amount of such tax or taxes by electing (a) to have the Company withhold a portion of the Shares which would otherwise be issuable to such optionee upon exercise of the option, or (b) to deliver and transfer to the Company Shares previously owned by the optionee, or (c) by a combination of the means specified in (a) and (b); provided, however, that the amount of federal, state and local income taxes that may be paid by delivery or withholding of Shares shall not exceed the applicable statutory minimum withholding requirements. The amount of any withholding tax not paid by delivery or withholding of Shares shall be paid by the optionee to the Company in cash. Any fractional Share shall also be paid in cash. Shares delivered or withheld shall have a Fair Market Value equal (as near as possible) to the amount of tax required to be withheld, or such part of such tax that the optionee elects to pay with Shares. The Fair Market Value of the Shares delivered to or withheld by the Company shall be determined as provided in this Section 9 as of the date the amount of tax to be withheld is determined (the "Tax Date") or if Shares did not trade on the New York Stock Exchange on the Tax Date, as of the last previous date Shares did so trade. An election by an optionee to deliver Shares or to have Shares withheld to satisfy tax withholding requirements shall be subject to the following restrictions: (1) if the election is made by an optionee other than an optionee who is a director or officer of the Company subject to Section 16 of the 1934 Act: (i) the election shall be made on or prior to the option exercise date, (ii) the election shall be irrevocable unless revocation is approved by the Committee,

9

and (iii) the election shall be subject to the approval or disapproval of theCommittee; (2) if the election is made by an optionee who is a director orofficer of the Company subject to Section 16 of the 1934 Act (a "Section 16 Optionee"), and the election is to deliver and transfer to the Company Shares previously owned by the optionee, the restrictions stated in (1) above shall apply; (3) if the election is made by a Section 16 Optionee, and the election is to have the Company withhold a portion of the Shares which would otherwise be issuable to such Section 16 Optionee upon exercise of the option, the election shall be made in accordance with either (A), (B) or (C) hereinafter: (A)(i) the election shall be made at least six (6) months prior to the date the option is exercised and the Shares are withheld, (ii) the election shall be irrevocable unless revocation is permitted by a rule or ruling of the SEC, and then only in accordance with such rule or ruling, provided that the Committee also approves the revocation, and (iii) the election shall be subject to the approval or disapproval of the Committee, or (B)(i) the election shall be made during the period beginning on the third business day following the date of the release by the Company for publication of the Company's quarterly or annual summary statement of sales and earnings and ending on the twelfth business day following such date (the "Window Period"), and the option exercise and the withholding of the Shares shall occur during the same Window Period, and (ii) the election shall be subject to the approval or disapproval of the Committee, or (C)(i) the election shall be made in advance of a Window Period to take effect in the Window Period next succeeding the date the election is made, with the option being exercised and the shares withheld in such Window Period, (ii) the election shall be subject to the approval or disapproval of the Committee, and (iii) the election may be revoked only if permitted by a rule or ruling of the SEC, and then only in accordance with such rule or ruling, provided that the Committee also approves the revocation.

10.  Rights as a Stockholder:

        An optionee or a Successor-in-Interest of an optionee shall have no rights as a stockholder with respect to any Shares covered by the optionee's option until the optionee or Successor-in-Interest shall have become the holder of record of such Shares, and no adjustment, except as may be effected pursuant to the provisions of paragraph 11 below, shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights in respect of such Shares for which the record date is prior to the date on which the optionee or Successor-in-Interest shall become the holder of record thereof.

11.  Merger, Consolidation, Reclassification, Stock Dividend, Etc.:

        In the event of any merger, consolidation, reorganization, reclassification, recapitalization, subdivision, stock dividend, stock split-up, reverse stock split-up, or other change in the corporate structure, which affects the Shares, such adjustment, if any, as the Committee in its sole discretion deems appropriate to reflect such change, shall be made in the aggregate number of Shares subject to the Plan, the maximum number of Shares which may be granted to a participant in a calendar year and the number of

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Shares and the price per Share subject to outstanding options.

12.  Company's Right to Terminate Employment:

        Nothing contained herein or in any share option agreement shall restrict the right of the Company or any subsidiary to terminate the employment of any optionee at any time, with or without cause, or to increase or decrease the compensation of any optionee.

13.  Indemnification and Exculpation:

        Each person, who is or shall have been a member of the Board of Directors or of the Committee, shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may bea party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof (with the Company's written approval) or paid by such person in satisfaction of a judgment in any such action, suit, or proceeding, except a judgment based upon a finding of such person's bad faith, subject, however, to the condition that upon the institution of any claim, action, suit or proceeding against such person, such person shall in writing give the Company an opportunity, at its own expense, to participate in, and to the extent it may wish, to assume the defense thereof before such person undertakes to handle it on such person's own behalf. The foregoing right of indemnification shall not be exclusive of any other right to which such person may be entitled as a matter of law under the Delaware General Corporation Law, the Bylaws of the Company or otherwise, or any power that the Company may have to indemnify such person or hold such person harmless. Each member of the Board of Directors or of the Committee, and each officer and employee of the Company shall be fully justified in relying or acting upon any information furnished on behalf of the Company by any person or persons other than himself or herself in connection with the administration of the Plan. In no event shall any person who is or shall have been a member of the Board of Directors or of the Committee, or an officer or employee of the Company, be liable for any determination made or other action taken or any omission to act in reliance upon any such information, or for any action taken (including the furnishing of information) or any failure to act, if in good faith.

14.  Use of Proceeds:

        The proceeds received from the sale of Shares pursuant to the Plan will be used for general corporate purposes.

15.  Amendment and Termination of Plan:

        The Board of Directors may at any time terminate the Plan. The Board of Directors or any committee thereof to whom authority is delegated by the Board of Directors may make such amendments and modifications as it deems advisable,

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in its sole discretion, except that the Board of Directors or such committee may not, without approval of the stockholders, (a) materially increase the total number of Shares on which options may be granted under the Plan, except as may be effected pursuant to the provisions of paragraph 11 hereof, (b) materially increase the benefits accruing to participants under the Plan, (c) materially change the requirement as to eligibility for participation in the Plan, or (d) extend the termination date of the Plan or the term of any option granted thereunder so that its term exceeds 10 years from the date of its original grant. Unless sooner terminated, the Plan shall terminate at midnight, Central Time, on May 12, 1996; provided, however, that all options granted under the Plan shall continue in full force and effect until terminated in accordance with the terms and conditions of the options and the Plan. No amendment, modification or termination of the Plan shall in any manner affect any option theretofore granted under the Plan without the consent of the optionee or the Successor-in-Interest of the optionee, as applicable.

16.  Approval by Stockholders:

        The Plan has been approved by the Board of Directors and is subject to approval by the affirmative votes of the holders of a majority of the Shares present, or represented, and entitled to vote at the meeting of stockholders at which the Plan is submitted.

17.  Implementation of the Plan and Grant of Options Under 1982 Plan:

        If the Plan is implemented, except as hereinafter provided, no further options will be granted under the Share Option Plan of 1982. If the Board of Directors terminates the Plan after it has been implemented, options may be granted under the Share Option Plan of 1982, but not as to any Shares issued or under option pursuant to the Plan.

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Exhibit 10.4
As Amended Through August 7, 1995

Resolution Amending Section 4
of
Share Option Plan of 1991

        RESOLVED, that, the Share Option Plan of 1991 is hereby amended by adding the following sentence at the end of the first paragraph of Section 4:

"The Committee may, in its discretion, delegate to members of the Committee and/or one or more elected officers of the Company the authority to grant options to key employees who are not subject to Section 16 of the 1934 Act."

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Exhibit 10.4

Exhibit 10.4 As Amended Through August 7, 1995

EX-10.5

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Exhibit 10.5

Resolutions Amending
the Motorola, Inc. Share Option Plan of 1991
and
the Motorola, Inc. Share Option Plan of 1982

RESOLVED, that, effective August 15, 1996, Section 7 of the Motorola, Inc. Share Option Plan of 1991 and Section 8 of the Motorola, Inc. Share Option Plan of 1982 are each amended to read as follows:

"Except as set forth in the last sentence of this section, an option shall not be transferable by an optionee otherwise than by operation of a death beneficiary designation made by the optionee in accordance with rules established by the Committee, by will or by the applicable laws of descent and distribution, and during the lifetime of any optionee, an option shall be exercisable only by the optionee or by the optionee's guardian or legal representative if the optionee is legally incompetent.

Notwithstanding the foregoing, except to the extent that it would cause the Plan to fail to meet the conditions required to be met under Rule 16b-3 under the 1934 Act, the Committee shall have the power and authority to provide, as a term of any Non-Qualified option, including any outstanding Non-Qualified option held by an optionee, that such Non-Qualified option may be transferred without consideration by the optionee to a member or members of his or her immediate family (i.e., a child, children, grandchild, grandchildren or spouse) and/or to a trust or trusts for the benefit of an immediate family member or family members."

RESOLVED, that, effective August 15, 1996, Section 9(b) of the Motorola, Inc. Share Option Plan of 1991 and Section 10(2) of the Motorola, Inc. Share Option Plan of 1982 are each hereby amended by deleting the last sentence and substituting the following two sentences:

"An election by an optionee to deliver Shares or to have Shares withheld to satisfy tax withholding requirements must be made on or prior to the Tax Date. The Committee may disapprove any election or may suspend, condition, restrict or terminate the right to make elections. An election is irrevocable, unless revocation is approved by the Committee."

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Exhibit 10.5

EX-10.6

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Exhibit 10.6

MOTOROLA SHARE OPTION PLAN OF 1996, as amended 5/7/97

1.    NAME AND PURPOSE

        1.1    Name.    The name of this plan is the Motorola Share Option Plan of 1996 (the "Plan").

        1.2    Purpose.    Motorola has established the Plan to promote the interests of Motorola and its stockholders by providing full and part-time employees of Motorola or its Subsidiaries and members of Motorola's Board who are not employees of Motorola or any of its Subsidiaries (each a "Non-Employee Director") with additional incentive to increase their efforts on Motorola's behalf and to remain in the employ or service of Motorola or its Subsidiaries and with the opportunity, through stock ownership, to increase their proprietary interest in Motorola and their personal interest in its continued success and progress.

2.    DEFINITIONS

        2.1    General Definitions.    The following words and phrases, when used herein, unless otherwise specifically defined or unless the context clearly indicates otherwise, shall have the following meanings:

        (a)  Affiliate. Any corporation, partnership, joint venture or other business entity in which Motorola or a Subsidiary holds an ownership interest.

        (b)  Board. The Board of Directors of Motorola.

        (c)  Change in Control. The events described in Section 11.2.

        (d)  Code. The Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant thereto.

        (e)  Committee. The Compensation Committee of the Board.

        (f)    Common Stock. Motorola's common stock, $3 par value per Share.

        (g)  Directors. Members of the Board of Motorola.

        (h)  Disinterested Person. A person described in Rule 16b-3(c)(2) or any successor definition adopted by the SEC.

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        (i)    Effective Date. The date that the Plan is approved by both the directors of Motorola and the stockholders of Motorola, and if not approved by both on the same day, the date of the last approval.

        (j)    Employee. Any person employed by Motorola or a Subsidiary on a full or part-time basis.

        (k)  Employee Stock Options. Stock Options granted to an Employee under Article 4 of the Plan, including both NSOs and ISOs.

        (l)    Exchange Act. The Securities Exchange Act of 1934, as amended.

        (m)  Fair Market Value. The average of the high and low sale prices of Shares as reported for the New York Stock Exchange—Composite Transactions on a given date, or, in the absence of sales on a given date, the average of the high and low sale prices (as so reported) for the New York Stock Exchange—Composite Transactions on the last previous day on which a sale occurred prior to such date. With respect to an ISO, as defined below, if such method of determining Fair Market Value shall not be consistent with the then current regulations of the U.S. Secretary of the Treasury, Fair Market Value shall be determined in accordance with those regulations.

        (n)  ISO. An incentive stock option that meets the requirements of Section 422 (or any successor section) of the Code.

        (o)  Motorola. Motorola, Inc. or any successor.

        (p)  NSO. A Stock Option that does not qualify as an ISO.

        (q)  Non-Employee Director. Is defined in Section 1.2.

        (r)  Non-Employee Stock Option Period. Is defined in Section 5.3.

        (s)  Non-Employee Stock Option. Is defined in Section 5.1.

        (t)    Non-Exercise Period. The period, for each Employee Stock Option, ending twelve (12) months from the date of its grant, or any longer period or periods determined by the Committee and set forth in, or incorporated by reference into, the Employee Stock Option.

        (u)  Optionee. An Employee who has been granted an Employee Stock Option under the Plan.

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        (v)  Participant. An individual who is granted a Stock Option under in the Plan.

        (w)  Plan. The Motorola Share Option Plan of 1996 and all amendments and supplements thereto.

        (x)  Plan Year. The calendar year.

        (y)  Rule 16b-3. Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to time.

        (z)  SEC. The Securities and Exchange Commission.

        (aa) Share. A share of Common Stock.

        (bb) Stock Options. Employee Stock Options and Non-Employee Stock Options.

        (cc) Subsidiary; Subsidiaries. Any corporation or other entity in which a fifty percent (50%) or greater interest is, at the time, directly or indirectly owned by Motorola or by one or more Subsidiaries or by Motorola and one or more Subsidiaries, except that: (i) with respect to ISOs, "Subsidiary" shall mean "subsidiary corporation" as defined in Section 424(f) of the Code, and (ii) with respect to Directors and any elected officer of Motorola or a Subsidiary subject to Section 16 of the Exchange Act, the terms "Subsidiary" or "Subsidiaries" mean and include any corporation or other entity at least a majority of the outstanding voting shares of which (other than directors' qualifying shares) is, at the time, directly or indirectly owned by Motorola or by one or more Subsidiaries or by Motorola and one or more Subsidiaries.

        (dd) Successor-in-Interest. Is defined in Section 4.5(a)(ii).

        (ee) Total and Permanent Disability. Is defined in Section 4.5(a)(i).

        2.2    Other Definitions.    In addition to the above definitions, certain words and phrases used in the Plan and any Stock Option certificate may be defined elsewhere in the Plan or in such Stock Option certificate.

3.    SHARES SUBJECT TO PLAN

        3.1    Number of Shares.    The number of Shares for which Stock Options may be granted under the Plan shall be (i) 29,000,000 Shares, plus (ii) the total number of Shares with respect to which no options have been granted

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under Motorola's Share Option Plan of 1991 on the Effective Date, plus (iii) the number of Shares as to which options granted under Motorola's Share Option Plan of 1991 terminate or expire without being fully exercised, subject, in each case, to Sections 3.2 and 3.3. Shares issued under the Plan may be either authorized and unissued Shares or issued Shares reacquired by Motorola. No Employee may receive Stock Options relating to more than 300,000 Shares in any Plan Year (as adjusted pursuant to Section 3.3).

        3.2    Reusage.    If a Stock Option expires or is terminated, surrendered or canceled without having been fully exercised, the Shares covered by such Option shall again be available for use under the Plan.

        3.3    Adjustments.    If there is any change in the Common Stock by reason of any stock split, stock dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation, reorganization, combination or exchange of shares, the number and class of Shares available for Stock Options the number of Shares to be automatically granted under Section 5.1 hereof and the number of Shares subject to outstanding Stock Options and the price of each of the foregoing, as applicable, shall be appropriately adjusted by the Committee to provide Participants with the same relative rights before and after such adjustment.

4.    EMPLOYEE STOCK OPTIONS

        4.1    Grant of Employee Stock Options.    The Committee shall have authority to grant Stock Options (ISOs or NSOs) to Employees. The Committee shall determine the number of Shares subject to each Employee Stock Option, the purchase price per Share, the term of the Employee Stock Option, the time or times at which the Employee Stock Option may be exercised, and all other terms and conditions of the Employee Stock Option. The Option exercise price per Share of an Employee Stock Option may not be less than the Fair Market Value of a Share on the date of grant. The Committee may accelerate the exercisability of any Employee Stock Option, including the waiver or modification of any installment exercise provisions. The Committee may in its discretion, delegate to members of the Committee and/or one or more elected officers of Motorola the authority to grant Stock Options to Employees who are not subject to Section 16 of the Exchange Act.

        4.2NSOs and ISOs.    

        (a)  The Stock Option exercise price of any Stock Option may not be less than the Fair Market Value on the date of grant of the Shares of the Common Stock subject to the Stock Option.

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        (b)  ISOs. The following additional terms and conditions shall apply to ISOs:

          (i)  No ISO shall be granted to any Participant who, at the time the Employee Stock Option is granted, would own (within the meaning of Section 422(b) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of Motorola.

        (ii)  The aggregate Fair Market Value (determined as of the time the Employee Stock Option is granted) of the Shares of Common Stock with respect to which one or more ISO's are exercisable for the first time by any individual Optionee during any calendar year (under all plans of Motorola and its Subsidiaries) shall not exceed $100,000.00.

        (iii)  Each ISO, by its terms, shall (1) not be exercisable after the expiration often (10) years after the date it is granted and (2) not be transferrable by the Optionee otherwise than by will or the applicable laws of descent and distribution or by operation of a death beneficiary designation made by the Optionee in accordance with rules established by the Committee and shall be exercisable during the Optionee's lifetime only by the Optionee or the Optionee's guardian or legal representative if the Optionee is legally incompetent.

        4.3    Exercise of Employee Stock Options; Payment.    

        (a)  An Employee Stock Option may be exercised by the Optionee submitting to Motorola such form(s) as are prescribed for such purpose. Motorola may require the surrender of the Employee Stock Option certificate if one has been issued. No Employee Stock Option shall be exercisable for less than a minimum of fifty (50) Shares except in cases where the number of Shares represented by the Employee Stock Option being exercised is less than fifty (50), in which case, the Employee Stock Option shall not be exercisable for less than all shares represented by such Option.

        (b)  Payment for Shares purchased upon exercise of an Employee Stock Option shall be paid in full as permitted by Section 13 for all Shares purchased at the time of purchase. No fractional Shares may be purchased.

        4.4    Non-Exercise Period.    Except as provided herein for Optionees who die while in the employ of Motorola or any Subsidiary or for a Change in Control, no Employee Stock Option granted under the Plan may be exercised prior to the expiration of the Non-Exercise Period. No Employee Stock Option may be exercised after expiration of its stated term.

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        4.5    Effect of Termination of Employment on Employee Stock Options:    

        (a)  Termination of Employment During the Non-Exercise Period.

          (i)  Except for a Change in Control and except for a disability leave of absence as provided in Section 4.5(a)(iii) hereof, if, during the NonExercise Period, the Optionee's employment with Motorola and its Subsidiaries shall terminate for any reason (including retirement) other than death, transfer to an Affiliate and other than Total and Permanent Disability (as that term is defined in the Motorola Profit Sharing and Investment Plan) of the Optionee, as determined by the Committee or its designee, the Optionee's right to exercise the Employee Stock Option shall terminate and all rights thereunder shall cease; provided, however, if the Optionee's employment terminates by reason of the transfer of such Optionee to an Affiliate, the Committee shall have the power and authority, in its discretion, to determine whether or not any or all of the Employee Stock Options held by the Optionee shall terminate or shall continue in effect (in which case such Options shall be subject to all of the conditions of the Plan, including this Section 4.5, and such other conditions as the Committee may impose, with "termination of employment," "employment is terminated" or "employment shall have been terminated" or words of like import or intent meaning termination of employment with the Affiliate.)

        (ii)  If, during the Non-Exercise Period, an Optionee dies while in the employ of Motorola or any Subsidiary, the deceased Optionee's Successor-in-Interest shall have the right to exercise, in whole or in part, at any time during the remainder of the term of such Employee Stock Option, the entire amount of the Shares subject to such Employee Stock Option (without regard to any installment limitation on the exercise of the Employee Stock Option). For purposes of the Plan, the term "Successor-in-Interest" shall mean the deceased Optionee's death beneficiary, personal representative, or any person who acquired the right to exercise such Employee Stock Option by bequest or inheritance or by reason of the laws of descent and distribution.

        (iii)  If, during the Non-Exercise Period, an Optionee's employment with Motorola and its Subsidiaries shall terminate because of the Total and Permanent Disability of the Optionee or if the Optionee shall be put on disability leave of absence status because of the Total and Permanent Disability of the Optionee, each Employee Stock Option held by such an Optionee which has a Non-Exercise Period in effect at the time of termination of employment or commencement of the disability leave of absence shall become exercisable at the time the applicable Non-Exercise Period elapses or terminates, and the Optionee shall then have the right to exercise, in whole or in part, each such Employee Stock Option for the

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entire amount of Shares subject to each such Employee Stock Option (without regard to any installment limitation on exercise of the Employee Stock Option) at any time during the remainder of the term of the Employee Stock Option. The unexercised portion of each Employee Stock Option shall terminate upon expiration of the term of such Stock Option, and any unexercised portion shall terminate immediately if and when the Optionee is employed by a competitor of Motorola or any Subsidiary without written consent of the Committee.

        (b)  Termination of Employment After the Non-Exercise Period.

          (i)  By Termination of Employment Without Cause. If the Non-Exercise Period shall have elapsed or terminated and the Optionee's employment with Motorola and its Subsidiaries shall have been terminated thereafter by Motorola or any Subsidiary without cause, the Optionee shall have the right to exercise the then presently exercisable unexercised portion of the Employee Stock Option at any time during a period of twelve (12) months after the date of termination of employment. The unexercised portion of the Employee Stock Option may be exercised, in whole or in part, for the number of Shares which were or would have become exercisable to the extent the Optionee could have exercised such Employee Stock Option had the Optionee remained in the employ of Motorola or any Subsidiary during the twelve (12) month period immediately following the date of termination of employment. Except as otherwise provided in Section 4.5(b)(vii) hereof, the unexercised and/or unexercisable portion of each Employee Stock Option shall terminate twelve (12) months after an Optionee's employment with Motorola and its Subsidiaries shall have been so terminated, and any unexercised and/or unexercisable portion shall terminate immediately if and when the Optionee is employed by a competitor of Motorola or any Subsidiary without the written consent of the Committee.

        (ii)  By Termination of Employment for Cause. If the Non-Exercise Period shall have elapsed or terminated and the Optionee's employment is terminated by Motorola or any Subsidiary for cause, any unexercised portion of any Employee Stock Option granted to the Optionee shall terminate with the Optionee's termination of employment. As used herein, the term "cause" means (a) the failure of the Optionee to carry out the duties assigned to the Optionee as a result of incompetence or willful neglect, as determined by the Committee, or (b) such other reasons, including the existence of a conflict of interest, as the Committee may determine.

        (iii)  By Voluntary Termination of Employment. If the Non-Exercise Period shall have elapsed or terminated and the Optionee voluntarily terminates employment with Motorola or any Subsidiary for reasons other than the retirement of the Optionee, any unexercised portion

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of the Optionee's Employee Stock Option shall terminate with the Optionee's termination of employment.

        (iv)  By Retirement. If the Non-Exercise Period shall have elapsed or terminated and the Optionee's employment with Motorola or any Subsidiary shall have been terminated because of the retirement of the Optionee from Motorola or any Subsidiary at age 55 or older, the Optionee shall have the right to exercise, in whole or in part, the unexercised portion of any Employee Stock Option held by such Optionee for the entire amount of Shares subject to such Stock Option (without regard to any installment limitation on exercise of the Employee Stock Option) at any time during the remainder of the term of such Stock Option. The unexercised portion of each Employee Stock Option shall terminate upon expiration of the term applicable to each such Employee Stock Option, and any unexercised portion shall terminate immediately if and when the Optionee is employed by a competitor of Motorola or any Subsidiary without the written consent of the Committee.

        For purposes of this Section 4.5, if the Optionee is a participant in Motorola's pension plan or the pension plan of any Subsidiary, the term "retirement" shall mean the Optionee's retirement as provided for in the applicable pension plan. If the Optionee is not a participant in Motorola's pension plan or the pension plan of any Subsidiary, "retirement" of an Optionee shall be determined by the Committee. In no event can retirement take place prior to age 55 even if permitted under the applicable pension plan.

        (v)  By Total and Permanent Disability. If the Non-Exercise Period shall have elapsed or terminated, and the Optionee's employment with Motorola and its Subsidiaries shall have been terminated because of the Total and Permanent Disability of the Optionee or if the Optionee shall be put on disability leave of absence status because of the Total and Permanent Disability of the Optionee, the Optionee shall have the right to exercise, in whole or in part, the unexercised portion of any Employee Stock Option held by such Optionee for the entire amount of Shares subject to such Employee Stock Option (without regard to any installment limitation on exercise of the Employee Stock Option) at any time during the remainder of the term of the Employee Stock Option. The unexercised portion of each Employee Stock Option shall terminate upon expiration of the term of each such Employee Stock Option, and any unexercised portion shall terminate immediately if and when the Optionee is employed by a competitor of Motorola or any Subsidiary without the written consent of the Committee.

        (vi)  By Death. If the Non-Exercise Period shall have elapsed or terminated and the Optionee dies while in the employ of Motorola or any Subsidiary, the unexercised portion of the Employee Stock Option may be

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exercised, in whole or in part, at any time during the remainder of the term of the Employee Stock Option by the Optionee's Successor-in-Interest, for the entire number of Shares subject to the Employee Stock Option (without regard to any installment limitation on exercise of the Employee Stock Option).

      (vii)  Effect of Death After Termination of Employment Without Cause or Retirement. If the Non-Exercise Period shall have elapsed or terminated and the Optionee dies during the twelve (12) month period immediately following the Optionee's termination of employment by Motorola or any Subsidiary without cause and at the time of death such Optionee is not employed by a competitor of Motorola or any Subsidiary (or while employed by a competitor of Motorola or any Subsidiary with the written consent of the Committee), the unexercised portion of the Employee Stock Option may be exercised by the Optionee's Successor-in-Interest at any time during the remainder of the term of the Employee Stock Option, in whole or in part, for the number of Shares which were or would have become exercisable had the Optionee survived for the remainder of the term of the Employee Stock Option, without regard to the requirement of exercise within twelve (12) months after termination of employment without cause.

        If the Non-Exercise Period shall have elapsed or terminated and the Optionee dies after retirement prior to the expiration of the term of the Employee Stock Option, and, if at the time of death such Optionee is not employed by a competitor of Motorola or any Subsidiary (or while employed by a competitor of Motorola or any Subsidiary with the written consent of the Committee), the unexercised portion of the Employee Stock Option may be exercised for the entire number of Shares subject to such Employee Stock Option (without regard to any installment limitation on exercise of the Employee Stock Option), by the Optionee's Successor-in-Interest at any time during the remainder of the term of the Employee Stock Option.

      (viii)  By Transfer of Optionee to an Affiliate. If the Non-Exercise Period shall have elapsed or terminated and the Optionee's employment with Motorola and its Subsidiaries shall terminate by reason of the transfer of such Optionee to an Affiliate, the Committee shall have the power and authority, in its discretion, to determine whether or not any or all of the Employee Stock Options held by the Optionee shall continue in effect for the remainder of the term of such Employee Stock Option or for the period otherwise applicable under the provisions of the Plan. Any Employee Stock Option which the Committee permits to continue in effect beyond the period otherwise applicable under the Plan shall be subject to all of the terms and conditions of the Plan, including this Section 4.5 and such other conditions as the Committee may impose (with "termination of employment", "employment shall terminate", "terminates employment",

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"employment is terminated" or "employment shall have been terminated" or words of like import or intent meaning termination of employment with the Affiliate).

        (c)  Procedure on Death.

        No transfer of an Employee Stock Option pursuant to Section 4.5 (a)(ii), (b)(vi) and (b)(vii) above, by will or by the laws of descent and distribution, shall be effective unless Motorola shall have been furnished with written notice thereof and a copy of the will, if any, and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the Successor-in-interest or Successors-in-interest of the terms and conditions of the Employee Stock Option, and under no circumstances shall the right of any such Successor-in-Interest to exercise any such Employee Stock Option extend beyond the applicable period specified in sub-paragraph (a)(ii), (b)(vi) or (b)(vii) above, or beyond the expiration of the term of such Employee Stock Option.

        (d)  Leaves of Absence and Lay-offs.

        If an Optionee is placed on leave of absence status (except as provided in Section 4.5 (a)(iii) or (b)(v) above) by Motorola or any Subsidiary, each Employee Stock Option then held by the optionee, whether exercisable or nonexercisable, shall be suspended at such time, but the period of time during which the Optionee is on leave of absence shall be counted in determining when the Non-Exercise Period elapses. If an Optionee is placed on lay-off status by Motorola or any Subsidiary, any then non-exercisable Employee Stock Option shall terminate and any then exercisable Employee Stock Option may be exercised during the period of twelve (12) months from the date the Optionee is placed on lay-off status and shall be suspended thereafter to the extent not exercised. In any case, the unexercised portion of each suspended Employe Stock Option shall either (i) terminate upon the Optionee's termination of employment with Motorola and its Subsidiaries or (ii) be reinstated upon such Optionee returning from leave of absence or lay-off status to active employment status with Motorola or any Subsidiary.

        (e)  Meaning of Termination of Employment.

        Wherever in this Article or elsewhere in the Plan the words "termination of employment, employment is terminated, employment shall terminate or employment shall have been terminated" or words of like import or intent are used, they shall mean the last day worked by the Participant rather than the last day the Participant is on the payroll of Motorola or any Subsidiary.

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5.    NON-EMPLOYEE STOCK OPTIONS

        5.1    Automatic Grant of Non-Employee Stock Options.    On June 1, 1996 and on June 1 of each Plan Year after 1996 in which the Plan is in effect, each individual elected, re-elected or continuing as a Non-Employee Director shall automatically receive a NSO covering 2,500 Shares (a "Non-Employee Stock Option"). Notwithstanding the foregoing, if, on that day, the General Counsel of Motorola determines, in his or her sole discretion, that Motorola is in possession of material, undisclosed information about Motorola, then the annual grant of NSO's to Non-Employee Directors shall be suspended until the second day after public dissemination of such information and the price, exercisability date and Non-Employee Stock Option Period shall then be determined by reference to such later date. If Common Stock is not reported as traded on the New York Stock Exchange—Composite Transactions on any date a grant would otherwise be awarded, then the grant shall be made the next day thereafter on which Common Stock is so traded.

        5.2    Price.    The Stock Option exercise price of a Non-Employee Stock Option shall be the Fair Market Value of the Shares subject to such Stock Option on the date of grant.

        5.3    Exercisability.    A Non-Employee Stock Option granted under the Plan shall become exercisable twelve months after the date of grant (except as otherwise provided in Section 5.6 for retirement and Section 5.7 for death which occurs during such period and in Article 11 if a Change in Control occurs during such period) and shall expire, except as otherwise provided herein, 10 years after the date of grant ("Non-Employee Stock Option Period").

        5.4    Payment.    The Non-Employee Stock Option exercise price shall be paid in full as permitted by Section 13 for all Shares purchased at the time the Non-Employee Stock Option is exercised. No fractional Shares may be purchased. Motorola may require the surrender of the Non-Employee Stock Option certificate if one has been issued, and no Non-Employee Stock Option may be exercised for less than fifty (50) Shares, except in cases where the number of shares represented by the Non-Employee Stock Option being exercised is less than fifty (50), in which case the Non-Employee Stock Option shall not be exercisable for less than all Shares represented by such Stock Option.

        5.5    Termination.    Upon cessation of services as a Non-Employee Director (for reasons other than retirement as defined in Section 5.6 hereof or death) only those Non-Employee Stock Options immediately

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exercisable at the date of cessation of service shall be exercisable by the Non-Employee Director. Such Non-Employee Stock Options must be exercised within 30 days after cessation of service (but in no event after the expiration of the Non-Employee Stock Option Period) or they shall be forfeited. If, however, the Non-Employee Director during or after his or her service on the Board, engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola, or any Subsidiary, any unexercised portion of such Non-Employee Stock Options shall immediately terminate, unless otherwise determined by the Chief Executive Officer of Motorola. The determination of whether a Director is or has engaged in any competitive activity or in any action or conduct which is adverse or contrary to the interests of Motorola or any of its Subsidiaries shall be made by the Chief Executive Officer of Motorola, and such determination shall be conclusive and binding upon all parties.

        5.6    Retirement.    As used in this Article 5, the term "retirement" shall mean, for Non-Employee Directors, resignation at or after age 65, failure to stand for re-election at or after age 65 or failure to be re-elected at or after age 65. Upon retirement, all Non-Employee Stock Options previously granted to a Non-Employee Director shall become or continue to be exercisable, except as otherwise provided herein. Such Non-Employee Stock Options must be exercised prior to the expiration of the Non-Employee Stock Option Period or they shall be forfeited.

        5.7    Death.    Upon the death of a Non-Employee Director, all Non-Employee Stock Options previously granted to the Non-Employee Director shall become exercisable by his or her Successor-in-Interest, except as otherwise provided herein. Such Non-Employee Stock Options can be exercised during the remainder of the Non-Employee Stock Option Period.

        5.8    Amendments.    An amendment of this Article 5 amending provisions of the kind described in Rule 16b-3(c)(2)(ii)(A) under the Exchange Act shall not be made more frequently than once every six months unless necessary to comply with the Code. No amendment may revoke or alter in a manner unfavorable to a Non-Employee Director holding Non-Employee Stock Options any Non-Employee Stock Options then outstanding, without such Non-Employee Director's approval.

        5.9    Interpretation.    The Chief Executive Officer of Motorola shall administer, construe and interpret this Article 5, whose decisions shall be conclusive and binding on all parties. The Chief Executive Officer of Motorola is authorized, subject to the provisions of this Article 5, from time to time to establish such rules and regulations as he or she may deem appropriate for the proper administration or operation of this Article 5.

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Non-Employee Stock Options may be evidenced by certificates at the option of the Chief Executive Officer of Motorola.

6.    ELIGIBILITY

        The Participants shall be determined by the Committee, except for Non-Employee Stock Options which shall be automatically granted to Non-Employee Directors under Article 5 and except to the extent authority has been delegated under Section 7.1 hereof. In making its determinations, the Committee shall consider past, present and expected future contributions of Employees to Motorola and its Subsidiaries.

7.    ADMINISTRATION

        7.1    Committee.    The Plan (except for Article 5 and the Non-Employee Stock Options automatically granted thereunder) shall be administered by the Committee; provided, however, if at any time Rule 16b-3 and Section 162(m) of the Code, and any implementing regulations (and any successor provisions thereof), so permit without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the Exchange Act (or any successor provision) provided by Rule 16b-3 and the exemption from the limitations on the deductibility of certain executive compensation provided by Section 162(m), the Committee may delegate the administration of the Plan in whole or in part, on such terms and conditions, to such other person or persons as it may determine in its discretion. References to the Committee hereunder shall include the Board where appropriate. The membership of the Committee or such successor committee shall be constituted so as to comply at all times with the applicable requirements of Rule 16b-3 and Section 162(m). No member of the Committee shall have within one year prior to his appointment received awards under the Plan or under any other plan, program or arrangement of Motorola or any of its affiliates if such receipt would cause such member to cease to be a "disinterested person" under Rule 16b-3; provided that if at any time Rule 16b-3 so permits without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the Exchange Act (or any successor provision) provided by Rule 16b-3, one or more members of the Committee may cease to be a "disinterested person."

        7.2    Authority.    Subject to the terms of the Plan, and except for the Non-Employee Stock Options granted under Article 5 (over which the Committee shall have no discretion), the Committee shall have complete power and authority to:

        (a)  determine the individuals to whom Employee Stock Options are

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granted, the type and amounts to be granted and the time of all such grants;

        (b)  determine the terms, conditions and provisions of, and restrictions relating to, each Employee Stock Option granted;

        (c)  administer, interpret and construe the Plan and the Employee Stock Options;

        (d)  prescribe, amend and revoke rules and regulations relating to the Plan;

        (e)  maintain accounts, records and ledgers relating to the Plan;

        (f)    maintain records concerning its decisions and proceedings;

        (g)  employ agents, attorneys, accountants or other persons for such purposes as the Committee considers necessary or desirable;

        (h)  take, at any time, any action permitted by Section 11.1 irrespective of whether any Change in Control has occurred or is imminent; and

        (i)    do and perform all acts which it may deem necessary or appropriate for the administration of the Plan and carry out the purposes of the Plan.

        7.3    Determinations.    All determinations of the Committee shall be final, binding and conclusive upon all persons, including Motorola and its Subsidiaries and Participants and their respective legal representatives, Successors-in Interest and permitted assigns and upon all other persons claiming by, through, under or against any of them.

8.    AMENDMENT

        Except as hereinafter provided, and except as may be required for compliance with Rule 16b-3 and Section 162(m) of the Code, the Board or the Committee shall have the right and power to amend the Plan at any time and from time to time. Only the Board may amend Article 5 of the Plan, subject to such Article and subject to compliance with Rule 16b-3. Neither the Board nor the Committee may amend the Plan in a manner which would impair or adversely affect the rights of the holder of a Stock Option without the holder's consent. If the Code or any other applicable statute, rule or regulation, including, but not limited to, those of any securities exchange, requires stockholder approval with respect to the Plan or any

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type of Plan amendment, then to the extent so required, stockholder approval shall be obtained.

9.    TERM AND TERMINATION

        9.1    Term.    The Plan shall commence as of the Effective Date and, subject to the terms of the Plan, including those in Section 14.7 requiring stockholder approval for implementation or limiting the period over which ISOs may be granted, shall continue in full force and effect until five (5) years from the Effective Date, unless sooner terminated by the Board.

        9.2    Termination.    The Plan may be terminated at any time by the Board. Termination shall not in any manner impair or adversely affect any Stock Option outstanding at the time of termination.

10.  MODIFICATION OR TERMINATION

        10.1    General.    Subject to the provisions of Section 10.2, the amendment or termination of the Plan shall not impair or adversely affect a Participant's right to any Stock Option granted prior to such amendment or termination.

        10.2    Committee's Right.    Any Stock Option granted may be converted, modified, forfeited or canceled, in whole or in part, by the Committee if and to the extent permitted in the Plan or applicable Stock Option certificate or with the consent of the Participant to whom such Stock Option was granted. Subject to the limitations in the Plan, the Committee may grant Stock Options on such terms and conditions, which may be different than those specified in the Plan, as it may deem desirable in order to comply with, or make available the benefits of, the laws of any foreign jurisdiction.

11.  CHANGE IN CONTROL

        11.1    Stock Option Vesting and Payment.    Upon the occurrence of a Change in Control, each Stock Option outstanding on the date on which the Change in Control occurs shall immediately become exercisable in full for the remainder of its term and each Participant holding Stock Options shall have the right, at his or her election made during a period of sixty (60) days following the date on which the Change in Control occurs, to have Motorola purchase any or all such Stock Options for an immediate lump-sum cash payment equal to the product of (1) the excess, if any, of the higher of (i) the average of the high and low sale prices of the Common Stock as

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reported on the New York Stock Exchange -Composite Transactions on the date immediately prior to the date of payment, or if Shares did not trade on such date, on the last previous day on which Shares traded prior to such date, or (ii) the highest per Share price for Common Stock actually paid in connection with the Change in Control, over the per Share exercise price of each such Stock Option held, and (2) the number of Shares covered by each such Stock Option.

        11.2    Change in Control.    A Change in Control shall mean:

        A Change in Control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act whether or not Motorola is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (A) any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Motorola representing 20% or more of the combined voting power of Motorola's then outstanding securities (other than Motorola or any employee benefit plan of Motorola; and, for purposes of the Plan, no Change in Control shall be deemed to have occurred as a result of the "beneficial ownership," or changes therein, of Motorola's securities by either of the foregoing), (B) there shall be consummated (i) any consolidation or merger of Motorola in which Motorola is not the surviving or continuing corporation or pursuant to which Shares of Common Stock would be converted into cash, securities or other property, other than a merger of Motorola in which the holders of Common Stock immediately prior to the merger have (directly or indirectly) at least an 80% ownership interest in the outstanding common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of Motorola, (C) the stockholders of Motorola approve any plan or proposal for the liquidation or dissolution of Motorola, or (D) as the result of, or in connection with, any cash tender offer, exchange offer, merger or other business combination, sale of assets, proxy or consent solicitation (other than by the Board), contested election or substantial stock accumulation (a "Control Transaction"), the members of the Board immediately prior to the first public announcement relating to such Control Transaction shall thereafter cease to constitute a majority of the Board.

12.  CERTIFICATES AND TRANSFER OF STOCK OPTIONS

        12.1    Provisions of Stock Option Certificates.    ISOs may be evidenced by Incentive Stock Option certificates and NSOs may be evidenced by

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Non-Qualified Stock Option certificates. Each certificate may include, but shall not be limited to, the following: description of the type of Stock Option; the Stock Option's duration; its transferability; the exercise price; the exercise period; the Non-Exercise Period; the person or persons who may exercise the Stock Option; the effect upon such Stock Option of the Participant's death or other termination of employment; and the Stock Option's conditions.

        12.2    Transfer of Stock Options.    Except as set forth in the next sentence of this Section 12.2, a Stock Option shall not be transferable by a Participant other than by operation of a death beneficiary designation made by the Participant in accordance with rules established by the Committee, or the Chief Executive Officer of Motorola, as appropriate, by will or the applicable laws of descent and distribution and shall be exercisable during the Participant's lifetime only by him or her or his or her guardian or legal representative if the Participant is legally incompetent. Notwithstanding the foregoing, except to the extent that it would cause the Plan to fail to meet the conditions required to be met under Rule 16b-3, the Committee shall have the power and authority to provide, as a term of any NSO, including any outstanding NSO held by a Non-Employee Director or an Optionee, that such NSO may be transferred without consideration by the Non-Employee Director or the Optionee to a member or members of his or her immediate family (i.e., a child, children, grandchild, grandchildren, or spouse) and/or to a trust or trusts for the benefit of an immediate family member or family members.

13.  PAYMENT

        Upon the exercise of a Stock Option, the amount due Motorola is to be paid:

        (a)  in cash;

        (b)  by the transfer to Motorola of Shares owned by the Participant valued at Fair Market Value on the date of transfer;

        (c)  by any combination of the payment methods specified in (a) and (b) above; or

        (d)  such other manner as may be authorized from time to time by the Committee.

Notwithstanding the foregoing, any method of payment other than (a) and (b) may be used only with the approval of the Committee or if and to the extent so provided in the applicable Stock Option certificate.

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14.  GENERAL

        14.1    Tax Withholding.    At the time Motorola is required to withhold any Federal Insurance Contribution Act ("FICA") tax and/or any federal, state or local tax of any kind with respect to the exercise of any Stock Option, the Participant shall pay to Motorola the amount of any such FICA, federal, state or local tax or taxes required to be withheld. The obligations of Motorola under the Plan shall be conditional on payment of all withholding taxes, and Motorola shall have the right to deduct any such taxes from any payment of any kind under the Plan or otherwise due to the Participant. Withholding tax obligations may be settled, in whole or in part, with Common Stock. At any time when a Participant is required to pay to Motorola an amount required to be withheld under applicable tax laws upon exercise of a Stock Option, the Participant may satisfy this obligation in whole or in part by transfer to Motorola of Shares previously owned by the Participant, by electing (the "Election") to have Motorola withhold from the distribution Shares of Common Stock having a value equal (as near as possible) to the amount required to be withheld or by a combination of such means, provided, however, that the amount of federal, state and local income taxes that may be paid by transfer or withholding of Shares shall not exceed the statutory minimum withholding requirements. The amount of any withholding tax not paid by transfer or withholding of Shares shall be paid to Motorola in cash. The value of the Shares transferred or to be withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined ("Tax Date") or if Shares did not trade on the New York Stock Exchange on the Tax Date, as of the last previous date Shares did so trade. Each Election must be made on or prior to the Tax Date. The Committee may disapprove of any Election or may suspend, condition, restrict or terminate the right to make Elections. An Election is irrevocable, unless revocation is approved by the Committee.

        14.2    Compliance With Legal Requirements.    Anything in the Plan to the contrary notwithstanding: (a) Motorola may, if it shall determine it necessary or desirable for any reason, at the time of award of any Stock Option or the issuance of any Shares of Common Stock, require the recipient of the Stock Option, as a condition to the receipt thereof or to the receipt of Shares of Common Stock issued pursuant thereto, to deliver to Motorola a written representation of present intention to acquire the Stock Option or the Shares of Common Stock issued pursuant thereto for his or her own account for investment and not for distribution; and (b) if at any time Motorola further determines that the listing, registration or qualification (or any updating of any such document) of any Stock Option or the Shares of Common Stock issuable pursuant thereto is necessary on any securities

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exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the grant of any Stock Option or the issuance of Shares of Common Stock pursuant thereto, such Stock Option shall not be granted or such Shares of Common Stock shall not be issued, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to Motorola. In addition, Motorola may terminate any Stock Option or terminate, condition, restrict or limit the issuance or delivery of any Shares of Common Stock if it determines that such Stock Option or delivery violates any applicable laws, regulations or rules, including but not limited to, those of any stock exchange or Rule 16b-3.

        14.3    Indemnification and Exculpation.    Each person, who is or shall have been a member of the Board or of the Committee, shall be indemnified and held harmless by Motorola against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof (with Motorola's written approval) or paid by such person in satisfaction of a judgment in any such action, suit, or proceeding, except a judgment based upon a finding of such person's bad faith, subject,however, to the condition that upon the institution of any claim, action, suit or proceeding against such person, such person shall in writing give Motorola an opportunity, at its own expense, to participate in, and to the extent it may wish, to assume the defense thereof before such person undertakes to handle it on such person's own behalf. The foregoing right of indemnification shall not be exclusive of any other right to which such person may be entitled as a matter of law, under the Delaware General Corporation Law, the Restated Certificate of Incorporation or By-Laws of Motorola or otherwise, or any power that Motorola may have to indemnify such person or hold such person harmless. Each member of the Board or of the Committee, and each officer and employee of Motorola shall be fully justified in relying or acting upon any information furnished on behalf of Motorola by any person or persons other than himself or herself in connection with the administration of the Plan. In no event shall any person who is or shall have been a member of the Board or of the Committee, or an officer or employee of Motorola, be liable for any determination made or other action taken or any omission to act in reliance upon any such information, or for any action taken (including the furnishing of information) or any failure to act, if in good faith.

        14.4    Headings.    The headings of the sections and subsections of the

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Plan are for convenience of reference only and shall not be used to construe any provision of the Plan.

        14.5    Governing Law.    The Plan shall be governed by, and construed and administered in accordance with, the laws of the State of Illinois except to the extent that any federal law otherwise controls.

        14.6    Employment Rights.    Nothing in the Plan or in any grant of any Employee Stock Option shall restrict the right of Motorola or any Subsidiary to terminate the employment of any Participant at any time, with or without cause, or to increase or decrease the compensation of any Participant.

        14.7    Approval by Stockholders.    The Plan has been approved by the Board of Directors and is subject to approval by the affirmative votes of the holders of a majority of the Shares present, or represented, and entitled to vote at the meeting of stockholders at which the Plan is submitted.

        14.8    Implementation of the Plan and Grant of Employee Stock Options Under 1991 Plan.    If the Plan is implemented pursuant to Section 14.7, except as herein provided, no further options will be granted under the Share Option Plan of 1991. If the Board of Directors terminates this Plan after it has been implemented, stock options may be granted under the Share Option Plan of 1991, but not as to any Shares issued or subject to Stock Options under this Plan.

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EX-10.9

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Exhibit 10.9
As Amended Through November 8, 2001

MOTOROLA COMPENSATION/ACQUISTION
PLAN OF 2000

        1.    Purpose.    The purposes of the Motorola Compensation/Acquisition Plan of 2000 (the "Plan") are (i) to make awards to employees of Motorola, Inc. ("Motorola") and it subsidiaries (excluding directors of Motorola and Officers, as defined below) in connection with Motorola's recruiting and retention efforts and (ii) to furnish maximum incentive to those persons to improve operations and increase profits and to strengthen the mutuality of interest between those persons and Motorola's stockholders by providing them stock options and other incentives.

        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 determine the number of shares of Motorola common stock to be reserved for issuance under the Plan; 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 pursuant to section 157(c) of the Delaware General Corporation Law.

        3.    Participants.    Participants may consist of all employees of Motorola and its subsidiaries other than directors of Motorola and officers within the meaning of Rule 16a-1 of the Exchange Act ("Officers"). Any corporation or other entity in which a 50% or greater interest is at the time directly or indirectly owned by Motorola shall be a subsidiary for purposes of the Plan. Designation of a participant in any year shall not require the Committee to designate that person to receive a benefit in any other year or to receive the same type or amount of benefit as granted to the participant in any other year or as granted to any other participant in any year. The Committee shall consider all factors that it deems relevant in selecting participants and in determining the type and amount of their respective benefits.

        4.    Shares Available under the Plan.    The Committee has the authority to determine from time to time the maximum numbers of shares of Motorola common stock reserved for issuance under the Plan. 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

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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. All shares issued under the Plan may be either authorized and unissued shares or issued shares reacquired by Motorola. The shares reserved for issuance and the limitations set forth above shall be subject to adjustment in accordance with Section 14 hereof. All of the available shares may, but need not, be issued pursuant to the exercise of incentive stock options. Notwithstanding anything else contained in this Section 4 the number of shares that may be issued under the Plan for benefits other than Stock Options, shall not exceed 10% of the shares authorized for issuance and reserved by the Committee as described in the Section 4 (subject to adjustment in accordance with Section 14 hereof).

        5.    Types of Benefits.    Benefits under the Plan shall consist of Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Stock, Performance Units and Other Stock Awards, all as described below.

        6.    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.

        7.    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 freestanding basis. The grant price of a tandem SAR shall be equal to the option price of the related option. The grant price of a freestanding 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

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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.

        8.    Restricted Stock and Restricted Stock Units.    Subject to the terms of the Plan, Restricted Stock and Restricted Stock Units may be awarded or sold to participants under such terms and conditions as shall be established by the Committee. Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee determines, including, without limitation, any of the following:

        (a)  a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; or

        (b)  a requirement that the holder forfeit (or in the case of shares or units sold to the participant resell to Motorola at cost) such shares or units in the event of termination of employment during the period of restriction.

All restrictions shall expire at such times as the Committee shall specify.

        9.    Performance Stock.    Subject to the terms of the Plan, the Committee shall designate the participants to whom long-term performance stock ("Performance Stock") is to be awarded and determine the number of shares, the length of the performance period and the other terms and conditions of each such award. Each award of Performance Stock shall entitle the participant to a payment in the form of shares of common stock upon the attainment of performance goals and other terms and conditions specified by the Committee.

        Notwithstanding satisfaction of any performance goals, the number of shares issued under a Performance Stock award may be adjusted by the Committee on the basis of such further consideration as the Committee in its sole discretion shall determine. The Committee may, in its discretion, make a cash payment equal to the fair market value of shares of common stock otherwise required to be issued to a participant pursuant to a Performance Stock award.

        10.    Performance Units.    Subject to the terms of the Plan, the Committee shall designate the participants to whom long-term performance units ("Performance Units") are to be awarded and determine the number of units and the terms and conditions of each such award. Each Performance Unit award shall entitle the participant to a payment in cash upon the attainment of performance goals and other terms and conditions specified by the Committee.

        Notwithstanding the satisfaction of any performance goals, the amount to be paid under a Performance Unit award may be adjusted by the Committee on the basis of such further consideration as the Committee in its sole discretion shall determine. The Committee may, in its discretion, substitute actual shares of common stock for the cash payment otherwise required to be made to a participant pursuant to a Performance Unit award.

        11.    Other Stock Awards.    In addition to the incentives described in Sections 6 through 10 above, and subject to the terms of the Plan, the Committee may grant other incentives payable

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in common stock under the Plan as it determines to be in the best interests of Motorola and subject to such other terms and conditions, as it deems appropriate.

        12.    Performance Goals.    Awards of Restricted Stock, Performance Stock, Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals, including, but not limited to, cash flow; cost; ratio of debt to debt plus equity; profit before tax; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating earnings; economic value added; ratio of operating earnings to capital spending; free cash flow; net profit; net sales; price of Company Stock; return on net assets, equity or stockholders' equity; market share; or total return to shareholders ("Performance Criteria"). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company. Any Performance Criteria may include or exclude Extraordinary Items. Performance Criteria shall be calculated in accordance with the Company's financial statements, generally accepted accounting principles, or under a methodology established by the Committee prior to the issuance of an award which is consistently applied and identified in the audited financial statements, including footnotes, or the Management Discussion and Analysis section of the Company's annual report.

        13.    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 Stock Options and SARs shall become vested and exercisable; all restrictions on Restricted Stock shall lapse; all performance goals shall be deemed achieved at target levels and all other terms and conditions met; all Performance Stock shall be delivered; all Performance Units shall be paid out as promptly as practicable; and all other Stock Awards shall be delivered or paid. 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

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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

        14.    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, and the number of shares covered by each outstanding award and the price therefor, if any, shall be equitably adjusted by the Committee, in its sole discretion.

        (b)  Subject to the provisions of Section 13, 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.

        15.    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.

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        16.    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 or the receipt or vesting of shares hereunder by electing to have Motorola withhold shares of common stock, having a fair market value equal to the amount to be withheld.

        17.    Duration, Amendment and Termination.    No Incentive Stock Option shall be granted more than ten years after the date of 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.

        18.    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.

        19.    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.

        20.    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).

        21.    Broad-Based Plan.    The Plan is intended to be a broadly based plan under the rules of the New York Stock Exchange.

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Exhibit 10.9 As Amended Through November 8, 2001

EX-10.16

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Exhibit 10.16
As Amended Through November 5, 2002

MOTOROLA MANAGEMENT DEFERRED COMPENSATION PLAN, AS AMENDED

1.    PLAN NAME AND DEFINITIONS

        1.1    Plan Name.

        This plan is the Motorola Management Deferred Compensation Plan, as Amended ("the Plan").

        1.2    Definitions.

        (a)  "Additional Compensation" shall mean bonuses and all other cash compensation designated by the Administrative Committee as Deferrable Compensation.

        (b)  "Administrative Committee" shall mean the committee appointed by the Compensation Committee of the Board to administer the Plan.

        (c)  "Base Salary" shall mean a Participant's annual base salary, excluding bonuses, commissions, incentives and all other remunerations for services rendered to Company and prior to reduction for any salary contributions to a plan established pursuant to Section 125 of the Code or qualified pursuant to Section 401(k) of the Code.

        (d)  "Beneficiary" or "Beneficiaries" shall mean the person or persons, including a trustee, personal representative or other fiduciary, last designated in writing by a Participant in accordance with procedures established by the Administrative Committee to receive the benefits specified hereunder in the event of the Participant's death. No beneficiary designation shall become effective until it is filed with the Administrative Committee. Any designation shall be revocable at any time through a written instrument filed by the Participant with the Administrative Committee with or without the consent of the previous Beneficiary. No designation of a Beneficiary other than the Participant's spouse shall be valid unless consented to in writing by such spouse. If there is no such designation, or if there is no surviving designated Beneficiary, then the Participant's surviving spouse shall be the Beneficiary. If there is no surviving spouse to receive any benefits payable in accordance with the preceding sentence, the duly appointed and currently acting personal representative of the Participant's estate (which shall include either the Participant's probate estate or living trust) shall be the Beneficiary. In any case where there is no such personal representative of the Participant's estate duly appointed and acting in that capacity within 90 days after the Participant's death (or such extended period as the Administrative Committee determines is reasonably necessary to allow such personal representative to be appointed, but not to exceed 180 days after the Participant's death), then Beneficiary shall mean the person or persons who can verify by affidavit or court order to the satisfaction of the Administrative Committee that they are legally entitled to receive the benefits specified hereunder. In the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead shall be paid (a) to that person's living parent(s) to act as custodian, (b) if that person's parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, or (c) if no parent of that person is then living, to a custodian selected by the Administrative Committee to hold the funds for the minor under the Uniform

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Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the Administrative Committee decides not to select another custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within 60 days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor. Payment by the Company pursuant to any unrevoked Beneficiary designation or to the Participant's estate if no such designation exists, of all benefits owed hereunder shall terminate any and all liability of the Company.

        (e)  "Board of Directors" or "Board" shall mean the Board of Directors of Motorola.

        (f)    "Board Fees" shall mean any fees paid to a Board member in connection with his service on the Board.

        (g)  "Change in Control" means 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.

        (h)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

        (i)    "Company" shall mean Motorola, Inc. and any Subsidiary designated by the Administrative Committee.

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        (j)    "Compensation" shall be Base Salary and Additional Compensation.

        (k)  "Deferral Account" shall mean the bookkeeping account or accounts maintained by the Administrative Committee pursuant to Section 3.1 for each Participant pursuant to Section 3.1 that are credited with amounts equal to (1) the Participant's Deferred Compensation and (2) earnings and losses under Section 2.2.

        (l)    "Deferrable Compensation" shall mean the Compensation and Board Fees designated by the Administrative Committee as eligible to be deferred in any Plan Year pursuant to Section 2.1(a).

        (m)  "Deferral Form" shall mean the form or forms required to be completed and delivered to the Administrative Committee or its designee for participation in the Plan for a Plan Year.

        (n)  "Deferred Compensation" shall mean the Compensation or Director Fees actually deferred by a Participant on the Deferral Form for a Plan Year.

        (o)  "Director" shall mean a member of the Board.

        (p)  "Disability" shall mean an entitlement to long-term disability benefits under the Motorola Disability Income Plan, as amended, and any successor plans.

        (q)  "Distributable Amount" shall mean the balance in the Participant's Deferral Account.

        (r)  "Early Distribution" shall mean an election by Participant in accordance with Section 4.3 to receive a withdrawal of amounts from his or her Deferral Account prior to the time at which such Participant would otherwise be entitled to such amounts.

        (s)  "Eligible Employee" shall be an employee selected by the Administrative Committee for participation in the Plan.

        (t)    "Fund" or "Funds" shall mean one or more of the investment funds selected by the Administrative Committee.

        (u)  "Hardship Distribution" shall mean a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of his or her Dependent (as defined in Section 152(a) of the Code), loss of a Participant's property due to casualty, or other similar or extraordinary and unforseeable circumstance arising as a result of events beyond the control of the Participant. The circumstances that would constitute an unforseeable emergency will depend upon the facts of each case, but, in any event, a Hardship Distribution may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant's assets, to the extent the liquidation of assets would not itself cause a severe financial hardship, or (iii) by cessation of deferrals under this Plan.

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        (v)  "In-Service Withdrawal Date" shall mean the distribution date elected on the Deferral Form by the Participant for withdrawal of Deferred Compensation for a specific Plan Year while still employed or in service of the Company, and earnings and losses attributable thereto.

        (w)  "Motorola" shall mean Motorola, Inc., a Delaware corporation.

        (x)  "Participant" shall mean any Eligible Employee and any member of the Board who becomes a Participant in this Plan by completing the Deferral Form.

        (y)  "Plan" shall be the Motorola Management Deferred Compensation Plan, as amended.

        (z)  "Plan Year" shall be January 1 to December 31.

        (aa) "Regular Enrollment Period" shall mean the period designated by the Administrative Committee for enrollment for a Plan Year.

        (bb) "Retirement" shall mean a Participant's retirement from Motorola or a Subsidiary at or after age 55.

        (cc) "Subsidiary" shall mean an entity of which Motorola owns directly or indirectly at least 50% and which is consolidated for financial reporting purposes.

        (dd) "Trust" shall mean the Motorola Management Deferred Compensation Plan Trust.

        (ee) "Trustee" shall mean the trustee of the Trust.

        (ff)  "Withdrawal Date" shall have the meaning set forth in Section 4.1.

2.    DEFERRAL ELECTIONS

        2.1    Elections to Defer Compensation.

        (a)    Deferrals.    To the extent authorized by the Administrative Committee, a Participant may elect to defer for a Plan Year the following:

          (i)  in the case of employees of the Company, taxable Compensation earned in a Plan Year and payable to a Participant by the Company; and

        (ii)  in the case of Directors, Board Fees payable by the Company and earned in a Plan Year;

provided, however, that a Participant who is an employee of the Company may defer in any calendar year only that portion of the Participant's Deferrable Compensation that exceeds the amount necessary to satisfy Social Security Tax (including Medicare), income tax and employee benefit plan withholding requirements as determined in the sole and absolute discretion of the

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Administrative Committee. The Deferral Form will set forth what the Administrative Committee has authorized as Deferrable Compensation.

        (b)    Election and Duration of Compensation Deferral Election.    Each Eligible Employee and Director may elect to defer Deferrable Compensation for a Plan Year in the time period set by the Administrative Committee. Each Eligible Employee and Director must complete a new Deferral Form for each Plan Year. All elections to defer must be filed during the Regular Enrollment Period for the applicable Plan Year which election shall be effective on the first day of the next following Plan Year. In the case of an individual who becomes an Eligible Employee or a new Director after the start of a Regular Enrollment Period, such Eligible Employee or Director shall have 30 days from the date he or she has become an Eligible Employee or Director and has been notified of their participation in the Plan to make an election to defer Deferrable Compensation. Such election shall be for the remainder of the Plan Year. All elections for a Plan Year are irrevocable. However, a Participant may amend his or her deferral election during a Plan Year but only with respect to the amount of Base Salary or Board Fees, if any, to be deferred by the Participant for any pay period commencing after the effective date of the amendment.

        2.2    Investment Election.

        (a)  Each Participant shall designate, on the Deferral Form or other form provided by the Administrative Committee, the Funds in which the Participant's Deferral Account will be deemed to be invested for purposes of determining the amount of earnings or losses to be credited or debited to that Deferral Account. In making the designation, the Participant may specify that all or any portion of his Deferral Account be deemed to be invested in one or more Funds listed on the Deferral Form in the manner set forth on the Deferral Form. A Participant may change investment designations by filing a new election with the Administrative Committee by a date specified by the Administrative Committee. If a Participant fails to designate a Fund for all or a portion of the Participant's Deferral Account, he or she shall be deemed to have elected the Money Market type of investment fund.

        (b)  The Administrative Committee may select from time to time, in its sole and absolute discretion, new commercially available investments to replace then existing Funds. Once the Administrative Committee has provided Participants with information on the replacement Funds, a Participant must re-designate his Funds in accordance with procedures established by the Administrative Committee at the time of re-designation. If a Participant fails to re-designate a Fund for all or a portion of the Participant's Deferral Account, he or she shall be deemed to have elected the Money Market type of investment fund.

        (c)  Although the Participant may designate the Funds to be used to determine the amount of earnings or losses with respect to the Participant's Deferral Account, the Administrative Committee shall not be bound to invest any amounts in a Participant's Deferral Account in the designated Funds. The Funds are to be used only for purposes of crediting or debiting the Deferral Account with deemed earning or losses thereon, and such crediting or debiting shall not be considered or construed in any manner as an actual investment in any such fund.

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3.    DEFERRAL ACCOUNTS AND TRUST FUNDING

        3.1    Deferral Accounts.

        Each Plan Year, the Administrative Committee shall establish and maintain a separate Deferral Account for each Participant. The Administrative Committee may establish more than one Deferral Account for each Participant for each Plan Year for different types of income deferred. Each Participant's Deferral Account may be further divided into separate subaccounts ("investment fund subaccounts"), each of which corresponds to a Fund elected by the Participant. A Participant's Deferral Account shall be credited as follows:

        (a)  On the fifth business day after amounts are withheld and deferred from a Participant's Deferrable Compensation, the investment fund subaccounts of the Participant's Deferral Account shall be credited with an amount equal to the portion of Deferred Compensation deferred and deemed to be invested in a certain Fund in accordance with the designation.

        (b)  At the end of each business day, each investment fund subaccount of a Participant's Deferral Account shall be credited with earnings or losses in an amount equal to the earnings or losses that would have resulted if the balance then credited to such investment fund subaccount had been invested in the investment fund designated by the Participant in accordance with Section 2.2.

        (c)  Crediting of earnings and losses with respect to a Participant's Deferral Account shall terminate and the account will be valued in accordance with the following:

          (i)  on termination of employment:

        (A)  lump sum distribution- on the last day of the quarter in which termination of employment occurs;

        (B)  installment distribution- on the last day of the quarter in which termination occurs with respect to the first installment and on the anniversary date thereof in each succeeding calendar year with respect to the remaining installments;

        (ii)  scheduled in-service withdrawal- on the last day of the quarter immediately preceding the quarter in which payment is scheduled;

        (iii)  non-scheduled distribution- upon completion of the Administrative Committee's processing of the request;

        (iv)  hardship distribution- upon completion of the Administrative Committee's processing of the request; and

        (v)  on death- on the last day of the quarter in which death occurs.

        (d)  In the event that a Participant elects for any portion of a given Plan Year's Deferred Compensation to have an In-Service Withdrawal Date, all such amounts shall be

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accounted for in a manner which allows separate accounting for that portion of Deferred Compensation and earnings and losses associated with such Plan Year's Deferred Compensation.

        3.2    Trust Funding.

        The Company has created a Trust with the Trustee. The Company shall cause the Trust to be funded each year with an amount equal to the amount deferred by each Participant.

        Although the principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and Beneficiaries as set forth therein, neither the Participants nor their Beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the Trust prior to the time such assets are paid to the Participants or Beneficiaries as benefits and all rights created under this Plan and the Trust shall be unsecured contractual rights of Participants and Beneficiaries against the Company. Any assets held in the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of insolvency as defined in Section Six of the Trust.

        Except as specifically provided in the Trust, the assets of the Plan and Trust shall never inure to the benefit of the Company and the same shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries.

4.    DISTRIBUTIONS

        4.1    Distribution of Deferred Compensation per the Deferral Form Elections.    A Participant must elect the timing of the distribution of Distributable Amounts from his Deferral Account on the Deferral Form ("Withdrawal Dates"). If a Participant fails to designate Withdrawal Dates, the Participant will be deemed to have elected the default election established by the Administrative Committee for the applicable Plan Year. Participants may elect an In-Service Withdrawal Date or Withdrawal Dates following Retirement. All distributions will be cash payments. Notwithstanding any elected Withdrawal Dates, Distributable Amounts are subject to Section 4.2 below.

        (a)    Distribution with an In-Service Withdrawal Date.    In the case of a Participant who has elected an In-Service Withdrawal Date (a distribution while still employed or in the service of the Company), such Participant shall receive his Distributable Amount as designated on his Deferral Form; provided that no payment may be made earlier than two years from the last day of the Plan Year for which the deferral was made; provided, further that, if a Participant has an aggregate balance in all of his Deferral Accounts under the Plan of less than $50,000 (or such other amount determined by the Administrative Committee) at the time of the In-Service Withdrawal Date, the distribution will be in the form of a single lump-sum payment.

        (b)    Distribution with a Withdrawal Date following Retirement.    In the case of a Participant who has elected a Withdrawal Date following Retirement, such Participant shall receive his Distributable Amount as designated on his Deferral Form; provided, however, if a Participant has an aggregate balance in all of his Deferral Accounts under the Plan of less than $50,000 (or such other amount determined by the Administrative Committee) the distribution

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will be in the form of a single lump-sum payment during the next calendar quarter following written notice to the Administrative Committee of the Participant's termination.

        (c)    Revising a Withdrawal Date.    A Participant may extend a Withdrawal Date for a Deferral Account up to two times with respect to any Plan Year's Deferral Account, provided such change occurs at least one year before a scheduled Withdrawal Date and in the case of an In-Service Withdrawal Date, is for a period of not less than two years after the end of the Plan Year of the deferral.

        (d)    Section 162(m) Matters.    Notwithstanding anything to the contrary in this Plan whether express or implied, the Administrative Committee may, in its sole discretion, defer payment of all or any portion of the Distributable Amount otherwise payable hereunder to any Participant who is considered a "covered employee" to the extent any such payment would not be deductible by the Company by reason of Section 162(m) of the Code. For these purposes, the term "covered employee" shall mean the Chief Executive Officer and the next four highest paid officers of the Company as determined for purposes of Code Section 162(m) and the regulations thereunder. In the event of a deferral of payment by reason of this Section 4.1(d), any such deferred amounts shall be paid to the Participant at the earliest date or dates such amounts can be paid without creating or increasing a limitation on deductibility of compensation under Code Section 162(m). Any amounts deferred under this Section 4.1(d) shall remain credited to the Participant's Deferral Account and shall be subject to all of the terms and condition of this Plan until paid to the Participant.

        4.2    Events Impacting Distribution of Deferred Compensation.    Notwithstanding any previously selected Withdrawal Dates, the following events may alter the timing of the Distribution from a Participant's Deferral Account:

        (a)    Distribution due to Death.    If a Participant dies while employed by the Company or serving as a Director or while receiving a distribution, all amounts in the Participant's Deferral Accounts will be distributed in a single lump-sum payment to his Beneficiaries during the next calendar quarter following written notice to the Administrative Committee of the Participant's death.

        (b)    Disability.    If a Participant's employment is terminated because of Disability, and he has an aggregate balance in all of his Deferral Accounts under the Plan of least $50,000 (or such amount determined by the Administrative Committee) at the time of termination, the Participant's previously selected Withdrawal Dates will remain; provided, however, if he has an aggregate balance in all of his Deferral Accounts under the Plan of less than $50,000 (or such other amount determined by the Administrative Committee), the Participant's Deferral Accounts will be distributed in a single lump-sum payment during the next calendar quarter following written notice to the Administrative Committee of the Participant's termination.

        (c)    Distribution due to Termination for Serious Misconduct.    If a Participant's employment or service is terminated because of serious misconduct, all amounts in the Participant's Deferral Accounts will be distributed in a single lump-sum payment within 30 days of the end of the month that the Administrative Committee receives written notice of the

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Participant's termination. Serious misconduct means any misconduct identified as a ground for termination in the Motorola Code of Business Conduct, or the human resources policies or other written policies or procedures.

        (d)    Change in Employment due to a Divestiture.    If a Participant's employment with the Company or a Subsidiary is terminated in direct connection with the sale, lease, outsourcing arrangement or other type of asset transfer or transfers of any facility or any portion of a discrete organizational unit of the Company or a Subsidiary (a "Divestiture"), and he has an aggregate balance in all of his Deferral Accounts under the Plan of at least $50,000 (or such other amount determined by the Administrative Committee) at the time of the Divestiture, the Participant's previously selected Withdrawal Dates will remain in effect for that Deferral Account; provided, however, if he has an aggregate balance in all of his Deferral Accounts under the Plan of less than $50,000 (or such other amount determined by the Administrative Committee), the Participant's Deferral Account will be distributed in a single lump-sum payment during the next calendar quarter following written notice to the Administrative Committee of the Participant's termination. The Administrative Committee shall have the authority to approve the transfer to a nonqualified deferred compensation plan maintained by the Company's successor in a Divestiture of all Deferral Accounts of each Participant who accepts employment with the successor and who is eligible to participate in the successor's plan.

        (e)    Distribution due to Termination of Employment or Service by the Company other than for Death, Disability, Serious Misconduct or a Divestiture.    If a Participant's employment is terminated by the Company other than for death, Disability, serious misconduct or a Divestiture, and he has an aggregate balance in all of his Deferral Accounts of at least $50,000 (or other such amount determined by the Administrative Committee) at the time of the Divesture, the Participant's previously selected Withdrawal Dates will remain. If the Participant has an aggregate balance in all of his Deferral Accounts under the Plan of less than $50,000 (or other such amount determined by the Administrative Committee), the Participant's Deferral Accounts will be distributed in a single lump-sum payment during the next calendar quarter following written notice to the Administrative Committee of the Participant's termination.

        (f)    Change in Control.    If there is a Change in Control of Motorola, all Participants' Deferral Accounts will be distributed in a single lump-sum payment within 30 days of the consummation of the transaction.

        (g)    Termination of Employment or Service for any other Reason than Described Above.    If a Participant's employment or service is terminated for any other reason than described above, all amounts in the Participant's Deferral Accounts will be distributed in a single lump-sum payment during the next calendar quarter following written notice to that the Administrative Committee of the Participant's termination.

        4.3    Early Non-Scheduled Distributions.

        A Participant shall be permitted to elect an Early Distribution from his or her Deferral Account prior to any previously selected Withdrawal Date, subject to the following restrictions:

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        (a)  The election to take an Early Distribution shall be made by filing a form provided by and filed with the Administrative Committee prior to the end of any calendar month.

        (b)  The amount of the Early Distribution shall equal up to 90% of his Deferral Account balance.

        (c)  The amount described in subsection (b) above shall be paid in a single lump sum as soon as practicable after the end of the calendar month in which the Early Distribution election is made.

        (d)  If a Participant requests an Early Distribution of his entire Deferral Account, the remaining balance of his Deferral Account (10% of the Deferral Account) shall be permanently forfeited and the Company shall have no obligation to the Participant or his Beneficiary with respect to such forfeited amount. If a Participant receives an Early Distribution of less than his entire Deferral Account, such Participant shall forfeit 10% of the gross amount requested to be distributed from the Participant's Deferral Account and the Company shall have no obligation to the Participant or his or her Beneficiary with respect to such forfeited amount.

        (e)  If a Participant receives an Early Distribution of either all or a part of his Deferral Account, the Participant will be ineligible to participate in the Plan for the balance of the Plan Year and the following Plan Year. All distributions shall be made on a pro rata basis from all of the Participant's Deferral Accounts.

        4.4    Hardship Distribution.

        A Participant shall be permitted to elect a Hardship Distribution from his or her Deferral Account prior to the Withdrawal Date, subject to the following restrictions:

        (a)  The election to take a Hardship Distribution shall be made by filing a form provided by and filed with the Administrative Committee prior to the end of any calendar month.

        (b)  The Administrative Committee shall have made a determination that the requested distribution constitutes a Hardship Distribution.

        (c)  The amount determined by the Administrative Committee as a Hardship Distribution shall be paid in a single cash lump sum as soon as practicable after the end of the calendar month in which the Hardship Distribution election is made and approved by the Administrative Committee. The distribution shall be made on a pro rata basis from all of the Participant's Deferral Accounts.

        (d)  If a Participant receives a Hardship Distribution, the Participant will be ineligible to participate in the Plan for the balance of the Plan Year and the following Plan Year.

        4.5    Credit or Debit of Earnings or Losses.

        Unless otherwise provided, a Participant's Deferral Account will continue to be credited or debited with earnings or losses thereon pursuant to Section 3.1 until all amounts in a Deferral Account are distributed.

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        4.6    Inability to Locate Participant.

        In the event that the Administrative Committee is unable to locate a Participant or Beneficiary within two years following a Withdrawal Date, the amount allocated to the Participant's Deferral Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings.

5.    ADMINISTRATION

        5.1    Administrative Committee.

        An Administrative Committee shall be appointed by, and serve at the pleasure of, the Compensation Committee of the Board of Directors (the "Compensation Committee"). The number of members comprising the Administrative Committee shall be determined by the Compensation Committee, which may from time to time vary the number of members. The Compensation Committee may remove any member at anytime at its discretion. The Compensation Committee shall fill vacancies in the membership of the Administrative Committee.

        5.2    Administrative Committee Action.

        The Administrative Committee shall act at meetings by affirmative vote of a majority of the members of the Administrative Committee. The Administrative Committee may also take action by a written consent signed by a majority of members of the Administrative Committee.

        5.3    Powers and Duties of the Administrative Committee.

        (a)  The Administrative Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms, shall be charged with the general administration of the Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

        (1)  To select the Funds;

        (2)  To construe and interpret the terms and provisions of this Plan;

        (3)  To compute and certify to the amounts payable to Participants and their Beneficiaries;

        (4)  To maintain all records that may be necessary for the administration of the Plan;

        (5)  To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

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        (6)  To make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof;

        (7)  To appoint a Plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Administrative Committee may from time to time prescribe;

        (8)  To take all other actions necessary for the administration of the Plan; and

        (9)  To delegate its powers and duties.

        (b)  The Administrative Committee shall have the authority to approve (i) the merger into the Plan of any nonqualified deferred compensation plan maintained by any person, firm, partnership, corporation, or other entity (a "Person") in the event that the Company succeeds by merger, acquisition, consolidation or other transaction, to all or part of the assets or business of, or enters into a joint venture with, such Person and the employees of such Person become employees of the Company or of a Subsidiary who may otherwise become eligible for participation in the Plan, and (ii) the transfer to the Plan of all deferral accounts maintained by the Person pursuant to such plan.

        5.4    Construction and Interpretation.

        The Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretations or construction shall be final and binding on all parties, including but not limited to the Company and any Participant or Beneficiary. The Administrative Committee shall administer such terms and provisions in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable to the Plan.

        5.5    Information.

        To enable the Administrative Committee to perform its functions, the Company shall supply full and timely information to the Administrative Committee on all matters relating to the Compensation of all Participants, their death or other events which cause termination of their participation in this Plan, and such other pertinent facts as the Administrative Committee may require.

        5.6    Compensation, Expenses and Indemnity.

        (a)  The members of the Administrative Committee shall serve without compensation for their services hereunder.

        (b)  To the extent permitted by Delaware law and the Company's amended Certificate of Incorporation, the Company shall indemnify and hold harmless the Administrative Committee and each member thereof, the Compensation Committee, the Board of Directors and any delegate of the Administrative Committee who is an employee of the Company against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to the Plan,

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other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or provided by the Company.

        5.7    Account Statements.

        Under procedures established by the Administrative Committee, a Participant shall receive a statement with respect to such Participant's Deferral Accounts on a quarterly basis.

        5.8    Disputes.

        (a)    Claim.

        A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan (hereinafter referred to as "Claimant") must file a written request for such benefit with the Administrative Committee and the Secretary of the Company, setting forth his or her claim.

        (b)    Claim Decision.

        Upon receipt of a claim, the Company shall advise the Claimant that a reply will be forthcoming within 90 days and shall, in fact, deliver such reply within such period. The Company may, however, extend the reply period for an additional 90 days for special circumstances.

        If the claim is denied in whole or in part, the Company shall inform the Claimant in writing, setting forth: (A) the specified reason or reasons for such denial; (B) the specific reference to pertinent provisions of this Plan or the rules related to the Plan on which such denial is based; (C) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation of why such material or such information is necessary; (D) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (E) the time limits for requesting a review under subsection (c).

        (c)    Request For Review.

        Within 60 days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Administrative Committee review the determination of the Company. Such request must be addressed to the Secretary of the Company, at its then principal place of business. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Administrative Committee. If the Claimant does not request a review within such 60-day period, he or she shall be barred and estopped from challenging the Company's determination.

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        (d)    Review of Decision.

        Within 60 days after the Administrative Committee's receipt of a request for review, after considering all materials presented by the Claimant, the Administrative Committee will inform the Participant in writing, in a manner calculated to be understood by the Claimant, the decision setting forth the specific reasons for the decision containing specific references to the pertinent provisions of this Plan on which the decision is based. If special circumstances require that the 60 day time period be extended, the Administrative Committee will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.

6.    MISCELLANEOUS

        6.1    Unsecured General Creditor.

        Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company. No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. Any and all of the Company's assets shall be, and remain, the general unpledged, unrestricted assets of the Company. In the event the Company, in its sole discretion, decides to invest in any of the Funds, Participants and Beneficiaries shall have no rights in or to such investments. The Company's obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors. It is the intention of the Company that this Plan be unfunded for purposes of the Code and for purposes of Title 1 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

        6.2    Restriction Against Assignment.

        The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant's Deferral Accounts shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant's Deferral Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the Administrative Committee, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Administrative Committee shall direct.

        6.3    Withholding.

        There shall be deducted from each payment made under the Plan all taxes that are required to be withheld by the Company in respect to such payment or this Plan. The Company

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shall have the right to reduce any payment (or compensation) by the amount of cash sufficient to provide the amount of said taxes. Each participant agrees the Company shall have such rights to withhold such taxes.

        6.4    Effective Date.

        The effective date of the Plan is January 1, 2001.

        6.5    Amendment, Modification, Suspension or Termination.

        The Board, the Compensation Committee or the Administrative Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant's Deferral Accounts. In the event that this Plan is terminated, the amounts allocated to a Participant's Deferral Accounts shall be distributed to the Participant or, in the event of his or her death, his or her Beneficiary in a lump sum within 30 days following the date of termination.

        6.6    Governing Law.

        This Plan shall be construed, governed and administered in accordance with the laws of the State of Delaware, except when preempted by federal law.

        6.7    Receipt or Release.

        Any payment to a Participant or the Participant's Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Administrative Committee, the Compensation Committee, the Board and the Company. The Administrative Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

        6.8    Payments on Behalf of Persons Under Incapacity.

        In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Compensation Committee or the Administrative Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Compensation Committee or the Administrative Committee may direct that such payment be made to any person found by the Compensation Committee or the Administrative Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Compensation Committee or the Administrative Committee and the Company.

        6.9    Limitation of Rights and Employment Relationship

        Neither the establishment of the Plan and Trust nor any modification thereof, nor the creating of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant, or Beneficiary or other person any legal or equitable right against the Company or the trustee of the Trust except as provided in the Plan and Trust; and in no event

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shall the terms of employment of any Employee or Participant be modified or in any way be affected by the provisions of the Plan and Trust.

        6.10    Headings.

        Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

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Exhibit 10.16 As Amended Through November 5, 2002

EX-10.17

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Exhibit 10.17

Description of insurance program for Elected Officers of Motorola, Inc.

Elected officers ("Officers") of Motorola, Inc. ("Motorola" or "Company") are eligible to participate in an insurance program which provides life insurance coverage for Officers throughout their Officer career at Motorola and continues after the Officer's retirement provided the Officer is 55 and has 5 years of service at the time of retirement.

Under the program the Company purchases a policy of life insurance on the Officer's life. Pursuant to an endorsement split-dollar agreement entered into between the Company and the Officer, the Company pays the insurance premiums for the policy during the Officer's career and qualified retirement from Motorola. The amount of coverage is based on a fixed multiple of salary that declines over time. The Company retains all incidents of ownership and privileges in the policy but the Officer has the right to designate the beneficiaries and to elect an income settlement option with respect to a portion of the death proceeds in an amount determined by a fixed formula and the right to assign his or her interest in the policy. The Company shall have all the rights to the cash values and to the balance of the death proceeds not paid to the Officer's beneficiaries. This insurance coverage may be terminated by either the Company or the Officer and shall automatically terminate on the termination of Officer's employment (except in certain circumstances of retirement) or non-payment of the premium by the Company.

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Exhibit 10.17

EX-10.24

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Exhibit 10.24

SEVERANCE PROTECTION AGREEMENT

        THIS AGREEMENT made as of the 23rd day of April 1998, by and between General Instrument Corporation (the "Corporation"), and Thomas J. Lynch (the "Executive").

        WHEREAS, the Board of Directors of the Corporation (the "Board") recognizes that the possibility of a Change in Control (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distraction of the Corporation's key management personnel because of the uncertainties inherent in such a situation;

        WHEREAS, the Board has determined that it is essential and in the best interest of the Corporation and its stockholders for the Corporation to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure the Executive's continued dedication and efforts in such event without undue concern for the Executive's personal financial and employment security; and

        WHEREAS, in order to induce the Executive to remain in the employ of the Corporation, particularly in the event of a threat or the occurrence of a Change in Control, the Corporation desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event the Executive's employment is terminated under circumstances described herein.

        NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows:

        1.    Term of Agreement.    This Agreement shall commence as of April 23, 1998 (the "Effective Date"), and shall continue in effect until December 31, 1999 (the "Term"); provided, however, that on January 1, 1999, and on each January 1 thereafter, the Term shall automatically be extended for one (1) year unless either the Executive or the Corporation shall have given written notice to the other at least ninety (90) days prior thereto that the Term shall not be so extended; provided, further, however, that following the occurrence of a Change in Control, the Term shall not expire prior to the expiration of twenty-four (24) months after such occurrence.

        2.    Termination of Employment.    If, during the Term, the Executive's employment with the Corporation and its Affiliates shall be terminated within twenty-four (24) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits:

        (a)  If the Executive's employment with the Corporation and its Affiliates shall be terminated (1) by the Corporation for Cause or Disability, (2) by reason of the Executive's death, or (3) by the Executive other than for Good Reason, the Corporation shall pay to the Executive his Accrued Compensation. In addition to the foregoing, if the Executive's employment is terminated by the Corporation for Disability or by reason of the Executive's death, the Corporation shall pay to the Executive or his beneficiaries a Pro Rata Bonus. The Executive's entitlement to any other compensation or benefits shall be determined in accordance with the Corporation's employee benefits plans and other applicable programs and practices then in effect.

        (b)  If the Executive's employment with the Corporation and its Affiliates shall be terminated for any reason other than as specified in Section 2(a), the Executive shall be entitled to the following:

        (1)  the Corporation shall pay the Executive all Accrued Compensation and a Pro Rata Bonus;

        (2)  the Corporation shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date, an amount equal to one and one-half (1 and 1/2) times the sum of (A) the Executive's Base Amount and (B) the Executive's Bonus Amount;

        (3)  for eighteen (18) months after such termination (the "Continuation Period"), the Corporation shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization coverages and benefits provided to the Executive immediately prior to the Change in Control or, if greater, the coverages and benefits provided at any time thereafter. The coverages and benefits (including deductibles and costs) provided in this Section 2(b)(3) during the Continuation Period shall be no less favorable to the Executive and his dependents and beneficiaries, than the most favorable of such coverages and benefits referred to above. The Corporation's obligation hereunder with respect to the foregoing coverages and benefits shall be reduced to the extent that the Executive obtains any such coverages and benefits pursuant to a subsequent employer's benefit plans, in which case the Corporation may reduce any of the coverages or benefits it is required to provide the Executive hereunder so long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. In the event such coverages and benefits may not be continued (or where such continuation would adversely affect the tax status of the benefit plan pursuant to

which the coverages and benefits are provided) under applicable law or regulations, the Corporation shall pay to the Executive the cash equivalent in lieu of such coverages and benefits. This Section 2(b)(3) shall not be interpreted so as to limit any benefits to which the Executive, his dependents or beneficiaries may be entitled under any of the Corporation's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits;

        (4)  If, at the end of the Continuation Period, the Executive is not employed by another employer (including self-employment), the Executive will receive for up to six months, an amount equal to one-twelfth (1/12) of the sum of (A) the Executive's Base Amount and (B) the Executive's Bonus Amount, payable at the end of each of the six (6) calendar months following the end of the Continuation Period; provided, however, that such payments will immediately cease upon the Executive's employment (including self-employment) by a subsequent employer. In addition, the coverages and benefits described in Section 2(b)(3) shall be continued until the earlier of (x) six (6) months after the end of the Continuation Period or (y) such time that the Executive obtains any such coverages or benefits pursuant to a subsequent employer's benefit plans;

        (5)  the Corporation shall pay or reimburse the Executive for the costs, fees and expenses of outplacement assistance services (not to exceed twenty-five (25%) of the sum of (A) the Executive's Base Amount and (B) the Executive's Bonus Amount) provided by any outplacement agency selected by the Executive;

        (6)  the Corporation shall pay or reimburse the Executive up to $2,000 for tax and financial planning services in respect of the calendar year in which the payments provided for in Section 2(b)(2) are paid to the Executive; and

        (7)  the Corporation shall pay or reimburse the Executive for the cost of relocation (in accordance with the Corporation's relocation policy) to the Executive's place of residence immediately prior to any relocation the Executive made for purposes of employment by the Corporation or General Instrument Corporation after July 1, 1995.

        (c)  If the Executive's employment is terminated by the Corporation without Cause (1) within six (6) months prior to a Change in Control or (2) at any time prior to the date of a Change in Control but the Executive reasonably demonstrates that such termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control (a "Third Party") and who effectuates a Change in Control or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which has been threatened or proposed and which actually occurs, such termination shall be deemed to have occurred after a Change in Control, provided a Change in Control shall actually have occurred.

        (d)  (1) Gross-Up Payment. In the event it shall be determined that any payment (other than the payment provided for in this Section 2(d)) or distribution of any type to or for the benefit of the Executive, by the Corporation, any Affiliate of the Corporation, any Person who acquires ownership or effective control of the Corporation or ownership of a substantial portion of the Corporation's assets (within the meaning of Section 2800 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder) or any Affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any income tax, employment tax or Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.

        (2)  Determination By Accountant. All mathematical determinations, and all determinations as to whether any of the Total Payments are "parachute payments" (within the meaning of Section 2800 of the Code), that are required to be made under this Section 2(d), including determinations as to whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and amounts relevant to the last sentence of this Section 2(d)(2), shall be made by an independent accounting firm selected by the Executive from among the six (6) largest accounting firms in the United States (the "Accounting Firm"), which shall provide its determination (the "Determination"), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Corporation and the Executive by no later than ten (10) days following the Termination Date, if applicable, or such earlier time as is requested by the Corporation or the Executive (if

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the Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive and the Corporation with an opinion reasonably acceptable to the Executive and the Corporation that no Excise Tax is payable (including the reasons therefor) and that the Executive has substantial authority not to report any Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to the Executive within twenty (20) days after the Determination (and all accompanying calculations and other material supporting the Determination) is delivered to the Corporation by the Accounting Firm. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive, absent manifest error. As a result of 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 not made by the Corporation should have been made ("Underpayment"), or that Gross-Up Payments will have been made by the Corporation which should not have been made ("Overpayments"). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred within two (2) years. In the case of an Underpayment, the amount of such Underpayment (together with any interest and penalties payable by the Executive as a result of such Underpayment) shall be promptly paid by the Corporation to or for the benefit of the Executive. In the case of an Overpayment, the Executive shall, at the direction and expense of the Corporation, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Corporation, and otherwise reasonably cooperate with the Corporation to correct such Overpayment, provided, however, that (i) the Executive shall not in any event be obligated to return to the Corporation an amount greater than the net after-tax portion of the Overpayment that he has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Section 2(d)(1), which is to make the Executive whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in the Executive repaying to the Corporation an amount which is less than the Overpayment. The fees and expenses of the Accounting Firm shall be paid by the Corporation.

        (e)  The amounts provided for in Sections 2(a) and 2(b)(l) and (2) shall be paid in a single lump sum cash payment within ten (10) days after the Executive's Termination Date (or earlier, if required by applicable law).

        (f)    The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Sections 2(b)(3) and 2(b)(4).

        (g)  The severance pay and benefits provided for in this Section 2 shall be in lieu of any other severance pay to which the Executive may be entitled under any severance plan or any other plan, agreement or arrangement of the Corporation or any of its Affiliates.

        3.    Notice of Termination.    Following a Change in Control, any intended termination of the Executive's employment by the Corporation shall be communicated by a Notice of Termination from the Corporation to the Executive, and any intended termination of the Executive's employment by the Executive for Good Reason shall be communicated by a Notice of Termination from the Executive to the Corporation.

        4.    Fees and Expenses.    The Corporation shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the termination of the Executive's employment by the Corporation or by the Executive for Good Reason (including all such fees and expenses, if any, incurred in contesting, defending or disputing the basis for any such termination of employment), (b) the Executive's hearing before the Board of Directors of the Corporation as contemplated in Section 13.6 of this Agreement or (c) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Corporation under which the Executive is or may be entitled to receive benefits.

        5.    Notice.    For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including any Notice of Termination) shall be in writing, shall be signed by the Executive if to the Corporation or by a duly authorized officer of the Corporation if to the Executive, and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Corporation shall be directed to the attention of the Board with a copy to the Secretary of the Corporation. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

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        6.    Nature of Rights.    Except as provided in Section 2(g), nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any Affiliate of the Corporation and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Corporation or any Affiliate of the Corporation. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any Affiliate of the Corporation shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement.

        7.    Settlement of Claims.    The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, defense, recoupment, or other right which the Corporation may have against the Executive or others.

        8.    Miscellaneous.    No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Corporation. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party which are not expressly set forth in this Agreement.

        9.    Successors: Binding Agreement.

        (a)  This Agreement shall be binding upon and shall inure to the benefit of the Corporation and its respective Successors and Assigns. The Corporation shall require its respective Successors and Assigns to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession or assignment had taken place.

        (b)  Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative.

        10.    Governing Law.    This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in the State of Delaware.

        11.    Severability.    The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

        12.    Entire Agreement.    This Agreement constitutes the entire agreement between the parties hereto, and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto, with respect to the subject matter hereof.

        13.    Definitions.

        13.1.    Accrued Compensation.    For purposes of this Agreement, "Accrued Compensation" shall mean all amounts of compensation for services rendered to the Corporation or any of its Affiliates that have been earned or accrued through the Termination Date but that have not been paid as of the Termination Date including (a) base salary, (b) reimbursement for reasonable and necessary business expenses incurred by the Executive on behalf of the Corporation or of its Affiliates of the Corporation during the period ending on the Termination Date, (c) vacation pay and (d) bonuses and incentive compensation; provided, however, that Accrued Compensation shall not include any amounts described in clause (a) or clause (d) that have been deferred pursuant to any salary reduction or deferred compensation elections made by the Executive.

        13.2.    Affiliate.    For purposes of this Agreement, "Affiliate" means, with respect to any Person, any entity, directly or indirectly, controlled by, controlling or under common control with such Person.

        13.3.    Base Amount.    For purposes of this Agreement, "Base Amount" shall mean the Executive's annual base salary at the rate in effect as of the date of a Change in Control or, if greater, at any time thereafter, determined without regard to any salary reduction or deferred compensation elections made by the Executive.

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        13.4.    "Beneficial Owner," "Beneficially Owned" and "Beneficially Owning" shall have the meanings applicable under Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

        13.5.    Bonus Amount.    For purposes of this Agreement, "Bonus Amount" shall mean the target annual bonus payable to the Executive under the Incentive Plan in respect of the fiscal year of the Corporation immediately prior to that in which the Termination Date occurs.

        13.6.    Cause.    For purposes of this Agreement, a termination of employment is for "Cause" if the Executive has been convicted of a felony or the termination is evidenced by a resolution adopted in good faith by two-thirds of the Board of Directors of the Corporation that the Executive:

        (a)  intentionally and continually failed substantially to perform his reasonably assigned duties with the Corporation and its Affiliates (other than a failure resulting from the Executive's incapacity due to physical or mental illness or from the assignment to the Executive of duties that would constitute Good Reason) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance, signed by a duly authorized officer of the Corporation, has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or

        (b)  intentionally engaged in conduct which is demonstrably and materially injurious to the Corporation and its Affiliates; provided, however, that no termination of the Executive's employment shall be for Cause as set forth in this Section 13.6(b) until (1) there shall have been delivered to the Executive a copy of a written notice, signed by a duly authorized officer of the Corporation, setting forth that the Executive was guilty of the conduct set forth in this Section 13.6(b) and specifying the particulars thereof in detail, and (2) the Executive shall have been provided an opportunity to be heard in person by the Board of Directors of the Corporation (with the assistance of the Executive's counsel if the Executive so desires).

        No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Executive's action or failure to act was in the best interest of the Corporation and its Affiliates. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by the Executive after a Notice of Termination is given to the Corporation by the Executive shall constitute Cause for purposes of this Agreement.

        13.7.    Change in Control.    "Change in Control" shall mean any of the following:

        (a)  the acquisition by any Person, other than Instrument Partners or Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-IV or any of their Affiliates (collectively, the "Forstmnann Little Companies") of Beneficial Ownership of Voting Securities-which, when added to the Voting Securities then Beneficially Owned by such Person, would result in such Person Beneficially Owning (1) 33% or more of the combined Voting Power of the Corporation's then outstanding Voting Securities and (2) a number of Voting Securities greater than the aggregate number of Voting Securities then Beneficially Owned by the Forstmann Little Companies; provided, however, that for purposes of this paragraph (a), a Person shall not be deemed to have made an acquisition of Voting Securities if such Person: (A) acquires Voting Securities as a result of a stock split, stock dividend or other corporate restructuring in which all stockholders of the class of such Voting Securities are treated on a pro rata basis; (B) acquires the Voting Securities directly from the Corporation; (C) becomes the Beneficial Owner of 33% or more of the combined Voting Power of the Corporation's then outstanding Voting Securities solely as a result of the acquisition of Voting Securities by the Corporation or any Subsidiary which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by such Person, provided that if (x) a Person would own at least such percentage as a result of the acquisition by the Corporation or any Subsidiary and (y) after such acquisition by the Corporation or any Subsidiary, such Person acquires Voting Securities, then an acquisition of Voting Securities shall have occurred; (D) is the, Corporation or any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Corporation (a "Controlled Entity"); or (B) acquires Voting Securities in connection with a "Non-Control Transaction" (as defined in paragraph (c) below); or

        (b)  the individuals who, as of the Effective Date, are members of the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that if either the election of any new director or the nomination for election of any new director by the Corporation's stockholders was approved by a vote of at least two-thirds of the Incumbent Board prior to such election or nomination, such new director shall be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an

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actual or threatened "Election Contest" (as described in Rule 14a-1 1 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

        (c)  approval by stockholders of the Corporation of:

        (1)  a merger, consolidation or reorganization involving the Corporation (a "Business Combination"), unless

        (A)  the stockholders of the Corporation, immediately before the Business Combination, own, directly or indirectly immediately following the Business Combination, at least a majority of the combined voting power of the outstanding voting securities of the corporation resulting from the Business Combination (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before the Business Combination, and

        (B)  the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for the Business Combination constitute at least a majority of the members of the Board of Directors of the Surviving Corporation, and

        (C)  no Person (other than the Corporation or any Controlled Entity, a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements (or any trust forming a part thereof) maintained by the Corporation, the Surviving Corporation or any Controlled Entity, or any Person who, immediately prior to the Business Combination, had Beneficial Ownership of 33% or more of the then outstanding Voting Securities) has Beneficial Ownership of 33% or more of the combined voting power of the Surviving Corporation's then outstanding voting securities (a Business Combination satisfying the conditions of clauses (A), (B) and (C) of this subparagraph (1) shall be referred to as a "Non-Control Transaction");

        (2)  a complete liquidation or dissolution of the Corporation; or

        (3)  the sale of other disposition of all or substantially all of the assets of the Corporation (other than a transfer to a Controlled Entity).

        Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because 33% or more of the then outstanding Voting Securities is Beneficially Owned by (x) a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements (or any trust forming a part thereof) maintained by the Corporation or any Controlled Entity or (y) any corporation which, immediately prior to its acquisition of such interest, is owned directly or indirectly by the stockholders of the Corporation in the same proportion as their ownership of stock in the Corporation immediately prior to such acquisition.

        13.8.    Corporation.    For purposes of this Agreement, all references to the Corporation shall include its Successors and Assigns.

        13.9.    Disability.    For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform his duties with the Corporation for six (6) consecutive months, and within the time period set forth in a Notice of Termination given to the Executive (which time period shall not be less than thirty (30) days), the Executive shall not have returned to full-time performance of his duties; provided, however, that if the Corporation's Long Term Disability Plan, or any successor plan (the "Disability Plan"), is then in effect, the Executive shall not be deemed disabled for purposes of this Agreement unless the Executive is also eligible for "Total Disability" (as defined in the Disability Plan) benefits (or similar benefits in the event of a successor plan) under the Disability Plan.

        13.10.    Good Reason.    (a) For purposes of this Agreement, "Good Reason" shall mean the occurrence after a Change in Control of any of the following events or conditions:

        (1)  a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with his status, title, position or responsibilities; or any removal of the Executive from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment for Disability, Cause, as a result of his death or by the Executive other than for Good Reason;

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        (2)  a reduction in the Executive's annual base salary below the Base Amount;

        (3)  the relocation of the offices of the Corporation at which the Executive is principally employed to a location more than twenty-five (25) miles from the location of such offices immediately prior to the Change in Control, or the Corporation's requiring the Executive to be based anywhere other than such offices, except to the extent the Executive was not previously assigned to a principal location and except for required travel on the Corporation's business to an extent substantially consistent with the Executive's business travel obligations at the time of the Change in Control;

        (4)  the failure by the Corporation to pay to the Executive any portion of the Executive's current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Corporation in which the Executive participated, within seven (7) days of the date such compensation is due;

        (5)  the failure by the Corporation to (A) continue in effect (without reduction in benefit level, and/or reward opportunities) any material compensation or employee benefit plan in which the Executive was participating immediately prior to the Change in Control, including, but not limited to, any of the plans listed in Appendix A hereto, unless a substitute or replacement plan has been implemented which provides substantially identical compensation or benefits to the Executive or (B) provide the Executive with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other compensation or employee benefit plan, program and practice in which the Executive was participating immediately prior to the Change in Control;

        (6)  the failure of the Corporation to obtain from its Successors or Assigns the express assumption and agreement required under Section 9 hereof; or

        (7)  any purported termination of the Executive's employment by the Corporation which is not effected pursuant to a Notice of Termination satisfying the terms set forth in the definition of Notice of Termination (and, if applicable, the terms set forth in the definition of Cause).

        (b)  Any event or condition described in Section 13.10(a)(1) through (7) which occurs (1) within six (6) months prior to a Change in Control or (2) at any time prior to a Change in Control but which the Executive reasonably demonstrates (A) was at the request of a Third Party or (B) otherwise arose in connection with, or in anticipation of a Change in Control which has been threatened or proposed and which actually occurs, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to a Change in Control.

        13.11.    Incentive Plan.    For purposes of this Agreement, "Incentive Plan" shall mean the General Instrument Corporation Annual Incentive Plan, or any successor annual incentive plan, maintained by the Corporation.

        13.12.    Notice of Termination.    For purposes of this Agreement, following a Change in Control, "Notice of Termination" shall mean a written notice of termination of the Executive's employment, signed by the Executive if to the Corporation or by a duly authorized officer of the Corporation if to the Executive, which indicates the specific termination provision in this Agreement, if any, relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated.

        13.13.    Person.    For purposes of this Agreement, "Person" shall mean a person within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

        13.14.    Pro Rata Bonus.    For purposes of this Agreement, "Pro Rata Bonus" shall mean the Bonus Amount multiplied by a fraction of the numerator of which is the number of days in the year in which an Executive's Termination Date occurs through the termination date and the denominator of which is 365.

        13.15.    Subsidiary.    For purposes of this Agreement, "Subsidiary" shall mean a corporation as defined in Section 424(f) (or a successor provision to such section) of the Internal Revenue Code of 1986, as amended, and regulations and rulings thereunder, with the Corporation being treated as the employer corporation for purposes of this definition.

        13.16.    Successors and Assigns.    For purposes of this Agreement, "Successors and Assigns" shall mean, with respect to the Corporation or the Corporation, a corporation or other entity acquiring all or substantially

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all the assets and business of the Corporation or the Corporation, as the case may be (including this Agreement) whether by operation of law or otherwise.

        13.17.    Termination Date.    For purposes of this Agreement, "Termination Date" shall mean (a) in the case of the Executive's death, his date of death, (b) if the Executive's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period) and (c) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days, and in the case of a termination for Good Reason shall not be more than sixty (60) days, from the date such Notice of Termination is given); provided, however, that if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination in good faith notifies the other party that a dispute exists concerning the basis for the termination, the Termination Date shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by the final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been taken). Notwithstanding the pendency of any such dispute, the Corporation shall continue to pay the Executive his Base Amount and continue the Executive as a participant in all compensation, incentive, bonus, pension, profit sharing, medical, hospitalization, dental, life insurance and disability benefit plans in which he was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section 13.17 whether or not the dispute is resolved in favor of the Corporation, and the Executive shall not be obligated to repay to the Corporation any amounts paid or benefits provided pursuant to this sentence.

        13.18.    Voting Power.    For purposes of this Agreement, "Voting Power" shall mean the combined voting power of the then outstanding Voting Securities.

        13.19.    Voting Securities.    For purposes of this Agreement, "Voting Securities" shall mean, with respect to the Corporation or any Subsidiary, any securities issued by the Corporation or such Subsidiary, respectively, which generally entitle the holder thereof to vote for the election of directors of the Corporation.

        IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by their duly authorized officers and the Executive has executed this Agreement as of the day and year first above written.

GENERAL INSTRUMENT CORPORATION
By:	/s/  SCOTT CRUM Senior Vice President, Administration and Employee Resources
By:	/s/  THOMAS J. LYNCH

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Exhibit 10.24

EX-10.25

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Exhibit 10.25

AMENDMENT TO SEVERANCE PROTECTION AGREEMENT

        This Amendment to the Severance Protection Agreement entered into as of December 21, 1999, by and between General Instrument Corporation, a Delaware Corporation (the "Corporation"), and Thomas J. Lynch (the "Executive") (such agreement, the "Severance Protection Agreement") is among the Corporation, the Executive, and Motorola, Inc. ("Motorola") and is dated as of December 21, 1999.

        WHEREAS, the Corporation, 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 Corporation will become a wholly owned subsidiary of Motorola in a merger (the "Merger"); and

        WHEREAS, the Executive is employed by the Corporation; and

        WHEREAS, the Corporation and Motorola wish to ensure that they will continue to receive the benefit of the Executive's services following the Merger, and to provide for the terms and conditions of the Executive's employment following the Merger, and the 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 practical after the Effective Time (as defined in the Merger Agreement), but in no event later than ten business days thereafter, Motorola shall grant the Executive stock options with respect to 65,000 shares (the "Closing Options") with an exercise price equal to the fair market value of the underlying shares on the date of grant, and 7,500 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 the Executive's continued employment until the date of vesting, and the Closing Options and the Closing Shares shall otherwise be subject to the terms and conditions of the Motorola Incentive Plan.

        (a)  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 the Executive stock options with respect to 15,000 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 be scheduled to vest in four equal installments on each of the first four anniversaries of the date of grant, subject to the Executive's continued employment until the date of vesting, 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 or such successor.

        (b)  If the Executive remains employed by Motorola or one of its Subsidiaries (including without limitation the Corporation) from the date on which the Effective Time occurs through the second anniversary thereof, or sooner terminates employment as a result of death or Disability, the Executive shall receive a one-time Retention Cash Bonus equal to $385,000.

        2.    Change in Control; Term.    It is acknowledged and agreed that the approval of the Merger by the Corporation's stockholders will be a "Change in Control" as defined in Section 13.7 of the Severance Protection Agreement, and that if such approval occurs, no subsequent event shall be deemed to be a Change in Control for purposes of the Severance Protection Agreement. As a result, if such approval occurs, then notwithstanding any provision of the Severance Protection Agreement: (i) the "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; and (ii) each reference in the Severance Protection Agreement to a Change in Control shall be deemed to refer to such stockholder approval and to no other event.

        3.    Employment Transfer.    It is acknowledged and agreed that the 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 Corporation may assign to the employing entity its rights, and cause the employing entity to assume its obligations, under the Severance Protection Agreement and this Amendment. In such event, references to the Corporation in the Severance Protection Agreement and this Amendment shall be deemed to refer to such employing entity.

        4.    Amendments to Severance Protection Agreement.    The following amendments to the Severance Protection Agreement shall be effective as of the Effective Time.

        (a)    Termination Benefits.    Notwithstanding Section 2(b)(3) of the Severance Protection Agreement, the requirement of that clause that certain specified life insurance, disability, medical, dental and hospitalization coverages and benefits be provided shall be satisfied if the Corporation or Motorola provides the Executive and his dependents and beneficiaries with such coverages and benefits on the terms and conditions (including employee contributions, deductibles and the like) on which such coverages and benefits are provided to active employees of the Corporation or Motorola during the 18-month period required by that clause (and subject to reduction as provided in that clause); provided, that the Executive shall not be entitled to duplicate benefits under plans of the Corporation and Motorola.

        (b)    Coordination with Motorola Change of Control Agreement.    Section 2(g) of the Severance Protection 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 the Executive hereafter becomes a party to any agreement with Motorola or any of its Subsidiaries providing for severance pay and/or benefits upon a 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 the Executive were not a party to this Agreement (the "Subsequent Severance"), and the payments and benefits to which the Executive would otherwise be entitled pursuant to this Section 2 shall be offset by the Subsequent Severance so that there is no duplication thereof."

        (c)    Good Reason.    The following provisions shall apply notwithstanding Section 13.10 of the Severance Protection Agreement:

          (i)  It is acknowledged and agreed that following the Effective Time, the Executive will serve as Corporate Vice President and General Manager, SBNS, Broadband Communications Sector, responsible for the strategic, tactical and operational leadership of the SBNS business unit of the Broadband Communications Sector. The responsibilities are focused on ensuring that the unit meets or exceeds its operational goals in a manner consistent with the overall business plan of the sector, Communications Enterprise and Motorola. The position reports to the Executive Vice President and President of the Broadband Communications Sector, and that so long as the Executive remains in such position or its equivalent in terms of scope of authority, there shall not be deemed to have been a change described in Section 13.10(a)(l) of the Severance Protection Agreement, notwithstanding any transfer of the Executive's employment described in Section 3 of this Amendment;

        (ii)  Section 13.10(a)(5) of the Severance Protection Agreement is hereby amended to read in its entirety as follows:

        (5)  the failure by Motorola to cause the Executive to be eligible to participate in the Incentive Plan and/or Motorola's compensation, employee benefit and perquisite plans and programs (other than severance plans and programs) on a basis no less favorable, in the aggregate, than that for comparable Motorola executives; and

        (iii)  The Executive expressly acknowledges and agrees that the Corporation has complied with the requirements of Section 9 of the Severance Protection Agreement in connection with the Merger.

        (d)    Incentive Plan.    Section 13.11 of the Severance Protection Agreement is hereby amended by adding an additional sentence at the end thereof, reading in its entirety as follows: "Notwithstanding the foregoing, beginning with the fiscal year 2001, the Incentive Plan shall mean the short-term incentive compensation program of Motorola in which the Executive participates."

        (e)    Notices.    Whenever a notice is given pursuant to the Severance Protection Agreement to the Corporation, a copy of such notice shall be given to:

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

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or to such other names or addresses as Motorola shall designate by notice pursuant to Section 5 of the Severance Protection Agreement.

        (f)    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.

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

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

        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:	/s/  SCOTT CRUM
MOTOROLA, INC.
By:	/s/  MERLE GILMORE
By:	/s/  THOMAS J. LYNCH Thomas J. Lynch

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Exhibit 10.25

EX-10.26

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Exhibit 10.26

December 21, 1999

TO: Mr. Tom Lynch

RE:
Amendment to Severance Protection Agreement

        Enclosed is the proposed Amendment to your existing Severance Protection Agreement, which will amend your existing agreement. It includes your proposed title and a description of your duties, a modified definition of "good reason," as well as your proposed retention package.

        Although not provided in the Amendment itself, Motorola has agreed, subject to the condition described below, that if the Retention Cash Bonus provided in Section 1(b) becomes payable to you, you shall receive an additional income tax gross-up with respect to that payment in an amount equal to $161,362.74. Motorola shall not be obligated to pay such amount if its agreement to do so in any way gives rise to a need on the part of Motorola or General Instrument to supplement or recirculate the Joint Proxy Statement and Prospectus for the Merger, or make any supplemental mailing to stockholders in connection with the Stockholders Meeting. Further, Motorola does not guarantee that this amount will be sufficient to make you whole for all income taxes with respect to the Retention Cash Bonus.

        Please acknowledge your receipt of this memo, and agreement to the foregoing, by signing below and returning the memo along with your signature to the Amendment.

Acknowledged and Agreed
By:	/s/  THOMAS J. LYNCH
Date:	12/22/99

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Exhibit 10.26

EX-10.27

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Exhibit 10.27

Mr. Tom Lynch
1321 Taylor Drive
Langhorne, Pa 19047

February 4, 2002

Dear Tom,

        This letter will serve as confirmation regarding the details of your relocation from Langbourne, Pa to Schaumburg, IL.

Relocation Benefits

        Based on current needs, the standard Motorola relocation package will be delayed until such time as you wish to implement it.

        Until that time, a check, in the amount of $7400, will be issued on a monthly basis, to cover living expenses. The payments will be provided for two years, effective January 2002 and ending December 2003. Per your request, you will assume the tax responsibility on these payments. Therefore, appropriate taxes will be withheld from these payments.

        Within the two-year period, you may elect to initiate Motorola's Relocation package, including Home Sale and Home Purchase benefits. Upon completion of your relocation, Motorola will pay your relocation expenses, less any previously paid amounts. Any responsibility for the 12 Oaks Apartment secured on your behalf will be your responsibility as of February 2002.

Tax Impact

        The monthly relocation checks will not be grossed up. The balance of your relocation benefits will include tax gross up where appropriate according to policy.

GAC Contact

        The Global Assignment Center (GAC) will assist you during the relocation process, including processing the monthly checks. Susan Kubiesa will be your GAC contact. She may be reached by phone at 847-538-2987, Sky Te12 pager, PIN 1192802, or email s.kubiesa@motorola.com.

        If you are in agreement with the terms and conditions of your relocation benefits as described in this letter, please sign the bottom of this letter as indicated and return to the Global Assignment Center, fax 847 538 7356.

/s/ Thomas J. Lynch            2/4/02 Tom Lynch            Date	/s/ Glenn Gienko Glenn Gienko            Date
/s/ Susan Kubiesa            2/22/02 Susan Kubiesa            Date

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Exhibit 10.27

EX-12

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Exhibit 12

Computation of Ratio of
Earnings to Fixed Changes

	Years Ended December 31,
	2002			2001			2000			1999			1998
	(In Millions)
Pretax income (loss)(1)	$	0		$	0		$	2,328		$	1,434		$	(1,230	)
Capitalized interest	$	0		$	0		$	(18	)	$	0		$	0
Fixed charges (as calculated below)	$	0		$	0		$	806		$	568		$	460
Earnings(2)	$	0		$	0		$	3,116		$	2,002		$	(770	)
Fixed charges:
Interest expense	$	0		$	0		$	680		$	399	(3)	$	348
Rent expense interest factor	$	0		$	0		$	126		$	169		$	112
Total fixed charges(2)	$	0		$	0		$	806		$	568		$	460
Ratio of earnings to fixed charges		0.0	(4)		0.0	(4)		3.9			3.5			0.0	(4)

(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 15, 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 years ended December 31, 2002 and 2001 by $3.4 billion and $5.4 billion, respectively. For the year ended December 31, 1998, earnings were inadequate to cover fixed charges by $1.2 billion.

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Exhibit 12

EX-21

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Exhibit 21

MOTOROLA, INC.
LISTING OF MAJOR SUBSIDIARIES
12/31/02

C-Port Corporation

General Instrument Corporation

Hangzhou Motorola Cellular Equipment Co. Ltd.

Motorola (China) Electronics Ltd.

Motorola (China) Investment Ltd.

Motorola Asia Limited

Motorola Asia Treasury Pte Ltd

Motorola Communications Israel Limited

Motorola Credit Coporation

Motorola de Mexico, S.A.

Motorola Electronics Pte. Limited

Motorola Electronics Sdn. Bhd.

Motorola Electronics Taiwan, Limited

Motorola Finance B.V.

Motorola G.m.b.H.

Motorola Industrial Ltda.

Motorola Japan Limited

Motorola Limited

Motorola Malaysia Sdn. Bhd.

Motorola Semiconducteurs S.A.

Motorola Semiconductor Hong Kong, Ltd.

Motorola Technology Sdn. Bhd.

Next Level Communications, Inc.

River Delta Networks, Inc.

Synchronous, Inc.

Tohoku Semiconductor Corp

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Exhibit 21

EX-99.1

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Exhibit 99.1

Certification For Year-End 2002

I, Christopher B. Galvin, Chairman of the Board and Chief Executive Officer of Motorola, Inc., certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

the Motorola, Inc. annual report on Form 10-K for the period ended December 31, 2002 fully complies with the requirements of Section 13(a) for the Securities Exchange Act of 1934 (15 U.S.C. 78m) and



(2)

the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc.

This certificate is being furnished solely for purposes of Section 906.

Dated:	March 27, 2003
		/s/  CHRISTOPHER B. GALVIN Christopher B. Galvin Chairman of the Board and Chief Executive Officer, Motorola, Inc.

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Exhibit 99.1

EX-99.2

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Exhibit 99.2

Certification For Year-End 2002

I, David W. Devonshire, Executive Vice President and Chief Financial Officer of Motorola, Inc., certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

the Motorola, Inc. annual report on Form 10-K for the period ended December 31, 2002 fully complies with the requirements of Section 13(a) for the Securities Exchange Act of 1934 (15 U.S.C. 78m) and



(2)

the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc.

This certificate is being furnished solely for purposes of Section 906.

Dated:	March 27, 2003
		/s/  DAVID W. DEVONSHIRE David W. Devonshire Executive Vice President and Chief Financial Officer, Motorola, Inc.

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Exhibit 99.2