10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year ended December 31, 2010

OR

¨ 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 000-19406

Zebra Technologies Corporation

(Exact name of registrant as specified in its charter)

Delaware	36-2675536
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

475 Half Day Road, Suite 500, Lincolnshire, IL 60069

(Address of principal executive offices)            (Zip Code)

Registrant’s telephone number, including area code:  (847) 634-6700

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

Title of Each Class	Name of Exchange on which Registered
Class A Common Stock, par value $.01 per share	The NASDAQ Stock Market, LLC

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

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).  Yes X No         

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act. Yes          No X

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 X No         

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No         

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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. [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Act) (Check one):

Large accelerated filer X	Accelerated filer
Non-accelerated filer            (Do not check if a smaller  reporting company)	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Act). Yes          No X

As of July 3, 2010, the aggregate market value of each of the registrant’s Class A Common held by non-affiliates was approximately $1,410,451,000. The closing price of the Class A Common Stock on July 2, 2010, as reported on the Nasdaq Stock Market, was $24.66 per share.

As of February 11, 2011, 55,758,784 shares of Class A Common Stock, par value $.01 per share, were outstanding.

Documents Incorporated by Reference

Certain sections of the registrant’s Notice of Annual Meeting of Stockholders and Proxy Statement for its Annual Meeting of Stockholders to be held on May 19, 2011, are incorporated by reference into Part III of this report.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

INDEX

		PAGE
PART I
Item 1.	Business		4
Item 1A.	Risk Factors		14
Item 1B.	Unresolved Staff Comments		18
Item 2.	Properties		19
Item 3.	Legal Proceedings		20
Item 4.	Submission of Matters to a Vote of Security Holders		20
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		21
Item 6.	Selected Financial Data		22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		50
Item 8.	Financial Statements and Supplementary Data		52
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		52
Item 9A.	Controls and Procedures		53
Item 9B.	Other Information		55
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		56
Item 11.	Executive Compensation		56
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		56
Item 13.	Certain Relationships and Related Transactions, and Director Independence		56
Item 14.	Principal Accounting Fees and Services		56
PART IV
Item 15.	Exhibits, Financial Statement Schedules		57
SIGNATURES
Signatures			58
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Index to Consolidated Financial Statements and Schedule			F-1
EXHIBITS
Index to Exhibits

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PART I

References in this document to “Zebra,” “we,” “us,” or “our” refer to Zebra Technologies Corporation and its subsidiaries, unless the context specifically indicates otherwise.

Safe Harbor

Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors which could cause actual results to differ materially from those expressed or implied in such forward looking statements. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

• Market acceptance of Zebra’s printer and software products and competitors’ product offerings and the potential effects of technological changes,

• The effect of global market conditions, including North America, Europe, Middle East and Africa and other regions in which we do business,

• Our ability to control manufacturing and operating costs,

• The availability of credit and the volatility of capital markets, which may affect our suppliers and customers,

• Success of integrating acquisitions,

• Interest rate and financial market conditions because of our large investment portfolio,

• Foreign exchange rates due to the large percentage of our international sales and operations, and

• The outcome of litigation in which Zebra is involved, particularly litigation or claims related to infringement of third-party intellectual property rights.

When used in this document and documents referenced, the words “anticipate,” “believe,” “estimate,” “will” and “expect” and similar expressions as they relate to Zebra or its management are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. We encourage readers of this report to review Item 1A, “Risk Factors,” in this report for further discussion of issues that could affect Zebra’s future results. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report.

Item 1. Business

Zebra Technologies Corporation is a Delaware corporation. Our principal offices are located at 475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069. Our main telephone number is (847) 634-6700 and our primary Internet Web site address is www.zebra.com. You can find all of Zebra’s filings with the SEC free of charge through the investor page on this Web site, immediately upon filing.

The Company

Zebra delivers products and solutions that improve our customers’ ability to put their critical assets to work smarter by identifying, tracking and managing assets, transactions and people.

We design, manufacture and sell specialty printing devices that print variable information on demand at the point of issuance. These devices are used worldwide by manufacturers, service and retail organizations and governments for automatic identification, data collection and personal identification in applications that improve productivity, deliver better customer service and provide more effective security. Our product range consists of direct thermal and thermal transfer label and receipt printers, passive radio frequency identification (RFID) printer/encoders and dye sublimation card printers. We also sell a comprehensive range of specialty supplies consisting of self-adhesive labels, thermal transfer ribbons, thermal printheads, batteries and other accessories, including software for label design and printer network management.

Sale of Navis Business and Marine Terminal Solution Software Product Line

In 2007 and 2008, we acquired WhereNet Corp., proveo AG, Navis Holdings, LLC and Multispectral Solutions, Inc. These companies comprised the Zebra Enterprise Solutions Group (ZES), through which we offered asset tracking and management solutions to optimize the flow of goods in complex logistical operations. These acquisitions provided us with new technologies to offer our customers, including active RFID, global positioning systems (GPS), telematics and ultra wideband (UWB) technologies. These solutions incorporate battery-powered wireless tags, fixed-position antennae, transponder modules and application software. We also provide consulting services, maintenance contracts and software licenses related to these solutions.

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On January 28, 2011, we entered into a Securities Purchase Agreement with Cargotec Corporation to sell all of our interest in the Navis business and WhereNet Marine Terminal Solution software product line (MTS). Navis is a global solutions provider of operating systems to coordinate and automate the planning and management of container and equipment moves in marine terminals and other complex and demanding business environments. We are retaining the real-time location solutions, tags and readers portion of the WhereNet business, along with the WhereNet applications that are sold into non-maritime industries. The sale is expected to close in the first quarter of 2011.

Beginning with the first quarter of 2011, Navis and other ZES assets will be reported as assets/liabillities held for sale and the operating results will be reported as discontinued operations. Our financial statements for the three-year period ended December 31, 2010 do not treat the Navis business as discontinued operations in accordance with the appropriate accounting guidance. Our financial statements for the three-year period ended December 31, 2010 reflect our Specialty Printing Group (SPG) and ZES segments, including the management discussion and analysis of financial condition and results of operations. Consequently, the remainder of this business description describes Zebra’s business consistent with our historical financial statements, including a business description of our SPG and ZES segments, while including comments to reflect the proposed sale of the Navis business entity, including MTS.

Zebra Specialty Printing Group (SPG)

We design our printer products to operate at the point of issuance to produce high-quality labels, tickets, receipts, and plastic cards on demand. The exceptional diversity of applications using our printer products for barcoding and personal identification includes routing and tracking, patient safety, transaction processing, and identification and authentication. These applications require high levels of data accuracy, where speed, reliability and durability are critical. They also include specialty printing for receipts and tickets where improved customer service and productivity gains may be the primary reason for using our on demand receipt printers. Plastic cards are used for secure, reliable personal identification, access control and financial cards (credit, debit and ATM cards) by financial institutions.

Applications for our printing technology span most industries and geographies. They include inventory control, small package delivery, baggage handling, automated warehousing, JIT (Just-In-Time) manufacturing, employee time and attendance records, file management systems, patient barcode wrist banding, medical specimen labeling, shop floor control, in-store product labeling, employee ID cards, driver’s licenses, and access control systems. As of December 31, 2010, management estimates that Zebra has sold more than 9,400,000 printers to customers around the world.

We believe competitive forces on businesses worldwide to strengthen security, reduce costs, more effectively manage assets, improve quality, deliver better customer service, and increase productivity support the adoption of the printing and automatic identification applications that Zebra provides because these solutions deliver significant and predictable economic benefits. Industry-mandated compliance requirements for bar code labeling and RFID tagging are also important catalysts in the deployment of these systems. Many of Zebra’s applications enhance the use of enterprise resource planning (ERP) and other process improvement systems in manufacturing and service organizations. Greater emphasis on supply chain management, the drive to reduce errors in healthcare, and heightened concern over safety and security are also increasing the use of automatic identification systems. Still other applications are taking advantage of recent advances in wireless and hand-held computing technologies.

Concern for safety and security and personal identification contribute to demand for our card printer products. This concern has heightened interest in systems that provide personal identification and access control, including secure ID systems for driver’s licenses, employee and visitor badges, national identification cards, event passes, club membership cards and keyless entry systems. Financial institutions utilize card printers for credit, debit and ATM cards.

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Our printers are used to print bar code labels, receipts, plastic identification cards, wristbands, and tags and to encode passive RFID “smart” labels and cards. We also sell related specialty labeling materials, thermal ink ribbons, and bar code label design and network management software. These products are used to support bar code labeling, personal identification, and specialty printing solutions principally in the manufacturing supply chain, retail, healthcare and government sectors of the economy. We work closely with distributors, value-added resellers, kiosk manufacturers and end users of our products to design and implement printing solutions that meet their technical demands. To achieve this flexibility, we provide our customers with a broad selection of printer models, each of which can be configured for a specific application. Additionally, we will select and, if necessary, create appropriate labeling stock, ink ribbons and adhesives to suit a particular application. In-house engineering personnel in software, mechanical, electronic and chemical engineering participate in the creation and development of printing solutions for particular applications.

We produce the industry’s broadest range of rugged, on-demand thermal transfer and direct thermal printers. Our printing systems include hundreds of optional configurations that can be selected to meet particular customer needs. We believe this breadth of product offering is a unique and significant competitive strength, because it allows Zebra to satisfy the widest variety of thermal printing applications and leverage our brand and reputation as customers install new systems that require on demand printing.

Of the major printing technologies, which include ink jet, laser and impact dot matrix, we believe that direct thermal and thermal transfer technologies are best suited for most bar code labeling and other on-demand printing applications. Thermal transfer printing produces durable dark, solid blacks and sharply defined lines that are important for printing readily scannable bar codes. These images can be printed on a wide variety of labeling materials, which enable users to affix bar code labels to virtually any object. This capability is very important in the industrial and service sectors Zebra serves. Direct thermal printing is best suited where ease of use, smaller size and cost are important factors in the application. Accordingly, this technology is found principally in Zebra’s mobile and desktop units.

As of December 31, 2010, we offered 54 thermal printer models with numerous variations, in eight categories as follows:

• Performance tabletop printers for applications requiring continuous operation in high output, mission-critical and industrial settings.

• Mid-range tabletop printers, which are designed for demanding commercial applications.

• Desktop printers to deliver value and performance in applications with lower volume or space restrictions.

• Mobile printers to meet the printing needs of workers in the field.

• Print engines, which are sold to manufacturers and integrators of high-speed automatic label applicator systems and are available with or without RFID smart label capabilities.

• Kiosk and ticket printers for use in kiosks and other unattended printing applications.

• Card printers, which print and encode national identity cards, driver’s licenses, employee identification badges, gift cards, personalized cards and financial cards (credit, debit and ATM cards).

• RFID printer/encoders for passive high frequency and ultra-high frequency radio frequency identification in the retail supply chain, for defense logistics, and other applications. These units are used to print and encode “smart labels” in a single pass. Smart labels are printable labels embedded with an ultra-thin radio frequency transponder. Information encoded in these transponders can then be read and modified by a radio frequency reader.

In addition to their use in on-demand automatic identification applications, our thermal printers can also be used for on-site batch production of custom bar code labels and other graphics. This capability results in shorter lead times, reduced inventory, and more flexibility than can be provided with traditional off-site printing.

Printer Supplies

Supplies products consist of stock and customized thermal labels, wristbands, plastic cards, card laminates and thermal transfer ribbons. Zebra promotes the use of genuine Zebra brand supplies with its printing equipment.

Zebra fully supports its printers, resellers and end users with an extensive line of superior quality, high-performance supplies optimized to a particular user’s needs. Supplies are chosen in consultation with the reseller and end user based on the specific application, printer and environment in which the labeling system must perform. These printing solutions frequently include proprietary ribbon and label formulations that are designed to optimize image resolution and printer performance while meeting the most demanding end user application performance criteria. Factors such as adhesion, resistance to scratches, smudges and abrasion, and chemical and environmental exposures are all taken into account when selecting the type of ribbon and labeling materials. The use of supplies that are not carefully matched to specific printers can degrade image quality, and decrease the part life of key printer components such as printheads.

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Printer Related Software

Zebra has specialized printer management, label design and driver solutions to help unlock the full potential of Zebra printers. The ZebraLink Solutions suite of networking, software, firmware offerings, combined with the enhanced printer management capabilities of ZebraNet™ Bridge, makes Zebra’s printers easy to use and integrate into small, medium and enterprise-wide environments. Our goal is to provide software that enables high levels of functionality to all major computer network and software systems. Network systems include Ethernet, 802.11b/g and Bluetooth^®.

Zebra offers label design and integration software specifically designed to optimize the performance of Zebra bar code label printers. Zebra’s suite of label design and printer configuration tools includes ZebraDesigner™, ZebraDesigner™ Pro, ZebraDesigner™ for XML, and ZebraDesigner™ Label Design Software for use with mySAP™ Business Suite. Zebra’s Enterprise Connector Solution for Oracle^® Business Intelligence Publisher™, delivers seamless integration between Oracle and Zebra printers, creating a versatile, easily managed, cost-effective printing platform.

Printer Maintenance and Services

Zebra provides depot maintenance and repair services at repair centers in Vernon Hills, Illinois; Etobicoke, Ontario, Canada; Mexico City, Mexico; Preston, U.K.; Singapore; Shanghai, China; and Heerenveen, Netherlands. Zebra Authorized Service Providers (ZASP) also provide repair services for most Zebra products at their locations. In addition, Zebra offers on-site repair services for tabletop printers in the United States. Outside of the United States, Zebra’s resellers may provide maintenance service, either directly as ZASPs or through independent service agents. Zebra also provides technical support from in-house support personnel located in the United States, the United Kingdom and Singapore. For most Zebra products, Zebra provides interactive technical support via the Internet at www.zebra.com, 24 hours per day, seven days per week.

Printer Warranties

In general, Zebra provides warranty coverage of one year on printers against defects in material and workmanship. Printheads are warranted for nine months, and batteries are warranted for twelve months. Zebra supplies are warranted against defects in material and workmanship for their stated shelf life or twelve months, whichever ends first. Defective equipment and supplies may be returned for repair or replacement during the applicable warranty periods.

Zebra’s Printer Technology

Our customers rely on Zebra to provide products and systems to help identify, authenticate, track or route both items and people, and then process the related transactions. These products and systems use technologies that provide specific benefits in each application.

All Zebra printers and print engines incorporate thermal printing technology, either direct thermal printing, thermal transfer printing or dye-sublimation printing. This technology creates an image by heating certain pixels of an electrical printhead to selectively image a ribbon or heat-sensitive substrate.

Direct thermal printers apply the heat directly to a thermally-sensitive label, wristband, or receipt to create an image. This form of thermal printing technology benefits applications requiring simple and reliable operations such as shelf labeling, patient identification, and kiosk receipts. Some desktop label printers, mobile printers and kiosk printers support only direct thermal printing.

Thermal transfer printers apply heat to a ribbon to release ink onto labels or tags. This form of thermal printing technology allows a wider range of specialty label materials and associated inks to be used for applications such as circuit board labels, chemical identification and product labels that require resistance to chemicals, temperature extremes, abrasion, or labels requiring a long shelf life. Most of our printers in our high performance, midrange, print engine, desktop and mobile categories use thermal transfer printing but can also support direct thermal printing.

Dye-sublimation card printers apply heat to a ribbon to release a dye that is absorbed into a plastic card, retransfer film or treated paper. This process creates full-color, photographic quality images that are well-suited for driver’s licenses, access and identification cards, transaction cards, on-demand photographs, and financial cards (credit, debit and ATM cards).

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Direct thermal and thermal transfer printers create crisp images at high speeds, making them ideal for printing easily readable text and machine readable bar codes. Dye sublimation thermal printers quickly create full-color images with visual characteristics more similar to halide-based film than to pixel-based ink jet or laser printers, making them ideal for high quality photographs and personalized plastic cards. Some printers also include HF (13.56 MHz) or UHF (860-960 MHz) RFID technology that can encode data into passive RFID transponders embedded in a label, card, or wristband.

Zebra’s printers integrate company-designed mechanisms, electrical systems, and firmware. Enclosures of metal or high-impact plastic ensure the durability of our printers. Special mechanisms optimize handling of labels, ribbons, and plastic cards. Fast, high-current electrical systems provide consistent image quality. Mobile printers use NiMH or LiIon batteries to optimize print quality over an extended operating shift. Firmware supports serial, parallel, Ethernet, USB, infrared, Bluetooth, or 802.11b/g wireless communications with appropriate security protocols. Printing instructions can be received as a proprietary language such as Zebra Programming Language II (ZPL II^®), as a print driver-provided image, or as user-defined XML. These features make our printers easy to integrate into virtually all common computer systems including those operating on UNIX, Linux, MS/DOS^®, or Microsoft^® Windows^® operating systems. Some independent software vendors, including Adobe, Oracle and SAP, have included Zebra printing support in applications for healthcare, warehouse management, manufacturing, passenger transportation, and retailing.

Printer Sales and Marketing

Sales. We sell our printer products primarily through distributors, value-added resellers (VARs), and original equipment manufacturers (OEMs). We also sell our printer products directly to a select number of named customer accounts. For media and consumables, we also sell directly to end users through the Internet and telesales operations. Distributors and VARs purchase, stock and sell a variety of automatic identification components from different manufacturers and customize systems for end-user applications using their systems and application integration expertise. Because these sales channels provide specific software, configuration, installation, integration and support services required by end users within various market segments, these relationships allow Zebra to reach end users throughout the world in a wide variety of industries. Zebra experiences a minor amount of seasonality in sales, depending on the geographic region and industry served.

We functionally classify our direct VARs as Premier Partners, Advanced Partners, or Associate Partners, depending on their business competencies, depth and breadth of their sales teams, customer support capabilities, contributions to Zebra’s strategic goals and sales commitment to Zebra. In addition, we offer VARs the opportunity to earn certifications for mobile/wireless printers, supplies, services and RFID products in specific industries. We also sell through distributors, which in turn sell to an extended VAR community. All VARs, as well as OEMs and systems integrators, provide customers with a variety of automatic identification components including scanners, accessories, applications software and systems integration expertise, and, in the case of some OEMs, resell the Zebra-manufactured products under their own brands as part of their own product offering. We believe that the breadth of this indirect channel network, both in terms of variety and geographic scope, enhances our ability to compete and more effectively offer our solutions to a greater number of end users.

In some instances, we have designated a customer as a strategic account when purchases of Zebra products reach specified levels and support requirements for the account become highly customized. Zebra sales personnel, either alone or together with our partners, manage these strategic accounts to ensure their needs are being met.

The sales function also encompasses a group that manages a small number of global alliances. They direct the business development strategies for a limited number of third-party relationships that are strategic to new demand creation for specific vertical markets and/or specific applications.

Marketing. Marketing operations encompass corporate marketing, marketing communications, product marketing, vertical marketing, solutions marketing, market research and channel marketing functions. Corporate marketing conducts activities to enhance the Zebra corporate brand, corporate public relations, internal corporate communications and our Web site. The product marketing group identifies, evaluates and recommends new product opportunities and manages product introductions, positioning and demand creation. Product marketing also focuses on strategic planning and market definition and analyzes Zebra’s competitive strengths and weaknesses.

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Printer Production and Manufacturing

We design our products to optimize product performance, quality, reliability, durability and versatility. These designs combine cost-efficient materials, sourcing and assembly methods with high standards of workmanship.

In February 2008, we announced that final printer assembly would be transferred to a third-party manufacturer, Jabil Circuit, Inc. We completed the transition of transferring all printer lines to Jabil in 2010. This action has helped to reduce costs and optimize our global printer product supply chain and enabled us to be more responsive to customer needs and increase Zebra’s flexibility to meet emerging business opportunities. See Note 9 to our Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of the transfer and transition process.

Jabil produces our printers to our design specifications in the quantities we order. We maintain control over the supply chain including supplier selection and price negotiations of key component parts. Jabil is responsible for the procurement of the component parts and subassemblies used in the Zebra printers it produces. Zebra has a subsidiary located in Guangzhou, China, and has an office located near the Jabil facility in China where our products are assembled. This office is staffed with Zebra sourcing, engineering and quality personnel to help ensure that we receive optimal pricing on raw materials and the final printers meet our quality standards. The majority of Zebra printers manufactured by Jabil are shipped to Zebra’s regional distribution centers. A small percentage of products are reconfigured at Zebra’s distribution centers through firmware downloads, packaging and some other customization before they are shipped to customers. In addition, certain products are manufactured in accordance with federal procurement regulations and various international trade agreements, and remain eligible for sale to the United States government.

Printer Competition

Many companies are engaged in the design, manufacture and marketing of bar code label printers, RFID printer/encoder and card personalization solutions.

We consider our direct competition in bar code label and receipt printing to be producers of on-demand thermal transfer and direct thermal label printing systems, printer/encoders, mobile printers and supplies. We also compete, however, with companies engaged in the design, manufacture and marketing of printing systems that use alternative technologies, such as ink-jet and laser printing. Many of these companies are substantially larger than Zebra.

Dye sublimation, the technology used in our card printers, is only one of several commercially available types of processes used to personalize cards. We also compete with companies that produce identification cards using alternative technologies, which include ink-jet, thermal transfer, embossing, film-based systems, encoders, laser engraving and large-scale dye sublimation printers. These card personalization technologies offer viable alternatives to Zebra’s card printers and provide effective competition from a variety of companies, many of which are substantially larger than Zebra. In addition, service bureaus compete for end user business and provide an alternative to the purchase of our card printing equipment and supplies.

Our ability to compete effectively depends on a number of factors. These factors include the reliability, quality and reputation of the manufacturer and its products; hardware and software innovations and specifications; breadth of product offerings; information systems connectivity; price; level of technical support; supplies and applications support offered by the manufacturer; available distribution channels; and financial resources to support new product design and innovation. We believe that Zebra presently competes favorably with respect to these factors.

We face competition from many competitors, including the following (listed in alphabetical order): Argox; Avery Dennison; Boca Systems; Brother International; Canon; CIM; Citizen; Cognitive TPG; Custom; Danaher; Datacard; Datamax-O’Neil, a unit of Dover Corporation; Dymo, a Newell Rubbermaid Company; Epson; Evolis; Fargo Electronics, a unit of HID Global; Godex; Hewlett-Packard; Hitachi; Intermec Inc.; Lexmark International; MagiCard; Matica; Microcom; Mitsubishi; NBS Technologies; Nisca; Oki Data; Olympus; Practical Automation; Printronix; Sato; Seiko Instruments; Song Woo Electronics; Sony; Star Micronics; Taiwan Semiconductor; Toshiba TEC; Victor Data Systems; Woosim; and Xerox.

The supplies business is highly fragmented and competition is comprised of numerous competitors of various sizes depending on the geographic area.

Alternative Printing Technologies

We believe thermal printing will be the preferred label, card and receipt printer technology in Zebra’s target applications for the foreseeable future. Among the many advantages of direct thermal and thermal transfer printing is the ability to print high-resolution, durable images on a wide variety of label materials at relatively low costs and high speeds compared with alternative printing technologies. We view passive RFID smart label encoding and active RFID location systems as complementary technologies to bar coded printing, offering growth opportunities to Zebra as the technologies become more widely adopted.

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If other technologies were to evolve or become available to Zebra, it is possible that those technologies would be incorporated into our products. Alternatively, if such technologies were to evolve or become available to our competitors, Zebra’s products may become obsolete. This obsolescence would have a significant negative effect on Zebra’s business, financial position, results of operations and cash flows.

Therefore, we continually assess competitive and complementary methods of bar code printing and other means of automatic identification. Alternative print technologies assessed include ink jet, laser and direct marking. While we cannot be sure that new technology will not supplant thermal printing for labels, cards and receipts, we are not aware of any developing technology that offers the advantages of thermal printing for our targeted applications. We continually monitor and evaluate new RFID technologies, support their standards development, and rapidly adopt RFID into new Zebra products and systems as new markets and applications emerge.

Zebra Enterprise Solutions Group (ZES)

Zebra offers asset tracking and management solutions to optimize the flow of goods within the supply chain. Whether managing parts for lean manufacturing or tracking and managing vehicles through off-line processes during production, the automated asset tracking and management solutions from Zebra improve business processes. Utilizing the combined products offered by these businesses, Zebra provides greater asset visibility and business efficiency for the aerospace and defense, aviation, automotive, industrial manufacturing, maritime, petrochemical, and transportation and logistics industries. Customers within these industries benefit by increasing productivity, lowering operational costs, and improving safety and security throughout their logistics operations. As noted previously, Zebra has entered into an agreement to sell the Navis business and the WhereNet Marine Terminal Solution software product line. The sale is expected to close in the first quarter of 2011.

Zebra’s asset tracking and management solutions business consists of the sale of software licenses and related services including maintenance, support and consulting services, and hardware including our proprietary real time asset management hardware. These products and services may be bundled and sold together to customers or sold separately.

• Software Licenses. We sell perpetual software licenses on both a fixed fee basis and for a fixed term. The amounts of the license fees are based primarily on the scope and functionality of the licenses purchased by the customer. The solutions we provide may also include third-party software.

• Hardware. We sell both proprietary real time asset management hardware and third-party hardware. Most of our hardware products provide electronic tagging of assets and real time information regarding the assets’ locations and telematics. We sell the hardware as part of an integrated solution and also replacement parts.

• Consulting Services. We provide consulting services for the planning and implementation of our solutions including initial installation and training. Our professional services team works with customers who are implementing our solutions for the first time, evaluating new technology automation solutions, integrating with third-party systems or upgrading to new platforms. Services are typically charged on a time and materials basis, although from time-to-time we may enter into fixed fee contracts.

• Maintenance and Support. We offer support to our customers 24 hours a day, 7 days a week, 365 days a year, usually for an annual fee, which entitles them to software upgrades and technical support.

These products extend Zebra’s reach beyond passive RFID by employing technologically advanced hardware and software solutions to locate, track, manage and optimize high-value assets, equipment and people. We offer a wide range of scalable real time locating systems (RTLS) technologies used to generate accurate, on-demand information about the physical location and status of high-valued assets. Customers benefit by utilizing the choice or combination of asset tracking products that can be “application matched” based on ISO/IEC 24730-2, Cisco CCX Wi-Fi, precision global positioning systems (GPS), and ultra wideband (UWB) technologies.

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Our selection of RTLS asset tracking product offerings includes battery-powered active RFID WhereTag™ tags, WhereCall™ button tags, precision WhereTrack™ products, and Ultra-Wideband products from our Dart family of tags. These asset tags enable organizations to access accurate, real-time information on the location and status of their assets both indoors and outdoors.

In addition, we offer a selection of RTLS infrastructure products. These products receive tag transmissions and forward the information to the Visibility Server Software™ (a middleware application) which provides location calculations, database and system management functions and asset visibility. The flexible infrastructure supports large tag populations and coverage areas that can range from small to large.

We offer a broad set of software development tools for integrating ZES hardware, middleware applications and software applications, with customer and third-party applications. Our middleware application, Visibility Server Software, provides software tools to design, configure, operate and troubleshoot our RTLS products. Visibility Server Software serves as the central repository for all of the real-time location and communication data captured by the ZES RTLS infrastructure.

ZES sells its products and services into the following major industries:

• Airport Operations. Our Airport Visualizer™ provides integrated aviation solutions and helps to optimize motorized ground support equipment on the pavement immediately adjacent to an airport terminal area or hangers (commonly referred to as the “apron”). As of December 31, 2010, our Airport Visualizer solution helped to optimize the processes of approximately 3,600 airport ground service vehicles at over 20 leading airports.

• Distribution Operations. Our Yard Tracking and Management System (YTMS), is a yard planning, management and execution solution that leverages wireless location and communication technologies and configurable business rules to optimize yard operations and the systems with which they interface.

• Personnel Safety and Security. Designed to automate the detection of potential personnel safety risks, as well as improve the management of emergencies and evacuations, the Personnel Safety Solution provides real-time visibility into locating and tracking of valued assets both indoors and outdoors.

• Manufacturing Operations. We provide an integrated wireless infrastructure for real-time location, digital messaging, telemetry, and wireless networking applications to give manufacturers the ability to continuously manage the physical location and status of their critical assets for improving lean processes within the core manufacturing functions.

These products and services are primarily sold through a global direct sales force which is organized around geographic and vertical markets. We complement our direct sales through the use of other channels including systems integrators with particular vertical market expertise.

ZES’s proprietary software and hardware are developed primarily by its internal team of engineers. Generally, our software is warranted for 90 days after going live to function consistently with its specifications, and our hardware is warranted to be free from material defects in materials and workmanship for up to one year after purchase.

Customers

Zebra has sold more than 9,400,000 thermal printers to customers as of December 31, 2010.

ScanSource, Inc., is our most significant customer. Our net sales to ScanSource, a global distributor of Zebra SPG products, as a percent of our total net sales, were as follows:

	Year Ended December 31,
	2010			2009			2008
Percent of net sales		18.5	%		16.1	%		15.4	%

No other customer accounted for 10% or more of total net sales during these years.

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Sales

Net sales by product category for the last three years were (in thousands):

	Year Ended December 31,
Product Category	2010		2009		2008
Hardware	$	682,455	$	539,934	$	692,638
Supplies		167,633		155,847		172,106
Service and software		101,579		102,541		105,113
Subtotal		951,667		798,322		969,857
Shipping and handling		5,181		5,263		6,843
Total net sales	$	956,848	$	803,585	$	976,700

Net sales to international customers, as a percent of total net sales, were as follows:

	Year Ended December 31,
	2010			2009			2008
Percent of net sales		57.4	%		54.9	%		54.5	%

We believe that international sales have the long-term potential to increase faster than domestic sales because of the lower penetration of automatic identification applications outside North America and Western Europe and generally higher economic growth rates in developing countries. As a result, Zebra has invested resources to support our international growth and currently operates facilities and sales offices, or has representation, in 30 different countries.

Research and Development

Zebra’s research and development expenditures for the last three years were as follows (in thousands, except percentages):

	Year Ended December 31,
	2010			2009			2008
Research and development expenses - SPG (excluding acquired in process technology)	$	69,605		$	55,614		$	63,142
Percent of SPG net sales		8.0	%		7.7	%		7.2	%
Research and development expenses - ZES (excluding acquired in process technology)	$	32,325		$	30,776		$	32,658
Percent of ZES net sales		37.7	%		38.0	%		34.7	%

We devote significant resources to developing new printing solutions for our target markets and ensuring that our products maintain high levels of reliability. Research and development resources are also directed toward enhancing our ZES systems.

Intellectual Property Rights

Zebra relies on a combination of trade secrets, patents, employee and third party nondisclosure agreements, copyright laws and contractual rights to establish and protect its proprietary rights in its products. We have and actively protect many domestic and international trademarks. We hold 375 United States and foreign patents and have 172 United States and foreign patent applications pending pertaining to products. The duration of these patents ranges from 1 to 22 years. The expiration of any individual patent would not have a significant negative impact on our business.

Despite our efforts to protect our intellectual property rights, it may be possible for unauthorized third parties to copy portions of our products or to reverse engineer or otherwise obtain and use some technology and information that we regard as proprietary. Moreover, the laws of some countries do not afford Zebra the same protection to

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proprietary rights, as do United States laws. There can be no assurance that legal protections relied upon by Zebra to protect its proprietary position will be adequate. While Zebra’s intellectual property is valuable and provides certain competitive advantages, we do not believe that the legal protections afforded to our intellectual property are fundamental to our success.

Other trademarks mentioned in this report are the property of their respective holders and include IBM, a registered trademark of International Business Machines; UNIX, a registered trademark of UNIX Systems Laboratories; MS/DOS and Windows, registered trademarks of Microsoft; SAP, a registered trademark of SAP AG; and Linux, a registered trademark of Linus Torvalds. Bluetooth is a trademark owned by Bluetooth SIG and used by Zebra under license.

Employees

As of January 28, 2011, Zebra employed approximately 2,750 persons, of which 2,020 are a part of SPG, 480 are a part of ZES and the remaining 250 are corporate employees. In connection with the sale of our Navis business and WhereNet Marine Terminal Solution software product line, we expect approximately 340 employees from ZES to become employees of the purchaser of these businesses. None of our employees is a member of a union. Some portions of our business, primarily in Europe, are subject to labor laws that differ significantly from those in the United States. For example, it is common for a works council to represent employees when discussing matters such as compensation, benefits or terminations of employment. We consider our employee relations to be very good.

Additional Information

For financial information regarding Zebra, see Zebra’s Consolidated Financial Statements and the related Notes, which are included in this Annual Report on Form 10-K. Zebra has two reportable segments for our operations and products. Financial information about segments and geographic areas is found in Note 19 to the Consolidated Financial Statements.

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Item 1A. Risk Factors

Investors should carefully consider the risks, uncertainties and other factors described below, as well as other disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations, because they could have a material adverse effect on Zebra’s business, financial condition, operating results, cash flows and growth prospects.

Final assembly of our thermal printers is performed by Jabil Circuit, a third-party electronics manufacturer. We are now dependent on Jabil for the manufacture of such printers. A failure by Jabil to provide manufacturing services to Zebra as Zebra now requires, or any disruption in such manufacturing services, may adversely affect Zebra’s business results. Because we rely on a third-party provider such as Jabil to manufacture its products, Zebra may incur increased business continuity risks.

Zebra is no longer able to exercise direct control over the assembly or related operations of its thermal printers Jabil produces. If Jabil experiences business difficulties or fails to meet Zebra’s manufacturing needs, then Zebra may be unable to satisfy customer product demands, lose sales and be unable to maintain customer relationships. Longer production lead times may result in shortages of certain products and inadequate inventories during periods of unanticipated higher demand. Without Jabil’s continuing manufacture of Zebra’s products, Zebra will have no other means of final assembly of its thermal printers until Zebra is able to secure the manufacturing capability at another facility or develop an alternative manufacturing facility. This transition could be costly and time consuming.

Although Zebra carries business interruption insurance to cover lost sales and profits in an amount it considers adequate, in the event of supply disruption, this insurance does not cover all possible situations. In addition, the business interruption insurance would not compensate Zebra for the loss of opportunity and potential adverse impact, both short term and long term, on relations with our existing customers.

A third-party provider such as Jabil will have access to Zebra’s intellectual property, which increases the risk of infringement or misappropriation of this intellectual property.

Zebra has significant operations outside the United States and sells a significant portion of its products internationally and purchases important components from foreign suppliers. These circumstances create a number of risks. Zebra has significant operations overseas which present added risks. In addition, Zebra sells a significant amount of its products to customers outside the United States. Shipments to international customers are expected to continue to account for a material portion of net sales.

Risks associated with operations, sales and purchases outside the United States include:

• Inadequately managing and overseeing operations that are distant and remote from corporate headquarters,

• Fluctuating foreign currency rates could restrict sales, or increase costs of purchasing, in foreign countries,

• Volatility in foreign credit markets may affect our customers and suppliers,

• Adverse changes in, or uncertainty of, local business laws or practices, including the following:

• Foreign governments may impose burdensome tariffs, quotas, taxes, trade barriers or capital flow restrictions,

• Restrictions on the export or import of technology may reduce or eliminate the ability to sell in or purchase from certain markets,

• Political and economic instability may reduce demand for our products, or put our foreign assets at risk,

• Potentially limited intellectual property protection in certain countries may limit recourse against infringing products or cause Zebra to refrain from selling in certain geographic territories,

• Staffing and turnover at international operations may be unusually difficult,

• A government controlled exchange rate and limitations on the convertibility of the Chinese yuan, and

• Transportation delays that may affect production and distribution of Zebra’s products.

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Zebra may not be able to continue to develop products to address user needs effectively in an industry characterized by ongoing change. To be successful, Zebra must adapt to rapidly changing technological and application needs by continually improving its products as well as introducing new products and services to address user demands.

Zebra’s industry is characterized by:

• Evolving industry standards,

• Frequent new product and service introductions,

• Evolving distribution channels,

• Increasing demand for customized product and software solutions, and

• Changing customer demands.

Future success will depend on Zebra’s ability to cost effectively adapt in this evolving environment. Zebra could incur substantial costs if it has to modify its business to adapt to these changes, and may even be unable to adapt to these changes.

Customers have the right to return products that do not function properly within a limited time after delivery. Zebra monitors and tracks product returns and records a provision for the estimated future returns based on historical experience and any notification received of pending returns. Zebra, however, cannot guarantee that it will continue to experience return rates consistent with historical patterns.

Zebra may be a party to fixed-price contracts particularly for its ZES product lines that could become unfavorable contracts. From time to time we may enter into contracts to provide services to customers for fixed fees. Such a contract could result in material loss to Zebra if the cost to perform such contract ultimately exceeds the fees earned on such contract.

Zebra competes in a competitive industry, which may become more competitive. Competitors may be able to respond more quickly to new or emerging technology and changes in customer requirements. Zebra faces significant competition in developing and selling its products and solutions. Some competitors have substantial marketing, financial, development and personnel resources. To remain competitive, Zebra believes it must continue to cost effectively provide:

• Technologically advanced systems that satisfy user demands,

• Superior customer service,

• High levels of quality and reliability, and

• Dependable and efficient distribution networks.

Zebra cannot assure it will be able to compete successfully against current or future competitors. Increased competition in printers or supplies may result in price reductions, lower gross profit margins and loss of market share, and could require increased spending on research and development, sales and marketing and customer support. Some competitors may make strategic acquisitions or establish cooperative relationships with suppliers or companies that produce complementary products.

Zebra is vulnerable to the potential difficulties associated with the rapid increase in the complexity of its business. Zebra has grown rapidly over the last several years through domestic and international growth and acquisitions. This growth has caused increased complexities in the business. We believe our future success depends in part on our ability to manage our growth and increased complexities of our business and the demands from increased responsibility on our management personnel. The following factors could present difficulties to us:

• Compliance with evolving laws and regulations,

• Managing our distribution channel partners,

• Manufacturing an increased number of products,

• Increased administrative and operational burden,

• Maintaining and improving information technology infrastructure to support growth,

• Increased logistical problems common to complex, expansive operations, and

• Managing increasing international operations.

Zebra could encounter difficulties in any acquisition it undertakes, including unanticipated integration problems and business disruption. Acquisitions could also dilute stockholder value and adversely affect operating results. Zebra may acquire or make investments in other businesses, technologies, services or products. An acquisition may

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present business issues which are new to Zebra. The process of integrating any acquired business, technology, service or product into operations may result in unforeseen operating difficulties and expenditures. Integration of an acquired company also may consume considerable management time and attention, which could otherwise be available for ongoing operations and development of the business. The expected benefits of any acquisition may not be realized.

Acquisitions also may involve a number of risks:

• Difficulties and uncertainties in transitioning the customers or other business relationships from the acquired entities to Zebra,

• The loss of key employees of acquired entities,

• The ability of acquired entities to fulfill obligations to their customers,

• The discovery of unanticipated issues or liabilities,

• The failure of acquired entities to meet or exceed expected returns, and

• The acquired entities’ ability to improve internal controls and accounting systems to be compliant with requirements applicable to public companies subject to SEC reporting.

Future acquisitions could result in potentially dilutive issuances of equity securities or the incurrence of debt and contingent liabilities.

Zebra sources some of its component parts from sole source suppliers. A disruption in the supply of such component parts could have a material adverse effect on our ability to meet customer demand and negatively affect our financial results.

Infringement by Zebra or Zebra suppliers on the proprietary rights of others could put Zebra at a competitive disadvantage, and any related litigation could be time consuming and costly. Third parties may claim that Zebra or Zebra suppliers violated their intellectual property rights. To the extent of a violation of a third party’s patent or other intellectual property right, Zebra may be prevented from operating its business as planned, and may be required to pay damages, to obtain a license, if available, or to use a non-infringing method, if possible, to accomplish its objectives. Any of these claims, with or without merit, could result in costly litigation and divert the attention of key personnel. If such claims are successful, they could result in costly judgments or settlements. Also, as new technologies emerge, such as RFID, the intellectual property rights of parties in such technologies can be uncertain. As a result, products involving such technologies may have higher risk of claims of infringement of the intellectual proprietary rights of third parties.

The inability to protect intellectual property could harm Zebra’s reputation, and its competitive position may be materially damaged. Zebra’s intellectual property is valuable and provides Zebra with certain competitive advantages. Copyrights, patents, trade secrets and contracts are used to protect these proprietary rights. Despite these precautions, it may be possible for third parties to copy aspects of Zebra’s products or, without authorization, to obtain and use information which Zebra regards as trade secrets.

Zebra may incur liabilities as a result of product failures due to actual or apparent design or manufacturing defects. Zebra may be subject to product liability claims, which could include claims for property or economic damage or personal injury, in the event our products present actual or apparent design or manufacturing defects. Such design or manufacturing defects may occur not only in Zebra’s own designed products but also in components provided by third party suppliers. Zebra generally has insurance protection against property damage and personal injury liabilities and also seeks to limit such risk through product design, manufacturing quality control processes, product testing and contractual indemnification from suppliers. However, due to the large and growing size of Zebra’s installed printer base, a design or manufacturing defect involving this large installed printer base could result in product recalls or customer service costs that could have material adverse effects on Zebra’s financial results.

Zebra’s products are subject to U.S. and foreign regulations that pertain to electrical and electronic equipment, which may materially adversely affect Zebra’s business. These regulations influence the design, components or operation of such products. New regulations and changes to current regulations are always possible and, in some jurisdictions, regulations may be introduced with little or no time to bring related products into compliance with these regulations. Zebra’s failure to comply with these regulations may prevent Zebra from selling our products in a certain country. In addition, these regulations may increase our cost of supplying the products by forcing us to redesign existing products or to use more expensive designs or components. In these cases, Zebra may experience unexpected disruptions in our ability to supply customers with products, or we may incur unexpected costs or operational complexities to bring products into compliance. This could have an adverse effect on Zebra’s revenues, gross profit margins and results of operations and increase the volatility of our financial results.

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Zebra is implementing a new company-wide enterprise resource planning (ERP) system. The implementation process is complex and involves a number of risks that may adversely affect Zebra’s business and results of operations. Zebra is currently replacing its multiple legacy business systems at its different sites with a new company-wide, integrated enterprise resource planning (ERP) system to handle various business, operating and financial processes for Zebra and its subsidiaries. The new system will enhance a variety of important functions, such as order entry, invoicing, accounts receivable, accounts payable, financial consolidation, logistics, and internal and external financial and management reporting matters.

ERP implementations are complex and time-consuming projects that involve substantial expenditures on system hardware and software and implementation activities that often continue for several years. Such an integrated, wide-scale implementation is extremely complex and requires transformation of business and financial processes in order to reap the benefits of the ERP system. Significant efforts are required for requirements identification, functional design, process documentation, data conversion, user training and post implementation support. Problems in any of these areas could result in operational issues including delayed shipments or production, missed sales, billing and accounting errors and other operational issues. System delays or malfunctioning could also disrupt Zebra’s ability to timely and accurately process and report key components of the results of its consolidated operations, its financial position and cash flows, which could impact Zebra’s ability to timely complete important business processes such as the evaluation of its internal controls and attestation activities pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.

Until the new ERP system is fully implemented, Zebra expects to incur additional selling, general and administrative expenses and capital expenditures to implement and test the system, and there can be no assurance that other issues relating to the ERP system will not occur or be identified. Zebra’s business and results of operations may be adversely affected if it experiences operating problems and/or cost overruns during the ERP implementation process or if the ERP system and the associated process changes, do not function as expected or give rise to the expected benefits.

Zebra depends on the ongoing service of its senior management and ability to attract and retain other key personnel. The future success of Zebra is substantially dependent on the continued service and continuing contributions of senior management and other key personnel.

The ability to attract, retain and motivate highly skilled employees is important to Zebra’s long-term success. Competition for skill sets in certain functions within our industry is intense, and Zebra may be unable to retain key employees or attract, assimilate or retain other highly qualified employees in the future.

Terrorist attacks or war could lead to further economic instability and adversely affect Zebra’s stock price, operations, and profitability. The terrorist attacks that occurred in the United States on September 11, 2001, caused major instability in the U.S. and other financial markets. The possibility of further acts of terrorism and current and future war risks could have a similar impact. Any such attacks could, among other things, cause further instability in financial markets and could directly, or indirectly through reduced demand, negatively affect Zebra’s facilities and operations or those of its customers or suppliers.

Taxing authority challenges may lead to tax payments exceeding current reserves. Zebra is subject to ongoing tax examinations in various jurisdictions. As a result, we may record incremental tax expense based on expected outcomes of such matters. In addition, we may adjust previously reported tax reserves based on expected results of these examinations. Such adjustments could result in an increase or decrease to Zebra’s effective tax rate.

Economic conditions and financial market disruptions may adversely affect Zebra’s business and results of operations. Adverse economic conditions, in the United States or internationally, or reduced information technology spending may adversely impact our business. As widely reported, financial markets throughout the world experienced extreme disruption in 2008 and 2009, including historically high volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others, failure and potential failures of major financial institutions and unprecedented government support of financial institutions and corporations. A recurrence of these developments and a related general economic downturn could adversely affect Zebra’s business and financial condition through a reduction in demand for our products by our customers. If a slowdown were severe enough, it could require further impairment testing and write-downs of

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goodwill and other intangible assets. Cost reduction actions may be necessary and lead to restructuring charges. A tightening of financial credit could adversely affect our customers, suppliers, outsource manufacturer and channel partners (e.g., distributors and resellers) from obtaining adequate credit for the financing of significant purchases. Another economic downturn could also result in a decrease in or cancellation of orders for Zebra’s products and services; negatively impact Zebra’s ability to collect its accounts receivable on a timely basis; result in additional reserves for uncollectible accounts receivable; and require additional reserves for inventory obsolescence. Higher volatility and fluctuations in foreign exchange rates for the U.S. dollar against currencies such as the euro, the British pound, the Chinese yuan, and the Brazilian real could negatively impact product sales, margins and collections.

Item 1B. Unresolved Staff Comments

Not applicable.

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Item 2. Properties

Zebra’s corporate headquarters are located in Lincolnshire, Illinois, a northern suburb of Chicago. Zebra also conducts its sales, marketing, engineering and operations activities from facilities in Vernon Hills, Illinois, and in Camarillo, California. In March 2011, our operations that are located in Camarillo will be moved to a new facility located in Agoura Hills, California, and the Camarillo facility will be closed.

Zebra’s principal facilities as of December 31, 2010, are listed below:

	Square Footage
Location	Manufacturing, Production & Warehousing		Administrative, Research & Sales		Total		Lease Expires
Vernon Hills, Illinois, USA (S)		111,676		113,429		225,105		June 2014
Camarillo, California, USA (S)		97,921		72,156		170,077		March 2011
Agoura Hills, California, USA (S)		—		75,077		75,077		March 2021
Heerenveen, The Netherlands (S)		48,427		46,145		95,572		January 2012
Greenville, Wisconsin, USA (S)		55,000		5,000		60,000		January 2018
Oakland, California, USA (Z)*		—		47,210		47,210		July 2013
Lincolnshire, Illinois, USA (C)		—		46,339		46,339		June 2014
Lincoln, Rhode Island, USA (S)		—		40,116		40,116		April 2016
Preston, UK (S)		30,450		8,600		39,050		Owned by Zebra
Guangzhou, China (S)		—		32,655		32,655		January 2014
Flowery Branch, Georgia, USA (S)		28,255		2,145		30,400		April 2012
Bourne End, UK (S)		—		27,251		27,251		June 2014
Otay Mesa, California, USA (S)		21,739		4,900		26,639		September 2013
San Jose, California, USA (Z)		—		24,630		24,630		July 2015
Chennai, India (Z)*		—		19,234		19,234		March 2014
McAllen, Texas, USA (S)		15,500		2,500		18,000		September 2011
Chennai, India (Z)*		—		15,095		15,095		November 2012
Germantown, Maryland, USA (Z)		—		13,134		13,134		December 2015
Warsaw, Poland (S)		7,750		3,875		11,625		June 2012
Guangzhou, China (S)		—		11,624		11,624		May 2011
Shanghai, China (S)		—		7,524		7,524		January 2014
Mexico City, Mexico (S)		3,488		3,400		6,888		September 2012
Singapore, Singapore (S)		—		5,360		5,360		February 2012
Total		420,206		627,399		1,047,605

S – Specialty Printing Group; Z – Zebra Enterprise Solution Group; C – Corporate;

* Lease will be transferred to the purchaser in connection with the sale of the Navis business and WhereNet Marine Terminal Solution software product line, which is expected to close in the first quarter of 2011.

Zebra leases various other facilities around the world, which are dedicated to administrative, research and sales functions. These other leases, solely or in aggregate, are not material to Zebra.

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Item 3. Legal Proceedings

See Notes 11 and 20 in the Notes to the Consolidated Financial Statements included in this Form 10-K.

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

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Information: Price Range and Common Stock

Our Class A Common Stock is traded on The NASDAQ Stock Market under the symbol ZBRA. The following table shows the high and low trade prices for each fiscal quarter in 2010 and 2009, as reported by The NASDAQ Stock Market.

2010	High		Low		2009	High		Low
First Quarter	$	30.72	$	26.10	First Quarter	$	21.70	$	16.00
Second Quarter		31.00		24.32	Second Quarter		24.55		18.61
Third Quarter		34.13		24.14	Third Quarter		27.67		20.98
Fourth Quarter		39.31		33.14	Fourth Quarter		28.87		23.76

Source: The NASDAQ Stock Market

At February 11, 2011, the last reported price for the Class A Common Stock was $41.18 per share, and there were 237 registered stockholders of record for Zebra’s Class A Common Stock. In addition, we had approximately 16,000 stockholders who owned Zebra stock in street name.

Dividend Policy

Since our initial public offering in 1991, we have not declared any cash dividends or distributions on our capital stock. Zebra currently does not anticipate paying any cash dividends in the foreseeable future.

Treasury Shares

During the fourth quarter of 2010, pursuant to our Rule 10b5-1 purchase plan, Zebra purchased 900,000 shares of Zebra’s Class A Common Stock at a weighted average share price of $38.56 per share, as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced program		Maximum number of shares that may yet be purchased under the program
October 2010 (October 3 – October 30)		0	$	0.00		0		2,750,000
November 2010 (October 31 – November 27)		0	$	0.00		0		2,750,000
December 2010 (November 28– December 31)		900,000	$	38.56		900,000		1,850,000

(1) In July 2010, Zebra purchased the then remaining authorized shares under our stock repurchase program. On August 3, 2010, Zebra’s Board authorized the purchase of up to an additional 3,000,000 shares under the same terms as previous authorizations. The August 2010 authorization does not have an expiration date.

(2) During the fourth quarter, Zebra did not acquire any shares of Zebra Class A common stock through the withholding of shares necessary to satisfy tax withholding obligations upon the vesting of restricted stock awards.

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Item 6. Selected Financial Data

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) DATA

(In thousands, except per share amounts)

	Year Ended December 31,
	2010			2009			2008			2007		2006
Net sales	$	956,848		$	803,585		$	976,700		$	868,279	$	759,524
Cost of sales		495,979			442,864			497,395			451,161		401,104
Gross profit		460,869			360,721			479,305			417,118		358,420
Total operating expenses		317,017	(1)		291,919	(2)		494,651	(3)		273,933		277,991	(4)
Operating income (loss)		143,852			68,802			(15,346)			143,185		80,429
Income (loss) before income taxes and cumulative effect of accounting change		144,935			70,523			(11,913)			167,375		101,642
Income (loss) before cumulative effect of accounting change		101,778			47,104			(38,421)			110,113		69,627
Cumulative effect of accounting change		—			—			—			—		1,319	(5)
Net income (loss)	$	101,778		$	47,104		$	(38,421)		$	110,113	$	70,946
Earnings (loss) per share before cumulative effect of accounting change
Basic	$	1.78		$	0.79		$	(0.60)		$	1.61	$	0.99
Diluted	$	1.77		$	0.79		$	(0.60)		$	1.60	$	0.98
Earnings (loss) per share
Basic	$	1.78		$	0.79		$	(0.60)		$	1.61	$	1.01
Diluted	$	1.77		$	0.79		$	(0.60)		$	1.60	$	1.00
Weighted average shares outstanding
Basic		57,143			59,306			64,524			68,463		70,516
Diluted		57,428			59,425			64,524			68,908		70,956

CONSOLIDATED BALANCE SHEET DATA

(In thousands)

	December 31,
	2010		2009		2008		2007		2006
Cash and cash equivalents, restricted cash, investments and marketable securities (current and long-term) (6)	$	259,899	$	246,721	$	224,886	$	281,179	$	559,189
Working capital		340,253		306,127		271,831		298,660		404,836
Total assets		878,864		830,479		850,878		1,034,278		963,142
Long-term obligations (7)		10,375		9,432		10,250		8,452		9,969
Stockholders’ equity		730,032		712,129		710,738		902,693		877,681

(1) Includes litigation settlement proceeds received of $1,082,000 and exit, restructuring and integration (ERI) charges of $4,197,000.

(2) Includes asset impairment reversal of $1,058,000 and ERI charges of $12,191,000.

(3) Includes asset impairment charges of $157,600,000 and ERI charges of $20,009,000.

(4) Includes litigation settlement paid of $53,392,000 and insurance receivable reserve of $12,543,000.

(5) Relates to the estimation of forfeitures on prior year compensation expense outstanding at the adoption date of Accounting Standards Codification (“ASC”) 505 and ASC 718. See Note 15 in the Notes to the Consolidated Financial Statements included in this Form 10-K.

(6) The decrease in 2007 and 2008 was principally the result of (i) our acquisitions of WhereNet, proveo AG, and Navis during 2007 and our acquisition of Multispectral Solutions Inc., and (ii) purchase of our stock during 2008. See Note 20 in the Notes to the Consolidated Financial Statements included in this Form 10-K for further discussion of the acquisitions.

(7) Long-term obligations include deferred compensation and unearned revenue. See Note 16 in the Notes to the Consolidated Financial Statements included in this Form 10-K for further discussion of the Deferred Compensation Plan.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations: Fourth Quarter of 2010 versus Fourth Quarter of 2009

Consolidated Results of Operations

(Amounts in thousands, except percentages)

	Three Months Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	223,071	$	197,097		13.2		89.9		88.6
Service & software		25,104		25,425		(1.3)		10.1		11.4
Total net sales		248,175		222,522		11.5		100.0		100.0
Cost of Sales
Tangible products		113,191		110,611		2.3		45.6		49.7
Service & software		11,343		10,433		8.7		4.6		4.7
Total cost of sales		124,534		121,044		2.9		50.2		54.4
Gross profit		123,641		101,478		21.8		49.8		45.6
Operating expenses		83,207		75,240		10.6		33.5		33.8
Operating income		40,434		26,238		54.1		16.3		11.8
Other income		(211)		945		(122.3)		(0.1)		0.4
Income before income taxes		40,223		27,183		48.0		16.2		12.2
Income taxes		12,006		9,553		25.7		4.8		4.3
Net income	$	28,217	$	17,630		60.1		11.4		7.9
Diluted earnings per share	$	0.50	$	0.30

Consolidated Results of Operations – Fourth quarter

Sales

Net sales for the fourth quarter of 2010 compared with the 2009 quarter increased 11.5% from a broad-based increase in demand for Zebra products, driven by the global economic recovery. This was the fourth consecutive quarter of year-over-year growth. The increase in sales was largely attributable to 14.8% growth in hardware sales (including all printer categories and aftermarket parts). Printer unit volume increased 13.3% for the fourth quarter of 2010 compared to levels in 2009.

Sales by product category were as follows (amounts in thousands, except percentages):

	Three Months Ended				Percent Change	Percent  of Net Sales 2010		Percent  of Net Sales 2009
Product Category	December 31, 2010		December 31, 2009
Hardware	$	179,956	$	156,706	14.8		72.5		70.4
Supplies		41,719		39,011	6.9		16.8		17.5
Service and software		25,104		25,425	(1.3)		10.1		11.4
Subtotal		246,779		221,142	11.6		99.4		99.3
Shipping and handling		1,396		1,380	1.2		0 .6		0.7
Total sales	$	248,175	$	222,522	11.5		100.0		100.0

Sales increased in all geographic territories due primarily to the global economic recovery. The sales growth on a percentage basis was greatest in Latin America and Asia Pacific because of higher rates of economic growth in those regions and increasing investment in sales and marketing resources in those regions. Movements in foreign exchange rates decreased sales by $6,364,000 in the Europe, Middle East and Africa regions for the quarter due principally to a weaker euro against the dollar from the prior year.

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Sales to customers by geographic region were as follows (in thousands, except percentages):

	Three Months Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
Geographic Region	December 31, 2010		December 31, 2009
Europe, Middle East and Africa	$	91,800	$	82,377		11.4		37.0		37.0
Latin America		23,215		20,196		14.9		9.4		9.1
Asia-Pacific		34,458		21,984		56.7		13.9		9.9
Total International		149,473		124,557		20.0		60.3		56.0
North America		98,702		97,965		0.8		39.7		44.0
Total sales	$	248,175	$	222,522		11.5		100.0		100.0

Gross Profit

Gross profit increased 21.8% due to higher volumes and an improved product mix, with increased sales primarily in mobile, high-performance, mid-range table top printers and lower freight costs of $1,224,000 in 2010. Gross profit was affected by unfavorable foreign currency movements which decreased fourth quarter gross profit by $5,628,000. As a percentage of sales, gross margin improved from 45.6% to 49.8%. The benefit of outsourcing printer production to a third party, higher volumes, improved product mix and continued cost control contributed to the increase in gross margin.

Operating Expenses

Operating expenses are summarized below (in thousands, except percentages):

	Three Months Ended				Percent Change		Percent of Net  Sales 2010		Percent of Net  Sales 2009
Operating Expenses	December 31, 2010		December 31, 2009
Selling and marketing	$	34,496	$	28,543		20.9		13.9		12.8
Research and development		26,741		21,838		22.5		10.8		9.8
General and administrative		19,492		19,514		(0.1)		7.9		8.8
Amortization of intangible assets		2,426		2,608		(7.0)		1.0		1.2
Litigation settlement		(1,082)		—		—		(0.4)		—
Exit, restructuring and integration costs		1,134		2,737		(58.5)		0.5		1.2
Total operating expenses	$	83,207	$	75,240		10.6		33.5		33.8

Operating expenses for the quarter increased 10.6% due mainly to greater selling and marketing expenses and research and development expenses. Several categories accounted for these increases, including compensation costs which include salaries, benefits, bonuses and commissions. Business development, outside professional services, project expenses, and travel and entertainment expenses all increased over 2009 levels. Litigation settlement relates to escrowed purchase funds received in 2010. Exit, restructuring and integration costs decreased $1,602,000 in the fourth quarter of 2010 as compared to 2009. Zebra’s program for outsourcing its manufacturing operations was completed in 2010. Integration costs associated with the Zebra Enterprise Solutions (ZES) businesses were completed in 2009.

Other Income

Zebra’s non-operating income and expense items are summarized in the following table (in thousands):

	Three Months Ended
	December 31, 2010				December 31, 2009
Investment income		$	570			$	695
Foreign exchange gain (loss)			(448	)			795
Other, net			(333	)			(545	)
Total other income		$	(211	)		$	945

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Investment income declined from lower short-term interest rates in the fourth quarter of 2010 compared with 2009. Zebra recorded a foreign exchange gain in the fourth quarter of 2009 as the U.S. dollar strengthened against the euro.

Operating Income (Loss)

The increased operating income for the fourth quarter of 2010 over the same period in 2009 is the result of increased sales in a stronger economy as noted above.

Income Taxes

The effective income tax rate for the fourth quarter of 2010 was 29.8% compared with 35.1% for the same quarter last year. The tax rate decrease for the fourth quarter of 2010 versus 2009 reflects an extension of Federal R&D tax credits. The company’s consolidated global tax rate has declined as Zebra’s business continued to expand more rapidly in international regions that have lower tax rates.

Business Groups

Specialty Printing Group – Fourth Quarter

(Amounts in thousands, except percentages):

	Three Months Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	217,899	$	194,566		12.0		95.9		95.8
Service & software		9,264		8,556		8.3		4.1		4.2
Total net sales		227,163		203,122		11.8		100.0		100.0
Cost of Sales
Tangible products		109,148		108,521		0.6		48.1		53.5
Service & software		6,128		4,732		29.5		2.7		2.3
Total cost of sales		115,276		113,253		1.8		50.7		55.8
Gross profit		111,887		89,869		24.5		49.3		44.2
Operating expenses		49,445		42,519		16.3		21.8		20.9
Operating income	$	62,442	$	47,350		31.9		27.5		23.3

Specialty Printing Group – Fourth quarter

Net sales in our Specialty Printing Group (SPG) increased 11.8% with the highest percentage growth in sales occurring in Latin America and Asia Pacific, and the highest dollar growth occurring in Asia-Pacific and the Europe, Middle East and Africa region.

The increase in sales was largely attributable to increased hardware sales, with notable increases in sales of high-performance and mid-range tabletop, desktop, mobile printers and aftermarket parts.

Gross profit increased due to higher volumes and an improved product mix, with increased sales primarily in mobile, high-performance, mid-range table top printers and lower freight costs of $1,224,000 in 2010. Gross profit for SPG was affected by unfavorable foreign currency movements which decreased fourth quarter gross profit by $5,628,000. As a percentage of sales, gross margin increased. The benefit of outsourcing printer production to a third party, higher volumes, improved product mix and continued cost control contributed to the increase in gross margin.

25

Printer unit volumes and average selling price information is summarized below:

	Three Months Ended
	December 31, 2010		December 31, 2009		Percent Change
Total printers shipped		276,597		244,100		13.3
Average selling price of printers shipped		$535		$531		0.8

For the fourth quarter of 2010, unit volumes increased in nearly all printer product lines compared to the same period of 2009, with notable volume increases in high-performance tabletop, desktop and mobile printers.

Operating expense changes for SPG in 2010, compared to the same periods in 2009, are due to the following (in thousands):

	Three Months Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	30,419	$	24,463	$	5,956
Business development		4,843		4,094		749
Project expenses		2,302		1,163		1,139
Travel and entertainment		2,266		1,698		568
Exit, restructuring and integration costs		—		1,817		(1,817)
Other changes		9,615		9,284		331
Total operating expenses	$	49,445	$	42,519	$	6,926

Operating expenses for SPG increased primarily due to greater selling and marketing expenses from the higher level of business activity and expansion into new geographic markets. Project expenses increased due to greater expenses related to bringing new products to market. Exit and restructuring charges have declined as the activities related to the outsourcing of our printer manufacturing began to ramp down in the fourth quarter of 2009 and were completed by the second quarter of 2010.

Zebra Enterprise Solutions – Fourth Quarter

(Amounts in thousands, except percentages)

	Three Months Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	5,172	$	2,531		104.3		24.6		13.0
Service & software		15,840		16,869		(6.1)		75.4		87.0
Total net sales		21,012		19,400		8.3		100.0		100.0
Cost of Sales
Tangible products		4,043		2,090		93.4		19.2		10.8
Service & software		5,215		5,701		(8.5)		24.9		29.4
Total cost of sales		9,258		7,791		18.8		44.1		40.2
Gross profit		11,754		11,609		1.2		55.9		59.8
Operating expenses		17,135		17,024		0.7		81.5		87.8
Operating loss	$	(5,381)	$	(5,415)		(0.6)		(25.6)		(28.0)

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Zebra Enterprise Solutions – Fourth quarter

ZES sales increased 8.3% for the fourth quarter of 2010 compared to 2009 primarily due to increased hardware revenue. The improved economic conditions helped increase ZES sales primarily in the automotive and industrial manufacturing verticals. Increases were offset by a reduction to installation services revenue associated with customer project implementations delays. Gross margin dollars increased slightly in the fourth quarter over 2009, yet the margin percentages for the 2010 quarter declined primarily driven by revenue mix change and license revenue which was not recognized from customer project implementation delays.

ZES operating expenses in the fourth quarter of 2010 compared to 2009 are summarized below (in thousands):

	Three Months Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	10,575	$	9,951	$	624
Business development		744		276		468
Travel and entertainment		1,074		822		252
Exit, restructuring and integration costs		443		866		(423)
Litigation settlement		(1,082)		—		(1,082)
Amortization expense		1,589		1,917		(328)
Other changes		3,792		3,192		600
Total operating expenses	$	17,135	$	17,024	$	111

ZES operating expenses for the fourth quarter of 2010 were higher than 2009 due to increases in payroll and benefit costs, selling and marketing, consulting, project expenses and travel and entertainment costs. These increases were offset by reductions to exit, restructuring and integration costs and lower amortization expense due to an intangible asset being fully amortized at the end of 2009. ZES received funds in the fourth quarter of 2010 from a litigation settlements related to escrowed purchase funds.

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Results of Operations: Year ended December 31, 2010 versus Year ended December 31, 2009

Consolidated Results of Operations

(Amounts in thousands, except percentages)

	Year Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	855,269	$	701,044		22.0		89.4		87.2
Service & software		101,579		102,541		(0.9)		10.6		12.8
Total net sales		956,848		803,585		19.1		100.0		100.0
Cost of Sales
Tangible products		455,007		401,727		13.3		47.6		50.0
Service & software		40,972		41,137		(0.4)		4.3		5.1
Total cost of sales		495,979		442,864		12.0		51.8		55.1
Gross profit		460,869		360,721		27.8		48.2		44.9
Operating expenses		317,017		291,919		8.6		33.1		36.3
Operating income		143,852		68,802		109.1		15.0		8.6
Other income		1,083		1,721		(37.1)		0.1		0.2
Income before income taxes		144,935		70,523		105.5		15.1		8.8
Income taxes		43,157		23,419		84.3		4.5		2.9
Net income	$	101,778	$	47,104		116.1		10.6		5.9
Diluted earnings per share	$	1.77	$	0.79

Consolidated Results of Operations – Year to date

Sales

Net sales for the year ended December 31, 2010 compared with 2009 increased 19.1% from a broad-based increase in demand for Zebra products and global economic recovery. The increase in sales was largely attributable to increased hardware sales with notable volume increases in high-performance tabletop, desktop, mobile printers and aftermarket parts. Supplies sales increased from greater shipments of labels and thermal ribbons. Printer unit volume increased 24.4% for the 2010 year compared to levels in 2009. The average selling price increased from $522 in 2009 to $533 in 2010, or by 2.1% due primarily to changes in product mix.

Sales by product category were as follows (amounts in thousands, except percentages):

	Year Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
Product Category	December 31, 2010		December 31, 2009
Hardware	$	682,455	$	539,934		26.4		71.4		67.1
Supplies		167,633		155,847		7.6		17.5		19.4
Service and software		101,579		102,541		(0.9)		10.6		12.8
Subtotal		951,667		798,322		19.2		99.5		99.3
Shipping and handling		5,181		5,263		(1.6)		0.5		0.7
Total sales	$	956,848	$	803,585		19.1		100.0		100.0

Sales increased in all geographic territories due primarily to the global economic recovery. The sales growth on a percentage basis was greatest in Latin America and Asia Pacific because of higher rates of economic growth in those regions and as a result of greater investment in sales and marketing resources. Movements in foreign exchange rates decreased sales in 2010 by $13,733,000 in the Europe, Middle East and Africa regions principally due to a weaker euro against the dollar compared to 2009 levels.

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Sales to customers by geographic region were as follows (in thousands, except percentages):

	Year Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
Geographic Region	December 31, 2010		December 31, 2009
Europe, Middle East and Africa	$	338,573	$	294,296		15.0		35.4		36.6
Latin America		87,278		65,060		34.2		9.1		8.1
Asia-Pacific		123,796		82,120		50.8		12.9		10.2
Total International		549,647		441,476		24.5		57.4		54.9
North America		407,201		362,109		12.5		42.6		45.1
Total sales	$	956,848	$	803,585		19.1		100.0		100.0

Gross Profit

Gross profit increased 27.8% due to higher volumes and an improved product mix, with increased sales primarily in mobile, high-performance and mid-range table top printers, partially offset by $13,552,000 in higher freight costs in 2010. Gross profit was affected by unfavorable foreign currency movements which decreased gross profit by $12,172,000. As a percentage of sales, gross margin improved from 44.9% to 48.2%. The benefit of outsourcing printer production to a third party, higher volumes, a favorable product mix and continued cost control contributed to the increase in gross margin.

Operating Expenses

Operating expenses are summarized below (in thousands, except percentages):

	Year Ended				Percent Change		Percent of Net  Sales 2010		Percent of Net  Sales 2009
Operating Expenses	December 31, 2010		December 31, 2009
Selling and marketing	$	122,689	$	102,535		19.7		12.8		12.8
Research and development		101,930		86,390		18.0		10.7		10.7
General and administrative		79,710		81,395		(2.1)		8.3		10.1
Amortization of intangible assets		9,573		10,466		(8.5)		1.0		1.3
Litigation settlement		(1,082)		—		—		(0.1)		—
Asset impairment charges		—		(1,058)		(100.0)		—		(0.1)
Exit, restructuring and integration costs		4,197		12,191		(65.6)		0.4		1.5
Total operating expenses	$	317,017	$	291,919		8.6		33.1		36.3

Operating expenses for the 2010 compared to 2009 increased 8.6% due to greater selling and marketing expenses and research and development expenses. Several categories accounted for these increases, including compensation costs, business development, project expenses, outside professional services, travel and entertainment, and offsite meeting expenses. Amortization of intangibles decreased $893,000 due to an intangible asset being fully amortized at the end of 2009. Expenses in 2010 were reduced by the receipt of an escrow claim litigation settlement received in the fourth quarter of 2010. During the second quarter of 2009, $1,495,000 of the goodwill impairment charge recorded at the end of 2008 was reversed and a $437,000 impairment charge was recorded related to an intangible asset in our ZES segment.

Exit, restructuring and integration costs decreased in 2010 as compared to 2009 as activities related to the shutdown of our production lines as part of the transition to outsourcing and the integration of our ZES businesses have decreased substantially in 2010. Zebra’s program for outsourcing its manufacturing operations is complete and the related restructuring costs for this program ended. In addition, integration costs associated with integrating the Zebra Enterprise Solutions (ZES) businesses were completed in 2009.

29

Selling and Marketing Expenses

Selling and marketing expenses are summarized below (in thousands):

	Year Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	76,720	$	64,491	$	12,229
Business Development		21,660		17,781		3,879
Travel and entertainment expenses		7,834		5,681		2,153
Other changes		16,475		14,582		1,893
Total selling and marketing expenses	$	122,689	$	102,535	$	20,154

Selling and marketing expenses were higher in 2010 primarily due to increased payroll and benefit costs related to expanding markets and increased sales volume. Payroll and benefit cost increases include salaries, bonus, commissions, benefits and payroll taxes. Other selling and marketing expense categories also increased over 2009 levels due to higher expenses relating to the addition of Zebra sales representatives to expand Zebra’s global reach into new developing geographic regions.

In 2009, comparable costs were lower due to a cost reduction program consisting primarily of headcount reductions implemented during the second half of 2008 in response to the difficult business environment. Expenditures for all types of advertising and marketing costs were lower in 2009 as part of our corporate wide cost control efforts in a challenging economy.

Research and Development Costs

The development of new products and enhancement of existing products are important to Zebra’s business and growth prospects. To maintain and build our product pipeline, we continue to make investments in research and development. In 2010 we introduced an updated two inch “plus” light duty printer and a new Xi4 high-performance printer. In the fourth quarter of 2009 we began shipping our first re-transfer card printer which has photo-quality imaging for security and government use. We also introduced innovative new IQ color labels which enables customers to print spot colors on predetermined areas of a label using any Zebra thermal label printer. This breakthrough product enhances readability, increases business efficiency and improves safety.

In 2010, Zebra Enterprise Solutions introduced new gate, vessel, billing, automation, analytics and monitoring capabilities in its terminal operating system solution, support for rack tracking, RFID support, and goods return for our manufacturing solution along with a new tag form factor for parts replenishment and a new Ethernet enabled proximity exciter. ZES also released enhancements to its equipment fleet management solution to provide added visibility for operator safety and equipment maintenance.

Quarterly product development expenses fluctuate widely depending on the status of ongoing projects. We are committed to a long-term strategy of significant investment in product development. Research and development costs are summarized below (in thousands):

	Year Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	70,243	$	63,036	$	7,207
Professional services expenses		8,069		5,165		2,904
Project expenses		7,943		4,765		3,178
Travel and entertainment expenses		2,749		1,867		882
Other changes		12,926		11,557		1,369
Total research and development costs	$	101,930	$	86,390	$	15,540

The increases in research and development costs relate to increased payroll and benefit costs, compliance and project expenses to bring new products to market.

30

General and Administrative Expenses

General and administrative expenses are summarized below (in thousands):

	Year Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	41,446	$	38,351	$	3,095
Professional services expenses		10,372		12,474		(2,102)
Travel and entertainment expenses		1,837		1,332		505
Depreciation expense		9,519		9,869		(350)
Gain (loss) on equipment		(61)		829		(890)
Other changes		16,597		18,540		(1,943)
Total general and administrative expenses	$	79,710	$	81,395	$	(1,685)

General and administrative expenses decreased slightly overall. Payroll and benefit costs increased due to increased amounts in 2010 for bonus and benefits related to improved operating results in 2010. Consulting expenses related to business improvement initiatives in 2009 were reduced in 2010.

Amortization of Intangible Assets

Amortization of intangible assets decreased $893,000 during 2010 due to an intangible asset being fully amortized at the end of 2009.

Litigation Settlement

In 2010 Zebra received litigation settlement proceeds related to our acquisition of MSSI in 2008. See Note 20 for further information related to the litigation settlement.

Asset Impairment Charges

During the fourth quarter of 2008, we determined that certain impairment indicators existed related to identified intangible assets and conducted an additional impairment test of intangibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill and other intangible assets were impaired requiring total estimated impairment charges of $157,600,000 at December 31, 2008. Upon completion of a detailed second step impairment analysis we recorded a credit of $1,495,000 in the second quarter of 2009 to adjust a portion of our original goodwill impairment. In 2009, we also recorded an impairment charge for an intangible asset of $437,000. See Note 7 of the Consolidated Financial Statements included in this Annual Report on Form 10-K for a more detailed discussion of the asset impairment charges.

Exit, Restructuring and Integration Charges

For 2010, exit and restructuring costs were $4,197,000. For 2009, exit and restructuring costs were $8,985,000 and integration costs were $3,206,000. The reduction is due to the completion of our production outsourcing. See Note 9 of the Consolidated Financial Statements included in this Annual Report on Form 10-K for a more detailed discussion of the exit, restructuring and integration charges.

Other Income

Zebra’s non-operating income and expense items are summarized in the following table (in thousands):

	Year Ended
	December 31, 2010				December 31, 2009
Investment income		$	2,681			$	2,933
Foreign exchange loss			(213	)			(45	)
Other, net			(1,385	)			(1,167	)
Total other income		$	1,083			$	1,721

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	Year Ended
Rate of Return Analysis:	December 31, 2010			December 31, 2009
Average cash and marketable securities balances		$	253,310		$	235,803
Annualized rate of return			1.1%			1.2%

Investment income for 2009 was $958,000 lower due to write-downs recorded in 2009 related to losses on equity investments. Investment income for 2009 was $2,933,000 compared to $2,681,000 in 2010. Excluding the 2009 write-downs, Zebra’s annualized rate of return would have been 1.6% for 2009. Considering this item, investment income in 2010 actually declined primarily from lower short-term interest rates in 2010 compared with 2009. Cash and marketable securities balances for 2010 have increased compared to 2009 as a result of increased cash from operations.

Operating Income

The operating income increase for 2010 was the result of increased sales and gross profit as noted above.

Income Taxes

The effective income tax rate for 2010 was 29.8% compared with an income tax rate of 33.2% for 2009. Zebra’s effective tax rate for 2010 included a $2,764,000 reduction of federal taxes related to prior years’ adjustments for intercompany profit in ending inventory which reduced our effective rate by 1.9%. The tax rate decrease for 2010 versus 2009 reflects an extension of Federal R&D tax credits. The company’s consolidated global tax rate has declined as Zebra’s business continued to expand more rapidly in international regions that have lower tax rates.

Business Groups

Specialty Printing Group - Year to date

(Amounts in thousands, except percentages)

	Year Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	834,392	$	688,057		21.3		95.8		95.2
Service & software		36,644		34,499		6.2		4.2		4.8
Total net sales		871,036		722,556		20.5		100.0		100.0
Cost of Sales
Tangible products		437,936		392,298		11.6		50.3		54.3
Service & software		19,432		18,013		7.9		2.2		2.5
Total cost of sales		457,368		410,311		11.5		52.5		56.8
Gross profit		413,668		312,245		32.5		47.5		43.2
Operating expenses		183,770		164,124		12.0		21.1		22.7
Operating income (loss)	$	229,898	$	148,121		55.2		26.4		20.5

Specialty Printing Group – Year to date

Net sales for SPG increased 20.5% for 2010 as compared to 2009 with the highest percentage growth in sales occurring in Latin America and Asia Pacific, and the highest dollar growth occurring in North America, Latin America and the Europe, Middle East and Africa region.

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The increase in sales was largely attributable to increased hardware sales, with notable increases in sales of high-performance and mid-range tabletop, desktop, mobile printers and aftermarket parts. Supplies sales increased from higher shipments of labels and thermal ribbons.

Gross profit for SPG increased from higher volumes and an improved product mix, with increased sales primarily in mobile, high-performance and mid-range table top printers, partially offset by $13,552,000 in higher freight costs in 2010. Gross profit was affected by unfavorable foreign currency movements which decreased gross profit by $12,172,000. As a percentage of sales, gross margin increased. The benefit of outsourcing printer production to a third party, higher volumes, improved product mix and continued cost control contributed to the increase in gross margin.

Printer unit volumes and average selling price information is summarized below:

	Year Ended
	December 31, 2010		December 31, 2009		Percent Change
Total printers shipped		1,057,744		850,230		24.4
Average selling price of printers shipped	$	533	$	522		2.1

For 2010, product unit volumes increased in nearly all printer product lines compared to the same periods of 2009, with notable volume increases in high-performance and midrange table top, desktop, and mobile. These increases were offset by a reduction in photo printers as this line was discontinued in 2009.

Operating expenses for SPG are summarized below (in thousands):

	Year Ended
	December 31, 2010		December 31, 2009		Increase / (Decrease)
Payroll and benefit costs	$	112,824	$	97,010	$	15,814
Business development		17,996		15,530		2,466
Project expenses		6,646		4,411		2,235
Travel & entertainment		7,314		5,416		1,898
I.S. expenses		2,977		2,278		699
Recruiting Fees		761		272		489
Sales meeting expenses		883		441		442
Exit and restructuring costs		2,123		7,819		(5,696)
Other changes		32,246		30,947		1,299
Total operating expenses	$	183,770	$	164,124	$	19,646

Operating expenses for SPG increased primarily due to greater selling and marketing expenses from the higher level of business activity and expansion into new markets. Operating expenses are higher due to increases in payroll and benefit costs, advertising and marketing costs, consulting fees, compliance costs, and travel and entertainment expenses. Exit, restructuring and integration costs are being reduced as the outsourcing project was completed in 2010.

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Zebra Enterprise Solutions - Year to date

(Amounts in thousands, except percentages)

	Year Ended				Percent Change		Percent  of Net Sales 2010		Percent  of Net Sales 2009
	December 31, 2010		December 31, 2009
Net Sales
Tangible products	$	20,877	$	12,987		60.8		24.3		16.0
Service & software		64,935		68,042		(4.6)		75.7		84.0
Total net sales		85,812		81,029		5.9		100.0		100.0
Cost of Sales
Tangible products		17,071		9,429		81.0		19.9		11.6
Service & software		21,540		23,124		(6.9)		25.1		28.5
Total cost of sales		38,611		32,553		18.6		45.0		40.2
Gross profit		47,201		48,476		(2.6)		55.0		59.8
Operating expenses		66,772		63,730		4.8		77.8		78.7
Operating loss	$	(19,571)	$	(15,254)		28.3		(22.8)		(18.9)

Zebra Enterprise Solutions – Year to date

ZES sales increased 5.9% for the year compared to 2009 primarily due to higher sales of hardware related to bookings and steady license revenue. ZES sales increased primarily in the automotive and industrial manufacturing verticals. Services remained steady in a difficult economy. Margins declined as a result of the change in sales mix.

ZES operating expenses are summarized below (in thousands):

	Year Ended				Increase / (Decrease)
	December 31, 2010		December 31, 2009
Payroll and benefit costs	$	40,944	$	37,576	$	3,368
Business development		2,326		1,108		1,218
Outside professional services		2,539		1,696		843
Project expenses		1,203		508		695
Travel & entertainment		3,809		2,569		1,240
Exit, restructuring and integration costs		673		4,210		(3,537)
Impairment charges		—		(1,059)		1,059
Amortization expense		6,568		7,712		(1,144)
Litigation settlements		(1,082)		—		(1,082)
Other changes		9,792		9,410		382
Total operating expenses	$	66,772	$	63,730	$	3,042

ZES operating expenses for the year were higher than the 2009 period due to increases in payroll and benefit costs, consulting, project expenses and travel and entertainment costs. These increases were offset due to lower provision required for receivables, reduced integration costs, and lower amortization expense due to an intangible asset being fully amortized at the end of 2009. Included in operating expenses for 2010 is a $1,082,000 in litigation settlement proceeds from escrow claims related to our acquisitions. See Note 20 of the Notes to the Consolidated Financial Statements for further information related to the escrow claim.

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Comparison of Years Ended December 31, 2009 and 2008

Consolidated Results of Operations

(Amounts in thousands, except percentages)

	Year Ended
	December 31, 2009		December 31, 2008			Percent Change			Percent of Net Sales - 2009		Percent of Net Sales - 2008
Net Sales
Tangible products	$	701,044	$	871,587			(19.6	)		87.2		89.2
Service & software		102,541		105,113			(2.4	)		12.8		10.8
Total net sales		803,585		976,700			(17.7	)		100.0		100.0
Cost of Sales
Tangible products		401,727		452,208			(11.2	)		50.0		46.3
Service & software		41,137		45,187			(9.0	)		5.1		4.6
Total cost of sales		442,864		497,395			(11.0	)		55.1		50.9
Gross profit		360,721		479,305			(24.7	)		44.9		49.1
Operating expenses		291,919		494,651			(41.0	)		36.3		50.6
Operating income (loss)		68,802		(15,346	)		548.3			8.6		(1.5	)
Other income		1,721		3,433			(49.9	)		0.2		0.3
Income (loss) before income taxes		70,523		(11,913	)		692.0			8.8		(1.2	)
Income taxes		23,419		26,508			(11.7	)		2.9		2.7
Net income (loss)	$	47,104	$	(38,421	)		222.6			5.9		(3.9	)
Diluted earnings (loss) per share	$	0.79	$	(0.60	)

Consolidated Results of Operations – Year to date

Sales

Net sales for the year ended December 31, 2009 compared with 2008 decreased 17.7%, due primarily to global economic conditions. Sales in each geographic region also were down by similar percentages. The decreases in sales were largely attributable to a decline in hardware sales volume. Hardware sales declined proportionally more for our high-performance, midrange table top and desk top printers, which carry a higher sales price and are more profitable. Notable weakness in sales from the economic downturn began in the third quarter of 2008 and continued throughout 2009.

Cash flow hedging activities in 2009 increased revenues by $603,000 compared with a decrease in revenues from cash flow hedging in 2008 of $12,354,000.

Sales by product category were as follows (amounts in thousands, except percentages):

	Year Ended
Product Category	December 31, 2009		December 31, 2008		Percent Change			Percent of Net Sales - 2009		Percent of Net Sales - 2008
Hardware	$	539,934	$	692,638		(22.0	)		67.1		70.9
Supplies		155,847		172,106		(9.4	)		19.4		17.6
Service and software		102,541		105,113		(2.4	)		12.8		10.8
Shipping and handling		5,263		6,843		(23.1	)		0.7		0.7
Total sales	$	803,585	$	976,700		(17.7	)		100.0		100.0

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Sales to customers by geographic region were as follows (in thousands, except percentages):

	Year Ended				Percent Change		Percent of Net Sales - 2009		Percent  of Net Sales - 2008
Geographic Region	December 31, 2009		December 31, 2008
Europe, Middle East and Africa	$	294,296	$	353,273		(16.7)		36.6		36.2
Latin America		65,060		76,489		(14.9)		8.1		7.8
Asia-Pacific		82,120		102,672		(20.0)		10.2		10.5
Total International		441,476		532,434		(17.1)		54.9		54.5
North America		362,109		444,266		(18.5)		45.1		45.5
Total sales	$	803,585	$	976,700		(17.7)		100.0		100.0

Gross Profit

Gross profit in 2009 compared with 2008 decreased due to lower volumes and a less favorable product mix. Higher freight costs were incurred in order to meet customer demand in 2009, primarily in the fourth quarter. Unfavorable foreign exchange rates in 2009 decreased gross profit in 2009 by $16,745,000, net of hedges. These factors were partially offset by the benefit of outsourcing and the full year effect of continued cost containment efforts in 2009.

Operating Expenses

Operating expenses are summarized below (in thousands, except percentages):

	Year Ended				Percent Change		Percent of Net  Sales 2009		Percent of Net  Sales 2008
Operating Expenses	December 31, 2009		December 31, 2008
Selling and marketing	$	102,535	$	126,325		(18.8)		12.8		12.9
Research and development		86,390		95,800		(10.0)		10.7		9.8
General and administrative		81,395		81,644		—		10.1		8.4
Amortization of intangible assets		10,466		18,575		(43.7)		1.3		1.9
Litigation settlement		—		(5,302)		100.0		—		(0.5)
Asset impairment charges		(1,058)		157,600		(100.7)		(0.1)		16.1
Exit, restructuring and integration costs		12,191		20,009		(39.1)		1.5		2.0
Total operating expenses	$	291,919	$	494,651		(41.0)		36.3		50.6

Lower overall operating expenses for 2009 compared to 2008 resulted from decreases in several categories including payroll costs primarily from lower staffing levels, outside commissions, project costs, and travel and entertainment expenses. Amortization of intangibles decreased due to impairments recorded in the fourth quarter of 2008 for the impairment of goodwill, intellectual property and other assets. Expenses in 2008 were reduced by the receipt of an escrow claim litigation settlement received in the third quarter of 2008. The above reductions were partially offset by increases in general and administrative expenses for consulting and benefit costs in 2009.

During the fourth quarter or 2008, we took charges totaling $157,600,000 for the impairment of goodwill, intellectual property and other assets. During the second quarter of 2009, $1,495,000 of the goodwill impairment charge was reversed and a $437,000 impairment charge was recorded related to an intangible asset in our ZES segment.

Exit, restructuring and integration costs decreased in 2009 as compared to 2008 as activities related to the ramp down of our production lines and the integration of our ZES businesses have substantially decreased.

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Selling and Marketing Expenses

Selling and marketing expenses are summarized below (in thousands):

	Year Ended				Increase/(Decrease)
	December 31, 2009		December 31, 2008
Payroll and benefit costs	$	64,920	$	75,986	$	(11,066)
Advertising and market development fund costs		17,781		23,078		(5,297)
Professional services expenses		2,826		3,434		(608)
Travel and entertainment expenses		5,681		8,133		(2,452)
Offsite meetings		418		3,659		(3,241)
Other changes		10,909		12,035		(1,126)
Total selling and marketing expenses	$	102,535	$	126,325	$	(23,790)

Selling and marketing expenses decreased in 2009 due to a cost reduction program consisting primarily of headcount reductions implemented during the second half of 2008 in response to the current difficult business environment. Expenditures for all types of advertising and marketing costs were reduced in 2009 as part of our corporate wide cost control efforts in a challenging economy. Zebra’s reduced sales volume also resulted in lower commissions.

Research and Development Costs

The development of new products and enhancement of existing products are important to Zebra’s business and growth prospects. To maintain and build our product pipeline, we continue to make investments in research and development. In 2009 we introduced an updated two inch “plus” light duty printer and a new Xi4 high-performance printer. In the fourth quarter of 2009 we began shipping our first re-transfer card printer which has photo-quality imaging for security and government use. We also introduced innovative new IQ color labels which enables customers to print spot colors on predetermined areas of a label using any Zebra thermal label printer. This breakthrough product enhances readability, increases business efficiency and improves safety.

In 2009, Zebra Enterprise Solutions introduced new gate, vessel, billing, automation, analytics and monitoring capabilities in its TOS solution, support for rack tracking, RFID support, and goods return for our manufacturing solution along with a new tag form factor for parts replenishment and a new Ethernet enabled proximity exciter. ZES also released enhancements to its equipment fleet management solution to provide added visibility for operator safety and equipment maintenance.

Quarterly product development expenses fluctuate widely depending on the status of ongoing projects. We are committed to a long-term strategy of significant investment in product development. Research and development costs are summarized below (in thousands):

	Year Ended				Increase/(Decrease)
	December 31, 2009		December 31, 2008
Payroll and benefit costs	$	63,323	$	66,652	$	(3,329)
Professional services expenses		5,165		7,144		(1,979)
Project expenses		4,765		8,341		(3,576)
Travel and entertainment expenses		1,867		2,445		(578)
Other changes		11,270		11,218		52
Total research and development costs	$	86,390	$	95,800	$	(9,410)

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The decreases are primarily related to cost reductions taken in 2008 which decreased research and development costs for the full year of 2009. Expenditures in this area were reduced as part of our corporate wide cost control efforts in a challenging economy.

General and Administrative Expenses

General and administrative expenses are summarized below (in thousands):

	Year Ended				Increase/(Decrease)
	December 31, 2009		December 31, 2008
Payroll and benefit costs	$	38,609	$	40,394	$	(1,785)
Professional services expenses		12,474		10,626		1,848
Travel and entertainment expenses		1,332		2,172		(840)
Recruiting fees		216		2,888		(2,672)
Depreciation expense		9,869		8,101		1,768
Gain/loss on sale of assets and equipment		810		(1,127)		1,937
Other changes		18,085		18,590		(505)
Total general and administrative expenses	$	81,395	$	81,644	$	(249)

General and administrative expenses decreased due to a cost reduction program consisting primarily of headcount reductions implemented during the second half of 2008 in response to the current difficult business environment. Offsetting the previously mentioned cost reduction were increases in consulting expenses related to business improvement initiatives and depreciation related to a worldwide enterprise resource planning system implementation.

Amortization of Intangible Assets

Amortization of intangible assets decreased $8,109,000 during 2009 due to intangible asset write-downs in the fourth quarter of 2008. See Asset impairment charges below for more details.

Litigation Settlement

In 2008 Zebra received a litigation settlement related to our recent acquisition of WhereNet. See Note 20 for further information related to the litigation settlement.

Asset Impairment Charges

During the fourth quarter of 2008, we determined that certain impairment indicators existed related to identified intangible assets and conducted an additional impairment test of intangibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill and other intangible assets were impaired requiring total estimated impairment charges of $157,600,000 at December 31, 2008. Upon completion of a detailed second step impairment analysis we recorded a credit of $1,495,000 in the second quarter of 2009 to adjust a portion of our original goodwill impairment. In 2009, we also recorded an impairment charge for an intangible asset or $437,000. See Note 7 of the Consolidated Financial Statements included in this Annual Report on Form 10-K for a more detailed discussion of the asset impairment charges.

Exit, Restructuring and Integration Charges

For 2009, exit and restructuring costs were $8,985,000 and integration costs were $3,206,000. For 2008, exit and restructuring costs were $16,650,000 and integration costs were $3,359,000. The reduction is due to the substantial completion of our production outsourcing. See Note 9 of the Consolidated Financial Statements included in this Annual Report on Form 10-K for a more detailed discussion of the exit, restructuring and integration charges.

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Other Income

Zebra’s non-operating income and expense items are summarized in the following table (in thousands):

	Year Ended
	December 31, 2009				December 31, 2008
Investment income (loss)		$	2,933			$	1,281
Foreign exchange gain (loss)			(45	)			3,518
Other, net			(1,167	)			(1,366	)
Total other income (loss)		$	1,721			$	3,433
Rate of Return Analysis:
Average cash and marketable securities balances		$	235,803			$	253,033
Annualized rate of return			1.2%				0.5%

Investment income for 2009 would have been $958,000 higher due to write-downs recorded in 2009 related to losses on equity investments. Investment income for 2008 would have been $7,271,000 higher due to losses related to the write-down of an auction rate security of $4,374,000 and a long term equity investment in the amount of $2,897,000 in 2008. Excluding these write-downs, investment income for 2009 would have been $3,891,000 compared to $8,552,000 in 2008. Excluding the 2008 write-downs, Zebra’s annualized rate of return would have been 3.4% for 2008, while the 2009 rate of return would have been 1.6%. The investment income for 2008 was higher due to interest rates being higher in 2008 and Zebra’s cash balances also being higher throughout 2008. Cash and marketable securities balances for 2009 have decreased compared to 2008 as a result of payments for acquisitions and for the repurchase of Zebra Class A common stock.

Operating Income (Loss)

The increase in operating income for 2009 over 2008 is the result of cost containment efforts, reduced exit, restructuring and integration costs and the impairment charge recorded in 2008. The operating loss for 2008 is the result of the impairment charges which totaled $157,600,000. See Note 7 of the Consolidated Financial Statements included in this Annual Report on Form 10-K for a more detailed discussion of the asset impairment charges. Also significantly contributing to the operating loss in 2008 were exit, restructuring and integrations costs of $20,009,000, offset by the WhereNet litigation settlement of $5,302,000.

Income Taxes

The effective income tax rate for 2009 was 33.2%. The effective income tax rate for 2008 was not meaningful because a substantial portion of the impairment charges recorded in the fourth quarter of 2008 was not deductible for income tax purposes.

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Business Groups

Specialty Printing Group - Year to date

(Amounts in thousands, except percentages)

	Year Ended				Percent Change		Percent  of Net Sales - 2009		Percent  of Net Sales - 2008
	December 31, 2009		December 31, 2008
Net Sales
Tangible products	$	688,057	$	851,561		(19.2)		95.2		96.5
Service & software		34,499		30,898		11.7		4.8		3.5
Net sales		722,556		882,459		(18.1)		100.0		100.0
Cost of Sales
Tangible products		392,298		439,471		(10.7)		54.3		49.8
Service & software		18,013		14,866		21.2		2.5		1.7
Cost of sales		410,311		454,337		(9.7)		56.8		51.5
Gross profit		312,245		428,122		(27.1)		43.2		48.5
Operating expenses		164,124		221,934		(26.0)		22.7		25.1
Operating income	$	148,121	$	206,188		(28.2)		20.5		23.4

Specialty Printing Group – Year to date

Net sales for SPG decreased 18.1% for 2009 as compared to 2008, with comparable percentage declines in all regions, except for APAC which decreased modestly more than the other regions. New printer products (defined as printers released within 18 months prior to the end of the applicable fiscal period) accounted for 9.0% of printer sales during 2009, compared with 19.1% of printer sales for 2008.

Our international SPG sales are denominated in multiple currencies, primarily the U.S. dollar, British pound and euro. This diversity causes our reported sales to be subject to fluctuations based on changes in currency rates. The stronger U.S. dollar to the euro and the pound had a negative impact of approximately $21,890,000, net of hedges, on sales during 2009 compared with 2008. We typically hedge a portion of anticipated euro-denominated sales to partially protect Zebra against exchange rate movements. For the year, this program resulted in a gain on hedges of $603,000.

Gross profit margin for SPG was affected by unfavorable foreign currency rate movements, which decreased year to date gross profit versus 2008 gross profit by $16,745,000, net of hedges. Lower volume and a less favorable product mix reduced gross margins. Outsourcing of our manufacturing operations resulted in favorable improvement to gross margin in 2009.

Lower overall operating expenses resulted from decreases in payroll costs, business development costs, recruiting and relocation costs, outside commissions, project costs, travel and entertainment expenses, and offsite meetings. Much of the decreased payroll and benefit costs were a result of lower staffing levels and cost reduction initiatives. Amortization of intangibles was reduced by $3,010,000 for 2009 as compared to 2008 due to asset write-downs taken in 2008.

Printer unit volumes and average selling price information is summarized below:

	Year Ended December 31,				Percent
	2009		2008		Change
Total printers shipped		850,230		972,478		(12.6)
Average selling price of printers shipped	$	522	$	603		(13.4)

For 2009, unit volumes decreased in nearly all printer product lines compared to the same periods of 2008, with notable volume decreases in high-performance and midrange table top, partially offset by an increase in kiosk volumes.

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Operating expenses for SPG are summarized below (in thousands):

	Year Ended				Increase/(Decrease)
	December 31, 2009		December 31, 2008
Payroll and benefit costs	$	97,010	$	115,461	$	(18,451)
Business development		15,530		22,395		(6,865)
Project expenses		4,411		6,609		(2,198)
Travel & entertainment		5,416		7,198		(1,782)
Sales meeting expenses		441		3,109		(2,668)
Exit and restructuring costs		7,819		16,488		(8,669)
Impairment charges		—		14,680		(14,680)
Loss (gain) on sale of assets & equipment		802		(1,101)		1,903
Facility relocation costs		5		1,092		(1,087)
Amortization expense		2,754		5,764		(3,010)
Stock options		3,787		5,151		(1,364)
Other changes		26,149		25,088		1,061
Total operating expenses	$	164,124	$	221,934	$	(57,810)

Lower operating expenses for 2009 compared to 2008 resulted from decreases in payroll costs primarily from lower staffing levels and reduced spending as part of a corporate wide initiative to reduce costs in a challenging economy.

Exit and restructuring costs decreased in 2009 as compared to 2008 due to the reduction in activities associated with the transfer of our printer manufacturing to a third-party manufacturer and the closure in 2008 of our Warwick, Rhode Island, supplies manufacturing facility. Restructuring costs relate to organizational changes made in December 2008. Facility relocation costs relate to the move of our UK facility into a new location. Amortization of intangibles decreased due to impairments recorded in the fourth quarter of 2008. Impairment charges relate to the write-down of intellectual property from changes in valuations related to current economic conditions and the business outlook. The above reductions were partially offset by increases in general and administrative expenses for consulting and benefit costs in 2009.

Zebra Enterprise Solutions - Year to date

(Amounts in thousands, except percentages)

	Year Ended
	December 31, 2009			December 31, 2008			Percent Change			Percent of Net Sales - 2009			Percent of Net Sales - 2008
Net Sales
Tangible products	$	12,987		$	20,025			(35.1	)		16.0			21.2
Service & software		68,042			74,216			(8.3	)		84.0			78.8
Net sales		81,029			94,241			(14.0	)		100.0			100.0
Cost of Sales
Tangible products		9,429			12,737			(26.0	)		11.6			13.5
Service & software		23,124			30,321			(23.7	)		28.5			32.2
Cost of sales		32,553			43,058			(24.4	)		40.2			45.7
Gross profit		48,476			51,183			(5.3	)		59.8			54.3
Operating expenses		63,730			217,149			(70.7	)		78.7			230.4
Operating loss	$	(15,254	)	$	(165,966	)		(90.8	)		(18.9	)		(176.1	)

Zebra Enterprise Solutions – Year to date

ZES sales decreased 14.0% for 2009 as compared to 2008 primarily due to the severely challenging economic conditions of ZES’ key markets, namely maritime and automotive markets. Sales declined in hardware and services but remained steady in license fees and maintenance support. Margins improved in services provided to customers due to reduced service costs.

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ZES operating expenses are summarized below (in thousands):

	Year Ended
	December 31, 2009		December 31, 2008		Increase/(Decrease)
Payroll and benefit costs	$	37,576	$	36,841	$	735
Outside professional services		1,696		5,869		(4,173)
Research & development		149		1,827		(1,678)
Travel & entertainment		2,569		4,510		(1,941)
Office services and supplies		599		(1,052)		1,651
Offsite meetings		(16)		673		(689)
Building allocation		(1,696)		(572)		(1,124)
Bad debt expense		(74)		937		(1,011)
Exit and restructuring		1,004		—		1,004
ZES integration		3,206		3,359		(153)
Impairment charges		(1,059)		142,920		(143,979)
Amortization expense		7,712		12,811		(5,099)
WhereNet escrow claim net settlement		—		(5,302)		5,302
Other changes		12,064		14,328		(2,264)
Total increase (decrease)	$	63,730	$	217,149	$	(153,419)

ZES operating expenses for 2009 were lower than the 2008 level due to lower staffing levels which were offset by increased benefit costs and contract employees. Other operating expenses reductions resulted from cost containment efforts, collection of previously reserved accounts, reduced outside service costs, and lower amortization of intangibles due to asset write-downs in the fourth quarter of 2008. Amortization of intangibles was reduced by $5,099,000 for 2009 as compared to 2008. Included in operating expenses for 2008 is a $5,302,000 expense reduction related to a payment received from an escrow claim settlement related to our prior acquisition of WhereNet. See Note 20 of the Notes to the Consolidated Financial Statements for further information related to the WhereNet escrow claim net settlement and Note 7 for further information related to the impairment charges.

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Critical Accounting Policies and Estimates

Management prepared the consolidated financial statements of Zebra under accounting principles generally accepted in the United States of America. These principles require the use of estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we used are reasonable, based upon the information available.

Our estimates and assumptions affect the reported amounts in our financial statements. The following accounting policies comprise those that we believe are the most critical in understanding and evaluating Zebra’s reported financial results.

Revenue Recognition

Product revenue is recognized once four criteria are met: (1) we have persuasive evidence that an arrangement exits; (2) delivery has occurred and title has passed to the customer, which happens at the point of shipment (except in Asia where the terms are FOB destination) provided that no significant obligations remain; (3) the price is fixed and determinable; and (4) collectability is reasonably assured. Other items that affect our revenue recognition include:

Customer returns

Customers have the right to return products that do not function properly within a limited time after delivery. We monitor and track product returns and record a provision for the estimated future returns based on historical experience and any notification received of pending returns. Returns have historically been within expectations and the provisions established, but Zebra cannot guarantee that it will continue to experience return rates consistent with historical patterns. Historically, our product returns have not been significant. However, if a significant issue should arise, it could have a material impact on our financial statements.

Growth Rebates

Some of our channel program partners are offered incentive rebates based on the attainment of specific growth targets related to products they purchase from us over a quarter or year. These rebates are recorded as a reduction to revenue. Each quarter, we estimate the amount of outstanding rebates and establish a reserve for them based on shipment history. Historically, actual rebates have been in line with our estimates.

Price Protection

Some of our customers are offered price protection by Zebra as an incentive to carry inventory of our product. These price protection plans provide that if we lower prices, we will credit them for the price decrease on inventory they hold. We estimate future payments under price protection programs quarterly and establish a reserve, which is charged against revenue. Our customers typically carry limited amounts of inventory, and Zebra infrequently lowers prices on current products. As a result, the amounts paid under these plans have been minimal.

Software Revenue

We sell four types of software and record revenue as follows:

• ZES has fixed fee software implementation projects, for which we use the percentage of completion method for revenue recognition. Under this method of accounting, we recognize revenue based on the ratio of costs incurred to total estimated costs. If increases in projected costs-to-complete are sufficient to create a loss contract, the entire estimated loss is charged to operations in the period the loss first becomes known.

• Our printers contain embedded firmware, which is part of the hardware purchase. We consider the sale of this firmware to be incidental to the sale of the printer and do not attribute any revenue to it.

• We sell a limited amount of prepackaged, or off-the-shelf, software for the creation of bar code labels using our printers. There is no customization required to use this software, and we have no post-shipment obligations on the software. Revenue is recognized at the time this prepackaged software is shipped.

• We sometimes provide custom software as part of a printer installation project. We bill custom software development services separate from the related hardware. Revenue related to custom software is recognized once the custom software development services have been completed and accepted by the customer.

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• We recognize license revenue under Accounting Standards Codification (“ASC”) 985 (formerly Statement of Position No. 97-2, “Software Revenue Recognition”, as amended by Statement of Position No. 98-9, “Software Revenue Recognition, With Respect to Certain Transactions”), when (1) a signed contract is obtained; (2) delivery of the product has occurred; (3) the license fee is fixed or determinable; and (4) collection is probable.

Maintenance and Support Agreements

We enter into post-contract maintenance and support agreements. Revenues are recognized ratably over the service period and the cost of providing these services is expensed as incurred.

Shipping and Handling

We charge our customers for shipping and handling services based upon our internal price list for these items. The amounts billed to customers are recorded as revenue when the product ships. Any costs incurred related to these services are included in cost of sales.

Zebra enters into sales transactions that include more than one product type. This bundle of products might include printers, current or future supplies, and services. When this type of transaction occurs, we allocate the purchase price to each product type based on the fair value of the individual products determined by vendor specific objective evidence. The revenue for each individual product is then recognized when the recognition criteria for that product is fully met.

Investments and Marketable Securities

Investments and marketable securities at December 31, 2010, consisted of the following:

U.S. government and agency securities	10.1	%
Obligations of government sponsored enterprises (1)	2.7	%
State and municipal bonds	63.7	%
Corporate securities	23.5	%

(1) Includes investments in notes issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Bank.

We classify our debt and marketable equity securities in one of three categories: trading, available-for-sale or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those debt securities that Zebra has the ability and intent to hold until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale.

Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of discounts or premiums. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity until realized. As of December 31, 2010, Zebra’s investments in marketable debt securities are classified as available-for-sale. In addition, as of December 31, 2010, all of our investments in marketable debt securities with maturities greater than one year are classified as long-term investments on the balance sheet due to our ability to hold them until maturity.

See Note 3 in the Notes to the Consolidated Financial Statements included in this Form 10-K for the fair value discussion of auction rate security investment valuations.

Accounts Receivable

We have standardized credit granting and review policies and procedures for all customer accounts, including:

• Credit reviews of all new customer accounts,

• Ongoing credit evaluations of current customers,

• Credit limits and payment terms based on available credit information,

• Adjustments to credit limits based upon payment history and the customer’s current credit worthiness,

• An active collection effort by regional credit functions, reporting directly to the corporate financial officers, and

• Limited credit insurance on the majority of our international revenues.

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We reserve for estimated credit losses based upon historical experience and specific customer collection issues. Over the last three years, accounts receivable reserves varied from 1.3% to 3.0% of total accounts receivable. Accounts receivable reserves as of December 31, 2010, were $2,161,000, or 1.4% of the balance due. We believe this reserve level is appropriate considering the quality of the portfolio as of December 31, 2010. While credit losses have historically been within expectations and the provisions established, we cannot guarantee that our credit loss experience will continue to be consistent with historical experience.

Inventories

We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out (FIFO) method, or the current estimated market value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on forecasts of product demand and production requirements for the subsequent twelve months.

Over the last three years, our inventory reserves have ranged from 6.8% to 11.0% of gross inventory. As of December 31, 2010, inventory reserves were $9,837,000, or 8.0% of gross inventory. We believe this reserve level is appropriate considering the quantities and quality of the inventories as of December 31, 2010.

Valuation of Goodwill

We test the impairment of goodwill each year or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We completed our annual assessment during June 2010 and determined that our goodwill was not impaired as of the end of May 2010.

Goodwill of a reporting unit should be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include:

• Significant adverse change in legal factors or in the business climate,

• Adverse action or assessment by a regulator,

• Unanticipated competition,

• Loss of key personnel,

• More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of,

• Testing for recoverability under ASC 360 (formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets) of a significant asset group within a reporting unit,

• Recognition of a goodwill impairment loss in the financial statement of a subsidiary that is a component of a reporting unit, or

• Allocation of a portion of goodwill to a business to be disposed of.

Due to the deterioration of the economy in 2008 and a significant reduction in the price of our stock, we performed an interim test of our goodwill in the fourth quarter of 2008 and determined that the goodwill associated with our ZES segment was impaired. See Note 7 of the Consolidated Financial Statements for further discussion of this impairment charge.

If we believe that one or more of the above indicators of impairment have occurred, we perform an impairment test. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using three valuation methods: Income Approach – Discounted Cash Flow Analysis, Market Approach – Guideline Public Company Method, and Market Approach – Comparative Transactions Method.

Under the “Income Approach – Discounted Cash Flow Analysis” the key assumptions consider sales, cost of sales and operating expenses projected through the year 2015. These assumptions were determined by management utilizing our internal operating plan and assuming growth rates for revenues and operating expenses, and margin assumptions. The fourth key assumption under this approach is the discount rate which is determined by looking at current risk-free rates of capital, current market interest rates and the evaluation of risk premium relevant to the business segment. If our assumptions relative to growth rates were to change or were incorrect, our fair value calculation may change which could result in impairment. The company’s risk factors are discussed under Item 1A of this Form 10-K.

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Under the “Market Approach – Guideline Company Method” we identified 12 publicly traded companies, including Zebra, which we believe have significant relevant similarities. For these 12 companies we calculated the mean ratio of invested capital to revenues and invested capital to EBITDA. Similar to the Income approach discussed above, sales, cost of sales, operating expenses and their respective growth rates were the key assumptions utilized. The market prices of Zebra and other guideline company shares are key assumptions. If these market prices increase, the estimated market value would increase. If the market prices decrease, the estimated market value would decrease.

Under the “Market Approach – Comparative Transactions Method” we looked at 22 market based transactions for companies that have similarities to our business segment, including similarities to one or more of the business lines, markets, growth prospects, margins and size. We calculated mean revenue and EBITDA multiples for the selected transactions. These multiples were applied to forecasted Zebra results for that segment to estimate market value. The key assumptions and impact to changes to those assumptions would be similar to those assumptions under the “Income Approach – Discounted Cash Flow Analysis” and the “Market Approach – Guideline Company Method”.

The results of these three methods are weighted based upon managements’ determination with more weight attached to the Income approach because it considers anticipated future financial performance. The Market approaches are based upon historical and current economic conditions which might not reflect the long term prospects or opportunities for our business segment being evaluated.

If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill.

Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill from our 2007 and 2008 ZES acquisitions was impaired requiring total estimated goodwill impairment charges of $113,679,000 at December 31, 2008. Upon completion of a detailed second step impairment analysis we recorded a credit of $1,495,000 in the second quarter of 2009 to adjust a portion of the original estimated goodwill impairment for ZES.

Valuation of Long-Lived and Other Intangible Assets

We evaluate the impairment of identifiable intangibles and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that may trigger an impairment review consist of:

• Significant underperformance relative to expected historical or projected future operating results,

• Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

• Significant negative industry or economic trends,

• Significant decline in Zebra’s stock price for a sustained period, and

• Significant decline in market capitalization relative to net book value.

If we believe that one or more of the above indicators of impairment have occurred and the undiscounted cash flow test has failed in the case of amortizable assets, we measure impairment based on projected discounted cash flows using a discount rate that incorporates the risk inherent in the cash flows.

During the fourth quarter of 2008, we determined that certain impairment indicators related to identified intangible assets existed and conducted an additional impairment test of intangibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our other intangible assets consisting of our 2007 and 2008 ZES acquisitions and intellectual property were impaired requiring total estimated impairment charges of $43,921,000 at December 31, 2008. The intangible asset impairment charges in our SPG segment were related primarily to radio frequency identification patents and patent rights. The intangible asset impairment charges in our ZES segment were related to customer relationships, technology, third party technology licenses and non-competition agreements. We recorded an impairment charge to a ZES intangible asset of $437,000 in 2009. No impairment charges were recorded in 2010.

Net intangible assets, long-lived assets and goodwill amounted to $290,622,000 as of December 31, 2010.

Income Taxes

On January 1, 2007, we adopted ASC 740 (formerly FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109). According to ASC 740, we identified, evaluated, and measured the amount of income tax benefits to be recognized for all of our income tax positions. During 2008, we recognized an increase of approximately $4,000,000 in the liability for unrecognized tax benefits related to an acquisition.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 1, 2008	$	—
Additions based on tax positions related to 2008		4,000
Additions based on tax positions related to 2009		—
Additions based on tax positions related to 2010		—
Balance at December 31, 2010	$	4,000

Zebra’s continuing practice is to recognize interest and penalties related to income tax matters as part of income tax expense. For the years ended December 31, 2010 and December 31, 2009, we did not accrue any interest or penalties into income tax expense.

Zebra has concluded all U.S. federal income tax audits for years through 2006. The tax years 2006 through 2009 remain open to examination by multiple state taxing jurisdictions. Tax authorities in the United Kingdom have completed income tax audits for tax years through 2006.

Included in deferred tax assets are amounts related to federal and state net operating losses that resulted from our acquisition of WhereNet Corp. As of December 31, 2010, we had approximately $21,932,000 of federal net operating loss carryforwards available to offset future taxable income which expire in 2022 through 2027. As of December 31, 2010, we also had approximately $27,134,000 of state net operating loss carryforwards which expire in 2012 through 2020. Zebra’s intention is to utilize these net operating loss carryforwards to offset future income tax expense. Under the United States Tax Reform Act of 1986, the amounts of benefits from net operating loss carryforwards may be impaired or limited in certain circumstances, including significant changes in ownership interests. In addition, as of December 31, 2010 Zebra had approximately $8,832,000 of foreign net operating loss carryforwards which currently can be carried forward indefinitely.

The effective income tax rate for the year ended December 31, 2010 was 29.8%.

Contingencies

We record estimated liabilities related to contingencies based on our estimates of the probable outcomes. Quarterly, we assess the potential liability related to pending litigation, tax audits and other contingencies and confirm or revise estimates and reserves as appropriate.

For further information regarding material pending legal proceedings, see Note 11 in the Notes to the Consolidated Financial Statements included in the Form 10-K.

Equity-Based Compensation

As of December 31, 2010, Zebra had an active equity-based compensation plan and a stock purchase plan available for future grants. We accounted for these plans in accordance with ASC 505 and ASC 718 (formerly SFAS No. 123(R), Share-Based Payments). Zebra recognizes compensation costs using the straight-line method over the vesting period of 1 month to 5 years. See Notes 2 and 15 to the Consolidated Financial Statements included in the Form 10-K for further information.

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Liquidity and Capital Resources

(Amounts in thousands, except percentages):

	Year Ended
Rate of Return Analysis:	December 31, 2010			December 31, 2009
Average cash and marketable securities balances	$	253,310		$	235,803
Annualized rate of return		1.1	%		1.2	%

Average cash and marketable securities balances for the year of 2010 increased compared to 2009 as a result of increased cash provided by operations in 2010 versus 2009.

As of December 31, 2010, Zebra had $259,899,000 in cash, restricted cash, investments and marketable securities, compared with $246,721,000 at December 31, 2009. Factors affecting cash and investment balances during 2010 include the following (changes below include the impact of foreign currency):

• Operations provided cash in the amount of $140,459,000, primarily from net income.

• Accounts receivable increased $4,603,000 because of higher sales.

• Inventories increased $33,884,000 due to increases in raw materials and finished goods.

• Accounts payable increased $6,619,000, due to the timing of vendor payments and increased purchasing as a result of higher demand.

• Accrued liabilities increased $15,386,000, due to increased bonus and benefit accruals.

• Taxes payable increased $9,272,000 due to increased earnings.

• Purchases of property and equipment totaled $30,721,000.

• Net sales of investments totaled $102,485,000.

• Purchases of treasury shares totaled $102,091,000. Zebra made open market repurchases of our shares under authorizations of the Board of Directors announced October 27, 2008 and August 3, 2010.

• Stock option exercises and purchases under the stock purchase plan contributed $8,975,000.

Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements.

Contractual Obligations

Zebra’s contractual obligations as of December 31, 2010 were (in thousands):

	Payments due by period
	Total			Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations		$	48,017	$	12,269	$	19,354	$	7,908	$	8,486
Deferred compensation liability			3,427		—		—		—		3,427
Deferred revenue			33,521		26,757		6,764		—		—
Purchase obligations			69,742		69,742		—		—		—
Total		$	154,707	$	108,768	$	26,118	$	7,908	$	11,913

Purchase obligations are for purchases made in the normal course of business to meet operational requirements, primarily raw materials.

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On August 14, 2008, Zebra entered into a revolving credit agreement for a five-year $100 million revolving credit facility. The funds under this credit agreement are available for general corporate purposes of Zebra and its subsidiaries in the ordinary course of business and other purposes permitted by the agreement. As of December 31, 2010, we had established letters of credit amounting to $3,858,000, which reduce the funds available for borrowing under the agreement. No amounts were outstanding under the credit agreement as of December 31, 2010.

On January 28, 2011, we entered into a Securities Purchase Agreement with Cargotec Corporation to sell all of our interest in the Navis business and MTS for approximately $190 million in cash. We are retaining the real time location, tags and readers portion of the WhereNet business, along with the WhereNet applications that are sold into non-maritime industries. The sale is expected to close in the first quarter of 2011.

Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements.

Recently Issued Accounting Pronouncements

In October 2009, the FASB issued update 2009-13, ASC 605, Revenue Recognition: Multiple –Deliverable Revenue Arrangements-a consensus of the FASB Emerging Issues Task Force. The revised guidance provides for two significant changes to existing multiple element arrangement guidance. The first relates to the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. This change is significant as it will likely result in the requirement to separate more deliverables within an arrangement, ultimately leading to less revenue deferral. The second change modifies the manner in which the transaction consideration is allocated across the separately identifiable deliverables. These changes are likely to result in earlier recognition of revenue for multiple-element arrangements than under previous guidance. This standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This standard did not have a material effect upon our consolidated financial statements.

In October 2009, the FASB issued update 2009-14, ASC 985, Software: Certain Revenue Arrangements That Include Software Elements – a consensus of the FASB Emerging Issues Task Force. This updated guidance is expected to significantly affect how entities account for revenue arrangements that contain both hardware and software elements. This standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This standard did not have a material effect upon our consolidated financial statements.

In January 2010, the FASB issued update 2010-06, ASC 820, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements. This updated guidance requires new disclosures related to transfers in and out of Levels 1 and 2. The standard also provides guidance on the disclosures related to Level 3 activities. In addition, existing disclosures related to disaggregation levels and disclosures about inputs and valuation techniques are clarified. This standard is effective for interim and annual periods beginning after December 15, 2009. This standard did not have a material effect upon our consolidated financial statements.

In December 2010, the FASB issued update 2010-28, ASC 350, Intangibles – Goodwill and Other: When to Perfrom Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force). This updated guidance requires entities with reporting units with zero or negative carrying amounts to perform and additional test to determine if goodwill has been impaired and to calculate the amount of impairment (Step 2). This standard is effective for interim and annual periods beginning after December 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

In December 2010, the FASB issued update 2010-29, ASC 805, Business Combinations: Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force). The standard provides updated guidance on the disclosures related to business combinations. This standard is effective for interim and annual periods beginning after December 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Zebra is exposed to the impact of changes in interest rates because of our large investment portfolio. As stated in our written investment policy, the investment portfolio is viewed as a strategic resource that will be managed to achieve above market rates of return in exchange for accepting a prudent amount of incremental risk, which includes the risk of interest rate movements. Risk tolerance is constrained by an overriding objective to preserve capital across each quarterly reporting cycle.

Zebra mitigates interest rate risk with an investment policy that requires the use of outside professional investment managers, specified investment liquidity levels, and broad diversification across investment strategies, and which limits the types of investments that may be made. Moreover, the policy requires due diligence of each investment manager both before employment and on an ongoing basis.

The following table sets forth the full year impact of a one-percentage point movement in interest rates on the value of Zebra’s investment portfolio (in thousands, except per share data).

	As of December 31,
Interest rate sensitive instruments	2010		2009
+1 percentage point movement
Effect on Pretax Income	$	(1,974)	$	(2,284)
Effect on Diluted EPS (after tax)	$	(0.02)	$	(0.03)
-1 percentage point movement
Effect on Pretax Income	$	1,974	$	2,284
Effect on Diluted EPS (after tax)	$	0.02	$	0.03

Because these securities are classified as available-for-sale under ASC 320 (formerly SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities), the impact of a one-percentage point movement in interest rates occurs over an extended period of time as investments are sold and the funds are subsequently reinvested.

Foreign Exchange Risk

We conduct business in over 100 countries throughout the world and, therefore, at times are exposed to risk based on movements in foreign exchange rates. On occasion, we invoice customers in their local currency and have a resulting foreign currency denominated revenue transaction and accounts receivable. We also purchase certain raw materials and other items in foreign currencies. We manage these risks using derivative financial instruments. See Note 10 of the Notes to the Consolidated Financial Statements included in this form 10-K for further discussions of hedging activities.

The following table sets forth the impact of a ten percent movement in the dollar/pound and dollar/euro rates measured as if Zebra did not engage in the selective hedging practices described above and in Note 10. It is based on the dollar/euro and dollar/pound exchange rates and euro and pound denominated assets and liabilities (in thousands, except per share data).

	As of December 31,
Foreign exchange	2010		2009
Dollar/pound
Effect on Pretax Income	$	1,233	$	575
Effect on Diluted EPS (after tax)	$	0.02	$	0.01
Dollar/euro
Effect on Pretax Income	$	5,585	$	2,805
Effect on Diluted EPS (after tax)	$	0.07	$	0.03
Euro/pound
Effect on Pretax Income	$	0	$	1,971
Effect on Diluted EPS (after tax)	$	0.00	$	0.02

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Equity Price Risk

Zebra’s investment manager uses a variety of investment strategies, some of which involve the use of equity securities. Zebra utilizes a Value-at-Risk (VaR) model to determine the maximum potential one-day loss in the fair value of its interest rate, foreign exchange and equity price sensitive instruments.

From time to time, Zebra has taken direct equity positions in companies. These investments relate to potential acquisitions and other strategic business opportunities. To the extent that it has a direct investment in the equity securities of another company, Zebra is exposed to the risks associated with such investments. However, at the end of 2010 and 2009, Zebra held no equity positions.

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Item 8. Financial Statements and Supplementary Data

The financial statements and schedule of Zebra are annexed to this report as pages F-2 through F-38. An index to such materials appears on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Not applicable.

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Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this Form 10-K. The evaluation was conducted under the supervision of our Disclosure Committee, and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by us in our reports that we file or furnish under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on this assessment and those criteria, our management believes that, as of December 31, 2010, our internal control over financial reporting is effective. Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on Zebra’s internal control over financial reporting. Ernst & Young LLP’s report is included on page 56 of this report on Form 10-K.

Changes in Internal Control over Financial Reporting

In January 2008, Zebra began a program to update substantially all of its key financial systems. As portions of these systems are completed, they will be subject to the requirements related to internal control over financial reporting. The requirements for internal control over financial reporting are a fundamental element of the design and implementation of these systems. As of January 1, 2010, we changed the functional currency of our UK subsidiary from the pound to the U.S. dollar. As a result we modified and enhanced our reconciliation and management review controls over this subsidiary. The modified controls have been in effect since the conversion date. During 2010, we made additional changes to our controls and procedures as part of our ongoing monitoring of our controls. However, none of these changes has materially affected, or is reasonably likely to materially affect, and there were no other changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Zebra have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

of Zebra Technologies Corporation:

We have audited Zebra Technologies Corporation internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Zebra Technologies Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Zebra Technologies Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Zebra Technologies Corporation as of December 31, 2010 and 2009, and the related consolidated statements of earnings (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2010 and the schedule listed in the index at Item 15, our report dated February 24, 2011 expressed an unqualified opinion thereon.

/s/Ernst & Young LLP

Chicago, Illinois

February 24, 2011

54

Item 9B. Other Information

Not applicable.

55

PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have adopted a Code of Ethics for Senior Financial Officers that applies to Zebra’s Chief Executive Officer, Chief Financial Officer and the Vice President, Finance. The Code of Ethics is posted on the Investor Relations – Corporate Governance page of Zebra’s Internet Web site, www.zebra.com, and is available for download. Any waiver from the Code of Ethics and any amendment to the Code of Ethics will be disclosed on such page of Zebra’s Web site

All other information in response to this item is incorporated by reference from the Proxy Statement sections entitled “Corporate Governance,” “Election of Directors,” “Board and Committees of the Board,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance.”.”

Item 11. Executive Compensation

The information in response to this item is incorporated by reference from the Proxy Statement sections entitled “Executive Compensation,” “Compensation Discussion and Analysis,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.”

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

The information in response to this item is incorporated by reference from the Proxy Statement sections entitled “Ownership of our Common Stock” and “Equity Compensation Plan Information.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information in response to this item is incorporated by reference from the Proxy Statement section entitled “Corporate Governance.”

Item 14. Principal Accounting Fees and Services

The information in response to this item is incorporated by reference from the Proxy Statement section entitled “Fees of Independent Auditors.”

56

PART IV

Item 15. Exhibits, Financial Statement Schedules

The financial statements and schedule filed as part of this report are listed in the accompanying Index to Financial Statements and Schedule. The exhibits filed as a part of this report are listed in the accompanying Index to Exhibits.

57

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 24thday of February 2011.

ZEBRA TECHNOLOGIES CORPORATION
	By: /s/ Anders Gustafsson
	Anders Gustafsson
	Chief Executive Officer

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

Signature	Title	Date
/s/Anders Gustafsson Anders Gustafsson	Chief Executive Officer and Director (Principal Executive Officer)	February 24, 2011
/s/Gerhard Cless Gerhard Cless	Executive Vice President, Director	February 24, 2011
/s/ Michael C. Smiley Michael C. Smiley	Chief Financial Officer (Principal Financial Officer)	February 24, 2011
/s/Todd R. Naughton Todd R. Naughton	Vice President, Finance (Principal Accounting Officer)	February 24, 2011
/s/Michael A. Smith Michael A. Smith	Director and Chairman of the Board of Directors	February 24, 2011
/s/ Andrew Ludwick Andrew Ludwick	Director	February 24, 2011
/s/Ross W. Manire Ross W. Manire	Director	February 24, 2011
/s/Robert J. Potter Robert J. Potter	Director	February 24, 2011
/s/ Richard Keyser Richard Keyser	Director	February 24, 2011

58

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

	Page
Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009		F-3
Consolidated Statements of Earnings (Loss) for the years ended December 31, 2010, 2009, and 2008		F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December  31, 2010, 2009, and 2008		F-5
Consolidated Statements of Stockholders’ Equity for the years ended December  31, 2010, 2009, and 2008		F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009, and 2008		F-7
Notes to Consolidated Financial Statements		F-8
Financial Statement Schedule
The following financial statement schedule is included herein:
Schedule II - Valuation and Qualifying Accounts		F-37

All other financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or related notes.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

of Zebra Technologies Corporation:

We have audited the accompanying consolidated balance sheets of Zebra Technologies Corporation (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of earnings (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index referenced in Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Zebra Technologies Corporation at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related 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.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Zebra Technologies Corporation’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2011 expressed an unqualified opinion thereon.

/s/Ernst & Young LLP

Chicago, Illinois

February 24, 2011

F-2

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	December 31, 2010		December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	47,476	$	38,943
Restricted cash		1,378		1,725
Investments and marketable securities		125,567		114,064
Accounts receivable, net of allowances of $2,161 in 2010 and $2,186 in 2009		154,146		150,992
Inventories, net		113,742		79,926
Deferred income taxes		19,162		10,792
Income taxes receivable		—		4,724
Prepaid expenses and other current assets		14,833		9,771
Total current assets		476,304		410,937
Property and equipment at cost, net of accumulated depreciation and amortization		88,983		77,589
Long term deferred income taxes		21,254		35,842
Goodwill		151,933		153,225
Other intangibles, net		49,706		55,982
Long term investments and marketable securities		85,478		91,989
Other assets		5,206		4,915
Total assets	$	878,864	$	830,479
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	35,304	$	28,137
Accrued liabilities		68,090		52,591
Deferred revenue		26,757		24,082
Income taxes payable		5,900		—
Total current liabilities		136,051		104,810
Deferred rent		2,406		4,108
Other long-term liabilities		10,375		9,432
Total liabilities		148,832		118,350
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock		—		—
Class A Common Stock		722		722
Additional paid-in capital		129,715		136,104
Treasury stock		(462,029)		(385,831)
Retained earnings		1,070,973		969,195
Accumulated other comprehensive income (loss)		(9,349)		(8,061)
Total stockholders’ equity		730,032		712,129
Total liabilities and stockholders’ equity	$	878,864	$	830,479

See accompanying notes to consolidated financial statements.

F-3

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Amounts in thousands, except per share data)

	Year Ended December 31,
	2010		2009		2008
Net sales
Net sales of tangible products	$	855,269	$	701,044	$	871,587
Revenue from services and software		101,579		102,541		105,113
Total net sales		956,848		803,585		976,700
Cost of sales
Cost of sales of tangible products		455,007		401,727		452,208
Cost of services and software		40,972		41,137		45,187
Total cost of sales		495,979		442,864		497,395
Gross profit		460,869		360,721		479,305
Operating expenses:
Selling and marketing		122,689		102,535		126,325
Research and development		101,930		86,390		95,800
General and administrative		79,710		81,395		81,644
Amortization of intangible assets		9,573		10,466		18,575
Litigation settlement		(1,082)		—		(5,302)
Exit, restructuring and integration costs		4,197		12,191		20,009
Asset impairment charges		—		(1,058)		157,600
Total operating expenses		317,017		291,919		494,651
Operating income (loss)		143,852		68,802		(15,346)
Other income (expense):
Investment income		2,681		2,933		1,281
Foreign exchange gain (loss)		(213)		(45)		3,518
Other, net		(1,385)		(1,167)		(1,366)
Total other income		1,083		1,721		3,433
Income (loss) before income taxes		144,935		70,523		(11,913)
Income taxes		43,157		23,419		26,508
Net income (loss)	$	101,778	$	47,104	$	(38,421)
Basic earnings (loss) per share	$	1.78	$	0.79	$	(0.60)
Diluted earnings (loss) per share	$	1.77	$	0.79	$	(0.60)
Basic weighted average shares outstanding		57,143		59,306		64,524
Diluted weighted average and equivalent shares outstanding		57,428		59,425		64,524

See accompanying notes to consolidated financial statements.

F-4

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

	Year Ended December 31,
	2010		2009		2008
Net income (loss)	$	101,778	$	47,104	$	(38,421)
Other comprehensive income (loss):
Unrealized gain/(loss) on hedging transactions, net of income taxes		(949)		19		5,750
Unrealized holding gains/(losses) on investments, net of income taxes		(406)		737		(543)
Foreign currency translation adjustment		67		3,972		(22,991)
Comprehensive income (loss)	$	100,490	$	51,832	$	(56,205)

See accompanying notes to consolidated financial statements.

F-5

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)

	Class A Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2007	$	722	$	141,522	$	(205,058)	$	960,512	$	4,995	$	902,693
Repurchase of 6,008,232 shares of Class A Common Stock		—		—		(157,582)		—		—		(157,582)
Issuance of 499,576 treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards		—		(11,348)		18,493		—		—		7,145
Additional tax benefit resulting from exercise of options		—		(275)		—		—		—		(275)
Equity-based compensation		—		14,962		—		—		—		14,962
Net loss		—		—		—		(38,421)		—		(38,421)
Unrealized holding loss on investments (net of income taxes)		—		—		—		—		(543)		(543)
Unrealized holding gain on hedging transactions (net of income taxes)		—		—		—		—		5,750		5,750
Foreign currency translation adjustment		—		—		—		—		(22,991)		(22,991)
Balance at December 31, 2008	$	722	$	144,861	$	(344,147)	$	922,091	$	(12,789)	$	710,738
Repurchase of 3,173,182 shares of Class A Common Stock		—		—		(65,445)		—		—		(65,445)
Issuance of 691,176 treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards		—		(18,789)		23,761		—		—		4,972
Additional tax benefit resulting from exercise of options		—		(1,435)		—		—		—		(1,435)
Equity-based compensation		—		11,467		—		—		—		11,467
Net income		—		—		—		47,104		—		47,104
Unrealized holding gain on investments (net of income taxes)		—		—		—		—		737		737
Unrealized holding gain on hedging transactions (net of income taxes)		—		—		—		—		19		19
Foreign currency translation adjustment		—		—		—		—		3,972		3,972
Balance at December 31, 2009	$	722	$	136,104	$	(385,831)	$	969,195	$	(8,061)	$	712,129
Repurchase of 3,349,286 shares of Class A Common Stock		—		—		(102,091)		—		—		(102,091)
Issuance of 765,078 treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards		—		(16,918)		25,893		—		—		8,975
Additional tax benefit resulting from exercise of options		—		(1,342)		—		—		—		(1,342)
Equity-based compensation		—		11,871		—		—		—		11,871
Net income		—		—		—		101,778		—		101,778
Unrealized holding loss on investments (net of income taxes)		—		—		—		—		(406)		(406)
Unrealized holding loss on hedging transactions (net of income taxes)		—		—		—		—		(949)		(949)
Foreign currency translation adjustment		—		—		—		—		67		67
Balance at December 31, 2010	$	722	$	129,715	$	(462,029)	$	1,070,973	$	(9,349)	$	730,032

See accompanying notes to consolidated financial statements.

F-6

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	Year Ended December 31,
	2010			2009			2008
Cash flows from operating activities:
Net income (loss)	$	101,778		$	47,104		$	(38,421	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		31,209			32,913			38,581
Equity-based compensation		11,871			11,467			14,962
Asset impairment charges		—			(1,058	)		157,600
Impairment of investments		—			958			7,271
Excess tax benefit from share-based compensation		(244	)		(13	)		(192	)
Loss (gain) on sale of assets		(58	)		829			(1,121	)
Deferred income taxes		(1,347	)		12,550			(23,138	)
Changes in assets and liabilities, net of businesses acquired:
Accounts receivable, net		(4,603	)		8,747			(21,891	)
Inventories, net		(33,884	)		22,315			(26,222	)
Other assets		(3,993	)		(733	)		(2,758	)
Accounts payable		6,619			(16,105	)		17,891
Accrued liabilities		15,386			(16,315	)		1,429
Deferred revenue		3,414			4,966			11,281
Income taxes payable		16,980			(2,008	)		(1,002	)
Other operating activities		(2,669	)		81			4,012
Net cash provided by operating activities		140,459			105,698			138,282
Cash flows from investing activities:
Purchases of property and equipment		(30,721	)		(24,890	)		(40,889	)
Proceeds from sale of asset		—			—			14,796
Acquisition of businesses, net of cash acquired		—			—			(18,588	)
Acquisition of intangible assets		(3,497	)		(425	)		(1,384	)
Purchases of investments		(382,091	)		(329,292	)		(723,791	)
Maturities of investments		274,208			257,936			592,749
Proceeds from sales of investments		102,485			56,020			198,541
Net cash provided by (used in) investing activities		(39,616	)		(40,651	)		21,434
Cash flows from financing activities:
Purchase of treasury shares		(102,091	)		(65,445	)		(157,582	)
Proceeds from exercise of stock options and stock purchase plan purchases		8,975			4,972			7,145
Excess tax benefit from share-based compensation		244			13			192
Net cash used in financing activities		(92,872	)		(60,460	)		(150,245	)
Effect of exchange rate changes on cash		562			1,089			(14,415	)
Net increase (decrease) in cash and cash equivalents		8,533			5,676			(4,944	)
Cash and cash equivalents at beginning of year		38,943			33,267			38,211
Cash and cash equivalents at end of year	$	47,476		$	38,943		$	33,267
Supplemental disclosures of cash flow information:
Income taxes paid	$	26,563		$	10,742		$	49,092

See accompanying notes to consolidated financial statements.

F-7

ZEBRA TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Description of Business

Zebra Technologies Corporation and its wholly-owned subsidiaries (Zebra) design, manufacture, sell and support a broad range of direct thermal and thermal transfer label printers, radio frequency identification printer/encoders, dye sublimation card printers, real-time locating solutions, related accessories and support software. These products are used principally in automatic identification (auto ID), data collection and personal identification applications and are distributed world-wide through a network of resellers, distributors and end users representing a wide cross-section of industrial, service and government organizations.

In 2008 and 2007, we acquired WhereNet Corp., proveo AG, Navis Holdings, LLC and Multispectral Solutions Inc., which we refer to as Zebra Enterprise Solutions Group (ZES). In 2009 and 2008, we integrated these businesses into a single business group and are reporting their results separately from our specialty printing business. Together, these ZES companies give Zebra the ability to deliver more high-value applications that help our customers identify, track and manage assets, transactions and people. The solutions these companies provide are sold on a contract basis and are typically installed over several quarters. These contracts cover a range of services, including design, installation and ongoing maintenance services. On January 31, 2011, we announced a definitive agreement to sell the Navis operations and certain other assets of ZES. Upon completion of the transaction, which is expected to occur in the first quarter of 2011, we will consolidate the remaining operations of ZES into Zebra’s SPG segment and no longer report ZES as a separate segment, as the remaining ZES entities will not be material.

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation. These consolidated financial statements were prepared on a consolidated basis to include the accounts of Zebra and its wholly owned subsidiaries. All significant intercompany accounts, transactions and unrealized profit were eliminated in consolidation.

Fiscal Calendar. Zebra operates on a 4 week/4 week/5 week fiscal quarter, and each fiscal quarter ends on a Saturday. The fiscal year always begins on January 1 and ends on December 31. This fiscal calendar results in some fiscal quarters being either greater than or less than 13 weeks, depending on the days of the week those dates fall. During the 2010 fiscal year, our quarter end dates were as follows:

• April 3,

• July 3,

• October 2, and

• December 31.

Use of Estimates. These consolidated financial statements were prepared using estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents. Cash consists primarily of deposits with banks. In addition, Zebra considers highly liquid short-term investments with original maturities of less than seven days to be cash equivalents.

Restricted Cash. Zebra has two types of restricted cash. In the Netherlands, we have an agreement with the import authorities to place €1,000,000 in a bank deposit account, which acts as security for the VAT payable. This deferment agreement allows Zebra to simply quote our deferment number at import and quickly clear customs without the need to pay VAT. The bank deposit account cannot be accessed or used without cancelling the deferment agreement. The remaining restricted cash primarily collateralizes payroll guarantees in a foreign jurisdiction.

Investments and Marketable Securities. Investments and marketable securities at December 31, 2010, consisted of U.S. government and agency securities, state and municipal bonds, corporate bonds, and other interests. Zebra classifies its debt and marketable equity securities in one of three categories: trading, available-for-sale or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those debt securities that Zebra has the ability and intent to hold until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale.

Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of discounts or premiums. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity until realized. As of December 31, 2010, our investments and marketable securities are classified as available-for-sale securities except for those securities held in the deferred compensation plan which would be considered trading securities. In addition, all investments in marketable debt securities with maturities greater than one year are classified as long-term in the balance sheet due to our ability and intent to hold them until maturity.

F-8

Accounts Receivable and Allowance for Doubtful Accounts. Accounts receivable consist primarily of amounts due to us from our normal business activities. Collateral on trade accounts receivable is generally not required. Zebra maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on our assessment of known delinquent accounts. Accounts are written off against the allowance account when they are determined to be no longer collectible.

Inventories. Inventories are stated at the lower of cost or market, and cost is determined by the first-in, first-out (FIFO) method. Manufactured inventories consist of the following costs: component, direct labor and manufacturing overhead. Purchased inventories consist of purchased costs and purchasing overhead.

Property and Equipment. Property and equipment is stated at cost. Depreciation and amortization is computed primarily using the straight-line method over the estimated useful lives of the various classes of property and equipment, which are 30 years for buildings and range from 3 to 10 years for other property. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset.

Income Taxes. During 2008, we recognized an increase of approximately $4,000,000 in the liability for unrecognized tax benefits related to an acquisition.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 1, 2008	$	—
Additions based on tax positions related to 2008		4,000
Additions based on tax positions related to 2009		—
Additions based on tax positions related to 2010		—
Balance at December 31, 2010	$	4,000

Zebra’s continuing practice is to recognize interest and penalties related to income tax matters as part of income tax expense. For the years ended December 31, 2010 and December 31, 2009, we did not accrue any interest or penalties into income tax expense.

Goodwill and Other Intangibles. Goodwill represents the unamortized excess of the cost of acquiring a business over the fair values of the net assets received at the date of acquisition. Goodwill is no longer being amortized, as required by ASC 350.

We test the impairment of goodwill each year or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We completed our last annual assessment during June 2010. At that time, no adjustment to goodwill was necessary due to impairment. Due to economic conditions in late 2008, we performed an additional assessment of our goodwill during December 2008 and found the goodwill of our Zebra Enterprise Solutions Group to be impaired. See Note 7 for further information related to goodwill impairment charges.

Goodwill of a reporting unit should be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include:

• Significant adverse change in legal factors or in the business climate,

• Adverse action or assessment by a regulator,

• Unanticipated competition,

• Loss of key personnel,

• More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of,

• Testing for recoverability under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, of a significant asset group within a reporting unit,

• Recognition of a goodwill impairment loss in the financial statement of a subsidiary that is a component of a reporting unit, or

• Allocation of a portion of goodwill to a business to be disposed of.

F-9

We evaluate the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that might trigger an impairment review consist of:

• Significant underperformance relative to expected historical or projected future operating results,

• Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

• Significant negative industry or economic trends,

• Significant decline in Zebra’s stock price for a sustained period, and

• Significant decline in market capitalization relative to net book value.

If we believe that one or more of the above indicators of impairment have occurred and the undiscounted cash flow test has failed in the case of amortizable assets, we measure impairment by comparing the carrying value of the asset group to its fair value, which is estimated by using projected discounted cash flows and using a discount rate that incorporates the risk inherent in the cash flows. Due to economic conditions in 2008, we performed an assessment of our identifiable intangibles during December 2008 and found that several of our identifiable intangible assets were impaired. See Note 7 for further information related to asset impairment charges.

Other intangible assets capitalized consist primarily of current technology, customer relationships and patents and patent rights. These assets are recorded at cost and amortized on a straight-line basis over a weighted-average life of 5.0 years, which approximates the estimated useful lives. Weighted average lives remaining by intangible asset class are as follows: Current technology 3.1 years; Patent and patent rights 2.9 years; Customer relationships 9.5 years.

Revenue Recognition. Revenue includes sales of hardware, supplies, software and services (including repair services, extended service contracts, and professional services). Product revenue is recognized once four criteria are met: (1) we have persuasive evidence that an arrangement exits; (2) delivery has occurred and title has passed to the customer, which happens at the point of shipment provided that no significant obligations remain; (3) the price is fixed and determinable; and (4) collectability is reasonably assured. We provide for an estimate of product returns based on historical experience. Revenue related to extended warranty and service contracts is recorded as deferred revenue and recognized over the life of the contract. Professional services revenue is recorded when performed. Zebra enters into sales transactions that include more than one product type. This bundle of products might include printers, current or future supplies, and services. When this type of transaction occurs, we allocate the purchase price to each product type based on the fair value of the individual products determined by vendor specific objective evidence. The revenue for each individual product is then recognized when the earning process for that product is complete. We enter into post-contract maintenance and support agreements. Revenues are recognized ratably over the service period and the cost of providing these services is expensed as incurred.

Zebra records payments to resellers of its product as reductions to revenue unless these payments meet the requirements for operating expense treatment under ASC 605. See the market development funds accounting policy for further details.

Revenue includes all customer billings for shipping and handling charges. The related costs of shipping and handling revenue are recorded as cost of goods sold.

ZES has fixed fee software implementation projects, for which we use the percentage of completion method for revenue recognition. Under this method of accounting, we recognize revenue based on the ratio of costs incurred to total estimated costs. Contract terms generally provide for progress billings on advance terms or based on completion of certain phases of the work. At December 31, 2010, unbilled revenue was $7,401,000 and receivables for contracts in progress included in accounts receivable were $12,291,000. At December 31, 2009, unbilled revenue was $8,480,000 and receivables for contracts in progress included in accounts receivable were $14,682,000.

Research and Development Costs. Research and development costs are expensed as incurred. These costs include:

• Salaries, benefits, and other R&D personnel related costs,

• Consulting and other outside services used in the R&D process,

• Engineering supplies,

• Engineering related information systems costs, and

• Allocation of building and related costs.

Advertising. Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2010, 2009 and 2008 totaled $7,115,000, $6,118,000 and $7,318,000, respectively.

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Market Development Funds. Zebra makes market development funds available to its resellers to support demand generation activity by the resellers. These funds require the reseller to provide specific services or benefits to Zebra and substantiate the fair value of such services rendered. Zebra reimburses resellers for agreed activities up to the amounts approved by Zebra. These payments are treated as marketing costs consistent with the requirements of ASC 605. Any payments to resellers that do not meet these requirements are recorded as reductions to revenue.

Warranty. In general, Zebra provides warranty coverage of one year on SPG printers against defects in material and workmanship. SPG printheads are warranted for nine months and batteries are warranted for twelve months. Warranty coverage for most ZES hardware products is similar, with coverage periods ranging from 90 days to one year depending on the nature of the product. Battery based products, such as location tags, are covered by a 30 day warranty. For ZES software products, the warranty period is generally 90 days and provides coverage against defects in material and workmanship as well as performance materially in compliance with the accompanying documentation. A provision for warranty expense is recorded at the time of shipment and adjusted quarterly based on historical warranty experience. The following table is a summary of Zebra’s accrued warranty obligation (in thousands):

	Year Ended December 31,
Warranty Reserve	2010		2009		2008
Balance at the beginning of the year		$    3,813		$    2,814		$    3,411
Warranty expense		6,427		4,629		4,094
Warranty payments		(5,686)		(3,630)		(4,691)
Balance at the end of the period		$    4,554		$    3,813		$    2,814

In the European Union, we have an obligation to recycle printers. We reserve for this obligation based on the number of new printers sold after August 13, 2005, and printers sold prior to that date that are returned to us upon our sale of a new printer to a customer. The following is a summary of Zebra’s accrued recycling obligation (in thousands):

	Year Ended December 31,
Recycling Reserve	2010		2009		2008
Balance at the beginning of the year		$    1,001		$    1,207		$    3,706
Recycling expense		114		324		1,664
Reserve adjustment		—		(640)		(3,757)
Recycling payments		(8)		(13)		(3)
Other adjustments		6		123		(403)
Balance at the end of the period		$    1,113		$    1,001		$    1,207

During the second quarter of 2009 and 2008 we reviewed the environmental recycling reserves based on our experience of providing for such reserves and decreased our estimates as noted in the above schedule.

Fair Value of Financial Instruments. Zebra estimates the fair value of its financial instruments as follows:

Instrument	Method for determining fair value
Cash, cash equivalents, restricted cash, accounts receivable and accounts payable	Cost, which approximates fair value due to the short-term nature of these instruments
Investments in marketable debt securities	Market quotes from independent pricing services
Investments in auction rate securities	Broker quotations, discounted cash flow analysis or other types of valuation adjustment methodologies
Foreign currency forward contracts	Estimated using market quoted rates for foreign currency at the balance sheet date
Foreign currency option contracts	Estimated using market quoted rates for foreign currency at the balance sheet date and application of such rates subject to the option terms

In accordance with ASC 815 we recognize derivative instruments and hedging activities as either assets or liabilities on the balance sheet and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. See Note 10 for additional information on our derivatives and hedging activities.

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Equity-Based Compensation. At December 31, 2010, Zebra had a general equity-based compensation plan and a stock purchase plan under which shares of our common stock was available for future grants and sales, and which are described more fully in Note 15. We account for these plans in accordance with ASC 505 and ASC 718. Zebra recognizes compensation costs using the straight-line method over the vesting period of 1 month to 5 years.

The compensation expense and the related income tax benefit for share-based payments were included in the Consolidated Statement of Earnings (Loss) as follows (in thousands):

	For the years ended December 31,
Compensation costs and related income tax benefit:	2010		2009		2008
Cost of sales	$	1,216	$	1,198	$	1,206
Selling and marketing		2,010		1,954		2,849
Research and development		1,610		1,709		2,426
General and administration		7,035		6,606		8,083
Acquisition integration expenses		—		—		398
Total compensation expense	$	11,871	$	11,467	$	14,962
Income tax benefit	$	4,095	$	3,956	$	5,162

ASC 505 and ASC 718 requires the cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized (excess tax benefits) to be classified as financing cash flows.

Deferred Compensation Plan. Zebra has a deferred compensation plan that permits directors, management and highly compensated employees to defer portions of their compensation. Zebra immediately pays deferred amounts into a Rabbi Trust, and plan participants select a method of investing these funds into hypothetical investments. Zebra tracks the performance of these hypothetical investments in order to determine the value of each participant’s deferral. Zebra accrues the deferred compensation liability in other long-term liabilities as the amount that is actually owed to the participants.

Foreign Currency Translations. The consolidated balance sheets of Zebra’s foreign subsidiaries, not having a U.S. dollar functional currency, are translated into U.S. dollars using the year-end exchange rate, and statement of earnings items are translated using the average exchange rate for the year. The resulting translation gains or losses are recorded in stockholders’ equity as a cumulative translation adjustment, which is a component of accumulated other comprehensive income (loss).

Acquisition Costs. Zebra periodically has external expenditures related to potential acquisitions. During 2008 and previously, these expenditures were recorded as prepaid expenses until such time as Zebra either completed the transaction or abandoned the transaction. If the transaction completed, the costs were treated as part of the cost of the acquisition. If the transaction was abandoned, the costs were expensed during the period in which it was abandoned. In 2009, Zebra expensed these costs as incurred in accordance with the adoption of ASC 805.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of. Zebra accounts for long-lived assets in accordance with the provisions of ASC 350. The statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. See Note 7 for further information related to impairment charges.

Recently Issued Accounting Pronouncements. In October 2009, the FASB issued update 2009-13, ASC 605, Revenue Recognition: Multiple –Deliverable Revenue Arrangements-a consensus of the FASB Emerging Issues Task Force. The revised guidance provides for two significant changes to existing multiple element arrangement guidance. The first relates to the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. This change is significant as it will likely result in the requirement to separate more deliverables within an arrangement, ultimately leading to less revenue deferral. The second change modifies the manner in which the transaction consideration is allocated across the separately identifiable deliverables. These changes are likely to result in earlier recognition of revenue for multiple-element arrangements than under previous guidance. This standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

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In October 2009, the FASB issued update 2009-14, ASC 985, Software: Certain Revenue Arrangements That Include Software Elements – a consensus of the FASB Emerging Issues Task Force. This updated guidance is expected to significantly affect how entities account for revenue arrangements that contain both hardware and software elements. This standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

In January 2010, the FASB issued update 2010-06, ASC 820, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements. This updated guidance requires new disclosures related to transfers in and out of Levels 1 and 2. The standard also provides guidance on the disclosures related to Level 3 activities. In addition, existing disclosures related to disaggregation levels and disclosures about inputs and valuation techniques are clarified. This standard is effective for interim and annual periods beginning after December 15, 2009. This standard did not have a material effect upon our consolidated financial statements.

In December 2010, the FASB issued update 2010-28, ASC 350, Intangibles – Goodwill and Other: When to Perfrom Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force). This updated guidance requires entities with reporting units with zero or negative carrying amounts to perform and additional test to determine if goodwill has been impaired and to calculate the amount of impairment (Step 2). This standard is effective for interim and annual periods beginning after December 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

In December 2010, the FASB issued update 2010-29, ASC 805, Business Combinations: Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force). The standard provides updated guidance on the disclosures related to business combinations. This standard is effective for interim and annual periods beginning after December 15, 2010. This standard will not have a material effect upon our consolidated financial statements.

Reclassifications . Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation. Selling and marketing expenses of $2,336,000 and research and development expenses of $1,301,000 for the year ended December 31, 2009 have been reclassified from general and administrative expenses. Selling and marketing expenses of $4,890,000 and research and development expenses of $1,351,000 for the year ended December 31, 2008 have been reclassified from general and administrative expenses to realign Zebra’s SPG product management group. Prior period amounts will differ in these categories from amounts previously reported.

Subsequent events. We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued. See Note 23 Subsequent Events.

Note 3 Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Zebra uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1:	Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2:	Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3:	Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in the assessment of fair value.

Included in our investment portfolio are three auction rate security instruments. These instruments are classified as available-for-sale securities and are reflected at fair value. Due to events in credit markets, however, the auction events for the instruments held by Zebra as of December 31, 2010, are failed. Therefore, the fair values of these securities are estimated utilizing broker quotations, discounted cash flow analysis or other types of valuation adjustment methodologies at December 31, 2010. These analyses consider,

F-13

among other items, the collateral underlying the security instruments, the creditworthiness of the counterparty, the timing of expected future cash flows, estimates of the next time the security is expected to have a successful auction, and Zebra’s intent and ability to hold such securities until credit markets improve. These securities were also compared, when possible, to other securities with similar characteristics. In June 2010, one of the four auction rate securities held at the end of 2009 was called by the issuer and redeemed at par value. Zebra received proceeds in the amount of $1,650,000 and adjusted other comprehensive income by $200,000. See Level 3 table below for more details.

Of the three auction rate security instruments still held, Zebra deemed one to be other than temporarily impaired and recorded the market value decline in 2008. The decline in the market value of the other securities is considered temporary and has been recorded in accumulated other comprehensive income (loss) on Zebra’s balance sheet. Since Zebra has the intent and ability to hold these securities until they are sold at auction, redeemed at carrying value or reach maturity, we have classified them as long-term investments on the balance sheet.

Financial assets and liabilities carried at fair value as of December 31, 2010, are classified below (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
U.S. government and agency securities	$	21,318	$	—	$	—	$	21,318
Obligations of government-sponsored enterprises (1)		5,785		—		—		5,785
State and municipal bonds		131,626		—		2,683		134,309
Corporate securities		46,683		—		2,914		49,597
Other investments		36		—		—		36
Investments subtotal		205,448		—		5,597		211,045
Forward contracts (2)		3,275		—		—		3,275
Money market investments related to the deferred compensation plan		3,427		—		—		3,427
Total assets at fair value	$	212,150	$	—	$	5,597	$	217,747
Liabilities:
Liabilities related to the deferred compensation plan	$	3,427	$	—	$	—	$	3,427
Total liabilities at fair value	$	3,427	$	—	$	—	$	3,427

Financial assets and liabilities carried at fair value as of December 31, 2009, are classified below (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
U.S. government and agency securities	$	12,811	$	—	$	—	$	12,811
Obligations of government-sponsored enterprises (1)		10,666		—		—		10,666
State and municipal bonds		161,839		—		4,133		165,972
Corporate securities		13,654		—		2,914		16,568
Other investments		36		—		—		36
Investments subtotal		199,006		—		7,047		206,053
Forward contracts (2)		851		—		—		851
Money market investments related to the deferred compensation plan		3,155		—		—		3,155
Total assets at fair value	$	203,012	$	—	$	7,047	$	210,059
Liabilities:
Liabilities related to the deferred compensation plan	$	3,155	$	—	$	—	$	3,155
Total liabilities at fair value	$	3,155	$	—	$	—	$	3,155

1) Includes investments in notes issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Bank.

2) The fair value of forward contracts are calculated as follows:

a. Fair value of forward collar contract associated with forecasted sales hedges are calculated using the midpoint of ask and bid rates for similar contracts.

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b. Fair value of regular forward contracts associated with forecasted sales hedges are calculated using the period-end exchange rate adjusted for the discount rate (3 month LIBOR rate).

c. Fair value of balance sheet hedges are calculated at the period end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end. If this is the case, the fair value is calculated at the rate at which the hedge is being settled.

The following table presents Zebra’s activity for assets measured at fair value on a recurring basis using significant unobservable inputs, Level 3 as defined in ASC 820 for the years ended December 31 (in thousands):

	Year Ended
	December 31, 2010			December 31, 2009
Balance at beginning of the year	$	7,047		$	7,047
Transfers to Level 3		—			—
Total losses (realized or unrealized):
Included in earnings		—			—
Included in other comprehensive income (loss)		200			—
Purchases and settlements (net)		(1,650	)		—
Balance at end of period	$	5,597		$	7,047
Total gains and (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets still held at end of period	$	—		$	—

As of December 31, 2010 and December 31, 2009, there were no other Level 3 unrealized losses that Zebra believes to be other-than-temporary. No realized gains or losses were recorded for the years ended December 31, 2010, 2009 and 2008.

The following is a summary of short-term and long-term investments at December 31, 2010 and December 31, 2009 (in thousands):

	As of December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government and agency securities	$	21,226	$	98	$	(6	)	$	21,318
Obligations of government-sponsored enterprises		5,731		54		—			5,785
State and municipal bonds		134,370		402		(463	)		134,309
Corporate securities		49,884		199		(486	)		49,597
Other investments		36		—		—			36
Total investments	$	211,247	$	753	$	(955	)	$	211,045
	As of December 31, 2009
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government and agency securities	$	12,931	$	45	$	(165	)	$	12,811
Obligations of government-sponsored enterprises		10,589		82		(5	)		10,666
State and municipal bonds		165,366		1,177		(571	)		165,972
Corporate securities		16,680		306		(418	)		16,568
Other investments		36		—		—			36
Total investments	$	205,602	$	1,610	$	(1,159	)	$	206,053

The maturity dates of investments as of December 31, 2010 are as follows (in thousands):

	As of December 31, 2010
	Amortized Cost		Estimated Fair Value
Less than 1 year	$	125,292	$	125,567
1 to 5 years		85,216		84,725
6 to 10 years		739		753
Thereafter		—		—
Total	$	211,247	$	211,045

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The carrying value for Zebra’s financial instruments classified as current assets (other than short-term investments) and current liabilities approximate fair value due to short maturities.

Note 4 Investments and Marketable Securities

We classify our investments in marketable debt securities as available-for-sale. As of December 31, 2010, all of our investments in marketable debt securities with maturities greater than one year are classified as long-term in the balance sheet due to our ability to hold them until maturity.

Changes in the market value of available-for-sale securities are reflected in the accumulated other comprehensive income caption of stockholders’ equity in the balance sheet, until we dispose of the securities. Once these securities are disposed of, either by sale or maturity, the accumulated changes in market value are transferred to investment income. On the statement of cash flows, changes in the balances of available-for-sale securities are shown as purchases, sales and maturities of investments and marketable securities under investing activities.

Changes in market value of trading securities would be recorded in investment income as they occur, and the related cash flow statement includes changes in the balances of trading securities as operating cash flows.

Changes in unrealized gains and losses on available-for-sale securities are included in these financial statements as follows (in thousands):

	Year Ended December 31,
	2010		2009		2008
Changes in unrealized gains and losses on available-for- sale securities, net of tax, recorded in accumulated other comprehensive income (loss)	$	(406)	$	737	$	(543)

The following table shows the number, aggregate market value and unrealized losses (in thousands) of investments with market values that were less than amortized cost as of December 31, 2010. These lower market values are primarily caused by fluctuations in credit spreads. Market values are expected to recover to the amortized cost prior to maturity.

	Unrealized Loss < 12 months					Unrealized Loss > 12 months
	Number of investments	Aggregate Market Value		Unrealized     Losses		Number of investments	Aggregate Market Value		Unrealized     Losses
Government securities	—		—	$	—	1	$	610	$	(6)
State and municipal bonds	10		17,707		(6)	13		20,461		(457)
Corporate Securities	3		4,029		(8)	12		13,850		(478)
Total	13	$	21,736	$	(14)	26	$	34,921	$	(941)
As of December 31, 2009, the number, aggregate market value and unrealized losses (in thousands) of investments with market values that were less than amortized cost were:
	Unrealized Loss < 12 months					Unrealized Loss > 12 months
	Number of investments	Aggregate Market Value		Unrealized     Losses		Number of investments	Aggregate Market Value		Unrealized     Losses
Government securities	12	$	5,511	$	(164)	2	$	2,361	$	(7)
State and municipal bonds	3		5,580		(1)	15		19,145		(570)
Corporate Securities	2		4,187		(413)	2		1,391		(5)
Total	17	$	15,278	$	(578)	19	$	22,897	$	(582)

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Using the specific identification method, the proceeds and realized gains on the sales of available-for-sale securities were as follows (in thousands):

	2010		2009		2008
Proceeds	$	102,485	$	56,020	$	165,177
Realized gains		458		260		376
Realized losses		(198)		(219)		(901)
Net realized losses included in other comprehensive income (loss) as of the end of the prior year		(264)		(26)		(441)

Note 5 Inventories

The components of inventories are as follows (in thousands):

	As of
	December 31, 2010		December 31, 2009
Raw material	$	33,441	$	27,953
Work in process		171		162
Deferred costs of long-term contracts		482		1,937
Finished goods		89,485		58,928
Total inventories, gross		123,579		88,980
Inventory reserves		(9,837)		(9,054)
Total inventories, net	$	113,742	$	79,926

Note 6 Property and Equipment

Property and equipment, which includes assets under capital leases, is comprised of the following (in thousands):

	December 31,
	2010		2009
Buildings	$	2,036	$	2,036
Land		471		320
Machinery, equipment and tooling		77,873		74,311
Furniture and office equipment		11,695		11,191
Computers and software		81,306		81,096
Automobiles		20		20
Leasehold improvements		12,924		11,637
Projects in progress – computers and software		26,844		11,594
Projects in progress - other		10,600		3,275
		223,769		195,480
Less accumulated depreciation and amortization		(134,786)		(117,891)
Net property and equipment	$	88,983	$	77,589

Other items related to property and equipment are as follows (in thousands):

	December 31,
	2010		2009
Unamortized computer software costs	$	17,509	$	21,545

	Year Ended December 31,
	2010		2009		2008
Amortization of capitalized software	$	5,624	$	6,212	$	5,058
Total depreciation expense charged to income		21,636		22,447		20,006

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Note 7 Goodwill and Other Intangible Asset Data

Intangible asset data are as follows (in thousands):

	As of December 31, 2010
	Gross Amount		Accumulated Amortization			Net Amount
Amortized intangible assets
Current technology	$	31,846	$	(20,743	)	$	11,103
Patent and patent rights		17,160		(9,351	)		7,809
Customer relationships		44,670		(13,876	)		30,794
Total	$	93,676	$	(43,970	)	$	49,706
Amortization expense for the year ended December 31, 2010			$	9,573

During the second quarter of 2010, Zebra entered into an agreement with an international technology provider to acquire patents and patent rights related to card printer solutions technology. The agreement required total consideration in the amount of approximately $3,047,000 or € 2,400,000, of which Zebra has paid in full through the end of 2010. This agreement provides Zebra with a new distribution partner and enhanced technology solutions and software.

	As of December 31, 2009
	Gross Amount		Accumulated Amortization		Net Amount
Amortized intangible assets
Current technology	$	32,038	$	(17,071)	$	14,967
Patent and patent rights		13,663		(6,774)		6,889
Customer relationships		44,822		(10,696)		34,126
Total	$	90,523	$	(34,541)	$	55,982
Amortization expense for the year ended December 31, 2009			$	10,466

Estimated amortization expense:
For the year ended December 31, 2011		9,553
For the year ended December 31, 2012		8,899
For the year ended December 31, 2013		7,550
For the year ended December 31, 2014		4,511
For the year ended December 31, 2015		3,797
Thereafter		15,396
Total	$	49,706

Certain of our intangible assets including goodwill are denominated in foreign currency and, as such, include the effects of foreign currency translation.

	December 31, 2010		December 31, 2009
Unamortized intangible assets
Goodwill at gross cost	$	265,799	$	265,799
Impairment charges		(112,184)		(112,184)
Foreign exchange impact		(1,682)		(390)
Goodwill	$	151,933	$	153,225

F-18

We test goodwill for impairment on an annual basis or more frequently if we believe indicators of impairment exist. Factors considered that may trigger an impairment review consist of:

• Significant underperformance relative to historical or projected future operating results,

• Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

• Significant negative industry or economic trends,

• Significant decline in Zebra’s stock price for a sustained period, and

• Significant decline in market capitalization relative to net book value.

If we believe that one or more of the above indicators of impairment have occurred, we perform an impairment test. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using three valuation methods: Income Approach – Discounted Cash Flow Analysis, Market Approach – Guideline Public Company Method and Market Approach – Comparative Transactions Method. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. See detailed discussion on Valuation of Goodwill, Long-Lived and Other Intangible Assets in the Critical Accounting Policies and Estimates Section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K.

During the fourth quarter of 2008, we determined that certain impairment indicators existed related to identified intangible assets and conducted an additional impairment test of intangibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill and other intangible assets were impaired requiring total estimated impairment charges of $157,600,000 at December 31, 2008. (The portion of the goodwill associated with our ZES segment included in the estimated impairment charge was $113,679,000). Upon completion of a detailed second step impairment analysis we recorded a credit of $1,495,000 in the second quarter of 2009 to adjust a portion of our original goodwill impairment for ZES. In addition, we recorded an impairment charge for a ZES intangible asset or $437,000.

We performed our annual impairment test in June 2010 and determined that our goodwill was not impaired as of the end of May 2010.

Changes in the net carrying value amount of goodwill were as follows (in thousands):

	ZES			SPG		Total
Goodwill at December 31, 2008		80,837			70,519		151,356
Impairment reversal		1,495			—		1,495
Foreign exchange impact		304			70		374
Goodwill at December 31, 2009	$	82,636		$	70,589	$	153,225
Impairment reversal		—			—		—
Foreign exchange impact		(1,292	)		—		(1,292	)
Goodwill at December 31, 2010	$	81,344		$	70,589	$	151,933

During 2010, we acquired intangible assets in the amount of $3,497,000 for patents and other intellectual property. During 2009, we acquired intangible assets in the amount of $425,000 for patent rights. These intangible assets have an estimated useful life of 2 to 9 years. In conjunction with our goodwill impairment testing in 2008, we also tested our identifiable intangible assets and found several of them to be impaired resulting in an additional impairment charge of $28,937,000 to our ZES segment and $14,680,000 to

F-19

our SPG segment. The intangible asset impairment charges in our SPG segment in were related primarily to radio frequency identification patents and patent rights. The intangible asset impairment charges in our ZES segment were related to customer relationships, technology, third party technology licenses and non-competition agreements.

Note 8 Other Assets

Other assets consist of the following (in thousands):

	December 31,
	2010		2009
Money market investments related to the deferred compensation plan (See Note 16)	$	3,427	$	3,155
Long-term equity securities		527		532
Deposits		1,194		1,120
Other long-term assets		58		108
Total	$	5,206	$	4,915

Note 9 Costs Associated with Exit or Disposal Activities

During 2008, we initiated two different plans to close facilities. These plans are being accounted for under ASC 420.

In January 2008, we initiated a plan to close our supplies manufacturing plant in Warwick, Rhode Island and transfer operations to a new facility in Flowery Branch, Georgia. This transition was completed during the second quarter of 2008. We do not expect to incur any further costs associated with this plan.

Costs incurred and included in the December 31, 2008 results were (in thousands):

Type of Cost	2008
Severance, stay bonuses, and other employee-related expenses		$    341
Other exit costs		261
Total		$    602

Also in 2008, we announced plans to establish regional distribution and configuration centers, consolidate our supplier base, and transfer final assembly of thermal printers to Jabil Circuit, Inc., a global third-party electronics manufacturer. These actions are intended to optimize our global printer product supply chain by improving responsiveness to customer needs and increasing Zebra’s flexibility to meet emerging business opportunities. All printer manufacturing in our Vernon Hills, Illinois, and Camarillo, California, facilities have been transferred to Jabil’s facility in Guangzhou, China as of December 31, 2010.

As of December 31, 2010, we have incurred the following exit costs (in thousands):

Type of Cost	Cost incurred through December 31, 2009		Costs incurred for the year ended December 31, 2010		Total costs incurred as of December 31, 2010
Severance, stay bonuses, and other employee-related expenses	$	7,633	$	605	$	8,238
Professional services		5,915		1,365		7,280
Relocation and transition costs		8,802		1,959		10,761
Other exit costs		30		268		298
Total	$	22,380	$	4,197	$	26,577

F-20

For the year ended December 31, 2010, we have incurred the following exit costs by segment (in thousands):

Type of Cost	Specialty Printing Group (SPG) costs		Zebra Enterprise Solutions (ZES) costs		Total costs incurred for the year ended December 31,  2010
Severance, stay bonuses, and other employee-related expenses	$	94	$	511	$	605
Professional services		140		1,225		1,365
Relocation and transition costs		1,959		0		1,959
Other exit costs		0		268		268
Total	$	2,193	$	2,004	$	4,197

For the year ended December 31, 2009, we incurred the following exit costs by segment (in thousands):

Type of Cost	Specialty Printing Group (SPG) costs		Zebra Enterprise Solutions (ZES) costs		Total costs incurred for the year ended December 31,  2009
Severance, stay bonuses, and other employee-related expenses	$	2,356	$	969	$	3,325
Professional services		485		5		490
Relocation and transition costs		5,140		0		5,140
Other exit costs		0		30		30
Total	$	7,981	$	1,004	$	8,985

Liabilities and expenses related to exit activities were as follows (in thousands):

	Year Ended
	December 31, 2010			December 31, 2009
Balance at beginning of period	$	3,038		$	6,378
Charged to earnings		4,197			8,985
Cash paid		(5,534	)		(12,325	)
Balance at the end of period	$	1,701		$	3,038

Liabilities related to exit activities are included in the accrued liabilities line item on the balance sheet. All current exit costs are included in operating expenses for our SPG segment under the line item exit, restructuring and integration costs.

Also included in the line item exit, restructuring and integration costs are expenses related to an integration project to combine our acquisitions of WhereNet Corp., proveo AG, Navis Holdings, LLC, and Multispectral Solutions, Inc., to form our ZES segment. Expenses related to integrating these businesses totaled $3,206,000 for the year ended December 31, 2009, and $3,359,000 for the year ended December 31, 2008.

On January 31, 2011, Zebra announced that it will sell its Navis Holdings, LLC business unit to a third party. See Note 23 Subsequent events for further details. Zebra incurred costs in 2010 related to consulting and professional fees in order to prepare for the sale of this unit. Costs incurred related to the future disposition of $1,153,000 have been included in the exit, restructuring and integration costs line item for 2010.

Note 10 Derivative Instruments

In the normal course of business, portions of our operations are subject to fluctuations in currency values. We manage these risks using derivative financial instruments. We conduct business on a multinational basis in a wide variety of foreign currencies. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade. Our objective is to preserve the economic value of non-functional currency denominated cash flows. We attempt to hedge transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts with third parties.

F-21

Credit and market risk

Financial instruments, including derivatives, expose us to counter party credit risk for nonperformance and to market risk related to interest and currency exchange rates. We manage our exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk. Our counterparties in derivative transactions are commercial banks with significant experience using derivative instruments. We monitor the impact of market risk on the fair value and cash flows of our derivative and other financial instruments considering reasonably possible changes in interest rates and currency exchange rates and restrict the use of derivative financial instruments to hedging activities. We continually monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. The terms and conditions of our credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. Our sales are not materially dependent on a single customer or a small group of customers.

Fair Value of Derivative Instruments

Zebra has determined that derivative instruments for hedges that have traded but have not settled are considered Level 1 in the fair value hierarchy, and hedges that have not traded are considered Level 2 in the fair value hierarchy. Derivative instruments are used to manage risk and are not used for trading or other speculative purposes, nor do we use leveraged derivative financial instruments. Our foreign currency exchange contracts are valued using broker quotations or market transactions, in either the listed or over-the-counter markets.

Hedging of Net Assets

We use forward contracts to manage exposure related to our pound and euro denominated net assets. Forward contracts typically mature within three months after execution of the contracts. We record gains and losses on these contracts and options in income each quarter along with the transaction gains and losses related to our net asset positions, which would ordinarily offset each other.

Forward Contracts

We record our forward contracts at fair value on our consolidated balance sheet as either long-term other assets or long-term other liabilities depending upon the fair value calculation as detailed in Note 3 of Zebra’s financial statements. The amounts recorded on our consolidated balance sheets are as follows (in thousands):

	As of
	December 31, 2010		December 31, 2009
Assets:
Other assets	$	3,275	$	851
Total	$	3,275	$	851
Liabilities:
Other long-term liabilities	$	—	$	—
Total	$	—	$	—

Summary financial information related to these activities included in our consolidated statement of earnings as other income (expense) is as follows (in thousands):

	Year Ended December 31,
		2010			2009			2008
Change in losses from foreign exchange derivatives	$	5,074		$	(512	)	$	(13,196	)
Gain (loss) on net foreign currency assets		(5,287	)		467			16,714
Net foreign exchange gain (loss)	$	(213	)	$	(45	)	$	3,518
	December 31, 2010			December 31, 2009			December 31, 2008
Notional balance of outstanding contracts:
Euro	€	46,307		€	37,042		€	18,500
Pound	£	6,162		£	7,476		£	5,000
Euro/Pound	€	—		€	—		€	17,000
Net fair value of outstanding contracts	$	667		$	(6	)	$	(2,414	)

Hedging of Anticipated Sales

We can manage the exchange rate risk of anticipated euro-denominated sales using purchased options, forward contracts, participating forwards and options. We designate these contracts as cash flow hedges which mature within twelve months after the execution of the contracts. Gains and losses on these contracts are deferred in other comprehensive income until the contracts are settled and the hedged sales are realized, the deferred gains or losses will then be reported as an increase or decrease to sales.

F-22

Summary financial information related to the cash flow hedges is as follows (in thousands):

	As of
	December 31, 2010		December 31, 2009
Net unrealized gains (losses) deferred in other comprehensive income:
Gross	$	(1,522)	$	31
Income tax benefit		(573)		12
Net	$	(949)	$	19

Summary financial information related to the cash flow hedges of future revenues follows (in thousands, except percentages):

	As of
	December 31, 2010		December 31, 2009
Notional balance of outstanding contracts versus the dollar	€	82,800	€	—
Hedge effectiveness		100%		—

	Year Ended December 31,
	2010			2009		2008
Net gain and (losses) included in revenue	$	(630	)	$	603	$	(12,354	)

Note 11 Commitments and Contingencies

Leases. Minimum future obligations under all non-cancelable operating leases as of December 31, 2010 are as follows (in thousands):

	Operating     Leases
2011	$	12,269
2012		10,450
2013		8,904
2014		5,078
2015		2,830
Thereafter		8,486
Total minimum lease payments	$	48,017

Rent expense for operating leases charged to operations was as follows (in thousands):

	Year Ended December 31,
		2010		2009		2008
Rent expense	$	13,367	$	13,312	$	15,695

The operating lease information includes a variety of properties around the world. These properties are used as manufacturing facilities, distribution centers and sales offices. Lease terms range from one year to 17 years with breaking periods specified in the lease agreements.

Letters of Credit. In connection with various customer contracts, Zebra has entered into four letters of credit agreements with a bank. The contingent liability of Zebra under these agreements as of December 31, 2010, is $1,781,000. See below for letters of credit related to our revolving credit agreement.

F-23

Revolving Credit Agreement. On August 14, 2008, Zebra entered into a revolving credit agreement for a five-year $100 million revolving credit facility. The funds under this credit facility are available for general corporate purposes of Zebra and its subsidiaries in the ordinary course of business and other purposes permitted by the agreement.

This credit agreement is guaranteed by certain of Zebra’s domestic subsidiaries. Loans under the agreement bear interest at a rate equal to the prime rate or a spread over the applicable LIBOR rate, as selected by Zebra. This spread for LIBOR-based loans depends on our ratio of Total Debt to EBITDA, as defined in the agreement, and ranges from 0.50% to 1.25%. The spread in effect at closing for LIBOR-based loans was 0.50%.

The credit agreement includes customary representations, warranties, affirmative and negative covenants (including, among others, restrictions on the payment of cash dividends) and events of default (and related remedies, including acceleration and increased interest rates following an event of default). It also contains financial covenants tied to Zebra’s leverage ratio and fixed charge coverage ratio. As of December 31, 2010, we had established letters of credit amounting to $3,858,000, which reduce the funds available for borrowing under the agreement. As of December 31, 2010 and 2009, no amounts were outstanding under the credit agreement.

Legal Proceedings. On April 9, 2008, a complaint was filed in the U.S. District Court for the Northern District of Illinois by Barcode Informatica, Ltd. (“Barcode”), a former Brazilian reseller, against Zebra. The complaint alleges that Zebra wrongfully terminated Barcode’s reseller status and tortiously interfered with Barcode’s alleged bid for the sale of printers to a Brazilian customer. Barcode’s claim seeks an unspecified amount of damages. Discovery in the case is on-going and we expect that a trial will occur in the second half of 2011. Zebra is vigorously defending this action, believes that Barcode’s claims are without merit and that the matter will not have a material adverse impact on our business.

We are subject to a variety of investigations, claims, suits and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort and breach of contract matters. We currently believe that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on our business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and management’s view of these matters and their potential effects may change in the future.

Note 12 Savings and Profit Sharing Plans

Zebra has a Retirement Savings and Investment Plan (401(k) Plan), which is intended to qualify under Section 401(k) of the Internal Revenue Code. During the first quarter of 2009, Zebra announced changes to its 401(k) Plan, profit sharing plan and stock purchase plan. Qualified employees may participate in Zebra’s 401(k) Plan by contributing up to 15% of their gross earnings to the plan subject to certain Internal Revenue Service restrictions. Effective March 1, 2009, Zebra reduced the company match to each participant’s contribution from 6% of gross eligible earnings at the rate of 50%, to 3% of gross eligible earnings at the rate of 50%. Effective January 1, 2010, Zebra increased the company match to each participant’s contribution to a total of 4%. Zebra will match 100% of the first 2% of gross eligible earnings, and also match the next 4% of gross eligible earnings at the rate of 50%. Zebra may contribute additional amounts to its 401(k) Plan at the discretion of the Board of Directors, subject to certain legal limits.

Zebra has a discretionary profit-sharing plan for qualified employees, to which it contributes a percentage of eligible payroll each year. In 2009, Zebra announced that it was suspending any further contributions to the profit sharing plan until further notice. Participants are not permitted to make contributions under the profit-sharing plan.

Company contributions to these plans, which were charged to operations, approximated the following (in thousands):

	Year Ended December 31,
	2010		2009		2008
401(k)	$	4,586	$	2,210	$	4,156
Profit sharing		0		145		1,748
Total	$	4,586	$	2,355	$	5,904
Percentage of eligible payroll contributed for profit sharing plan		N/A		N/A		1.5%

F-24

Note 13 Stockholders’ Equity

Share count and par value data related to stockholders’ equity are as follows:

	December 31,     2010		December 31,     2009
Preferred Stock
Par value per share	$	0.01	$	0.01
Shares authorized		10,000,000		10,000,000
Shares outstanding		—		—
Common Stock—Class A
Par value per share	$	0.01	$	0.01
Shares authorized		150,000,000		150,000,000
Shares issued		72,151,857		72,151,857
Shares outstanding		55,711,325		58,318,983
Treasury stock
Shares held		16,440,532		13,832,874

During the year ended December 31, 2010, Zebra purchased 3,349,286 shares of common stock for $102,091,000 under board authorized share repurchase plans compared to the year ended December 31, 2009, in which Zebra purchased 3,173,182 shares of common stock for $65,445,000. During the year ended December 31, 2008, Zebra purchased 6,008,232 shares of common stock for $157,582,000.

A roll forward of Class A common shares outstanding is as follows:

	Year Ended December 31,
	2010		2009
Balance at the beginning of the year		58,318,983		60,861,592
Repurchases		(3,349,286)		(3,173,182)
Stock option and ESPP issuances		389,799		281,975
Restricted share issuances		375,279		409,201
Restricted share forfeitures		(16,252)		(49,650)
Shares withheld for tax obligations		(7,198)		(10,953)
Balance at the end of the period		55,711,325		58,318,983

Stockholder Rights Agreement. Zebra’s Board of Directors adopted a Stockholder Rights Agreement under which stock purchase rights were paid by dividend to stockholders of record on March 15, 2002, at the rate of one Class A Right for each outstanding share of Class A Common Stock. Each Class A Right, other than those held by an acquiring person, entitles the registered holder to purchase one ten-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, at a price of $133.33 per four ninety-thousandth of Class A Preferred Share after the distribution date. The distribution date is 10 days after the date on which any person or group announces that it has acquired 15% or more of Zebra’s outstanding common stock or 10 days (or a later date as determined by the Board of Directors) after the date on which any person or group announces or commences a tender offer that would result in the person or group becoming an owner of 15% or more of the outstanding common stock.

The Rights will expire on March 14, 2012, unless that date is extended by the Board of Directors or unless the Rights are redeemed or terminated earlier. A committee of Zebra’s independent directors reviews the Rights Plan at least every three years and decides whether it should continue or be revoked. Zebra generally may amend the Rights Plan or redeem the Rights at $0.001 per Right at any time prior to the time a person or group has acquired at least 15% of the outstanding common stock.

Note 14 Earnings (Loss) Per Share

For the years ended December 31, 2010, 2009, and 2008, earnings (loss) per share were computed as follows (in thousands, except per-share amounts):

	Year Ended December 31,
	2010		2009		2008
Basic earnings (loss) per share:
Net income (loss)	$	101,778	$	47,104	$	(38,421)
Weighted average common shares outstanding		57,143		59,306		64,524
Per share amount	$	1.78	$	0.79	$	(0.60)
Diluted earnings (loss) per share:
Net income (loss)	$	101,778	$	47,104	$	(38,421)
Weighted average common shares outstanding		57,143		59,306		64,524
Add: Effect of dilutive securities – stock options		285		119		—
Diluted weighted average and equivalent shares outstanding		57,428		59,425		64,524
Per share amount	$	1.77	$	0.79	$	(0.60)

F-25

The potentially dilutive securities that were excluded from the earnings (loss) per share calculation consist of stock options and stock appreciation rights (SARs) with an exercise price greater than the average market price of the Class A Common Stock. These options were as follows:

	Year Ended December 31,
	2010		2009		2008
Potentially dilutive shares		1,844,038		2,350,854		2,217,940

Note 15 Equity-Based Compensation

As of December 31, 2010, Zebra had a general equity-based compensation plan and a stock purchase plan under which shares of our common stock were available for future grants and sales, and which are described below.

On May 9, 2006, Zebra’s stockholders approved the 2006 Zebra Technologies Corporation Incentive Compensation Plan (the 2006 Plan), which included authorization for issuance of awards of 5,500,000 shares under the 2006 Plan. The 2006 Plan became effective immediately and superseded the 1997 Stock Option Plan (the 1997 Plan) and the 2002 Non-Employee Director Stock Option Plan (the 2002 Director Plan), except that the prior plans will remain in effect with respect to stock options granted under the prior plans until such options have been exercised, forfeited, cancelled, expired or otherwise terminated in accordance with the terms of such grants. The types of awards available under the 2006 Plan are incentive stock options, nonqualified stock options, SARs, restricted stock, performance shares and units and performance-based cash bonuses. Employees, directors and consultants of Zebra and its subsidiaries are eligible to participate in the 2006 Plan. The Compensation Committee of the Board of Directors administers the plan. As of December 31, 2010, 2,205,918 shares were available for grant under the plan, and options for 2,262,412 shares were outstanding under the 2006 Plan.

The options and SARs granted under the 2006 Plan have an exercise or grant price equal to the closing market price of Zebra’s stock on the date of grant. Options and SAR’s generally vest over a four or five-year period. These awards expire on the earlier of (a) ten years following the grant date, (b) immediately if the employee is terminated for cause, (c) ninety days after termination of employment if the employee is terminated involuntarily other than for cause, (d) thirty days after termination of employment if the employee voluntarily terminates his or her employment, or (e) one year after termination of employment if the employee’s employment terminates due to death, disability, or retirement.

The following table shows the number of shares of time-vested restricted stock granted in 2010 and the vesting schedules of the restricted stock awards that were granted under the Plan to certain executive officers and other members of management.

Vesting period	Number of shares granted
After three years of service	341,580
After four years of service	11,233
After five years of service	22,466

These restricted stock awards will vest at each vesting date if the employee remains employed by Zebra throughout the applicable time period, but will vest in whole or in part (as set forth in each Restricted Stock Agreement) before the end of the each vesting period in the event of death, disability, resignation for good reason, a change in control (as defined in the 2006 Plan), or termination by Zebra other than for Cause, as defined in the Restricted Stock Agreement entered into by Zebra with each employee who was granted restricted stock. The restricted stock is forfeited in certain situations specified in the Restricted Stock Agreement, including, if the employee’s employment is terminated by Zebra for Cause or if the employee resigns for other than good reason.

The 1997 Plan was superseded by the 2006 Plan. As of December 31, 2010, options for 1,080,576 shares were outstanding and exercisable under the 1997 Plan. These options expire on the earlier of (a) ten years following the grant date, or (b) immediately if the employee is terminated for cause, (c) ninety days after termination of employment if the employee is terminated involuntarily other than for cause, (d) thirty days after termination of employment if the employee voluntarily terminates his or her employment, or (e) one year after termination of employment if the employee’s employment terminates due to death, disability, or retirement.

F-26

The 2002 Director Plan was superseded by the 2006 Plan. As of December 31, 2010, options for 159,068 shares were outstanding and exercisable under the 2002 Director Plan. Unless otherwise provided in an option agreement, options granted under the 2002 Director Plan become exercisable in five equal increments beginning on the date of the grant and continuing on each of the four anniversaries thereafter. All such options expire on the earlier of (a) ten years following the grant date, (b) the first anniversary of the termination date of the non-employee director’s directorship for any reason other than the termination of the non-employee director’s directorship by Zebra’s stockholders for cause, or resignation for cause, in each case as defined in the option agreement.

In connection with Zebra’s acquisitions of Navis and WhereNet, Zebra assumed existing unvested stock options exercisable for shares of Navis’ common stock and WhereNet’s common stock, respectively, and made them options exercisable for Zebra common stock. These new options have exercise prices and vesting dates based on their previous terms. The vesting dates extend in some cases until April 30, 2011 for the Navis options and extended until October 23, 2010 for the WhereNet options. As of December 31, 2010, outstanding Navis options were exercisable into 48,162 shares of Zebra Class A Common Stock. As of December 31, 2010, outstanding WhereNet options were exercisable into 23,278 shares of Zebra Class A Common Stock.

The Board of Directors and stockholders adopted the 2001 Stock Purchase Plan under which employees who work a minimum of 20 hours per week may elect to withhold up to 10% of their cash compensation through regular payroll deductions to purchase shares of Class A Common Stock from Zebra over a period not to exceed 12 months at a purchase price per share which prior to April 1, 2009 was equal to the lesser of: (1) 85% of the fair market value of the shares as of the date of the grant, or (2) 85% of the fair market value of the shares as of the date of purchase. Effective April 1, 2009, the purchase price per share is now equal to the lesser of: (1) 95% of the fair market value of the shares as of the date of the grant, or (2) 95% of the fair market value of the shares as of the date of purchase. The effect of this change to Zebra was to reduce the general and administrative expense related to this portion of Zebra’s stock purchase plan. Stock purchase plan expense for the year ended December 31, 2010 was $315,000. Stock purchase plan expense for the year ended December 31, 2009 was $514,000.

For purposes of calculating the compensation cost, the fair value is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of Zebra’s stock prices over our entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights (SAR) that will be settled in Zebra stock. The following table shows the weighted-average assumptions used for grants of stock options and SARs as well as the fair value of the grants based on those assumptions (excluding the Navis and WhereNet options):

	2010	2009	2008
Expected dividend yield	0%	0%	0%
Forfeiture rate	9.78%	9.92%	8.99%
Volatility	39.50%	43.08%	37.79%
Risk free interest rate	2.26%	2.23%	3.17%
- Range of interest rates	0.06% - 3.41%	0.15% - 3.29%	0.81% - 3.87%
Expected weighted-average life	5.36 years	5.23 years	5.09 years
Fair value of options granted	$6,527,000	$6,046,000	$7,566,000
Weighted-average grant date fair value of options granted     (per share underlying the options)	$10.64	$8.06	$13.33

The forfeiture rate is based on the historical annualized forfeiture rate, which is consistent with prior year rates. This rate includes only pre-vesting forfeitures. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of Zebra’s stock prices over our entire stock history. The risk free interest rate used is the implied yield currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the options. The expected weighted-average life is based on historical exercise behavior, which combines the average life of the options that have already been exercised or cancelled with the exercise life of all unexercised options. The exercise life of unexercised options assumes that the option will be exercised at the midpoint of the vesting date and the full contractual term. These assumptions are consistent with the assumptions used in prior years.

Stock option and SAR activity for the years ended December 31, 2010, 2009, and 2008, was as follows:

	2010					2009					2008
Options and SARs	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price
Outstanding at beginning of year		3,451,945			$ 32.81		3,139,174			$ 35.83		3,029,138			$ 34.68
Granted		612,681			27.82		749,951			19.96		567,676			35.72
Exercised		(304,565	)		23.03		(128,311	)		17.53		(202,204	)		16.77
Forfeited		(93,476	)		30.44		(132,646	)		37.28		(213,012	)		36.11
Expired		(90,839	)		38.02		(176,223	)		39.88		(42,424	)		41.38
Outstanding at end of year		3,575,746			$ 32.68		3,451,945			$ 32.81		3,139,174			$ 35.83
Exercisable at end of year		2,042,664			$ 36.24		1,884,449			$ 35.23		1,719,434			$ 33.30
Intrinsic value of exercised     options and SARs		$ 2,567,000					$ 738,000					$ 3,138,000

F-27

For the year ended December 31, 2010, shares granted above include SARs with respect to 612,681 shares of Zebra stock. There were no stock options granted in 2010. The terms of the SARs are established under the 2006 Plan and the applicable SAR agreement. Once vested, a SAR entitles the holder to receive a payment equal to the difference between the per-share grant price of the SAR and the fair market value of a share of Zebra stock on the date the SAR is exercised, multiplied by the number of shares covered by the SAR. Exercised SARs will be settled in whole shares of Zebra stock, and any fraction of a share will be settled in cash. Vesting of SARs granted in 2010 is as follows: 18,000 SARs vest after one year, 474,382 SARs vest annually in four equal amounts on each of the first four anniversaries of the grant date; 120,299 vest 25% on the third and fourth anniversary of the grant date, with an additional 50% vesting on the fifth anniversary of the grant date. All SARs expire 10 years after the grant date.

The following table summarizes information about stock options and SARs outstanding at December 31, 2010:

	Outstanding						Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Remaining Contractual Life		Weighted- Average Exercise Price		Number of Shares		Weighted- Average Exercise Price
$ 1.29-$20.74		703,589		7.83 years	$	18.87		215,355	$	17.28
$ 20.75-$27.82		995,495		6.58 years		25.97		377,096		23.20
$ 27.83-$39.27		742,892		6.39 years		35.81		455,233		35.88
$ 39.28-$43.35		519,238		5.82 years		42.07		392,448		42.07
$ 43.36-$53.92		614,532		4.02 years		47.61		602,532		47.64
		3,575,746						2,042,664

	Outstanding	Exercisable
Aggregate intrinsic value	$    13,027,000	$    5,733,000
Weighted-average remaining contractual term	6.2 years	4.7 years

Restricted stock award activity, granted under the 2006 Plan, for the years ended December 31, 2010, 2009 and 2008 was as follows:

	2010					2009					2008
Restricted Stock Awards and Performance Share Awards	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		507,984			$ 23.94		283,567			$ 30.35		166,415			$ 31.05
Granted		375,279			27.84		298,703			20.02		179,060			31.42
Released		(22,325	)		29.11		(35,904	)		32.97		(50,114	)		35.46
Forfeited		(16,252	)		26.19		(38,382	)		32.34		(11,794	)		34.89
Outstanding at end of year		844,686			$ 25.47		507,984			$ 23.94		283,567			$ 30.35

As of December 31, 2010, there was $19,780,000 of unearned compensation cost related to awards granted under Zebra’s equity-based compensation plans, which is expected to be recognized over a weighted-average period of 2.4 years.

The fair value of the purchase rights issued to Zebra employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. Expected lives of three months to one year have been used along with these assumptions.

	2010		2009		2008
Fair market value	$	27.95	$	21.41	$	20.26
Option price	$	26.55	$	19.66	$	17.22
Expected dividend yield		0%		0%		0%
Expected volatility		25%		34%		46%
Risk free interest rate		0.14%		0.18%		1.87%

F-28

Note 16 Deferred Compensation Plan

Zebra offers a deferred compensation plan that permits directors and executive management employees to defer portions of their compensation and to select a method of investing these funds. The salaries that have been deferred since the plan’s inception have been accrued and the only expense, other than salaries, related to this plan is the gain or loss from the changes to the deferred compensation liability, which is charged to compensation expense. To fund this plan, Zebra purchases money market investments. Previously, Zebra purchased corporate-owned whole-life insurance contracts on the related employees, of which Zebra is the beneficiary. During 2007, the whole-life insurance policies were liquidated and money market investments were purchased.

The following table shows the income, asset and liability amounts related to this plan (in thousands):

	Year Ended December 31,
	2010		2009		2008
Gain on cash surrender value of life insurance     policies/money market interest included in     investment income	$	—	$	—	$	55

	December 31,   2010		December 31,   2009
Money market investments included in other assets	$	3,427	$	3,155
Deferred compensation liability included in other long-term     liabilities		3,427		3,155

Note 17 Income Taxes

The geographical sources of income (loss) before income taxes were as follows (in thousands):

	Year Ended December 31,
	2010		2009		2008
United States	$	73,915		$49,514	$	(30,517)
Outside United States		71,020		21,009		18,604
Total	$	144,935		$    70,523	$	(11,913)

Zebra’s intention is to permanently reinvest the undistributed earnings of all of our foreign subsidiaries in accordance with ASC740. Deferred income taxes are not provided on undistributed earnings of foreign subsidiaries, aggregating approximately $90,000,000 at December 31, 2010 and $38,000,000 at December 31, 2009. If the undistributed earnings were to be remitted to Zebra, foreign tax credits would be available to substantially offset any U.S. tax due upon repatriation.

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2010			2009		2008
Current:
Federal	$	24,340		$	4,213	$	38,149
State		2,890			861		5,213
Foreign		16,994			5,556		7,494
Total current		44,224			10,630		50,856
Deferred:
Federal		(3,591	)		10,504		(22,309)
State		2,524			509		(2,039)
Foreign					1,776		—
Total deferred		(1,067	)		12,789		(24,348)
Total	$	43,157		$	23,419	$	26,508

F-29

The provision for income taxes differs from the amount computed by applying the U.S. statutory Federal income tax rate of 35% to income before income taxes. The reconciliation of statutory and effective income taxes is presented below (in thousands):

	Year Ended December 31,
	2010		2009		2008
Provision computed at statutory rate	$	50,727	$	24,683	$	(4,170)
State income tax, net of Federal tax benefit		1,666		566		1,127
Tax-exempt interest income		(554)		(1,047)		(1,997)
Acquisition related items		(315)		—		(2,450)
Asset impairment charges		—		—		35,360
Domestic manufacturing deduction		(70)		(700)		(1,715)
Research and experimental credit		(950)		(600)		(400)
Foreign rate differential		(7,799)		(1,263)		1,094
Other		452		1,780		(341)
Provision for income taxes	$	43,157	$	23,419	$	26,508

Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. Based on management’s assessment, it is more likely than not that the deferred tax assets will be realized through future taxable earnings.

Tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2010			2009
Deferred tax assets:
Deferred rent	$	897		$	1,462
Accrued vacation		2,072			1,227
Deferred compensation		1,459			1,525
Inventory items		4,962			4,131
Allowance for doubtful accounts and other receivables		494			410
Other accruals		12,165			3,488
Equity based compensation expense		16,463			16,132
Unrealized gain on securities		76			—
Unrealized loss on other investments		570			5,552
Net operating loss carry-forwards		10,626			18,334
Valuation allowance		(267	)		—
Total deferred tax assets		49,517			52,261
Deferred tax liabilities:
Unrealized loss on securities		(42	)		(169)
Depreciation and amortization		(9,059	)		(5,458)
Total deferred tax liabilities		(9,101	)		(5,627)
Net deferred tax assets	$	40,416		$	46,634

On January 1, 2007, we adopted ASC 740 (formerly FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109). According to ASC 740, we identified, evaluated, and measured the amount of income tax benefits to be recognized for all of our income tax positions. During 2008, we recognized an increase of approximately $4,000,000 in the liability for unrecognized tax benefits related to an acquisition. This benefit remained unchanged as of December 31, 2010 and we do not anticipate any significant changes to the liability in 2011.

Included in deferred tax assets are amounts related to federal and state net operating losses that resulted from our acquisition of WhereNet Corp. As of December 31, 2010, we had approximately $21,932,000 of federal net operating loss carryforwards available to offset future taxable income which expire in 2022 through 2027. As of December 31, 2010, we also had approximately $27,134,000 of state net operating loss carryforwards which expire in 2012 through 2020. Zebra’s intention is to utilize these net operating loss carryforwards to offset future income tax expense. Under the United States Tax Reform Act of 1986, the amounts of benefits from net operating loss carryforwards may be impaired or limited in certain circumstances, including significant changes in ownership interests. In addition, as of December 31, 2010, Zebra had approximately $8,832,000 of foreign net operating loss carryforwards which currently can be carried forward indefinitely.

F-30

Deferred tax asset valuation allowances included in the temporary differences above are as follows (in thousands):

	Year Ended December 31,
Valuation allowance	2010		2009		2008
Balance at the beginning of the year	$	0	$	0	$	0
Additions		267		0		0
Subtractions		0		0		0
Balance at the end of the period	$	267	$	0	$	0

Zebra’s deferred tax valuation allowance is the result of uncertainties regarding the future realization of recorded tax benefits on state income tax loss carry-forwards. The addition in 2010 is primarily related to state income tax law changes in 2011 for that year and tax years going forward.

Zebra has concluded all U.S. federal income tax audits for years through 2006. The tax years 2006 through 2009 remain open to examination by multiple state taxing jurisdictions. Tax authorities in the United Kingdom have completed income tax audits for tax years through 2006.

Zebra’s continuing practice is to recognize interest and/or penalties related to income tax matters as part of income tax expense. For the years ended December 31, 2010, 2009 and 2008, we did not accrue any interest or penalties into income tax expense.

Note 18 Other Comprehensive Income (Loss)

Stockholders’ equity contains certain items classified as other comprehensive income (loss), including:

• Foreign currency translation adjustments related to our non-U.S. subsidiary companies that have designated a functional currency other than the dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, month-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustments component of other comprehensive income (loss).

• Unrealized holding gains (losses) on foreign currency hedging activities relate to derivative instruments used to hedge the currency exchange rates for forecasted euro sales. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transaction occurs. See Note 10 for more details.

• Unrealized gains (losses) on investments classified as available-for-sale are deferred from income statement recognition. See Note 4 for more details.

The components of other comprehensive income (loss) included in the Consolidated Statements of Comprehensive Income (Loss) are as follows (in thousands):

	Year Ended December 31,
	2010		2009		2008
Foreign currency translation adjustments	$	67	$	3,972	$	(22,991)
Changes in unrealized gains and (losses) on hedging transactions:
Gross Income tax (benefit)	$	(1,522)     (573)	$	31     12	$	9,220     3,470
Net	$	(949)	$	19	$	5,750
Changes in unrealized holding gains and (losses) on investments classified as available-for-sale:
Gross	$	(652)	$	1,182	$	(871)
Income tax (benefit)		(246)		445		(328)
Net	$	(406)	$	737	$	(543)

F-31

The components of accumulated other comprehensive income (loss) included in the Consolidated Balance Sheets are as follows (in thousands):

	As of December 31,
	2010			2009
Foreign currency translation adjustments	$	(8,275	)	$	(8,342	)
Unrealized losses on foreign currency hedging activities:
Gross	$	(1,523	)	$	(1	)
Income tax benefit		(573	)		—
Net	$	(950	)	$	(1	)
Unrealized gains and (losses) on investments classified as available-for-sale:
Gross	$	(200	)	$	452
Income tax benefit		(76	)		170
Net	$	(124	)	$	282

Note 19 Segment and Geographic Data

Zebra has two reportable segments: Specialty Printing Group (SPG) and Zebra Enterprise Solutions (ZES).

SPG includes direct thermal and thermal transfer label and receipt printers, passive radio frequency identification (RFID) printer/encoders and dye sublimation card printers. Also included in this group is a comprehensive range of specialty supplies consisting of self-adhesive labels, thermal transfer ribbons, thermal printheads, batteries and other accessories, including software for label design and printer network management.

ZES has evolved since the beginning of 2007 with the acquisitions of WhereNet Corp., proveo AG, Navis Holdings, LLC and Multispectral Solutions, Inc. The solutions provided by ZES are generally sold on a contract basis and are typically installed over several quarters. These contracts cover a range of services, including design, installation and ongoing maintenance services.

The accounting policies for reportable segments are the same as those described in the summary of significant accounting policies except that Zebra records its federal and state deferred tax assets and liabilities in corporate and other. Intersegment sales are not significant.

Segment information is as follows (in thousands):

	Years Ended
	December 31, 2010			December 31, 2009			December 31, 2008
Net sales:
SPG Tangible products	$	834,392		$	688,057		$	851,562
SPG Service & software		36,644			34,499			30,897
SPG Net Sales		871,036			722,556			882,459
ZES Tangible products		20,877			12,987			20,025
ZES Service & software		64,935			68,042			74,216
ZES Net Sales		85,812			81,029			94,241
Total	$	956,848		$	803,585		$	976,700
Operating income (loss):
SPG	$	229,898		$	148,121		$	206,188
ZES		(19,571	)		(15,254	)		(165,966	)
Corporate and other		(66,475	)		(64,065	)		(55,568	)
Total	$	143,852		$	68,802		$	(15,346	)
Depreciation and amortization:
SPG	$	15,564		$	15,565		$	17,515
ZES		8,389			9,518			14,885
Corporate and other		7,256			7,830			6,181
Total	$	31,209		$	32,913		$	38,581

F-32

	December 31, 2010		December 31, 2009
Identifiable assets:
SPG	$	392,512	$	336,428
ZES		179,109		185,495
Corporate and other		307,243		308,556
Total	$	878,864	$	830,479

Corporate and other includes corporate administration costs or assets that support both reporting segments.

Information regarding Zebra’s operations by geographic area is contained in the following table. These amounts (in thousands) are reported in the geographic area of the destination of the final sale. We manage our business based on these regions rather than by individual countries.

	North America		Europe, Middle East & Africa		Latin America		Asia		Total
2010
Net sales	$	407,201	$	338,573	$	87,278	$	123,796	$	956,848
Long-lived assets		79,850		7,338		332		1,463		88,983
2009
Net sales	$	362,109	$	294,296	$	65,060	$	82,120	$	803,585
Long-lived assets		68,852		6,986		346		1,405		77,589
2008
Net sales	$	444,266	$	353,273	$	76,489	$	102,672	$	976,700
Long-lived assets		64,296		8,642		340		2,085		75,363

Net sales by major product category are as follows (in thousands):

	Hardware		Supplies		Service and Software		Shipping and Handling		Total
2010	$	682,455	$	167,633	$	101,579	$	5,181	$	956,848
2009		539,934		155,847		102,541		5,263		803,585
2008		692,638		172,106		105,113		6,843		976,700

Note 20 Business Combinations

Multispectral Solutions Inc. On April 1, 2008, Zebra acquired all of the outstanding stock of Multispectral Solutions Inc. (MSSI) for $18,366,000, which is net of cash acquired and includes transaction costs. Headquartered in Germantown, Maryland, MSSI is a global provider of ultra wideband (UWB) real-time locating systems and other UWB-based wireless technology. Zebra acquired this company to further extend our range of solutions. The Consolidated Statements of Earnings (Loss) reflect the results of operations of MSSI since the effective date of the purchase. The pro forma impact of this acquisition was not significant.

The following table (in thousands) summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition.

	At April 1, 2008
Current assets	$        700
Property and equipment	70
Intangible assets	8,000
Goodwill	13,547
Total assets acquired	$  22,317
Deferred tax liability	(3,011)
Current liabilities	(940)
Net assets acquired	$    18,366

F-33

The purchase price was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values resulting in goodwill of $13,547,000. The intangible assets of $8,000,000 consist of the following (in thousands):

	Amount		Useful life
Customer relationships	$	1,000	10 years
Developed technology	$	7,000	8 years

The goodwill is not deductible for tax purposes.

As part of the acquisition closing, an escrow was established, which, as of December 31, 2009 held $2,000,000. On September 17, 2009, Zebra filed a demand against the former shareholders of MSSI seeking recovery for damages resulting from the selling Shareholders’ breach of several representations and warranties contained in the acquisition agreement. Representatives of the selling shareholders of MSSI disputed the allegations contained in Zebra’s demand and after settlement discussions were unsuccessful, on October 28, 2009, filed a Declaratory Action in the Circuit Court of Cook County seeking to obtain a portion of the escrowed funds. On December 9, 2009, Zebra filed its Answer to the Declaratory Action and its Counterclaim against the former shareholders of MSSI and others (the “Defendants”), alleging that Zebra is entitled to indemnification from the Defendants as a result of, among other things, fraud and breaches of the representations and warranties in the acquisition agreement.

The dispute was settled and the complaint was dismissed in December of 2010. In accordance with the settlement agreement, Zebra received $1,000,000 of the escrowed funds, less 50% of the unpaid expenses of the Escrow Agent, and the balance of the escrow fund was distributed to the former shareholders and vested option holders of MSSI pursuant to the terms of the acquisition agreement.

Zebra agreed to make payments to its current employees that had been shareholders and vested option holders of MSSI to reimburse them for their pro rata portions of any share of the escrow fund that they did not receive due to Zebra’s recoupment of amounts from the escrow fund. Accordingly, we recorded expense in the amount of $100,000 related to these payments. This expense was netted against the $1,000,000 received from the escrow settlement and is shown on the Consolidated Statements of Earnings (Loss) on a separate line titled litigation settlement.

WhereNet Corp. On January 24, 2008, Zebra filed an indemnification claim against the sellers of WhereNet for the entire escrow balance of $13,600,000, alleging that Zebra was entitled to indemnification from the former shareholders of WhereNet as a result of, among other things, breaches of the representations and warranties in the acquisition agreement and potential third party claims. Representatives of the shareholders disputed the allegations and filed a declaratory action to obtain the escrowed funds. The dispute was settled and the complaint was dismissed in September 2008. In accordance with the settlement agreement, Zebra received $7,000,000 of the escrowed funds, and the remainder was distributed to the former shareholders and vested option holders of WhereNet pursuant to the terms of the acquisition agreement.

Zebra agreed to make payments to its current employees that had been shareholders and vested option holders of WhereNet to reimburse them for their pro rata portions of any share of the escrow funds that they did not receive due to Zebra’s recoupment of amounts from the escrow funds. Accordingly, we recorded expense in the amount of $1,698,000 related to these payments. This expense was netted against the $7,000,000 received from the escrow settlement and is shown on the Consolidated Statements of Earnings (Loss) on a separate line titled litigation settlement in 2008. In 2010, litigation settlement also includes $182,000 related to the WhereNet settlement that remained after distributing funds to its current employees.

Note 21 Major Customers

ScanSource, Inc. is our most significant customer. Our net sales to ScanSource, Inc., an international distributor of Zebra SPG products related to automatic identification, telephony and security, as a percentage of total net sales, were as follows:

	Year Ended December 31,
	2010		2009		2008
ScanSource		18.5%		16.1%		15.4%

No other customer accounted for 10% or more of total net sales during these years.

F-34

Note 22 Quarterly Results of Operations (unaudited)

(Amounts in thousands, except per share data)

2010	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	226,431		$	235,735		$	246,507		$	248,175
Cost of sales		119,096			124,556			127,793			124,534
Gross profit		107,335			111,179			118,714			123,641
Selling and marketing		27,500			30,328			30,365			34,496
Research and engineering		23,072			25,371			26,746			26,741
General and administrative		20,869			19,558			19,791			19,492
Amortization of intangibles		2,358			2,345			2,444			2,426
Litigation settlement		—			—			—			(1,082	)
Exit, restructuring and integration costs		1,816			736			511			1,134
Total operating expenses		75,615			78,338			79,857			83,207
Operating income		31,720			32,841			38,857			40,434
Investment income (loss)		842			634			635			570
Foreign exchange gain (loss)		199			361			(325	)		(448	)
Other, net		(349	)		(487	)		(216	)		(333	)
Total other income (loss)		692			508			94			(211	)
Income before taxes		32,412			33,349			38,951			40,223
Income taxes		7,679			10,672			12,800			12,006
Net income	$	24,733		$	22,677		$	26,151		$	28,217
Basic earnings per share	$	0.43		$	0.39		$	0.46		$	0.50
Diluted earnings per share	$	0.42		$	0.39		$	0.46		$	0.50

F-35

2009	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	192,609		$	187,676		$	200,778		$	222,522
Cost of sales		106,800			105,940			109,080			121,044
Gross profit		85,809			81,736			91,698			101,478
Selling and marketing		23,199			24,398			26,395			28,543
Research and engineering		22,149			20,949			21,454			21,838
General and administrative		21,357			18,077			22,447			19,514
Amortization of intangibles		2,634			2,575			2,649			2,608
Exit, restructuring and integration costs		2,296			3,643			3,515			2,737
Asset impairment charges (reversal)		—			(1,058	)		—			—
Total operating expenses		71,635			68,584			76,460			75,240
Operating income (loss)		14,174			13,152			15,238			26,238
Investment income (loss)		1,178			247			813			695
Foreign exchange gain (loss)		(1,284	)		(131	)		575			795
Other, net		(317	)		(19	)		(286	)		(545	)
Total other income (loss)		(423	)		97			1,102			945
Income (loss) before taxes		13,751			13,249			16,340			27,183
Income taxes		4,399			4,238			5,229			9,553
Net income (loss)	$	9,352		$	9,011		$	11,111		$	17,630
Basic earnings (loss) per share	$	0.16		$	0.15		$	0.19		$	0.30
Diluted earnings (loss) per share	$	0.16		$	0.15		$	0.19		$	0.30

Note 23 Subsequent Events

On January 28, 2011, we entered into a Securities Purchase Agreement with Cargotec Corporation to sell all of our interest in the Navis business and WhereNet Marine Terminal Solution software product line for approximately $190 million in cash. We are retaining the real time location, tags and readers portion of the WhereNet business, along with the WhereNet applications that are sold into non-maritime industries. The sale is expected to close in the first quarter of 2011.

Beginning with the first quarter of 2011, Navis and other ZES assets will be reported as assets/liabilities held for sale and the operating results will be reported as discontinued operations. We do not treat the Navis business as discontinued operations in our financial statements for the three-year period ended December 31, 2010. Our financial statements for the three-year period ended December 31, 2010 reflect our Specialty Printing Group (SPG) and ZES segments, including the management discussion and analysis of financial condition and results of operations. After the divestiture, we will be consolidating the remaining location solutions businesses of ZES into Zebra and the separation of segments between SPG and ZES will no longer be required.

F-36

ZEBRA TECHNOLOGIES CORPORATION

Schedule II

Valuation and Qualifying Accounts

(Amounts in thousands)

Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions / (Recoveries)		Balance at End of Period
Valuation account for accounts receivable:
Year ended December 31, 2010	$	2,186	$	367	$	392	$	2,161
Year ended December 31, 2009	$	2,734	$	329	$	877	$	2,186
Year ended December 31, 2008		5,075		1,061		3,402		2,734
Valuation accounts for inventories:
Year ended December 31, 2010	$	9,054	$	5,470	$	4,687	$	9,837
Year ended December 31, 2009	$	9,664	$	6,661	$	7,271	$	9,054
Year ended December 31, 2008		10,004		8,394		8,734		9,664

See accompanying report of independent registered public accounting firm.

F-37

Index to Exhibits

2.1	(1)	Agreement and Plan of Merger between the Company, Waldo Acquisition Corp., WhereNet Corp. and Crosspoint Venture Partners 1996, LLP, dated as of January 11, 2007.
2.2	(2)	Agreement and Plan of Merger between the Company, Nero Acquisition LLC, Navis Holdings, LLC and Navis Corporation, dated October 15, 2007.
2.3		Securities Purchase Agreement, dated as of January 28, 2011 by and among Cargotec U.S. Manufacturing OY, Cargotec Corporation, Zebra Enterprise Solutions Holdings LLC and Zebra Technologies Corporation.
3.1(i)	(3)	Certificate of Incorporation of the Company, as amended.
3.1(ii)	(15)	Amended and Restated By-laws of Zebra Technologies Corporation.
4.0	(5)	Specimen stock certificate representing Class A Common Stock.
4.1	(6)	Rights Agreement between the Company and Mellon Investor Services, as Rights Agent.
10.1	(7)	1997 Stock Option Plan. +
10.2	(8)	First Amendment to 1997 Stock Option Plan. +
10.3	(8)	Second Amendment to 1997 Stock Option Plan. +
10.4	(9)	Third Amendment to 1997 Stock Option Plan. +
10.5	(10)	Amendment No. Four to 1997 Stock Option Plan. +
10.6	(7)	Directors’ 1997 Stock Option Plan. +
10.7	(5)	Lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois.
10.8	(3)	Amendment to the lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois, dated April 1, 1993.
10.9	(3)	Amendment to the lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois, dated December 1, 1994.
10.10	(11)	Amendment to the lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois, dated June 1, 1996.
10.11	(11)	Amendment to the lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois, dated June 2, 1996.
10.12	(12)	Amendment to the lease between the Company and Unique Building Corporation for the Company’s facility in Vernon Hills, Illinois, dated as of July 1, 1999.
10.13	(13)	2002 Non-Employee Director Stock Option Plan. +
10.14	(13)	Amendment No. 1 to 2002 Non-Employee Director Stock Option Plan. +
10.15	(16)	Employment Agreement between the Company and Anders Gustafsson dated August 23, 2007. +
10.16	(17)	First Amendment to Employment Agreement between the Company and Anders Gustafsson dated November 16, 2007. +
10.17	(14)	Second Amendment to Employment Agreement between the Company and Anders Gustafsson dated December 30, 2008. +
10.18	(16)	Non-Qualified Stock Option Agreement between the Company and Anders Gustafsson dated September 4, 2007. +
10.19	(16)	LTI Restricted Stock Agreement between the Company and Anders Gustafsson dated September 4, 2007. +
10.20	(16)	LTI Non-Qualified Stock Option Agreement between the Company and Anders Gustafsson dated September 4, 2007. +
10.21	(18)	Employment Agreement between the Company and Hugh Gagnier dated December 12, 2007. +
10.22	(14)	Amendment No. 1 to Employment Agreement between the Company and Hugh Gagnier dated December 30, 2008. +
10.23	(32)	Employment Agreement between the Company and Michael H. Terzich dated November 16, 2007. +
10.24	(32)	Employment Agreement between the Company and Todd Naughton dated November 16, 2007. +
10.25	(17)	Employment Agreement between the Company and Phil Gerskovich dated November 16, 2007. +
10.26	(27)	Employment Agreement between the Company and Joanne Townsend dated March 17, 2008. +
10.27	(28)	Employment Agreement between Michael C. Smiley and the Company dated May 1, 2008. +
10.28	(14)	Form of Amendment No. 1 to Employment Agreement by and between the Company and each executive officer other than Messrs. Gustafsson and Gagnier, each dated December 30, 2008. +
10.29	(8)	Form of Stock Option Agreement under the 1997 Stock Option Plan for awards granted prior to February 6, 2006. +
10.30	(13)	Form of Stock Option Agreement under the 2002 Non-Employee Director Stock Option Plan for awards granted prior to February 8, 2006. +
10.31	(31)	Form of Amendment to outstanding Stock Option Agreements under the 2002 Non-Employee Director Stock Option Plan. +
10.32	(19)	Form of Stock Option Agreement under the 1997 Stock Option Plan for awards granted on or after February 6, 2006. +
10.33	(19)	Form of Stock Option Agreement under the 2002 Non-Employee Director Stock Option Plan for awards granted on or after February 6, 2006. +

10.34	(20)	Form of Stock Option Agreement under the 2006 Incentive Compensation Plan for awards granted prior to April 25, 2007. +
10.35	(21)	Form of Stock Option Agreement under the 2006 Incentive Compensation Plan for awards granted to executive officers on or after April 25, 2007 and prior to December 2, 2008. +
10.36	(20)	Form of Restricted Stock Agreement under the 2006 Incentive Compensation Plan for retention grants to executive officers granted prior to April 24, 2008. +
10.37	(26)	Form of Restricted Stock Agreement under the 2006 Incentive Compensation Plan for awards granted on or after April 24, 2008 and prior to December 2, 2008. +
10.38	(29)	Form of Director 1-Year Vesting Stock Option Agreement under the 2006 Incentive Compensation Plan for awards granted to directors on or after May 22, 2008 and prior to December 2, 2008. +
10.39	(29)	Form of Director 4-Year Vesting Stock Option Agreement under the 2006 Incentive Compensation Plan for awards granted to directors on or after May 22, 2008 and prior to December 2, 2008. +
10.40	(31)	Amendment to outstanding Stock Option Agreements under the 2006 Incentive Compensation Plan, dated December 2, 2008. +
10.41	(31)	Form of Stock Option Agreement under the 2006 Incentive Compensation Plan for awards granted to executive officers on or after December 2, 2008. +
10.42	(31)	Form of Director Stock Option Agreement (1-Year Vesting) under the 2006 Incentive Compensation Plan for awards granted to directors on or after December 2, 2008. +
10.43	(31)	Form of Director Stock Option Agreement (4-Year Vesting) under the 2006 Incentive Compensation Plan for awards granted to directors on or after December 2, 2008. +
10.44	(31)	Form of Restricted Stock Agreement (time-vesting) under the 2006 Incentive Compensation Plan for awards granted on or after December 2, 2008. +
10.45	(31)	Form of Restricted Stock Agreement (time-vesting) under the 2006 Incentive Compensation Plan for awards granted on or after December 2, 2008. +
10.46	(27)	Manufacturing Services Agreement between Jabil Circuit, Inc. and the Company dated May 30, 2007 (portions of this exhibit have been omitted and have been filed separately with the Commission pursuant to a request for confidential treatment.)
10.47	(30)	Credit Agreement between Zebra Technologies Corporation and Northern Trust Company, as Syndication Agent, Bank of America, N.A., as Documentation Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent, dated as of August 14, 2008.
10.48	(4)	Amendment No. 1 and Waiver to Credit Agreement dated as of August 25, 2009 among the Company, Lenders, and JPMorgan Chase Bank.
10.50	(23)	2006 Incentive Compensation Plan. +
10.51	(31)	Amendment to the 2006 Incentive Compensation Plan dated December 2, 2008. +
10.52	(24)	WhereNet Corp. 1997 Stock Option Plan. +
10.53	(24)	First Amendment to the WhereNet Corp. 1997 Stock Option Plan. +
10.54	(25)	Amended and Restated Navis Holdings, LLC 2000 Option Plan. +
10.55	(15)	Zebra Incentive Plan for 2011. +
10.56	(27)	2005 Executive Deferred Compensation Plan, as amended. +
10.57	(15)	Zebra Enterprises Incentive Plan for 2011. +
10.58	(4)	Employment agreement between the Company and Jim Kaput dated August 31, 2009. +
10.59	(4)	Employment agreement between the Company and William Walsh dated January 5, 2009.
10.60	(33)	Form of indemnification agreement between Zebra Technologies Corporation and each director and executive officer. +
10.61	(33)	Form of 2010 time-vested stock appreciation rights agreement for employees. +
10.62	(33)	Form of 2010 time-vested restricted stock agreement for employees. +
10.63	(33)	Form of 2010 performance-based restricted stock agreement for executive officers other than the chief executive officer. +
10.64	(33)	Form of 2010 time-vested stock appreciation rights agreement for chief executive officer. +
10.65	(33)	Form of 2010 time-vested restricted stock agreement for chief executive officer. +
10.66	(33)	Form of 2010 performance-based restricted stock agreement for chief executive officer. +
10.67	(33)	Form of 2010 time-vested stock appreciation rights agreement for non-employee directors. +
10.68	(33)	Form of 2009 time-vested stock appreciation rights agreement for non-employee directors. +
10.69	(33)	Amended and Restated Employment Agreement between Zebra Technologies Corporation and Anders Gustafsson dated as of May 6, 2010. +
10.70	(33)	Letter Agreement between Zebra Technologies Corporation and Anders Gustafsson dated as of May 6, 2010. +
10.71	(22)	Form of Amendment to Employment Agreement between Zebra Technologies Corporation and executive officers. +
10.72		Amendment to Manufacturing Services Agreement between Jabil Circuit, Inc. and Zebra Technologies Corporation dated May 30, 2007

21.1	Subsidiaries of the Company.
23.1	Consent of Ernst & Young LLP, independent registered public accounting firm.
31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Zebra Technologies Corporation Annual Report on Form 10-K, for the year ended December 31, 2010, filed with the SEC on February 24, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the consolidated balance sheets; (ii) the consolidated statements of earnings (loss); (iii) the consolidated statements of comprehensive income (loss); (iv) the consolidated statements of stockholders equity; (v) the consolidated statements of cash flows; and (vi) notes to consolidated financial statements.

(1	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.
(2	)	Incorporated by reference from Current Report on Form 8-K filed on December 17, 2007.
(3	)	Incorporated by reference from Form 10-K for fiscal year ended December 31. 2006.
(4	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended October 3, 2009.
(5	)	Incorporated by reference from Registration Statement on Form S-1, File No. 33-41576.
(6	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended March 30, 2002.
(7	)	Incorporated by reference from Form 10-K for the fiscal year ended December 31, 1997.
(8	)	Incorporated by reference from Registration Statement on Form S-8, File No. 333-63009.
(9	)	Incorporated by reference from Registration Statement on Form S-8, File No. 333-84512.
(10	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended September 28, 2002.
(11	)	Incorporated by reference from Form 10-K for the fiscal year ended December 31, 1996.
(12	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended April 1, 2000.
(13	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended June 29, 2002.
(14	)	Incorporated by reference from Current Report on Form 8-K filed on January 5, 2009.
(15	)	Incorporated by reference from Current Report on Form 8-K filed on February 16, 2011.
(16	)	Incorporated by reference from Current Report on Form 8-K filed on September 4, 2007.
(17	)	Incorporated by reference from Current Report on Form 8-K filed on November 21, 2007.
(18	)	Incorporated by reference from Current Report on Form 8-K filed on December 17, 2007.
(19	)	Incorporated by reference from Current Report on Form 8-K filed on February 10, 2006.
(20	)	Incorporated by reference from Current Report on Form 8-K filed on October 26, 2006.
(21	)	Incorporated by reference from Current Report on Form 8-K filed on May 1, 2007.
(22	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended October 2, 2010.
(23	)	Incorporated by reference from Current Report on Form 8-K filed on May 15, 2006.
(24	)	Incorporated by reference from Registration Statement on Form S-8 filed on January 25, 2007, File No. 333-140207.
(25	)	Incorporated by reference from Registration Statement on Form S-8 filed on December 19, 2007, File No. 333-148183.
(26	)	Incorporated by reference from Current Report on Form 8-K filed on April 30, 2008.
(27	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended March 29, 2008.
(28	)	Incorporated by reference from Current Report on Form 8-K filed on May 7, 2008.
(29	)	Incorporated by reference from Current Report on Form 8-K filed on May 29, 2008.
(30	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended September 27, 2008.
(31	)	Incorporated by reference from Current Report on Form 8-K filed on December 8, 2008.
(32	)	Incorporated by reference from Form 10-K for fiscal year ended December 31, 2008.
(33	)	Incorporated by reference from Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.
+		Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.

EX-2.3

Exhibit 2.3

SECURITIES PURCHASE AGREEMENT

by and among

CARGOTEC U.S. MANUFACTURING OY,

CARGOTEC CORPORATION,

ZEBRA ENTERPRISE SOLUTIONS HOLDINGS LLC

and

THE MEMBER

(as defined herein)

January 28, 2011

TABLE OF CONTENTS

		Page
ARTICLE I - PURCHASE AND SALE OF COMPANY UNITS; CLOSING			1
Section 1.1	Certain Definitions		1
Section 1.2	Purchase and Sale of Company Units		7
Section 1.3	Consideration		7
Section 1.4	Closing		8
Section 1.5	Certain Payments and Deliverables at Closing		8
Section 1.6	Closing Estimates		8
Section 1.7	Purchase Price Adjustment		8
Section 1.8	Escrow Funds		11
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY			11
Section 2.1	Existence; Good Standing		11
Section 2.2	Authority		12
Section 2.3	Capitalization		12
Section 2.4	No Conflict; Consents		13
Section 2.5	Financial Statements		13
Section 2.6	Absence of Certain Changes		14
Section 2.7	Litigation		16
Section 2.8	Warranties		16
Section 2.9	Taxes		17
Section 2.10	Employee Benefit Plans		19
Section 2.11	Real and Personal Property		21
Section 2.12	Labor and Employment Matters		23
Section 2.13	Contracts and Commitments		24
Section 2.14	Intellectual Property		27
Section 2.15	Environmental Matters		29
Section 2.16	Brokers		30
Section 2.17	Insurance		30
Section 2.18	Compliance with Laws		31
Section 2.19	Licenses and Permits		31
Section 2.20	Sufficiency of Assets		31
Section 2.21	Notes and Accounts Receivable		32
Section 2.22	Bank Accounts		32
Section 2.23	Customers		32
Section 2.24	Business Continuity		32
Section 2.25	Computer Security		32
Section 2.26	Certain Business Relationships with the Company and the Subsidiaries		33
Section 2.27	Internal Control Over Financial Reporting		33
Section 2.28	Disclosure		33
Section 2.29	Disclaimer of Other Representations and Warranties; Knowledge		33
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE MEMBER			34
Section 3.1	Company Units		34

i

Section 3.2	Existence; Good Standing; Authority	34
Section 3.3	Litigation	35
Section 3.4	Brokers	35
Section 3.5	Disclosure	35
Section 3.6	Warranties Limited	36
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT		36
Section 4.1	Existence; Good Standing; Authority	36
Section 4.2	No Conflict; Consents	36
Section 4.3	Available Funds	37
Section 4.4	Litigation	37
Section 4.5	Brokers	37
Section 4.6	Investment Intent	37
Section 4.7	Inspection; No Other Representations	38
Section 4.8	Disclosure	38
Section 4.9	Warranties Limited	38
ARTICLE V - CERTAIN AGREEMENTS		39
Section 5.1	Conduct of Business Prior to Closing	39
Section 5.2	Access to Information	40
Section 5.3	Confidentiality	40
Section 5.4	Regulatory and Other Authorizations; Consents	40
Section 5.5	Officers’ and Directors’ Indemnification	42
Section 5.6	Press Releases	42
Section 5.7	Conflicts and Privilege	42
Section 5.8	Employee Benefit Arrangements	43
Section 5.9	Books and Records	47
Section 5.10	Further Action	47
Section 5.11	Tax Matters	47
Section 5.12	Exclusivity	51
Section 5.13	Non-Competition; Non-Solicitation	52
Section 5.14	Buyer Ultimate Parent Guarantee	53
Section 5.15	Change of Name; Use of Trademarks	53
Section 5.16	Transfers with Respect to the WhereNet Marine Business	54
Section 5.17	Transition Covenants; Project Plan	54
Section 5.18	Covenant Not to Sue	56
Section 5.19	Letters of Credit	57
Section 5.20	Netherlands Lease	57
ARTICLE VI - CONDITIONS TO CLOSING		57
Section 6.1	Conditions to the Obligations of the Company, Member, the Buyer and Buyer Ultimate Parent	57
Section 6.2	Conditions to Obligations of the Member and the Company	57
Section 6.3	Conditions to Obligations of Buyer and Buyer Ultimate Parent	58

ii

ARTICLE VII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION		60
Section 7.1	Survival	60
Section 7.2	Indemnification by the Member	60
Section 7.3	Indemnification by Buyer	64
Section 7.4	Treatment of Indemnity Payments	67
Section 7.5	Remedies Exclusive	67
Section 7.6	Subrogation	67
ARTICLE VIII - TERMINATION		67
Section 8.1	Termination	67
Section 8.2	Effect of Termination	68
ARTICLE IX - GENERAL PROVISIONS		68
Section 9.1	Notices	68
Section 9.2	Disclosure Schedules	69
Section 9.3	Entire Agreement	70
Section 9.4	No Other Representations, Warranties, Covenants and Agreements	70
Section 9.5	Amendment; Waivers	70
Section 9.6	Assignment	70
Section 9.7	No Agreement Until Executed	70
Section 9.8	Interpretation	70
Section 9.9	Fees and Expenses	71
Section 9.10	Governing Law	71
Section 9.11	Dispute Resolution	71
Section 9.12	Specific Performance	72
Section 9.13	Mutual Drafting	72
Section 9.14	Miscellaneous	72
Section 9.15	Severability	73
ANNEX
Annex A	Defined Terms
EXHIBITS
Exhibit A	Assignment and Assumption Agreement
Exhibit B	Escrow Agreement
Exhibit C	MTS Contribution Agreement
Exhibit D	Reseller Agreement
Exhibit E	Source Code License Agreement (Carina Framework)
Exhibit F	Source Code License Agreement (MTS)
Exhibit G	Source Code License Agreement (TTS)
Exhibit H	Transitional Trademark License
Exhibit I	Transition Services Agreement

iii

Exhibit J	Form of Resignation
Exhibit K	Form of FIRPTA Affidavit

iv

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of January 28, 2011, by and among Zebra Enterprise Solutions Holdings LLC, a Delaware limited liability company (the “Company”), Cargotec U.S. Manufacturing Oy, an entity organized pursuant to the laws of the Republic of Finland (“Buyer”), Cargotec Corporation, an entity organized pursuant to the laws of the Republic of Finland (“Buyer Ultimate Parent”) and Zebra Technologies Corporation, a corporation formed under the laws of the State of Delaware (the “Member”). Certain terms used in this Agreement are defined in Section 1.1 hereof. All defined terms used in this Agreement are listed on Annex A hereto.

WHEREAS, the Member owns all the issued and outstanding limited liability membership interests in the Company (the “Company Units”);

WHEREAS, the Member desires to sell to Buyer, and Buyer desires to purchase from the Member, all of the issued and outstanding Company Units on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I - PURCHASE AND SALE OF COMPANY UNITS; CLOSING

Section 1.1 Certain Definitions. For purposes of this Agreement:

(a) “848 Application Patents” means any and all United States or foreign patents issuing from or claiming priority to United States Patent Application No. 11/624,848.

(b) “Action” means any action, suit, arbitration, hearing, investigation, audit, charge, complaint, claim, demand or other proceeding by or before any Governmental Authority.

(c) “Affiliate” means, with respect to any Person, another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

(d) “Antitrust Authorities” means the Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other Governmental Authority having jurisdiction with respect to the transactions contemplated hereby pursuant to applicable Antitrust Laws.

(e) “Antitrust Filings” means any pre-merger notification and report Form filed under the HSR Act and any other filings, notifications or submissions to any Antitrust Authority under any Antitrust Law.

(f) “Antitrust Laws” means the Sherman Antitrust Act, as amended; the Clayton Act, as amended; the HSR Act; the Federal Trade Commission Act, as amended; and all

other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

(g) “Assignment and Assumption Agreement” means that certain Assignment and Assumption Agreement between Zebra Enterprise Solutions LLC and Zebra Enterprise Solutions Corp., substantially in the form of Exhibit A attached hereto.

(h) “Business” means the business of the Company and the Subsidiaries as currently conducted by the Company and the Subsidiaries. Without limiting the foregoing, “Business” shall be understood to include the development of software products and the provision of solutions and services by the Company and the Subsidiaries (including the activities of the WhereNet Marine Business), as the same are currently provided, including (i) Terminal Operating Systems; (ii) yard management for terminals and distribution centers; and (iii) Marine Telematics Solutions. For purposes hereof “provision of solutions and services” shall mean the marketing, distribution, sales, resales and/or licensing of (1) software developed by the Company and/or the Subsidiaries, (2) hardware and software provided by third parties, the Member or its Affiliates (other than the Subsidiaries), and (3) professional services, maintenance and support provided by the Company and/or the Company’s Affiliates and/or third parties. For the avoidance of doubt “Business” shall not include the other products or services offered by Member and/or its Affiliates (other than the Subsidiaries).

(i) “Business Day” means any day, other than a Saturday or Sunday, on which the principal commercial banks in Chicago, Illinois are open for commercial banking business during normal banking hours.

(j) “Cash and Cash Equivalents” means all cash held in deposit accounts, including money market accounts, of the Company and the Subsidiaries and all cash equivalents of the Company and the Subsidiaries that are immediately convertible into cash, as determined in accordance with GAAP, net of any outstanding checks or similar instruments.

(k) “CFIUS” means the Committee on Foreign Investment in the United States.

(l) “CFIUS Clearance” means that the transactions contemplated by this Agreement have been notified to CFIUS by the Member and Buyer, and either (i) CFIUS has advised such parties that it has concluded all action under the Foreign Investment and National Security Act of 2007 without sending a report to the President of the United States regarding the transactions contemplated by this Agreement, or (ii) the President of the United States has announced his decision not to exercise his authority under the Foreign Investment and National Security Act of 2007 with respect to the transactions contemplated by this Agreement, or (iii) such parties have entered a mitigation agreement that does not materially impact the business purposes of the transactions contemplated by this Agreement.

(m) “Closing” means the date of the closing of the purchase and sale of the Company Units and the other transactions contemplated by this Agreement, as provided in Section 1.4 below.

2

(n) “Closing Indebtedness” means an amount equal to the Indebtedness outstanding as of the Closing.

(o) “Code” means the Internal Revenue Code of 1986, as amended.

(p) “Consideration” means the aggregate consideration to be paid by Buyer at Closing for the Company Units, as finally adjusted pursuant to Section 1.7.

(q) “Covered Application” means either or both of the Transferred MTS Application and the Licensed TTS Application in existence as of the Closing Date (“Initial Versions”), and any derivative works thereof solely with respect to the functionality of the Initial Versions therein.

(r) “Current Assets” means the accounts receivable, deposits, prepaid expenses and other current assets (excluding Cash and Cash Equivalents, any prepaid assets relating to Indebtedness and any income tax related assets) of the Business, determined in accordance with GAAP, the calculation of which is illustrated on Schedule 1.1(ww).

(s) “Current Liabilities” means the accounts payable, accrued liabilities and other current liabilities (excluding items included in Indebtedness and deferred revenue and any income tax related liabilities) of the Business (including accrued vacation and payroll expenses to be allocated to the Business by the Member), determined in accordance with GAAP, the calculation of which is illustrated on Schedule 1.1(ww).

(t) “Escrow Account” means the account established with the Escrow Agent pursuant to the Escrow Agreement.

(u) “Escrow Agent” means JP Morgan Chase Bank, N.A.

(v) “Escrow Agreement” means the escrow agreement entered into in connection with this Agreement in substantially the form attached as Exhibit B.

(w) “Escrow Amount” means 15% of the Closing Consideration.

(x) “GAAP” means United States generally accepted accounting principles as in effect from time to time, applied consistently with the principles used in preparing the Member’s financial statements as of and for the year ended December 31, 2009.

(y) “Governing Documents” means, with respect to any Person (other than an individual): (i) the certificate or articles of incorporation or organization and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and (ii) all by-laws, voting agreements and similar documents, instruments or agreements relating to the organization or governance of such Person, in each case, as amended or supplemented to date.

3

(z) “Governmental Authority” means any federal, provincial, state, local or foreign government, any governmental, regulatory or administrative authority, agency, bureau or commission or any court, tribunal or judicial or arbitral body.

(aa) “Indebtedness” means, with respect to the Company or any Subsidiary, all obligations (including all obligations in respect of principal, accrued interest, penalties, fees and premiums, including any applicable prepayment penalties, fees or premiums): (i) for borrowed money (including overdraft facilities); (ii) evidenced by bonds, debentures, notes or other similar instruments; (iii) for the deferred purchase price of property, goods or services, except trade accounts payable and other current liabilities arising in the ordinary course of business; (iv) as lessee under capitalized leases in accordance with GAAP; (v) created or arising under any conditional sale or other title retention agreement with respect to acquired property; (vi) contingent or otherwise, under acceptance credit, letters of credit or similar facilities; (vii) relating to interest rate or currency exchange rate protection, swap agreements and collar agreements; (viii) for Transaction Expenses; (ix) for net present value of the gross amount of facility lease impairment (to the extent not otherwise included in Current Liabilities); (x) for overpayment by Peninsular & Oriental Steam Navigation Company Limited; (xi) for any intercompany balance sheet liabilities to Member or any Affiliate of Member; and (xii) in the nature of guarantees of any of the foregoing, the calculation of which is illustrated on Schedule 1.1(ww).

(bb) “Initial Escrow Release Date” means the date that is 12 months following the Closing Date.

(cc) “Law” means any constitution, statute, law, code, ordinance, rule, regulation, judgment, order, decree or ruling of any Governmental Authority.

(dd) “Liability” means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether direct or indirect, whether liquidated or unliquidated, and whether due or to become due), including, without duplication, any Indebtedness or liability for Taxes.

(ee) “License Agreements” means the Source Code License Agreement (TTS), the Source Code License Agreement (MTS) and the Source Code License Agreement (Carina Framework), collectively.

(ff) “Licensed TTS Application” means the Truck Tagging Solution software application made commercially available by Zebra Enterprise Solutions Corp. for which the source code is licensed to Company pursuant to the Source Code License Agreement (TTS).

(gg) “Losses” of a Person means any and all losses, liabilities, damages, claims, awards, judgments, costs and expenses (including reasonable attorneys’ fees) actually suffered or incurred by such Person.

(hh) “Marine Telematics Solutions” means systems comprising the combination of the Transferred MTS Application and/or Licensed TTS Application with hardware and/or software provided by third parties, the Member or its Affiliates (other than the Subsidiaries) for locating, tracking and managing containers and container handling equipment (including terminal tractors) and trucks for use with Terminal Operating Systems.

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(ii) “Marine Terminal Software” means a software application designed to provide business events to a Terminal Operating System indicating the movement of containers and container handling equipment (including terminal tractors) within a terminal by processing physical location and telematics information received from other hardware and software.

(jj) “Material Adverse Effect” means any material adverse change, event, circumstance with respect to, or material adverse effect on, the Business, financial condition or results of operations of the Company and the Subsidiaries, taken as a whole, provided, however, that none of the following constitute, or will be considered in determining whether there has occurred, a Material Adverse Effect: (i) changes that are the result of factors generally affecting the industries or markets in which the Company or any of the Subsidiaries operates; (ii) any adverse change, event or circumstance to the extent arising out of or resulting from actions of the parties contemplated by this Agreement or the pendency or announcement of the transactions contemplated by this Agreement; (iii) changes in Laws or GAAP or the interpretation thereof; (iv) any action taken at the written request of Buyer or Buyer Ultimate Parent; (v) any failure of the Company to meet any projection or forecast prior to the Closing and disclosed to Buyer or Buyer Ultimate Parent (provided that the changes, events or circumstances underlying any such failure may constitute a Material Adverse Effect and may be taken into account in determining whether a Material Adverse Effect exists or has occurred); (vi) changes that are the result of general economic or industry factors affecting the national, regional or world economy; and (vii) acts of war or terrorism; except, in each case described in (i), (iii), (vi) or (vii), to the extent they have a disproportionate impact on the Business relative to other participants in the industry in which the Company operates.

(kk) “Member Patents” means any and all United States and/or foreign patents issued as of the Closing Date or issuing after the Closing Date and claiming priority to patent applications in existence as of the Closing Date, in each case, only to the extent owned or controlled (by way of an exclusive license with the right to enforce) by Member or any of its current Affiliates including Zebra Enterprise Solutions Corp., as of the Closing Date.

(ll) “MTS Contribution Agreement” means that certain MTS Contribution Agreement between Zebra Enterprise Solutions LLC and Zebra Enterprise Solutions Corp., substantially in the form of Exhibit C attached hereto.

(mm) “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity or group (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended).

(nn) “Pre-Closing Taxable Period” means any taxable period (or portion thereof) ending on or before the Closing Date, including, in the case of a Straddle Period the portion of such Straddle Period ending at the end of the day on the Closing Date.

(oo) “Reseller Agreement” means that certain Reseller Agreement between the Member or one of the Subsidiaries or Affiliates, and the Company or Buyer and Buyer Ultimate

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Parent, substantially in the form of Exhibit D attached hereto, pursuant to which Company may resell certain specified location solutions of Member or the Subsidiaries or Affiliates into the markets defined therein.

(pp) “Second Escrow Release Date” means the date that is 18 months following the Closing Date.

(qq) “Securities Act” means the Securities Act of 1933, as amended, or any successor Law.

(rr) “Source Code License Agreement (Carina Framework)” means that certain Source Code License Agreement (Carina Framework) between the Member, and the Company or Buyer and Buyer Ultimate Parent, substantially in the form of Exhibit E attached hereto.

(ss) “Source Code License Agreement (MTS)” means that certain Source Code License Agreement (MTS) between the Member, and the Company or Buyer and Buyer Ultimate Parent, substantially in the form of Exhibit F attached hereto.

(tt) “Source Code License Agreement (TTS)” means that certain Source Code License Agreement (TTS) between the Member, and the Company or Buyer and Buyer Ultimate Parent, substantially in the form of Exhibit G attached hereto.

(uu) “Straddle Period” means any taxable period that begins on or before and ends after the Closing Date.

(vv) “Subsidiaries” means the Company’s subsidiaries listed on Schedule 2.1(c) attached hereto.

(ww) “Target Working Capital” means an amount equal to Twenty Two Million Three Hundred Seventy Five Thousand Dollars ($22,375,000), the calculation of which is illustrated on Schedule 1.1(ww).

(xx) “Tax Returns” means any report, return, declaration, claim for refund, information return, statement, document or other filing, including any schedule or attachment thereto and any amendment thereof, required to be supplied to the IRS or any other Governmental Authority with respect to Taxes.

(yy) “Taxes” means (i) any and all U.S. federal, state, local and foreign taxes, charges, fees, levies or other assessments, imposed by the IRS or any other taxing authority, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes and (ii) all interest, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such amounts referred to in clause (i).

(zz) “Terminal Operating Systems” means terminal operating systems that provide visibility, control, optimization, scheduling, planning, analytics and automated handling of maritime containers, rail containers and break bulk, in maritime, waterway, rail-to-rail and intermodal rail terminal operations.

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(aaa) “Transaction Expenses” means any: (i) unpaid fees, expenses and disbursements of the Company’s legal, accounting and financial advisors incurred by the Company or any Subsidiary (including Goodwin Procter LLP or Deutsche Bank Securities Inc.), to the extent the Company or any Subsidiary is liable therefor, in connection with the transactions contemplated by this Agreement, (ii) any other unpaid third party fees and expenses incurred by the Company or any Subsidiary, to the extent the Company or any Subsidiary is liable therefor, in connection with the transactions contemplated by this Agreement (it being understood that, as of the date hereof, there are no such third parties who have been so engaged except as described in clause (i) above) and (iii) any unpaid change-in-control, termination, severance stay-bonus, transaction completion bonus or other similar payment required to be made or reimbursed by the Company or any Subsidiary on or after Closing as a result of the transactions contemplated by this Agreement.

(bbb) “Transferred MTS Application” means the Marine Terminal Solution software application formerly made commercially available by Zebra Enterprise Solutions Corp., as assigned to the Company pursuant to the MTS Contribution Agreement.

(ccc) “Transitional Trademark License” means that certain Transitional Trademark License among Zebra Enterprise Solutions LLC, Zebra Enterprise Solutions Corp. and ZIH Corp. substantially in the form of Exhibit H attached hereto.

(ddd) “Transition Services Agreement” means that certain Transition Services Agreement between the Member, the Company, Buyer and Buyer Ultimate Parent, substantially in the form of Exhibit I attached hereto.

(eee) “WhereNet Marine Business” means the following as conducted by Zebra Enterprise Solutions Corp. and/or the Company and the Subsidiaries with respect to the Transferred MTS Application: (i) the development of the Transferred MTS Application; (ii) the marketing, distribution, sales, resales and/or licensing of the Transferred MTS Application and (iii) professional services, maintenance and support related to the Transferred MTS Application.

(fff) “Working Capital” means the working capital of the Company and the Subsidiaries, calculated as of the close of business on the Closing Date as Current Assets minus Current Liabilities, determined consistent with the calculation of Target Working Capital as set forth on Schedule 1.1(ww).

(ggg) “Working Capital Adjustment Amount” means the excess, if any, of the Target Working Capital over the Estimated Working Capital.

Section 1.2 Purchase and Sale of Company Units. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Member agrees to sell to Buyer, and Buyer agrees to purchase from the Member, the Company Units for the Consideration as provided in Section 1.3 below.

Section 1.3 Consideration. The aggregate consideration to be paid by Buyer at Closing for the Company Units (the “Closing Consideration”) shall be a cash amount equal to: (a) the sum of (i) One Hundred Ninety One Million Six Hundred Thousand Dollars ($191,600,000), plus (ii) Estimated Cash and Cash Equivalents, minus (b) the sum of (i) the Estimated Closing Indebtedness, plus (ii) if the Estimated Working Capital is less than the Target Working Capital, the Working Capital Adjustment Amount.

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Section 1.4 Closing. The Closing shall be held at the offices of Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109, on the date that is the earlier of (i) thirty (30) days following the date of this Agreement and (ii) five (5) Business Days following the date on which the conditions to Closing set forth in Section 6.1, Section 6.2 and Section 6.3 of this Agreement have been satisfied, or at such other time or such other place as Buyer and the Member may mutually determine. The date of the Closing is referred to herein as the “Closing Date.”

Section 1.5 Certain Payments and Deliverables at Closing.

(a) The Member will deliver or cause to be delivered to Buyer, at the Closing, an updated ownership ledger evidencing the transfer of the Company Units to Buyer.

(b) At the Closing, Buyer will deliver or cause to be delivered the Closing Consideration, determined pursuant to Section 1.3, as follows:

(i) to the Escrow Agent by wire transfer of immediately available funds to the account previously specified in writing by the Escrow Agent to Buyer, cash equal to the Escrow Amount for deposit into the Escrow Account; and

(ii) to the Member by wire transfer of immediately available funds to the account previously specified in writing by the Member to Buyer, cash equal to the balance of the Closing Consideration.

Section 1.6 Closing Estimates. No later than three (3) Business Days prior to the Closing Date, the Member shall (i) cause to be prepared and delivered to Buyer the most recently available month-end balance sheet of the Company and the Subsidiaries prepared in the same manner as the Base Balance Sheet (as defined below), and (ii) cause to be prepared and delivered to Buyer a certificate setting forth in reasonable detail the Closing Consideration, including the estimated Closing Cash (the “Estimated Cash and Cash Equivalents”), estimated Closing Indebtedness (the “Estimated Indebtedness”) and estimated Closing Working Capital (the “Estimated Working Capital”) for the Company and the Subsidiaries based on such balance sheet.

Section 1.7 Purchase Price Adjustment.

(a) Post-Closing Estimate. Within sixty (60) days following the Closing Date, the Buyer shall prepare and deliver to the Member (i) a balance sheet of the Company and the Subsidiaries as of the close of business on the date preceding the Closing Date prepared in the same manner as the Base Balance Sheet (the “Closing Balance Sheet”) and (ii) a statement (the “Closing Statement”) setting forth Buyer’s calculation of [a] the Company’s and the Subsidiaries’ Working Capital prepared as of the close of business on the date preceding the Closing Date (the “Closing Working Capital”), [b] Closing Indebtedness and [c] the Company’s and the Subsidiaries’ Cash and Cash Equivalents prepared as of the close of business on the date preceding the Closing Date (the “Closing Cash”), along with reasonable supporting detail to evidence the Buyer’s calculations, explanations and assumptions for the calculation of such amounts.

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(b) Disputes. If the Member disagrees with all or any portion of the Closing Statement, the Member shall notify the Buyer of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement and including a revised version of the Closing Statement (the “Dispute Notice”), within thirty (30) days of its receipt of the Closing Statement; provided, however, that the Member shall not dispute, and shall not provide any Dispute Notice, with respect to any item or series of related items unless the amount in dispute with respect to such item or series of related items exceeds $10,000. In the event that the Member does not provide a Dispute Notice within such thirty (30) day period, the Member shall be deemed to have accepted the Closing Statement in its entirety, which shall be final, binding and conclusive for all purposes hereunder. In the event any such Dispute Notice is provided within such thirty (30) day period, the Buyer and the Member shall use commercially reasonable efforts for a period of fifteen (15) days (or such longer period as they may mutually agree in writing) to negotiate and resolve any disagreements by the Member set forth in the Dispute Notice. During each of the thirty (30) day periods following the Member’s receipt of the Closing Statement and the fifteen (15) day period described in the immediately preceding sentence, Buyer shall on a timely basis provide to the Member and its authorized representatives reasonable access to all records (and employees of Buyer and the Company who were involved in the preparation of the Closing Statement, including such access to facilities as is reasonably necessary to have such access to such employees) and the Buyer’s outside accountants and their work papers and other documents used in preparing the such statement. If, at the end of the fifteen (15) day period, Buyer and the Member do not resolve any such disagreements, then the Buyer and the Member shall engage KPMG to resolve such dispute (the “Neutral Auditor”). The Neutral Auditor shall be authorized to resolve only those items remaining in dispute between the Buyer and the Member in accordance with this Section 1.7(b). The Neutral Auditor shall be provided with (i) a copy of this Agreement, (ii) the Closing Statement and related supporting detail prepared by the Buyer and delivered to the Member, (iii) the Dispute Notice and any supporting detail accompanying such Dispute Notice prepared by the Member, and (iv) any information requested by the Neutral Auditor as necessary or appropriate in resolving such dispute. The Neutral Auditor shall review such statements and, within thirty (30) days of its appointment, shall deliver a revised version of the Closing Statement setting forth its resolution of the dispute, which absent fraud or manifest error, shall be binding upon the parties; provided, however, that in resolving any disputed item, the Neutral Auditor shall select an amount that is either the amount owed as shown on the Closing Statement or the Dispute Notice or any amount between the amounts shown thereon. Any fees and expenses of the Neutral Auditor shall be allocated between Buyer and the Member such that the amount paid by the Member bears the same proportion to the total amount of such fees and expenses that the aggregate dollar amount unsuccessfully disputed by the Member bears to the total dollar amount of disputed items that were submitted to the Neutral Auditor, and Buyer shall pay the balance.

(c) Determinations; Adjustments.

(i) Working Capital Adjustment.

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(A) If the Target Working Capital was greater than or equal to the Estimated Working Capital, and the Estimated Working Capital is greater than the Closing Working Capital as finally determined pursuant to this Section 1.7, the Member shall pay to Buyer the excess of the Estimated Working Capital over the Closing Working Capital in accordance with Section 1.7(d).

(B) If the Target Working Capital was greater than or equal to the Estimated Working Capital, and the Estimated Working Capital is less than the Closing Working Capital as finally determined pursuant to this Section 1.7, then (1) if the Closing Working Capital is less than or equal to the Target Working Capital, Buyer shall pay to the Member the excess of the Closing Working Capital over the Estimated Working Capital in accordance with Section 1.7(d) or (2) if the Closing Working Capital exceeds the Target Working Capital, Buyer shall pay to the Member the Working Capital Adjustment Amount, plus, to the extent the Closing Working Capital exceeds the Target Working Capital by more than $200,000, the amount of such excess, in accordance with Section 1.7(d).

(C) If the Estimated Working Capital was greater than or equal to the Target Working Capital, and the Target Working Capital is greater than the Closing Working Capital as finally determined pursuant to this Section 1.7, the Member shall pay to Buyer the excess of the Target Working Capital over the Closing Working Capital in accordance with Section 1.7(d).

(D) If the Estimated Working Capital was greater than or equal to the Target Working Capital, and the Target Working Capital is less than the Closing Working Capital as finally determined pursuant to this Section 1.7, to the extent the excess of the Closing Working Capital over the Target Working Capital exceeds $200,000, Buyer shall pay to the Member such excess in accordance with Section 1.7(d).

(ii) Closing Indebtedness Adjustment. If the Closing Indebtedness as finally determined pursuant to this Section 1.7 is greater than the Estimated Indebtedness, the Member shall pay to the Buyer such excess in accordance with Section 1.7(d). If the Estimated Indebtedness is greater than the Closing Indebtedness as finally determined pursuant to this Section 1.7, Buyer shall pay to the Member such excess in accordance with Section 1.7(d).

(iii) Closing Cash Adjustment. If the Closing Cash as finally determined pursuant to this Section 1.7 is greater than the Estimated Cash and Cash Equivalents, Buyer shall, or shall cause the Company to, pay to the Member such excess in accordance with Section 1.7(d). If the Closing Cash as finally determined pursuant to this Section 1.7 is less than the Estimated Cash and Cash Equivalents, Buyer shall be entitled to receive such shortfall in accordance with Section 1.7(d).

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(d) Payments. Without duplication, all amounts owed pursuant to Section 1.7 shall be aggregated, and the net amount (if any) owed by Buyer to the Member, on the one hand, or the Member to Buyer, on the other hand, shall be referred to as the “Final Closing Adjustment Amount.” In the event that the Final Closing Adjustment Amount is owed to Buyer, an amount in cash equal to the Final Closing Adjustment Amount shall be paid by wire transfer of immediately available funds in cash by the Member to Buyer. In the event the Final Closing Adjustment Amount is owed to the Member, Buyer shall pay to the Member, by wire transfer of immediately available funds, an amount in cash equal to the Final Closing Adjustment Amount. Any payment required under this Section 1.7(d) shall be made within five (5) Business Days of the final determination of the Final Closing Adjustment Amount.

Section 1.8 Escrow Funds. The funds held in the Escrow Account (the “Escrow Funds”) shall be held by the Escrow Agent to secure the rights of Buyer and any Buyer Indemnified Parties to any right to indemnification pursuant to Section 7.2. The Escrow Funds will be held by the Escrow Agent pursuant to the terms of the Escrow Agreement for a period of 18 months after the Closing Date.

ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company and the Member, jointly and severally, hereby make to each of Buyer and Buyer Ultimate Parent the representations and warranties in this Article II as of the date hereof and as of the Closing Date (unless another date is so indicated, then only as of such date); and, for the avoidance of doubt, such representations and warranties are made effective following the transfers and assignments described in Section 5.16. Such representations and warranties shall be subject to the exceptions set forth in the disclosure schedules attached hereto and incorporated herein by reference (the “Schedules”), and each of which exceptions shall also be deemed to be representations and warranties made by the Company under this Article II.

Section 2.1 Existence; Good Standing.

(a) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company is duly licensed or qualified to do business as a foreign limited liability company under the Laws of each jurisdiction in which the character of its properties or in which the transaction of its Business makes such licensing or qualification necessary, except where the failure to be so licensed or qualified will not have, individually or in the aggregate, a Material Adverse Effect. The Company has all requisite power and authority to own, operate, lease and encumber its properties and to carry on its Business as currently conducted. The copies of the Company’s Governing Documents made available to Buyer’s counsel are complete and correct, and no amendments thereto are pending.

(b) Each of the Subsidiaries is a limited liability company or other corporate entity duly incorporated, organized or otherwise formed, as applicable, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization (except, in the case of good standing, for entities organized under the Laws of a jurisdiction that does not recognize such concept). Each Subsidiary is duly licensed or qualified to do business as a foreign corporation, limited liability company or other entity, as applicable, under the Laws of

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each jurisdiction in which the character of its properties or in which the transaction of its business makes such licensing or qualification necessary, except where the failure to be so licensed or qualified will not have, individually or in the aggregate, a Material Adverse Effect. Each Subsidiary has all requisite power and authority to own, operate, lease and encumber its properties and to carry on its business as currently conducted. The copies of the Governing Documents of each Subsidiary made available to Buyer’s counsel are complete and correct, and no amendments thereto are pending.

(c) Schedule 2.1(c) sets forth the full legal name of the Company and each Subsidiary, such entity’s jurisdiction of incorporation or organization, each jurisdiction in which such entity is licensed or qualified to do business and such entity’s business registration, federal and state tax or other comparable identifying numbers.

Section 2.2 Authority. The Company has the limited liability company power and authority to execute and deliver this Agreement, the Transition Services Agreement, the Reseller Agreement, the License Agreements and each agreement, document and instrument to be executed and delivered by or on behalf of the Company pursuant to this Agreement, the Transition Services Agreement, the Reseller Agreement and the License Agreements and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the Transition Services Agreement, the Reseller Agreement and the License Agreements, the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited liability company action on the part of the Company. Each of this Agreement, the Transition Services Agreement, the Reseller Agreement and the License Agreements has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement, the Transition Services Agreement, the Reseller Agreement and the License Agreements, as the case may be, by Buyer, Buyer Ultimate Parent and the Member, as the case may be, this Agreement, the Transition Services Agreement, the Reseller Agreement and the License Agreements, as the case may be, each constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

Section 2.3 Capitalization. As of the date of this Agreement, the authorized, issued and outstanding units of membership interest or other equity interests of the Company and each of the Subsidiaries are set forth on Schedule 2.3. All of the issued and outstanding units of membership interest or other equity interests of the Company and each of the Subsidiaries are duly authorized, validly issued, fully paid and non-assessable. As of the date of this Agreement, except as set forth on Schedule 2.3 there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, conversion rights, exchange rights, deferred compensation rights, agreements, arrangements or commitments of any kind to which the Company or any of the Subsidiaries is a party relating to the issuance, or outstanding securities convertible into or exercisable or exchangeable for, any units of membership interest or other equity interests of the Company or any of the Subsidiaries, nor is the Company or any of the Subsidiaries committed to issue any such option, warrant, right of any type or security or to enter into any such agreement, arrangement or commitment. Except as set forth on Schedule 2.3, there are no outstanding or authorized unit (or equity) appreciation, phantom unit (or equity), profit participation or similar rights with respect to the Company or any of the Subsidiaries. Except as set forth on Schedule 2.3, there are no agreements or understandings to which the Member, the Company or

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any of the Subsidiaries is a party with respect to the voting of any units of membership interest or other equity interests of the Company or any of the Subsidiaries or which restrict the transfer of any such units or other equity interests. Except as set forth on Schedule 2.3, there are no outstanding contractual obligations of the Company or any of the Subsidiaries to repurchase, redeem or otherwise acquire any units of membership interest or other equity interests of the Company or any of the Subsidiaries. Except as set forth on Schedule 2.3, neither the Company nor any of the Subsidiaries owns directly or indirectly any interest or investment (whether equity or debt) in any Person (other than investments in short term investment securities).

Section 2.4 No Conflict; Consents. Except as set forth on Schedule 2.4, the execution and delivery by the Company of this Agreement and the License Agreements, Reseller Agreement and Transition Services Agreement, and the consummation by the Company of the transactions contemplated hereby and thereby in accordance with the terms hereof and thereof, do not (i) violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under, or give rise to a right of termination of, any Material Contract or any other material contract, agreement, permit, license, authorization or obligation to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries or any of their respective assets are bound, or any provision of the Governing Documents of the Company or any of the Subsidiaries; (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, in each case in any material respect, any provision of any Law, or any order of, or any restriction imposed by, any court or other Governmental Authority applicable to the Member or the Company; or (iii) require from the Company or any of the Subsidiaries any notice to, declaration or filing with, or consent or approval of any Governmental Authority or other third party, except for (a) the filing of a pre-merger notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the expiration or termination of applicable waiting periods thereunder; (b) as may result from review of the transaction by CFIUS in accordance with the Foreign Investment and National Security Act of 2007; and (c) the filing of such notices, declarations, filings, consents or approvals, which if not obtained or made, will not have, individually or in the aggregate, a Material Adverse Effect.

Section 2.5 Financial Statements.

(a) The Company has delivered to Buyer true and complete copies of the following financial statements, copies of which are attached hereto as Schedule 2.5(a) (collectively, the “Financial Statements”): unaudited pro forma consolidated balance sheets of the Business which reflect the elimination of any intercompany assets and liabilities and certain pro forma adjustments as of December 31, 2009 and December 31, 2010 (the December 31, 2010 balance sheet of the Business being the “Base Balance Sheet”), and unaudited pro forma consolidated statements of income and unaudited pro forma consolidated statements of cash flows of the Business for each of the years then ended, and an illustration of the relevant pro forma adjustments.

(b) The Financial Statements (including the notes thereto): (i) have been prepared in accordance with GAAP (subject to the absence of footnotes and year end audit adjustments which are not material either individually or in the aggregate) and present fairly in all material respects the consolidated financial condition of the Business and consolidated results

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of the operations of the Business at and for the periods presented, (ii) are correct and complete in all material respects and (iii) are consistent with the books and records of the Business in all material respects (which books and records are correct and complete in all material respects).

(c) The Business does not have any material Liabilities, whether due or to become due, except for: (i) Liabilities set forth and adequately provided for in accordance with GAAP on the Base Balance Sheet, (ii) Liabilities that will be included as “Current Liabilities” in the Estimated Working Capital, (iii) Liabilities which have arisen or been incurred in the ordinary course of business consistent with past practices since the date of the Base Balance Sheet (none of which is a Liability for breach of contract, breach of warranty, product liability, tort or infringement, or a claim or lawsuit, or an environmental liability), (iv) Liabilities set forth on Schedule 2.5(c) or (v) Liabilities under executory contracts for the Company or any Subsidiary or the WhereNet Marine Business to perform in the ordinary course of business and as to which neither the Company nor any Affiliate is delinquent or in default pursuant to such contract (none of which is a Liability for breach of contract, breach of warranty, product liability, tort or infringement). As of the Closing Date, neither the Company nor any Subsidiary have any Indebtedness other than the Closing Indebtedness nor any intercompany balance sheet liabilities to Member or any Affiliate of Member.

Section 2.6 Absence of Certain Changes. Except as set forth on Schedule 2.6, since the date of the Base Balance Sheet, (a) the Company and the Subsidiaries have operated only in the ordinary course of business consistent with past practices and (b) there has been no change in the condition, assets or Business of the Company or the Subsidiaries, except such changes that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, except as set forth on Schedule 2.6 or as contemplated by this Agreement, since the date of the Base Balance Sheet there has not been any of the following involving the Company or any Subsidiary:

(a) any amendment to the Governing Documents of the Company or any Subsidiary;

(b) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company’s or any of the Subsidiaries’ share capital, capital stock or other equity interests, as applicable;

(c) any issuance, sale, material amendment or other disposal or purchase, redemption or other acquisition by the Company or any of the Subsidiaries of any capital stock or other equity or debt securities of the Company or any Subsidiary or any options, warrants, calls or rights to acquire any such shares or other securities;

(d) any split, combination or reclassification of any of the Company’s or any of the Subsidiaries’ share capital, capital stock or other equity interests, as applicable;

(e) any material change in employment terms, or any resignation, transfer or termination of any officer, director or member of the board of managers of the Company or any Subsidiary;

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(f) any material change by the Company in its accounting methods, principles or practices, except as required by concurrent changes in GAAP;

(g) any material revaluation by the Company of any of its or the Subsidiaries’ assets, including writing down the value of capitalized inventory or writing off notes or accounts receivable other than in the ordinary course of business;

(h) any (i) creation or incurrence of any Indebtedness, except in the ordinary course of business and consistent with past practices, (ii) assumption, guarantee, endorsement or otherwise as an accommodation or other assumption of responsibility for the obligations of any other Person, (iii) grant of any loans or advances to, other than in the ordinary course of business and consistent with past practices, or any or capital contributions to or investment in, any other Person, (iv) creation of any Encumbrance over any asset having a book or market value in excess of $50,000 individually or $150,000 in the aggregate or (v) entry into any “keep well” or other contract to maintain any financial statement condition of another Person (including any Subsidiary) or entry into any arrangement having the economic effect of any of the foregoing;

(i) any material damage, destruction or loss (whether or not covered by insurance) adversely affecting the assets of the Company or the Subsidiaries or the business of the Company or the Subsidiaries;

(j) any sale, lease, license, pledge or other disposition of or Encumbrance on any of the Company’s or a Subsidiary’s properties or tangible assets having a book or market value in excess of $50,000 individually or $150,000 in the aggregate (other than sales of products and services in the ordinary course of business);

(k) any acquisition by merger or consolidation with, or by purchase of all or a substantial portion of the assets or any stock of, or by any other manner, any business or Person;

(l) except for renewals of or entry into of new contracts with customers entered into in the ordinary course of business consistent with past practices, any entry into, modification, acceleration, cancellation or termination of or receipt of notice of termination of, any contract (or series of related contracts) which involves a total remaining commitment by or to the Company or any Subsidiary of at least $50,000 individually or $150,000 in the aggregate;

(m) any (i) adoption, entry into, termination or amendment of any Benefit Plan, collective bargaining agreement or employment, severance or similar contract with any executive officer or key employee (except as required by applicable Law), (ii) increase in the compensation or fringe benefits of, or payment of any bonus to, any director, executive officer, employee or consultant or other independent contractor, except normal scheduled increases in the ordinary course of business and in accordance with past practices (iii) amendment or acceleration of the payment, right to payment or vesting of any compensation or benefits, (iv) payment of any benefit not provided for as of the date of this Agreement under any Benefit Plan, (v) grant of any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Benefit Plans or contracts or awards made thereunder, except in the ordinary course of business, or (vi) any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan;

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(n) any loan to, or other transaction with, any of the directors, officers or employees of the Company or any Subsidiary outside the ordinary course of business;

(o) any cancellation, settlement, compromise, release or waiver of any claims or rights (or series of related claims or rights) with a value exceeding $50,000 individually or $150,000 in the aggregate;

(p) any capital expenditure or other expenditure, or commitment thereof, with respect to property, plant or equipment in excess of $50,000 individually or $150,000 in the aggregate for the Company and the Subsidiaries taken as a whole;

(q) any material acceleration or material delay in the payment of accounts payable or other Liabilities or in the collection of notes or accounts receivable;

(r) any transfer, assignment or grant of any license or sublicense of any rights under or with respect to any Intellectual Property outside the ordinary course of business;

(s) any authorization of, or contract by the Company or any Subsidiary, to take any of the actions described in this Section 2.6.

Section 2.7 Litigation. Except as set forth on Schedule 2.7, (a) there is no Action pending or material Action threatened in writing by the Company or any of the Subsidiaries, (b) there is no Action pending against the Company or any of the Subsidiaries and (c) neither the Company nor any of the Subsidiaries have received written notice of, and the Company does not have any knowledge of, any material Action threatened against the Company or any of the Subsidiaries or any condition, event, fact, circumstance or other occurrence which would reasonably be expected to result in a material Action. Schedule 2.7 sets forth each instance in which the Company or any of the Subsidiaries was a party or, to the knowledge of the Company, is or was threatened in writing to be made a party to any Action since January 1, 2008, and includes a brief description of each such Action, its amount or value and its current status or final disposition (other than ordinary and normal course workers’ compensation claims involving immaterial Liabilities). There has been no Action relating to product liability or errors or omissions with respect to products sold or licensed, or services rendered, by the Company or any of the Subsidiaries. As of the date of this Agreement, neither the Company nor any of the Subsidiaries is subject to any outstanding writ, order, judgment, ruling, charge, injunction or decree which, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

Section 2.8 Warranties. Schedule 2.8 sets forth a description of the standard product warranties, service level agreements and other warranties provided by the Company and the Subsidiaries with respect to their business, products and services and any material deviations therefrom. The reserve for warranty claims reflected on the Base Balance Sheet is adequate, in all material respects, to cover the anticipated warranty obligation of the Company or any Subsidiary in the normal and ordinary course of business.

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Section 2.9 Taxes. Except as set forth on Schedule 2.9:

(a) The Company and the Subsidiaries have timely filed or been included in all income and other Tax Returns required to be filed by them or in which they were required to be included, taking into account any extension of time to file granted to or obtained on behalf of the Company or any of the Subsidiaries;

(b) Each Tax Return referred to in Section 2.9(a) (including any amendment thereto) is correct and complete in all material respects;

(c) The Company and the Subsidiaries have paid or caused to be paid all Taxes shown on the Tax Returns referred to in Section 2.9(a) as due and payable by any of them, except to the extent such Taxes are being contested in good faith by the Company or any Subsidiary or are properly reserved for on the books or records of the Company;

(d) There are no extensions of time to file any Tax Returns that are pending;

(e) There are no liens on any of the Company’s or any of the Subsidiaries’ assets that have arisen in connection with any failure (or alleged failure) to pay any Taxes;

(f) Neither the Company nor any of the Subsidiaries (i) are a party to or bound by any tax indemnity, tax sharing or tax allocation agreement, (ii) are liable for the Taxes of any other Person (other than as members of any combined, consolidated or unitary group the parent of which is the Member) or (iii) have any Liability for Taxes of any other Person (other than the Company or any of the Subsidiaries) payable by reason of contract, assumption, transferee liability, operation of law, Treasury Regulations Section 1.1502-6 (or any corresponding or similar provision of state, local or foreign Tax law) or otherwise;

(g) All Taxes required to be withheld by the Company or the Subsidiaries have been withheld and have been (or will be) duly and timely paid to the proper taxing authority (including those required to be withheld from any employee, vendor or other Person);

(h) Neither the Internal Revenue Service (the “IRS”) nor any other Governmental Authority is proposing or asserting by written notice to the Company or any of the Subsidiaries or has proposed or threatened in writing to assert against the Company or the Subsidiaries any deficiency, adjustment or claim for any amount of additional Taxes;

(i) No federal, state, local or foreign audits or other administrative proceedings or court proceedings are pending with regard to any Taxes or Tax Returns of the Company or any of the Subsidiaries and neither the Company nor any of the Subsidiaries has received a written notice of any actual or threatened audits or proceedings;

(j) Since January 1, 2006, no written claim has been made by a Governmental Authority in a jurisdiction where neither the Company nor the Subsidiaries file Tax Returns that either the Company and/or any of the Subsidiaries is or may be subject to taxation in that jurisdiction;

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(k) Neither the Company nor any of the Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency which extension is currently effective;

(l) The Company has a valid election in effect to be treated as an association taxable as a corporation for U.S. federal and state income tax purposes;

(m) Each Subsidiary of the Company has been since January 1, 2008, or, if later, the date of acquisition by the Company, treated for U.S. federal and state income tax purposes as the type of entity indicated for such Subsidiary on Schedule 2.9;

(n) Neither the Company nor any of the Subsidiaries has been a member of any combined, consolidated or unitary group filing a consolidated federal income Tax Return, other than a group the common parent of which is the Member;

(o) The Member has filed a consolidated federal income Tax Return with the Company and each Subsidiary that is organized in the United States and treated as a corporation for U.S. federal income tax purposes for the taxable year immediately preceding the current taxable year;

(p) No power of attorney has been granted by or with respect to the Company or any of the Subsidiaries with respect to any matter relating to Taxes;

(q) Neither the Company nor any of the Subsidiaries will be required to include any item of income, or exclude any item of deduction from, taxable income for any taxable period ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) closing agreement (as described in Section 7121 of the Code or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date, (iii) intercompany transactions or excess loss account resulting from a transaction effected by the Company or any of the Subsidiaries on or before the Closing Date and described in Treasury Regulations promulgated under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax law) (iv) installment sale or open transaction disposition made on or prior to the Closing Date, (v) prepaid amounts received on or prior to the Closing Date or (vi) pursuant to Section 951 of the Code (or any corresponding or similar provision of state, local or foreign Tax law) with respect to income earned by the Company or any of the Subsidiaries on or before the Closing Date;

(r) Since December 14, 2007, neither the Company nor any of the Subsidiaries was a “distributing corporation” or a “controlled corporation” (each within the meaning of Section 355 of the Code) in a transaction intended to be governed by Section 355 of the Code;

(s) Neither the Company nor any of the Subsidiaries are a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding or similar provision of state, local or foreign Tax law) or (ii) any amount that would not be deductible pursuant to Section 162(m) of the Code (or any corresponding or similar provision of state, local or foreign Tax law);

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(t) All “non-qualified deferred compensation plans” (as such term is defined under Section 409A(d)(1) of the Code and the guidance issued thereunder) of the Member, its Affiliates, the Company and the Subsidiaries under which the Member, its Subsidiaries, the Company and/or the Subsidiaries make, are obligated to make or promise to make any payments or other awards to “service providers” (as such term is defined under Treasury Regulations Section 1.409A-1(f)) of the Company and/or the Subsidiaries (each, a “409A Plan”) (i) meet and have met the requirements of Sections 409A(a)(2), (3), and (4) of the Code, (ii) at all times were operated in accordance with such requirements, (iii) were operated in good faith compliance with the transitional relief and all guidance and regulations provided by the Internal Revenue Service under Section 409A of the Code, and (iv) no 409A Plan has been funded by an off-shore arrangement described in Section 409A(b)(1) of the Code;

(u) The Company and the Subsidiaries have withheld and paid all applicable FICA taxes imposed under Sections 3101 and 3111 of the Code on all nonqualified deferred compensation plans (within the meaning of Section 3121(v)(2) of the Code) of the Company and the Subsidiaries in accordance with the “special timing rule” under Treasury Regulations Sections 1.3121(v)(2)-1 through 1.3121(v)(2)-2;

(v) The Company and the Subsidiaries have disclosed on its federal income Tax Return, or have caused to be disclosed on the federal income Tax Return in which they are to be included, all positions taken therein that could give rise to substantial understatement of federal income Taxes within the meaning of Section 6662 of the Code;

(w) Neither the Company nor any of the Subsidiaries have engaged in any “listed transaction” as defined in Treasury Regulations Section 1.6011-4(b);

(x) The Company has delivered to Buyer correct copies of the Company’s federal and state income Tax Returns relating to the Company and the Subsidiaries, including, in each case, amended Tax Returns, for each of its preceding three (3) taxable years;

(y) The representations and warranties set forth in this Section 2.9 shall constitute the only representations and warranties by the Company with respect to Taxes except as otherwise explicitly provided; and

(z) Notwithstanding anything to the contrary in this Agreement, the Company makes no representations or warranties in respect of the existence, amount or usability of the Company’s tax attributes, including, without limitation, net operating losses, capital loss carryforwards, foreign tax credit carryforwards, research and development credits, asset bases and depreciation periods for taxable periods or portions thereof beginning after the Closing Date.

Section 2.10 Employee Benefit Plans.

(a) Schedule 2.10(a) sets forth (i) a list of every material employee benefit plan other than the International Employee Plans, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and any cafeteria

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plans within the meaning of Code section 125 currently maintained, sponsored or contributed to by the Member, the Company or any ERISA Affiliate (as defined below) for the benefit of any current or former employee, officer or director of the Company and the Subsidiaries (the “Benefit Plans”) and (ii) each Benefit Plan that is maintained, sponsored or contributed to by the Company or the Subsidiaries (the “Company Benefit Plans”). Except for such matters as set forth on Schedule 2.10(a), (i) each Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS regarding its qualifications thereunder; (ii) each Company Benefit Plan (and each Benefit Plan subject to Code Sections 401(a) and 125) has been administered in accordance with its terms and requirements of applicable Law; (iii) no Company Benefit Plan is subject to Title IV of ERISA or Section 412 of the Code or is a “multiemployer plan,” as defined in Section 3(37) of ERISA; and (iv) no Company Benefit Plan provides for post-employment life or health insurance benefits for any participant or any beneficiary of a participant, except as may be required by part 6 of Subtitle B of Title 1 of ERISA or similar Law. An “ERISA Affiliate” of the Company is an entity that is considered a single employer with the Company under ERISA Section 4001(b) or part of the same “controlled group” as the Company for purposes of ERISA Section 302(d)(3).

(b) Neither the Company nor any ERISA Affiliate has engaged in any transaction within the meaning of Section 4069 of ERISA.

(c) No Action (other than routine claims for benefits) is pending or, to the knowledge of the Company, asserted in writing, in each case against the Company Benefit Plans.

(d) With respect to each Company Benefit Plan which will be assumed or continued by Buyer and each Benefit Plan subject to Code Section 401(k) or 125 for which assets may be transferred to a similar plan of Buyer or its Affiliates, the Company has made available to Buyer (if applicable to such Benefit Plan): (i) all documents embodying or governing such Benefit Plan, and any funding medium for such Benefit Plan (including trust agreements); (ii) the most recent IRS determination or opinion letter with respect to such Benefit Plan; (iii) the most recently filed IRS Forms 5500; and (iv) the summary plan description for such Benefit Plan (or other descriptions of such Benefit Plan provided to employees).

(e) With respect to each International Employee Plan (as defined below), (i) each International Employee Plan has been established, maintained and administered in compliance with its terms and conditions and applicable Law, (ii) each International Employee Plan required to be registered has been registered and has been maintained in good standing with the appropriate regulatory authorities, (iii) there are no pending, threatened or anticipated Actions (other than routine claims for benefits) by, on behalf of or against any of the International Employee Plans or any trusts, insurance contracts, escrow accounts or similar funding arrangements related thereto and (iv) since the date of the Base Balance Sheet, no International Employee Plan has been amended or modified in a manner that increases in any material amount the benefits payable pursuant to such International Employee Plan other than in the ordinary course of business or as required by applicable Law. As used in this Agreement, “International Employee Plan” shall mean each benefit plan that has been adopted or maintained by the Company or the Subsidiaries or in which the Company or the Subsidiaries or any of their employees participate, whether informally or formally, or with respect to which the Company or the Subsidiaries will or may have any material Liability, for the benefit of Company Employees who perform services outside the United States and Schedule 2.10(e) sets forth each International Employee Plan.

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(f) Except as disclosed on Schedule 2.10(f), neither the Company nor any ERISA Affiliate has sponsored or been required to contribute to a defined benefit pension plan subject to Code Section 412 or a multiemployer plan as defined in ERISA Section 3(37). Neither the Company nor any ERISA Affiliate has incurred or been assessed withdrawal liability (as defined in ERISA Section 4201) that has not been paid in full.

(g) Schedule 2.10(g) sets forth every employee of the Company or any Subsidiary who, as a result of his or her participation in any Benefit Plan, holds, directly or indirectly, any option, warrant, right of any type or security or other arrangement or commitment with respect to the equity interests of the Member or any of its Affiliates, or any equity appreciation, phantom equity, profit participation or similar rights with respect to the Member or any of its Affiliates (collectively, “Member Equity Rights”) and describes the nature of such Member Equity Rights and identifies the Benefit Plan to which it relates.

(h) All contributions or premium payments required to be made to the Company Benefit Plans have been made timely or are reflected in the Company’s financials.

(i) Neither the Company nor any Subsidiary has any severance policies or plans with respect to Company Employees located outside of the United States. Any severance obligations with respect to Company Employees located outside of the United States are solely as required by applicable Law.

Section 2.11 Real and Personal Property.

(a) Neither the Company nor any of the Subsidiaries owns any real property. To the knowledge of the Company, neither the Company nor any of the Subsidiaries ever owned any real property.

(b) Schedule 2.11(b) sets forth: (i) the address of each parcel of real property currently leased by the Company or any of the Subsidiaries (the “Leased Real Property”) (ii) as well as a true and complete list of all leases relating to Leased Real Property (each, a “Lease”), including the date and name of the parties to such Lease. The Company has delivered to Buyer a true and complete copy of each Lease. With respect to each Lease:

(i) the Company or a Subsidiary, as applicable, has a legal, valid, binding and enforceable leasehold interest to the leasehold estate in the Leased Real Property granted to the Company or such Subsidiary, as applicable, pursuant to such Lease that is in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity as they may relate to third parties other than the Company or a Subsidiary;

(ii) neither the Company nor any of the Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in such Lease;

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(iii) the transactions contemplated by this Agreement: (a) do not require the consent of any other party to such Lease, (b) will not result in a material breach of or material default under such Lease and (c) will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on substantially identical terms immediately following the Closing, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity as they may relate to third parties other than the Company or a Subsidiary;

(iv) since January 1, 2008, neither the Company’s nor any of the Subsidiaries’ possession and quiet enjoyment of the Leased Real Property under such Lease has been disturbed and there are no current or unresolved material disputes with respect to such Lease;

(v) neither the Company nor any of the Subsidiaries, nor to the knowledge of the Company, any other party to the Lease is in material breach of or material default under such Lease, and to the knowledge of the Company, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a material breach or default, or permit the termination, modification or acceleration of rent under such Lease;

(vi) since January 1, 2008, no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach of or default under such Lease that has not been redeposited in full;

(vii) neither the Company nor any of the Subsidiaries owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;

(viii) the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest (other than any share ownership in Member that is equal to or less than 2% of the Member’s outstanding share capitalization) in, the Company or any of the Subsidiaries;

(ix) neither the Company nor any of the Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property or any portion thereof; and

(x) there are no Encumbrances on the estate or interest created by such Lease that, individually or in the aggregate, are material in character, amount or extent or which could reasonably be expected to materially detract from the value or materially interfere with the operation of the Business as currently conducted.

(c) The Leased Real Property comprises all of the real property used in the Business; and neither the Company nor any of the Subsidiaries is a party to any agreement or option to purchase any real property or interest therein.

(d) Except as set forth on Schedule 2.11(d) or as specifically disclosed in the Base Balance Sheet, the Company and each of the Subsidiaries has good title to, or valid

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leasehold interest in or valid rights to use, all of their tangible personal property and assets used by them or shown on the Base Balance Sheet or acquired after the date of the Base Balance Sheet (collectively, the “Company Assets”), free and clear of any mortgage, pledge, lien, conditional sale agreement, security title, encumbrance or other charge (collectively, “Encumbrances”), except for (i) assets that have been disposed of since the date of the Base Balance Sheet in the ordinary course of business, (ii) Taxes, fees, assessments or other governmental charges which are not due and payable as of the Closing Date and (iii) Encumbrances of record or imperfections affecting title which are not, individually or in the aggregate, material in character, amount or extent and which do not materially detract from the value or materially interfere with the present or presently contemplated use or occupancy of the properties or assets subject thereto or affected thereby. The current use and improvements on the Leased Real Property are not: (a) nonconforming, (b) a special use or (c) a special exception. To the knowledge of the Company, there is no contemplated change in the zoning classification for the Leased Real Property. The Company and the Subsidiaries are not party to or subject to any indenture, agreement, contract, commitment, lease, plan, license, permit, authorization or other instrument, document or understanding, oral or written, or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award which materially adversely affects or materially restricts their business, operations, assets, properties or condition (financial or otherwise).

Section 2.12 Labor and Employment Matters.

(a) Except as set forth on Schedule 2.12(a), the Company and each of the Subsidiaries are in material compliance with all Laws respecting employment and employment practices (including Laws relating to immigration and visas), terms and conditions of employment and wages and hours. Except as set forth on Schedule 2.12(a), since January 1, 2008, neither the Company nor any Subsidiary has been subject to any Action relating to discrimination or wage and hour Laws.

(b) Neither the Company nor any Subsidiary is a party to or otherwise bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization. Neither the Company nor any Subsidiary is subject to any charge, demand, petition or representation proceeding seeking to compel, require or demand it to bargain with any labor union or labor organization, nor is there pending or, to the Company’s knowledge, threatened in writing, any material labor strike, dispute, walkout, work stoppage, slow-down or lockout involving the Company or any Subsidiary.

(c) There has been no “mass layoff” or “plant closing” within the meaning of the Worker Adjustment and Retraining Notification Act of 1988, as amended (“WARN”), and any similar state or local “mass layoff” or “plant closing” Law with respect to the Company or any of the Subsidiaries within the past six (6) months.

(d) The Company has provided Buyer copies of all of the Company’s and each Subsidiary’s written employment policies, and written summaries of all of the Company’s and each Subsidiary’s material known unwritten employment policies, presently in effect.

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(e) Schedule 2.12(e) is a correct and complete list of all employees of the Company and each Subsidiary as of the date hereof, including salary or hourly wage, position, and hire date.

(f) A list of all employees of the Company and Subsidiaries, as of the date hereof, working in the United States who are not U.S. citizens, and their respective visas or other resident status (including expiration dates where applicable) is attached as Schedule 2.12(f).

Section 2.13 Contracts and Commitments.

(a) Except as set forth in Schedule 2.13(a) or as contemplated by this Agreement, neither the Company nor any Subsidiary is a party to:

(i) any currently effective agreement (other than purchase orders or work orders issued in the ordinary course of business) with: (a) a top 20 customer, client, purchaser or licensee of the Company and the Subsidiaries or (b) any customer, client, purchaser or licensee representing more than 1% of the revenues of the Company and the Subsidiaries, collectively, as represented by bookings for the fiscal year ended December 31, 2010;

(ii) any currently effective agreement (other than purchase orders or work orders issued in the ordinary course of business) with a top 20 supplier or licensor of the Company and the Subsidiaries, collectively, as represented by expenditures for the fiscal year ended December 31, 2010;

(iii) any currently effective agreement under which the Company or any of the Subsidiaries has made advances or loans to any other Person (which shall not include advances made to an employee of the Company or any of the Subsidiaries in the ordinary course of business consistent with past practice);

(iv) [a] any written severance or retention agreement with any director, officer, employee or other Person, [b] any written employment agreement for any director, officer, employee or other Person who earned a base salary in excess of [i] $125,000 if residing in the United States or the United Kingdom or [ii] $75,000 if residing elsewhere; [c] any standard form agreements used for any director, officer, employee or other Person; and [d] any agreement relating to loans or advances to any director, officer or employee of the Company or any of the Subsidiaries;

(v) any agreement with a third party consultant, sales representative, distributor, dealer or other independent contractor to which either the Company or a Subsidiary is a party under which the Company made any payments in excess of $100,000 in the aggregate for the fiscal year ended December 31, 2010;

(vi) any agreement containing any covenant limiting the right of the Company or any of the Subsidiaries to enter or engage in any line of business or conduct business in any geographic territory or market or otherwise to compete with any Person in any line of business, or requiring the Company or any Subsidiary to deal on an exclusive basis with any other party;

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(vii) other than agreements conforming to the Company’s standard form of employment agreement or independent contractor services agreement disclosed in Schedule 2.13(a)(vii), any currently effective agreement of which the Company has knowledge to which any employee, consultant or independent contractor of the Company or a Subsidiary is bound that in any manner purports to: (a) restrict the freedom of such employee, consultant or independent contractor to engage in any line of business or activity that relates to the Business or (b) assign to any other Person such employee’s, consultant’s or independent contractor’s rights to any Intellectual Property that relates to the Business;

(viii) any currently effective joint venture, partnership and other agreement (however named) involving a sharing of profits, losses, costs or liabilities by the Company or a Subsidiary with any other Person, other than sales commissions agreements and similar arrangements with employees of the Company or the Subsidiaries entered into in the ordinary course of business consistent with past practices;

(ix) any power of attorney relating to the Company or a Subsidiary that is currently effective and outstanding;

(x) any currently effective agreement containing a written representation or warranty regarding any features, functionality or performance of any products or services of the Company or any of the Subsidiaries that is materially different from the Company’s or the Subsidiaries’ standard warranties for such products or services and for which the Company or any of the Subsidiaries have any outstanding or potential obligations;

(xi) any currently effective agreement: (a) relating to the disposition or acquisition by the Company or any of the Subsidiaries occurring after the date of this Agreement of any business, line of business, operations, real property or assets not in the ordinary course of business, (whether by merger, sale of capital stock or membership interests, sale of assets or otherwise) or (b) pursuant to which the Company or any of the Subsidiaries has any ownership interest in any other Person or other business enterprise other than the Subsidiaries;

(xii) any currently effective agreement providing for the indemnification or holding harmless of any current or former director, officer, employee or consultant by the Company or any of the Subsidiaries and any other agreement requiring the Company or any Subsidiary to indemnify a third party, other than pursuant to (i) agreements entered into in the ordinary course of business materially consistent with forms of contracts of the Company or any of its Affiliates provided to Buyer, (ii) agreements entered into in the ordinary course of business providing for indemnification against third party claims arising from gross negligence, personal injury, willful misconduct or, to the extent materially consistent with industry practices, breach of contract and (iii) non-negotiated “shrink wrap,” “click wrap” or “standard form” licenses for readily commercially available, off the shelf software used by the Company or any of the Subsidiaries;

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(xiii) any currently effective agreement relating to any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements relating to the borrowing of money or extension of credit in a principal amount in excess of $50,000 individually or $150,000 in the aggregate that is outstanding or may be incurred on the terms thereof, other than accounts receivable and payables in the ordinary course of business, and any agreement relating to the granting by the Company or any Subsidiary of an Encumbrance on any of its material assets;

(xiv) any currently effective agreement whereby the Company or any of the Subsidiaries: (a) has granted to any Person an ownership interest in or exclusive license or exclusive sublicense to any Intellectual Property or (b) has been granted by any Person an ownership interest in or exclusive license or sublicense to any Intellectual Property; in each case excluding non-negotiated “shrink wrap” or “click wrap” licenses for readily commercially available, off the shelf software;

(xv) any currently effective agreement for which compliance with the U.S. Federal Acquisition Regulation is required pursuant to the terms thereof;

(xvi) any currently effective agreement pursuant to which the Company or any of the Subsidiaries is required to provide “most favored nations” or similar pricing;

(xvii) any currently effective contract set forth in Schedule 5.16(a) to be assigned to the Company or any Subsidiary by Zebra Enterprise Solutions Corp. or any other Affiliate of the Company in connection with the transactions contemplated by Section 5.16; or

(xviii) any material amendment, supplement or modification in respect of any of the foregoing, except as entered into in the ordinary course of business relating to the sale or license of additional software, products or services.

(b) Each of the contracts set forth on Schedule 2.13(a) (the “Material Contracts”) is the legal, valid and binding obligation of the Company and/or the Subsidiaries, as applicable, enforceable against them in accordance with its terms and in full force and effect. To the Company’s knowledge, each Material Contract is the legal, valid and binding obligation of each party thereto other than the Company or any of the Subsidiaries, enforceable against such party in accordance with its terms and in full force and effect, except, in each case, as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity). Neither the Company nor any of the Subsidiaries are in material breach of, or material default under, any Material Contract. Neither the Company nor any of the Subsidiaries have received any written notice of, and the Company does not have any knowledge of, any claimed breach or the occurrence of any event which after the passage of time or the giving of notice or both would constitute a breach by any party to any Material Contract. Neither the Company nor any of the Subsidiaries have received any written notice of, and the Company does not have any knowledge of, any contemplated termination or nonrenewal or material reduction in the performance of, or of the purchase or sale of goods or services under, any Material Contract. None of the rights of the

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Company or any of the Subsidiaries under the Material Contracts have been or will be impaired in any material respect by the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement. All of the rights of the Company and the Subsidiaries under the Material Contracts will be enforceable by the Company and the Subsidiaries immediately after the Closing without the consent or agreement of any other party, except, in each case, as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity). The Company and the Subsidiaries have provided Buyer copies of all Material Contracts.

Section 2.14 Intellectual Property.

(a) For purposes of this Agreement, the term “Intellectual Property” means (i) patents, registered and unregistered trademarks and service marks, trade names, domain names, registered and unregistered copyrights in works of authorship, and rights under applicable US state trade secret Laws in any confidential or proprietary information (“Trade Secrets”) and (ii) applications for, and issuances and registrations of, such patents, trademarks, service marks, trade names, domain names and copyrights. Schedule 2.14(a) sets forth a complete and accurate list of all patents, registered trademarks, registered copyrights, domain names and applications for any of the foregoing, in each case owned by the Company or the Subsidiaries (the “Company Intellectual Property”).

(b) Schedule 2.14(b) sets forth a complete and accurate list of all material licenses, sublicenses and other agreements to which the Company and/or the Subsidiaries are a party (i) granting any other Person the right to use Company Intellectual Property, other than customer agreements and reseller agreements entered into in the ordinary course of business, or (ii) pursuant to which Company or the Subsidiaries are authorized to use any third-party Intellectual Property in the operation of the Business (“Licenses-In”), other than commercial off-the-shelf software.

(c) Except as set forth on Schedule 2.14(c):

(i) The Company or a Subsidiary is the owner of, or has the right to use, all Company Intellectual Property and all Intellectual Property that is the subject of any Licenses-In, as is necessary to operate the Business as currently conducted. All Company Intellectual Property and Intellectual Property that is the subject of any Licenses-In, in each case that is used in the Business as currently conducted, will be available to the Company and the Subsidiaries following Closing without any limitation or loss of rights as the result of the transactions contemplated by this Agreement.

(ii) Neither the Company nor any of the Subsidiaries is a party to any Action which involves a claim of infringement, unauthorized use, or violation of any Intellectual Property used or owned by any Person against the Company or the Subsidiaries, or challenging the ownership, use, validity or enforceability of any Company Intellectual Property. Further, neither the Company nor any of the Subsidiaries have received any written, or to the Company’s knowledge, other allegation of

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infringement, misappropriation, or violation of any Intellectual Property used or owned by any Person against the Company or the Subsidiaries, or challenging the ownership, use, validity or enforceability of any Company Intellectual Property.

(iii) The operation of the Business does not infringe, misappropriate, or violate any right of any third party in or to any Intellectual Property, and, to the knowledge of the Company, there exists no reasonable basis for any claim of such infringement, misappropriation, or other violation of any third party Intellectual Property. Except with respect to the Licensed TTS Application and the Transferred MTS Application, nothing in this Section 2.14 shall constitute a representation or warranty that any hardware and/or software solution and/or service provided to Company by third parties or Member or its Affiliates has not infringed, misappropriated or otherwise violated any rights of any third party in or to any Intellectual Property. However, neither the Company nor any of the Subsidiaries have received any written, or to the Company’s knowledge, other allegation that any hardware and/or software solution and/or service provided to Company by third parties has infringed, misappropriated, or violated any third party Intellectual Property.

(iv) To the knowledge of the Company, there is no infringement by a third party of any Company Intellectual Property.

(v) The Company and the Subsidiaries have taken reasonable security measures to protect the confidentiality of Trade Secrets included in the Company Intellectual Property.

(vi) None of the Company’s or the Subsidiaries’ software products contain, incorporate, link or call to or otherwise use software governed by a license commonly referred to as an open source, free software, copyleft or community source code license, including the GNU General Public License or GNU Lesser General Public License (such software, “Open Source Software”), such that the incorporation, linking, calling or other use in or by any such Company software product of any such Open Source Software obligates the Company or the Subsidiaries to disclose, make available, offer or deliver any portion of the source code of such Company software product or component thereof to any third party other than the applicable Open Source Software.

(vii) All software used by Company or any Subsidiary and necessary for the operation of the Business as currently conducted is owned by or licensed to Company and the Subsidiaries pursuant to valid and enforceable written licenses or other agreements, and neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any third party, is in material breach or default thereof.

(viii) To the knowledge of the Company, neither the Company nor any of the Subsidiaries have provided or disclosed any source code of any of the Company’s or the Subsidiaries’ products to any third party, other than to a source code escrow agent pursuant to a source code escrow agreement and any such source code escrow agreements are identified in Schedule 2.14(c).

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(ix) All Company Intellectual Property was created, developed, programmed or authored by: (a) employees of the Company or the Subsidiaries, acting within the scope of their employment or (b) by consultants or contractors who have executed and delivered to the Company or the Subsidiaries written agreements assigning to the Company or the Subsidiaries all rights arising from such services performed by them. No current or former director, officer, employee, consultant or contractor of the Company or the Subsidiaries owns or claims to own any interest in or to any Intellectual Property developed by such director, officer, employee, consultant or contractor for the Company or any of the Subsidiaries.

Section 2.15 Environmental Matters. Except as set forth on Schedule 2.15:

(a) the Company and the Subsidiaries are, and since January 1, 2008 have been, in material compliance with all Environmental Laws (as defined below) and have obtained and are, and since January 1, 2008 have been, in material compliance with all permits under any Environmental Law and there are not, and since January 1, 2008, have not been, any Actions referring, regarding, relating and/or pursuant to any Environmental Law, pending or, to the knowledge of the Company, threatened, against the Company or any of the Subsidiaries;

(b) to the knowledge of the Company, prior to January 1, 2008: (i) the Company and the Subsidiaries were in material compliance with all Environmental Laws and obtained and were in material compliance with all permits under any Environmental Law and (ii) there were no Actions referring, regarding, relating and/or pursuant to any Environmental Law, pending or threatened, against the Company or any of the Subsidiaries;

(c) since January 1, 2008, neither the Company nor the Subsidiaries have transported, treated, stored, or disposed of any Hazardous Material (as defined below), except in material compliance with all applicable Environmental Laws, and, to the knowledge of the Company, no Hazardous Material is or has been present on any of the Leased Real Property, and there are not and have not been any Actions referring, regarding or relating in any way to Hazardous Material pending or threatened, against the Company or any of the Subsidiaries;

(d) to the knowledge of the Company, prior to January 1, 2008, neither the Company nor the Subsidiaries transported, treated, stored, or disposed of any Hazardous Material (as defined below), except in material compliance with all applicable Environmental Laws, and no Hazardous Material was present on any of the Leased Real Property, and were no Actions referring, regarding or relating in any way to Hazardous Material pending or threatened, against the Company or any of the Subsidiaries;

(e) except for those matters that are no longer pending, neither the Company nor the Subsidiaries have (i) received written notice under the citizen suit provisions of any Environmental Law; (ii) received any written request for information, notice, demand letter, administrative inquiry or written complaint or claim under any Environmental Law; (iii) been subject to or, to the Company’s knowledge, threatened in writing with any governmental or citizen enforcement action with respect to any Environmental Law; or (iv) received written notice of or otherwise have knowledge of any unsatisfied Liability under any Environmental Law; and

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(f) For the purposes of this Agreement:

(i) “Environment” means soil, surface waters, groundwater, wetlands, land, stream sediments, surface or subsurface strata and ambient air and biota living in or on such media.

(ii) “Environmental Laws” means all Laws relating to protection of the Environment or natural resources, solid waste, hazardous waste, hazardous or toxic substances, pollution, public health, human health, worker health or safety, including the federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Endangered Species Act, the Hazardous Materials Transportation Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the Occupational Safety and Health Act of 1970 and similar Laws as in effect on the Closing Date, as each of these Laws have been amended from time to time, and any related regulations thereunder.

(iii) “Hazardous Material” means any substance defined in, listed under, referred to or regulated by any Environmental Law, including pesticides, pollutants, contaminants, toxic chemicals, noise, radiation, petroleum, asbestos, polychlorinated biphenyls, lead-based paint, mold and fungi.

Section 2.16 Brokers. Neither the Company nor any of the Subsidiaries has entered into any contract, arrangement or understanding with any Person or firm that may result in the obligation of the Company, any Subsidiary or the Buyer or Buyer Ultimate Parent to pay any finder’s fees, brokerage or agent’s commissions or other like payments in connection with the negotiations leading to this Agreement or consummation of the transactions contemplated hereby, however the Member has retained and will owe fees to Deutsche Bank Securities Inc. as its financial advisor in connection with the transactions contemplated hereby, which fees will be included in the Transaction Expenses and paid at Closing.

Section 2.17 Insurance. Neither the Company nor any of the Subsidiaries have any formal self-insurance arrangements. Schedule 2.17 sets forth a true and correct summary of the insurance policies (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which the Company or any of the Subsidiaries has been a party, a named insured or otherwise the beneficiary of coverage at any time within the past 3 years, including the underwriter of such policies and the amount of coverage thereunder. With respect to each such insurance policy: (a) the policy is legal, valid, binding, enforceable, and in full force and effect; (b) neither the Company, nor any of the Subsidiaries, nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and, to the knowledge of the Company, no event has occurred that, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (c) no party to the policy has repudiated any provision thereof. To the knowledge of the Company, each of the Company and the Subsidiaries have been covered during the past 3 years by insurance in scope and amount customary and reasonable for the businesses in which they have engaged during the aforementioned period and as required by any contractual obligations.

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Section 2.18 Compliance with Laws. Each of the Company and the Subsidiaries are currently and have been operated in compliance, in all material respects, with all applicable Laws (including the U.S. Foreign Corrupt Practices Act, laws implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, other laws relating to bribery and/or corruption, laws relating to the import and export of goods and services, and laws relating to data privacy) of all Governmental Authorities, and to the knowledge of the Company, since January 1, 2008, no Action has been filed or commenced against any of them alleging any failure so to comply. Neither the Company nor any Subsidiary is in material default or material violation of any Law applicable to the Company or such Subsidiary or by which any property or asset of the Company or the Subsidiaries is bound. Without limiting the foregoing, the Company’s and the Subsidiaries’ assets and other assets owned, leased, occupied or operated by the Company or any Subsidiary in connection with the Business or the ownership, leasing, occupancy or operation thereof, are in compliance, in all material respects, with all applicable Laws. Notwithstanding the foregoing, the representations and warranties in this Section 2.18 do not apply to matters covered by Section 2.9 (“Taxes”), Section 2.10 (“Employee Benefit Plans”), Section 2.12 (“Labor and Employment Matters”), Section 2.14 (“Intellectual Property”) and Section 2.15 (“Environmental Matters”), which matters are covered exclusively in such Sections.

Section 2.19 Licenses and Permits. Schedule 2.19 sets forth a true, complete and correct list of all material licenses, permits, approvals, authorizations, registrations and certifications of any Governmental Authority necessary for the continued operation of the Business as currently conducted (the “Company Licenses”). The Company and the Subsidiaries own or hold all Company Licenses. Each Company License is valid and in full force and effect, and there is no Action pending or, to the knowledge of the Company, threatened in writing that would result in the termination, revocation, suspension, nonrenewal or restriction of any Company License or the imposition of any material fine, penalty or other sanctions for violation of any legal or regulatory requirements relating to any Company License. The Company and the Subsidiaries are conducting their businesses in material compliance with the requirements, standards, criteria and conditions set forth in the Company Licenses and other applicable orders, approvals, variances, rules and regulations and are not in material violation of any of the foregoing. All Company Licenses will be in full force and effect and available for use by the Company immediately after the Closing.

Section 2.20 Sufficiency of Assets. The Company Assets, after giving effect to the transfers provided for in Section 5.16, together with the Company Intellectual Property, Licenses-In and certain services and rights to be provided pursuant to the Assignment and Assumption Agreement, Transitional Trademark License, Transition Services Agreement, the MTS Contribution Agreement, the Source Code License Agreement (TTS) and the Reseller Agreement constitute all of the assets, properties, services and rights necessary, in all material respects, for the conduct of the Business as currently conducted. For the avoidance of doubt, references in this Agreement to the conduct of the Business “as currently conducted” include the operation of the WhereNet Marine Business. All of the tangible Company Assets are adequate for the operation of the Business, have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear) and are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.

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Section 2.21 Notes and Accounts Receivable. All notes and accounts receivable of the Company and the Subsidiaries, to the extent included in their respective Current Assets, represent valid claims for bona fide sales actually made or services actually performed or to be performed in accordance with the terms of valid and enforceable agreements in the ordinary course of business. Except as set forth in Schedule 2.21, and except to the extent reserved against any accounts receivable or as reflected by prepayments or unused credits that, in each such case, will be reflected as a reserve in Current Assets or as Current Liabilities in the determination of Closing Working Capital to the extent the same are outstanding as of the Closing Date, no amounts included in such notes and accounts receivable are subject to any set off or counterclaim or, with respect to notes and accounts receivable outstanding longer than 120 days, are the subject of a bona fide dispute.

Section 2.22 Bank Accounts. Schedule 2.22 sets forth a correct and complete list of all banks in which the Company or any of the Subsidiaries has an account, safe deposit box, lock box, or other arrangement for the collection of accounts receivable or line of credit or other loan facility relationship, the address of each such bank, the account number of each such account, and the name of all persons authorized to draw thereon.

Section 2.23 Customers. Schedule 2.23 lists: the 20 largest customers of the Company and the Subsidiaries for each of the 3 most recent fiscal years and sets forth: (i) the name of each such customer and (ii) dollar volumes of revenues for each such customer for each such year.

Section 2.24 Business Continuity. The Company and the Subsidiaries currently maintain, and have maintained for the past 6 months, a plan with respect to business continuity and disaster recovery activities (the “Business Continuity Plan”). The Business Continuity Plan is current and consistent with industry standards. None of the computer software, computer hardware (whether general or special purpose), telecommunications capabilities (including all voice, data and video networks) and other similar or related items of automated, computerized, and/or software systems and any other networks or systems and related services that are used by or relied on by the Company or any of the Subsidiaries (collectively, the “Systems”) have experienced bugs, failures, breakdowns, or continued substandard performance in the past 12 months that has caused any substantial disruption or interruption in or to the use of any such Systems. The Company and the Subsidiaries are covered by business interruption insurance in scope and amount customary and reasonable to ensure its ongoing business operations.

Section 2.25 Computer Security. The Company and the Subsidiaries have taken all commercially reasonable precautions consistent with best practices in their industry to safeguard the information technology networks and systems utilized in the operation of its business, including the implementation of procedures to ensure that such information technology systems are free from any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” or other software routines or hardware components that in each case permit unauthorized access or the unauthorized disablement or unauthorized erasure of data or other software by a third party, and, to the knowledge of the Company, there have been no successful unauthorized intrusions or breaches of the security of the information technology systems.

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Section 2.26 Certain Business Relationships with the Company and the Subsidiaries. Except as set forth on Schedule 2.26 or as contemplated by this Agreement, other than employment relationships in the ordinary course of business consistent with past practices or pursuant to Material Contracts provided to Buyer, neither the Member nor its Affiliates, nor either of their respective directors, officers or employees or any of the Company’s or the Subsidiaries’ directors, officers or employees has been involved in any business arrangement or relationship with the Company or any of the Subsidiaries within the past 12 months, and none of Member or its Affiliates or either of their respective directors, officers or employees or any of the Company’s or the Subsidiaries’ directors, officers or employees owns any asset, tangible or intangible, that is used in the business of the Company or any of the Subsidiaries.

Section 2.27 Internal Control Over Financial Reporting. The Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance, in all material respects, that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liability is permitted only in accordance with management’s general or specific authorization and (iv) the recorded balances for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals. To the knowledge of the Company, there is no fraud that involves management or other employees who have a significant role in their internal controls over financial reporting.

Section 2.28 Disclosure. No representation or warranty made by the Company and the Member contained in this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary to make the statements therein contained not misleading.

Section 2.29 Disclaimer of Other Representations and Warranties; Knowledge.

(a) NONE OF THE COMPANY, ITS REPRESENTATIVES OR THE MEMBER HAVE MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE COMPANY OR ANY RELATED PARTY OR THE BUSINESS OF THE COMPANY OR ANY RELATED PARTY OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE II AND ARTICLE III HEREOF.

(b) Without limiting the generality of the foregoing, none of the Company, the representatives of the Company or the Member have made, and shall not be deemed to have made, any representations or warranties in the materials relating to the Business, including due diligence materials made available in the Project Green VDR 2010 virtual data room operated by Merrill Corporation (the “VDR”), or in any presentation of the Business by management of the Company or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by Buyer or Buyer Ultimate Parent in executing, delivering and performing this Agreement and the

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transactions contemplated hereby. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including any offering memorandum or similar materials made available by the Company and its representatives are not and shall not be deemed to be or to include representations or warranties of the Company or the Member, and are not and shall not be deemed to be relied upon by Buyer or Buyer Ultimate Parent in executing, delivering and performing this Agreement and transactions contemplated hereby.

(c) Whenever a representation or warranty made by the Company herein refers to the knowledge of the Company, such knowledge shall be deemed to consist only of the actual knowledge of William Walsh, Robert Dillon, Richard Harrison, Scott Peoples, Kelly Cole, Robert Inchausti and Frank Kooijman.

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE MEMBER

The Member hereby makes to Buyer and Buyer Ultimate Parent each of the representations and warranties set forth in this Article III as of the date hereof and as of the Closing Date (unless another date is so indicated, then only as of such date).

Section 3.1 Company Units. The Member owns of record and beneficially all of the Company Units. The Company Units are, and when delivered by the Member to Buyer pursuant to this Agreement will be, free and clear of any and all Encumbrances, other than Encumbrances resulting from this Agreement.

Section 3.2 Existence; Good Standing; Authority.

(a) The Member is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Member is duly licensed or qualified to do business as a foreign corporation under the Laws of each jurisdiction in which the character of its properties or in which the transaction of its business makes such licensing or qualification necessary, except where the failure to be so licensed or qualified will not have, individually or in the aggregate, a material adverse effect on the Member and its subsidiaries, taken as a whole. The Member has all requisite corporate power and authority to own, operate, lease and encumber its properties and to carry on its business as currently conducted.

(b) The Member has full right, power and authority under its Governing Documents to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by the Member pursuant to this Agreement and to perform its obligations hereunder and thereunder. This Agreement constitutes a valid and binding obligation of the Member, enforceable in accordance with its respective terms, and has been duly authorized by all necessary corporate or similar action of the Member, and the Member has full power and authority to transfer, sell and deliver the Company Units to Buyer pursuant to this Agreement.

(c) Neither the execution and delivery by the Member of this Agreement and the other agreements, documents and instruments contemplated hereby, nor the consummation

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by the Member of the transactions in accordance with the terms hereof and thereof, violates, conflicts with or results in a default (whether after the giving of notice, lapse of time or both) of any provisions of the Member’s Governing Documents. The execution and delivery by the Member of this Agreement and the other agreements, documents and instruments contemplated hereby, and the consummation by the Member of the transactions in accordance with the terms hereof and thereof, will not violate, or conflict with, or result in a default of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default), in each case in any material respect: (i) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, lease, contract, permit, license, authorization, obligation or other agreement to which the Member is a party, or by which the Member or any of its properties is bound; (ii) under any provision of any Law, or any order of, or any restriction imposed by, any court or other Governmental Authority applicable to the Member; or (iii) require from the Member any notice to, declaration or filing with, or consent or approval of any Governmental Authority or other third party, except for (a) the filing of a pre-merger notification and report form under the HSR Act, and the expiration or termination of applicable waiting periods thereunder; (b) as may result from review of the transaction by CFIUS in accordance with the Foreign Investment and National Security Act of 2007; and (c) the filing of such notices, declarations, filings, consents or approvals, which if not obtained or made, will not have, individually or in the aggregate, a Material Adverse Effect.

Section 3.3 Litigation. There is no Action pending or threatened by the Member, there is no Action pending against the Member, the Member has not received written notice of (and the senior management of the Member does not have any actual knowledge of) any Action threatened against the Member or any condition, event, fact, circumstance or other occurrence which would reasonably be expected to result in an Action, and the Member is not subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in the case of any of the foregoing, would, individually or in the aggregate, (a) delay or prevent the consummation of the transactions contemplated by this Agreement by the Member, (b) reasonably be expected to result in a Material Adverse Effect or (c) reasonably be expected to result in a material adverse effect on the ability of the Member to perform its obligations under this Agreement.

Section 3.4 Brokers. The Member has not entered into any contract, arrangement or understanding with any Person or firm that may result in the obligation of the Company, any Subsidiary or the Buyer or Buyer Ultimate Parent to pay any finder’s fees, brokerage or agent’s commissions or other like payments in connection with the negotiations leading to this Agreement or consummation of the transactions contemplated hereby, except that the Member has retained and will owe fees to Deutsche Bank Securities Inc. as its financial advisor in connection with the transactions contemplated hereby, which fees will be included in the Transaction Expenses and paid at Closing.

Section 3.5 Disclosure. No representation or warranty made by the Member contained in this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary to make the statements therein contained not misleading.

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Section 3.6 Warranties Limited. THE MEMBER HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE COMPANY OR ANY RELATED PARTY, THE BUSINESS OF THE COMPANY OR ANY RELATED PARTY, THE COMPANY UNITS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE II AND THIS ARTICLE III.

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT

Buyer and Buyer Ultimate Parent, jointly and severally, hereby make to each of the Company and the Member the representations and warranties in this Article IV as of the date hereof and as of the Closing Date (unless another date is so indicated, then only as of such date).

Section 4.1 Existence; Good Standing; Authority.

(a) Buyer is an entity duly organized, validly existing and in good standing under the Laws of the Republic of Finland. Buyer Ultimate Parent is a public stock company (OYJ), validly existing and in good standing under the Laws of the Republic of Finland. Each of Buyer and Buyer Ultimate Parent is duly licensed or qualified to do business as a foreign corporation under the Laws of each jurisdiction in which the character of its properties or in which the transaction of its business makes such licensing or qualification necessary, except where the failure to be so licensed or qualified will not have, individually or in the aggregate, a material adverse effect on Buyer Ultimate Parent and its subsidiaries, taken as a whole. Each of Buyer and Buyer Ultimate Parent has all requisite corporate power and authority to own, operate, lease and encumber its properties and to carry on its business as currently conducted.

(b) Each of Buyer and Buyer Ultimate Parent has the power and authority to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of Buyer and Buyer Ultimate Parent pursuant to this Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the performance by Buyer and Buyer Ultimate Parent of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Buyer and Buyer Ultimate Parent. This Agreement has been duly executed and delivered by Buyer and Buyer Ultimate Parent and, assuming the due authorization, execution and delivery of this Agreement by the Member and the Company, this Agreement constitutes a legal, valid and binding obligation of Buyer and Buyer Ultimate Parent, enforceable against them in accordance with its terms.

Section 4.2 No Conflict; Consents. The execution and delivery by Buyer and Buyer Ultimate Parent of this Agreement and the other agreements, documents and instruments contemplated hereby, and the consummation by Buyer and Buyer Ultimate Parent of the transactions contemplated hereby and thereby in accordance with the terms hereof and thereof, do not (a) violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under, or give rise to a right of termination of, any contract, agreement, permit, license, authorization or obligation to which Buyer and Buyer Ultimate Parent is a party or by

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which Buyer and Buyer Ultimate Parent or any of their respective assets are bound, or any provision of the Governing Documents of Buyer and Buyer Ultimate Parent or any of their respective subsidiaries; (b) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any Law, or any order of, or any restriction imposed by, any court or other Governmental Authority applicable to Buyer and Buyer Ultimate Parent; or (c) require from Buyer or Buyer Ultimate Parent any notice to, declaration or filing with, or consent or approval of any Governmental Authority or other third party, except for (i) the filing of a pre-merger notification and report form under the HSR Act, and the expiration or termination of applicable waiting periods thereunder; (ii) the additional Antitrust Filings or other competition-related filings identified in, or deemed necessary pursuant to, Section 5.4(a); (iii) as may result from review of the transaction by CFIUS in accordance with the Foreign Investment and National Security Act of 2007; and (iv) the filing of such notices, declarations, filings, consents or approvals, which if not obtained or made, will not have, individually or in the aggregate, a Material Adverse Effect.

Section 4.3 Available Funds. Buyer has, or Buyer Ultimate Parent shall cause Buyer to have, sufficient currently-available funds on hand to consummate the transactions contemplated herein, to make the payments required to be made by Buyer hereunder, and to pay any fees and expenses of Buyer in connection with the transactions contemplated herein. Each of Buyer and Buyer Ultimate Parent agrees and acknowledges that the performance of its respective obligations under this Agreement is not in any way contingent upon the availability of any financing.

Section 4.4 Litigation. There is no Action pending or threatened by Buyer or Buyer Ultimate Parent, there is no Action pending against Buyer or Buyer Ultimate Parent, neither Buyer nor Buyer Ultimate Parent have received written notice of (and the senior management of Buyer and Buyer Ultimate Parent do not have any knowledge of) any Action threatened against Buyer or Buyer Ultimate Parent or any condition, event, fact, circumstance or other occurrence which would reasonably be expected to result in an Action, and neither Buyer nor Buyer Ultimate Parent are subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in the case of any of the foregoing, would, individually or in the aggregate, (a) delay, hinder or prevent the consummation of the transactions contemplated by this Agreement by Buyer or Buyer Ultimate Parent or (b) reasonably be expected to result in a material adverse effect on the ability of Buyer or Buyer Ultimate Parent to perform their respective obligations under this Agreement.

Section 4.5 Brokers. Except for any fees or commissions payable to Fredericks Michael & Co., neither Buyer nor Buyer Ultimate Parent has incurred or become liable for any broker’s commission or finder’s fee relating to or in connection with this Agreement or the transactions contemplated hereby.

Section 4.6 Investment Intent. Buyer is acquiring the Company Units for its own account and not with a view to distribution of the Company Units within the meaning of the Securities Act.

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Section 4.7 Inspection; No Other Representations.

(a) Each of Buyer and Buyer Ultimate Parent is an informed and sophisticated Person, and has engaged expert advisors experienced in the evaluation and acquisition of companies such as the Company and the Subsidiaries as contemplated hereunder. Each of Buyer and Buyer Ultimate Parent has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement and the transactions contemplated hereby. Each of Buyer and Buyer Ultimate Parent has received all materials relating to the Business which it has requested and has been afforded the opportunity to obtain any additional information necessary to verify the accuracy of any such information or of any representation or warranty made by the Company and the Member hereunder or to otherwise evaluate the merits of the transactions contemplated hereby. The Company, the Member and their representatives have answered to Buyer’s and Buyer Ultimate Parent’s satisfaction all inquiries that each of Buyer, Buyer Ultimate Parent or their respective representatives have made concerning the Business or otherwise relating to the transactions contemplated hereby.

(b) Without limiting the generality of the foregoing, each of Buyer and Buyer Ultimate Parent acknowledges that (a) neither the Company nor the Member makes any representation or warranty with respect to (i) any projections, estimates or budgets delivered to or made available to Buyer or Buyer Ultimate Parent of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company and the Subsidiaries or the future business and operations of the Company and the Subsidiaries or (ii) any other information or documents made available to Buyer, Buyer Ultimate Parent or their respective counsel, accountants or advisors with respect to the Company, the Subsidiaries or any of their respective businesses, assets, liabilities or operations, in each such case, except as expressly set forth in this Agreement.

(c) Neither Buyer nor Buyer Ultimate Parent has knowledge of any material errors in, or material omissions from, the representations and warranties set forth in Article II or in Article III or the Schedules thereto. For purposes of this Section 4.7(c), the knowledge of Buyer and Buyer Ultimate Parent shall mean the actual knowledge of Ismo Matinlauri, Pekka Vauramo, Jason Dake, Jukka Heinonen, Bob Wills, Markus Hamalainen and Riikka Pajunen.

Section 4.8 Disclosure. No representation or warranty made by Buyer and Buyer Ultimate Parent contained in this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary to make the statements therein contained not misleading.

Section 4.9 Warranties Limited. NEITHER BUYER NOR BUYER ULTIMATE PARENT HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE IV.

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ARTICLE V - CERTAIN AGREEMENTS

Section 5.1 Conduct of Business Prior to Closing. The Company agrees that, between the date hereof and the Closing Date, it shall operate, and shall cause the Subsidiaries to operate, in the ordinary course of business, consistent with past practices, except as described in Schedule 5.1 or as otherwise contemplated by this Agreement. In furtherance of the foregoing, the Company shall refrain from and shall cause the Subsidiaries to refrain from:

(a) entering into any material contract, agreement or other arrangement except in the ordinary course of business and on terms substantially consistent with those provided in the Material Contracts;

(b) (i) modifying, amending or terminating any of its Material Contracts except as specifically provided in this Agreement or in the ordinary course of business, or (ii) waiving, releasing or assigning any material rights or claims, other than in the ordinary course of business;

(c) materially changing accounting policies or procedures, except as required by GAAP or any applicable law, rule or regulation;

(d) increasing the rates of direct compensation or bonus compensation payable or to become payable to any officer, employee, agent or consultant of the Company or any Subsidiary, except (i) in the ordinary course of business consistent with past practices or in accordance with the existing terms of written contracts entered into prior to the date of this Agreement or (ii) as disclosed or contemplated in this Agreement or the Schedules hereto;

(e) permitting any material Company Intellectual Property or material License-In, including any registered Company Intellectual Property or pending applications for registration with respect to any Company Intellectual Property, to lapse or go abandoned;

(f) making any material acquisition or capital expenditure;

(g) amending the Company’s or any Subsidiary’s Governing Documents;

(h) forming a Subsidiary; or

(i) entering into any executory agreement, commitment or undertaking to do any of the activities prohibited by the foregoing provisions.

Notwithstanding the foregoing: (y) prior to the Closing the Company shall be permitted to repay outstanding principal and accrued and unpaid interest (as well as prepayment, breakage and similar charges payable) with respect to any money borrowed by the Company or any Subsidiary and to settle any accounts payable and receivable owed by or to, as the case may be, the Company by or from, as the case may be, the Member, any Subsidiary or other Affiliate of the Company or the Member and (z) the Member shall promptly notify Buyer and Buyer Ultimate Parent in writing if the Company or any Subsidiary enters into, modifies, amends or terminates any letter of credit in the ordinary course of business.

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Section 5.2 Access to Information.

(a) Without undue disruption of its Business, between the date of this Agreement and the Closing Date, the Company shall, and shall cause each of the Subsidiaries and each of the Company’s and Subsidiaries’ officers, employees and agents to, give Buyer and its representatives full access upon reasonable notice and during times mutually convenient to Buyer and senior management of the Company to the facilities, properties, employees (including key personnel), consultants, books and records (including Tax records), contracts and documents of or pertaining to the Company and the Subsidiaries as from time to time may be reasonably requested.

(b) Any such investigation by Buyer shall not unreasonably interfere with any of the businesses or operations of the Company and the Subsidiaries. Buyer shall not, prior to the Closing Date, have any contact whatsoever with respect to the Company or any of the Subsidiaries or with respect to the transactions contemplated by this Agreement, the Transition Services Agreement, the Reseller Agreement or the License Agreements with any partner, lender, ground lessor, customer, vendor or supplier of the Company or any of the Subsidiaries, except in consultation with the Member and then only with the express prior approval of the Member. All requests by Buyer for access or information shall be submitted or directed exclusively to an individual or individuals designated in writing by the Member. Buyer shall not be permitted to conduct any invasive tests on any Leased Real Property without the prior written consent of the Member.

Section 5.3 Confidentiality. The parties shall adhere to the terms and conditions of that certain confidentiality agreement dated November 9, 2010 by and between the Company and Buyer Ultimate Parent (the “Confidentiality Agreement”).

Section 5.4 Regulatory and Other Authorizations; Consents.

(a) The Company, Buyer and Buyer Ultimate Parent shall use commercially reasonable efforts to obtain the authorizations, consents, orders and approvals necessary for their execution and delivery of, and the performance of their obligations pursuant to, this Agreement, subject to the further provisions of this Section 5.4. As promptly as practicable after the date of this Agreement, the parties shall file (i) pre-merger notification and report forms under and in compliance with the HSR Act with the U.S. Department of Justice Antitrust Division (“DOJ”) and the U.S. Federal Trade Commission Bureau of Competition (“FTC”) with respect to the transactions contemplated by this Agreement; (ii) to the extent Buyer, in its reasonable discretion, deems necessary or advisable, any Antitrust Filings or other competition-related filings under the Laws of the following jurisdictions with respect to the transactions contemplated by this Agreement: Brazil, Greece, Pakistan, Spain, Taiwan and Israel; (iii) such other Antitrust Filings as the parties deem necessary or advisable to obtain such approvals or consents as may be required under any other applicable Antitrust Law; and (iv) the filings identified on Schedule 2.4 (together with the Antitrust Filings, the “Regulatory Filings”). The parties shall cooperate in the timely preparation and submission of, including furnishing to the other party or its counsel information required for, any necessary Regulatory Filings. Filing fees in connection with any Regulatory Filings shall be paid by Buyer and Buyer Ultimate Parent; for the avoidance of doubt, the parties shall each bear their own costs and expenses of preparation

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(including attorneys’ fees, etc.) with respect to any Regulatory Filings. In the event that, after the date of this Agreement, Buyer becomes aware of information concerning the Company and or any Subsidiary related to the determination of necessary or advisable Antitrust Filings or other competition-related filings that is materially different from such information provided by the Company prior to the date of this Agreement, Buyer may, in its reasonable discretion, expand the list of jurisdictions set forth in this Section 5.4(a).

(b) Each of the Company and Buyer hereby covenants and agrees to use commercially reasonable efforts to secure, and not to take any action that will have the effect of delaying, impairing or impeding, the early termination or expiration of any waiting periods under the HSR Act or any other applicable Antitrust Law and the approval of any Governmental Authority, as applicable, including the CFIUS Clearance, for the transactions contemplated hereby. The parties shall each cooperate reasonably with one another in connection with resolving any inquiry or investigation by any Governmental Authority relating to their respective Regulatory Filings or the transactions contemplated hereby. Without limiting the foregoing, each party shall, except as prohibited by applicable Law or Governmental Authority, (i) promptly inform the other party of any written or oral communication received from any Governmental Authority relating to its Regulatory Filing or the transactions contemplated hereby (and if in writing, furnish the other party with a copy of such communication); (ii) use its best efforts to respond as promptly as practicable to any request from any Governmental Authority for information, documents or other materials in connection with the review of the Regulatory Filings or the transactions contemplated hereby; (iii) provide to the other party, and permit the other party to review and comment in advance of submission, all proposed correspondence, filings, and written communications to any Governmental Authority with respect to the transactions contemplated hereby; and (iv) not participate in any substantive meeting or discussion with any Governmental Authority in respect of an investigation or inquiry concerning the transactions contemplated hereby unless it consults with the other party in advance and gives the other party the opportunity to attend and participate thereat. The parties will consult and cooperate with each other, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party in connection with Actions under or relating to any Antitrust Law or the Foreign Investment and National Security Act of 2007, except as may be prohibited or restricted by Law.

(c) Each party hereby covenants and agrees to use commercially reasonable efforts to contest, defend against and appeal any threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of any party hereto to consummate the transactions contemplated hereby and take any and all other actions to prevent the entry, enactment or promulgation thereof; provided, however, that Buyer, Buyer Ultimate Parent and their respective Affiliates shall not be required to dispose of, restructure or take any similar action that might restrict or otherwise adversely affect their assets or business.

(d) Notwithstanding any of the foregoing, (i) Buyer and Buyer Ultimate Parent shall not be required to provide the Company or the Member any document (including filings) or information that by its nature would tend to reveal information with respect to which Buyer or Buyer Ultimate Parent (or any of their Affiliates) has requested confidential treatment

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from any Governmental Authority and (ii) the Member shall not be required to provide Buyer or Buyer Ultimate Parent any document (including filings) or information that by its nature would tend to reveal information with respect to which the Member has requested confidential treatment from any Governmental Authority.

Section 5.5 Officers’ and Directors’ Indemnification. Prior to the Closing Date, Member shall purchase an extended reporting period endorsement under the Member’s or the Company’s existing directors’ and officers’ liability insurance coverage for the Company’s and the Subsidiaries’ directors and officers during all periods prior to and through the Closing in a form acceptable to the Company that shall provide such directors and officers with coverage for seven (7) years following the Closing Date of not less than the existing coverage and have other terms not materially less favorable to the insured persons than the directors’ and officers’ liability insurance coverage presently maintained by the Company. Following the Closing, Member shall maintain such policy in full force and effect, and shall be solely responsible for and hold Buyer, Buyer Ultimate Parent, the Company and the Subsidiaries harmless from and against any indemnification obligations of the Member, the Company or the Subsidiaries to directors and officers with respect to events occurring on or prior to the Closing.

Section 5.6 Press Releases. The parties shall each issue a press release, mutually acceptable to the Member and Buyer, promptly after the date hereof. The parties hereto will, and will cause each of their Affiliates and representatives to, maintain the confidentiality of the details of any negotiations or disputes between the parties with respect to this Agreement and will not, and will cause each of their Affiliates not to, issue or cause the publication of any other press release or public announcement with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto; provided, however, that a party may, without the prior consent of the other parties hereto, take any action to enforce this Agreement pursuant to Section 9.11 or issue or cause publication of any press release or public announcement to the extent that such party reasonably determines, after consultation with outside legal counsel, such action to be required by Law or by the rules of the NASDAQ or the NASDAQ OMX, as applicable to such party, in which event such party will use its commercially reasonable efforts to allow the other parties hereto reasonable time to comment on such press release or public announcement in advance of its issuance; and provided further, that any party may (a) re-issue or republish any release previously approved by the Member and Buyer Ultimate Parent and (b) respond in the ordinary course to investor relations inquiries to the extent such communications do not reveal information regarding any disputes or the details of any negotiations between the parties.

Section 5.7 Conflicts and Privilege. It is acknowledged by each of the parties hereto that the Member may retain counsel to the Company (“Counsel”) to act as its counsel in connection with the transactions contemplated hereby. Each of Buyer and Buyer Ultimate Parent hereby agrees that, in the event that a dispute arises after the Closing between Buyer and/or Buyer Ultimate Parent and the Member, Counsel may represent the Member in such dispute even though the interests of the Member may be directly adverse to Buyer, Buyer Ultimate Parent, the Company or the Subsidiaries, and even though Counsel may have represented the Company or the Subsidiaries in a matter substantially related to such dispute, or may be handling ongoing matters for the Buyer, Buyer Ultimate Parent, the Company or the Subsidiaries. Each of Buyer and Buyer Ultimate Parent further agrees that, as to all communications among Counsel, the

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Company, the Subsidiaries and the Member that relate in any way to the transactions contemplated by this Agreement, the attorney-client privilege and the expectation of client confidence belongs to the Member and may be controlled by the Member and shall not pass to or be claimed by the Buyer, Buyer Ultimate Parent, the Company or the Subsidiaries. Notwithstanding the foregoing, in the event that a dispute arises between Buyer, Buyer Ultimate Parent, the Company or the Subsidiaries and a third party other than a party to this Agreement after the Closing, the Company and the Subsidiaries may assert the attorney-client privilege to prevent disclosure of confidential communications by Counsel to such third party; provided, however, that neither the Company nor the Subsidiaries may waive such privilege without the prior written consent of the Member.

Section 5.8 Employee Benefit Arrangements.

(a) General. Buyer shall offer each person who is listed on Schedule 2.12(e) who is not employed by the Company or a Subsidiary as of the Closing, including those: (i) on normal scheduled vacation or (ii) identified on Schedule 5.8(a)(ii) as being on or scheduled to be on leave of absence as of the date hereof, which Schedule also sets forth the type of leave (e.g., FMLA) and anticipated duration of such leave (the “Transferred Company Employees”), continued employment in a comparable position immediately after the Closing, subject to such person’s reasonably satisfactory completion of the standard employment application process applicable to comparable employees of Buyer and its Affiliates. Buyer shall ensure that all of the persons who are employed by the Company and the Subsidiaries as of the Closing, including those: (i) on normal scheduled vacation or (ii) identified on Schedule 5.8(a)(ii) as being on or scheduled to be on leave of absence as of the date hereof, which Schedule also sets forth the type of leave (e.g., FMLA) and anticipated duration of such leave (the “Continuing Company Employees” and together with the Transferred Company Employees, the “Company Employees”), will remain employed in a comparable position immediately after the Closing, provided, however, that, the foregoing shall not be deemed a contract of employment with any Person and Buyer retains the discretion to terminate the employment of any Company Employees after Closing. For the avoidance of doubt, the foregoing shall not be deemed a contract of employment with any Person and Buyer retains the discretion to terminate the employment of any Company Employees after Closing. Company Employees shall be credited for their length of service with, or credited by, the Member, the Company or the Subsidiaries for all purposes to the extent permitted under any benefit plan or program or fringe benefit made available to Company Employees by Buyer or any of its Affiliates after the Closing; provided, however, that such service shall not be so credited (i) for purposes of calculating accrued benefits under any defined benefit pension plan or (ii) to the extent that crediting such service would result in the duplication of either benefits or accruals to any Company Employee. Buyer shall provide the Company Employees with comparable employee benefits maintained from time to time by Buyer for similarly-situated employees of Buyer; provided, however, to the extent the Company Employees are eligible for health, dental, vision, long-term disability, accidental death and dismemberment and/or life insurance benefits under the Benefit Plans prior to the Closing, the Company Employees shall remain covered under such Benefit Plans until the Transfer Date (as defined below). In order for Buyer to enroll the Company Employees in Buyer’s welfare benefit plans, the Member shall provide the census data described in Schedule 5.8(a). Buyer shall enroll the Company Employees in Buyer’s health, dental, vision, long-term disability, accidental death and dismemberment and/or life insurance plans as of the later of (i) the Closing, or (ii) five business days after the Member provides the required census data, at which time the Company Employees shall cease to be eligible under the Benefit Plans (“Transfer Date”).

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(b) No Duplicative Benefits. Notwithstanding anything herein to the contrary, nothing in this Agreement shall be construed to require the Company, any of the Subsidiaries, Buyer or any of its Affiliates to provide duplicative benefits or accruals to any Company Employee (or anyone else) or to employ or continue to employ any Company Employee or anyone else, and except to the extent expressly provided in this Section 5.8, nothing in this Agreement shall be construed as in any way limiting or restricting Buyer’s ability to amend, modify or terminate any wage packages or programs or any benefit plan at any time and from time to time, including any Benefit Plan, after the Closing.

(c) Employee Communications. Subject to Section 5.6, Buyer shall be permitted, after the date of this Agreement and subject to the consent of the Member, to communicate in writing with and solicit elections from Company Employees with respect to matters described in this Section 5.8 and in order to enable Buyer to accomplish the various administrative processes required under this Section 5.8, including (i) employee education and enrollment and elections under the various benefit plans in which Company Employees will participate on and after the Closing and (ii) the negotiation, amendment and implementation of retention and similar arrangements to be effective following Closing.

(d) Bonuses. At or prior to Closing, Member shall cause the Company and, where applicable, the Subsidiaries to calculate and pay any bonuses accrued and payable prior to the Closing under the incentive plans listed on Schedule 5.8(d) (the “Incentive Plans”). To the extent not paid at or prior to Closing, Buyer shall cause the Company or the Subsidiaries to pay such bonuses, provided that such bonuses are or will be accrued as Current Liabilities on the Closing Statement. Such bonuses shall be paid in accordance with the terms of the Incentive Plan to which the bonus relates. Member and Company may establish 2011 incentive plans for Company Employees covering the one-year performance period ending on December 31, 2011; provided, however, that any such plan shall be comparable in all material respects to a corresponding Incentive Plan, including with respect to performance goals, employee grade levels, number of employees eligible to participate, target incentive amounts for employee grade levels and vesting, forfeiture and termination provisions. Beginning on the Closing, each Company Employee shall be eligible to participate in one or more Buyer bonus plans or programs that are at least as favorable as those made available to employees of Buyer with comparable levels of responsibility. Except as provided in this Section 5.8(d), neither the Company nor any Subsidiary has adopted or will before Closing adopt any other bonus or incentive compensation plan or similar arrangement with respect to the 2011 year or thereafter.

(e) US Benefits. The following provisions shall apply to Company Employees located in the United States:

(i) Welfare Benefits. With respect to the Company Employees, after the Closing, Buyer, the Company and its Subsidiaries shall have the liability and obligation for, and neither the Member nor any of its Affiliates shall have any liability or obligation for: any short-term disability, sick pay or salary continuation attributable to periods after Closing. With respect to the Company Employees, after the Transfer Date,

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Buyer, the Company and its Subsidiaries shall have the liability and obligation for, and neither the Member nor any of its Affiliates shall have any liability or obligation for: any medical, vision, dental, life insurance, long-term disability or other welfare benefit claims attributable to periods after the Transfer Date. Any preexisting condition clause in any of Buyer’s Benefit Programs (including medical, dental and disability coverage) in which Company Employees are eligible to participate after the Closing shall be waived for each Company Employee to the extent such Company Employee’s creditable coverage under the Member’s health plan (or any other health plan in which such Company Employee participated) exceeds the maximum duration of any preexisting condition limitation under Buyer’s health plan, as required by law. Buyer shall credit the Company Employees with any amounts paid under the Benefit Plans on or prior to the Closing toward satisfaction of the applicable deductible amounts and copayment obligations under the corresponding Buyer Benefit Programs for the plan year in which the Company Employees become eligible to participate in Buyer Benefit Programs, provided the Member provides to Buyer within 10 days after Closing the information providing the deductibles and copayments credited to each such Company Employee as of Closing.

(ii) COBRA. If any employee or former employee of the Company or any of the Subsidiaries covered under any health plan in which the employees of the Company or any Subsidiary participate prior to the Transfer Date has a “qualifying event” within the meaning of Section 4980B(f) of the Code, which occurs on or before the date such employee or former employee is covered under Buyer’s health plan, then the Member shall be responsible for providing such individual (and such individual’s “qualified beneficiaries” within the meaning of Section 4980B(f) of the Code) with the continuation of group health coverage required by Section 4980B(f) of the Code.

(iii) Severance. For a period commencing on the day after the Closing and ending no earlier than December 31, 2011, Buyer agrees to offer each Company Employee whose employment is terminated during such period severance pay determined in accordance with the terms set forth in Schedule 5.8(e)(iii) or if greater, the amount under Buyer’s severance plan(s) or policy(ies), if any, for similarly situated employees. Employees who are parties to the retention and severance agreements identified on Schedule 5.8(e)(iii) shall receive any severance benefits in accordance with the terms of such agreement in lieu of the terms set forth in Schedule 5.8(e)(iii). Buyer shall reimburse the Member for its liabilities for the payment of any severance benefits that become payable to a Company Employee under the Zebra Technologies Corporation Severance Plan (as Amended and Restated Effective July 1, 2009) (the “Member’s Severance Plan”) to the extent Buyer fails to offer a Company Employee a “Comparable Position” (as such term is defined in the Member’s Severance Plan) and provided such Company Employee does not accept any other position with Buyer or an Affiliate of Buyer on or after the Closing; provided further, that no other exception to the payment of severance benefits under the Member’s Severance Plan applies.

(iv) WARN. None of the Member, the Company, the Subsidiaries or any of their respective Affiliates shall, at any time within the 90-day period prior to the Closing, effectuate a “plant closing” or “mass layoff’ as those terms are defined in WARN and similar state and local rules, statutes and ordinances, affecting in whole or in

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part any site of employment, facility, operating unit or employee of any of the Company or the Subsidiaries. The Member agrees to indemnify and hold Buyer harmless for any Action by a Company Employee for back pay, front pay, benefits or compensatory or punitive damages, any Action by any Governmental Authority for penalties regarding any issue of prior notification (or lack thereof) of any plant closing or mass layoff, occurring prior to the Closing and Buyer’s costs, including costs of collection, attorneys fees and other costs of defense, in defending such Actions. Buyer, the Company and the Subsidiaries shall be responsible for all liabilities and obligations under WARN (and such similar rules, statutes and ordinances) resulting from the actions or inactions of Buyer, the Company or any of the Subsidiaries after the Closing. Buyer agrees to hold the Member harmless for any breach of such responsibility and Buyer’s indemnification of the Member in this regard specifically includes any Action by the Company Employees for back pay, front pay, benefits or compensatory or punitive damages, any Action by any Governmental Authority for penalties regarding any issue of prior notification (or lack thereof) of any plant closing or mass layoff occurring after the Closing and the Member’s costs, including reasonable attorney’s fees, in defending any such Actions.

(v) Flexible Spending Accounts. With respect to the year in which the Closing occurs, Buyer shall cause Company Employees to be eligible to participate in a flexible spending account for medical and dependent care expenses maintained under Sections 125 and 129 of the Code (an “FSA”) maintained by Buyer (“Buyer’s FSA”). As soon as administratively practicable after the Closing, the Member shall transfer to Buyer an amount equal to the total contributions made to the Member’s FSA by Company Employees in respect of the plan year in which the Closing occurs, reduced by an amount equal to the total claims already paid to Company Employees in respect of such plan year. To the extent permitted by law, Buyer and the Member intend that the actions to be taken pursuant to this subsection be treated as an assumption by Buyer of the portion of Member’s FSA and the elections made thereunder attributable to Company Employees.

(vi) 401(k) Plan. As expeditiously as possible after the Closing Date, Buyer shall cause Company Employees to be eligible to participate in a tax-qualified defined contribution plan maintained by Buyer (“Buyer’s Savings Plan”) to the extent consistent with such plan’s terms, including eligibility requirements. The Member shall provide such information as is reasonably necessary to allow Buyer to enroll the Company Employees in Buyer’s Savings Plan. The parties shall effectuate a trust-to-trust transfer of the account balances of Company Employees under the Member’s Profit Sharing and Retirement Plan (“Member’s Savings Plan”) to Buyer’s Savings Plan designated by Buyer, as follows. As soon as practicable after the Closing, but no later than 180 days after the Closing, the Member shall cause the account of each Company Employee who participates in Member’s Savings Plan to be valued pursuant to the terms of Member’s Savings Plan. As of such valuation date, assets equal in value to the amount credited to each such Company Employee’s account under Member’s Savings Plan will be transferred to the trust maintained under Buyer’s Savings Plan. Such transferred assets shall be in cash (except for any promissory notes evidencing outstanding loan balances of the Company Employees, which shall be transferred in kind), and shall be in accordance with Section 414(1) of the Code. Prior to, and as a condition of, any transfer of assets each party shall provide the other with satisfactory evidence that its plan is tax-qualified

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within the meaning of Section 401(a) of the Code. As of the transfer date, Buyer’s Savings Plan will have sole liability for the payment of benefits accrued by the Company Employees under Member’s Savings Plan and transferred in respect of such employees.

(vii) Vacation. Buyer shall not unreasonably restrict the ability of Company Employees to take unused vacation earned as of the Closing and reflected on the Closing Statement and set forth by Company Employee on Schedule 5.8(e)(vii).

(f) Member Plans. For the avoidance of doubt, none of Buyer, Buyer Ultimate Parent, the Company or any Subsidiary is assuming any Member Plans (defined below) or obligations thereunder. Member shall administer and perform all obligations (including the withholding and remittal of all employment and withholding taxes) under the Benefit Plans adopted, maintained or previously assumed by the Member, including the Benefit Plans set forth on Schedule 5.8(f) (“Member Plans”) with respect to participants in such plans (including Company Employees) after the Closing.

(g) Information to be Provided by the Member. The Member shall use commercially reasonable efforts to provide the information set forth on Schedule 5.8(g) within 21 days of the date of this Agreement and, in any event, shall continue to use commercially reasonable efforts to provide such information that it is unable to provide within such time period as soon as reasonably practicable.

(h) International Employee Plans. Within 30 days of the date hereof, Buyer may direct the Member in writing to terminate or to cause the Company or any Subsidiary to terminate, any or all of the International Employee Plans identified on Schedule 5.8(h) (each, a “Designated International Plan”). Upon such direction, the Member shall terminate or cause the Company or the appropriate Subsidiary to terminate such Designated International Plan effective as of the Closing and such Designated International Plan shall be treated as a “Member Plan” for all purposes of this Agreement, including Section 5.8 and Section 7.2.

Section 5.9 Books and Records. Buyer shall until the seventh (7th) anniversary of the Closing Date, retain all books, records and other documents pertaining to the Business in existence on the Closing Date and make the same available for inspection and copying by the Member or any of the representatives of the Member at the expense of the Member during the normal business hours of Buyer upon reasonable request and upon reasonable notice.

Section 5.10 Further Action. Each of the parties hereto shall use its respective commercially reasonable efforts to take or cause to be taken all appropriate action, do or cause to be done all things necessary, proper or advisable and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement.

Section 5.11 Tax Matters.

(a) Member shall, at its own expense, prepare or cause to be prepared and timely file or cause to be timely filed all Tax Returns of the Company and the Subsidiaries, for all periods ending on or prior to the Closing Date that have not yet been filed and are required to

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be filed after the Closing Date. Member shall pay or cause to be paid any Taxes due in respect of such Tax Returns. If any such Tax Return must be signed by Buyer, any Affiliate thereof, or the Company or the Subsidiaries (or any representative of the foregoing) following the Closing Date, Buyer agrees that it will (or will cause such other parties to) cooperate fully and punctually in signing such Tax Return in order to permit the timely filing of such Tax Return. For the avoidance of doubt Member shall (A) file a U.S. federal income Tax Return of the Company and the Subsidiaries for the Company’s taxable year ending on the Closing Date pursuant to Treasury Regulations Section 1.1502-76(c) and (B) allocate all items accruing on the Closing Date to the Company’s taxable period ending on the Closing Date pursuant to Treasury Regulations Section 1.1502-76(b)(1)(ii)(A)(1) (and not pursuant to the “next day” rule under Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) or pursuant to the ratable allocation method under Treasury Regulations Section 1.1502-76(b)(2)(ii) or 1.1502-76(b)(2)(iii)).

(b) Buyer shall timely prepare and file, or cause to be timely prepared and filed, all Tax Returns of the Company or the Subsidiaries, for taxable years or periods ending after the Closing Date. Tax Returns that are required to be filed by or with respect to the Company or the Subsidiaries for Straddle Periods (“Straddle Returns”) shall be prepared consistently with past practice to the extent permitted by applicable law. Buyer shall provide, or cause to be provided, to Member a draft of any Straddle Return at least 30 days prior to the due date, giving effect to extensions thereto, for filing such Tax Return, for review by Member. Member shall notify Buyer of any reasonable objections Member may have to any items set forth in such draft Straddle Return and Buyer and Member agree to consult and resolve in good faith any such objection. If the parties cannot resolve any such objections, the item in question shall be resolved by KPMG (the “Independent Accountant”). The fees and expenses of the Independent Accountant shall be borne equally by Member and Buyer. Buyer shall notify Member of any amounts due from Member in respect of any Straddle Return no later than 10 Business Days prior to the date on which such Straddle Return is due, and no later than 5 Business Days prior to the date on which such Straddle Return is due, Member shall pay to Buyer the amount of Taxes for which Member is responsible, but in all events, no later than 10 days after demand is made.

(c) For purposes of apportioning any Taxes relating to a Straddle Period to a Pre-Closing Taxable Period, such apportionment shall be made assuming that the relevant entity had a taxable year that ended at the close of business on the Closing Date. In the case of property Taxes and similar Taxes which apply ratably to a taxable period, the amount of Taxes allocable to the portion of the Straddle Period that is a Pre-Closing Taxable Period shall equal the Tax for the period multiplied by a fraction, the numerator of which shall be the number of days in the period up to and including the Closing Date, and the denominator of which shall be the total number of days in the period.

(d) For the portion of the Closing Date after the time of Closing, other than transactions expressly contemplated hereby, Buyer shall carry on the Business only in the ordinary course in the same manner as previously conducted.

(e) Upon written request of Member, Buyer shall, at Member’s expense, cause the Company to file for, and use commercially reasonable efforts to obtain and expedite the receipt of, any refund to which the Company or the Subsidiaries may be entitled with respect

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to any Pre-Closing Taxable Period; provided, however, that if any such refund could reasonably be expected to adversely affect the liability of the Company and/or the Subsidiaries for Taxes for any taxable period (or portion thereof) beginning after the Closing Date, Buyer may, in its sole discretion, refuse to cause the Company to file for any such refund until a mutual agreement with respect thereto is reached between the Member and Buyer. Any Tax refunds that are received by Buyer, the Company or any of the Subsidiaries, and any amounts credited against Tax to which Buyer, the Company or any of the Subsidiaries becomes entitled (including any interest paid or credited with respect thereto but reduced by any expenses of Buyer in obtaining such refunds or credits), that relate to Pre-Closing Taxable Periods shall be for the account of Member, and Buyer shall pay over to Member any such refund or amount of any such credit within 15 days after receipt or entitlement thereto. Any such refunds or credits relating to Straddle Periods shall be equitably apportioned between Buyer and Member.

(f) Buyer, the Company and the Subsidiaries, and the Member shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section 5.11, the provision of information relating to Tax Liabilities and potential Tax Liabilities relating to the Company and the Subsidiaries for all Pre-Closing Taxable Periods and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and the provision of records and information (upon the other party’s request, at the expense of the requesting party) that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and the Subsidiaries and the Member agree (i) to retain all books and records with respect to Tax matters pertinent to the Company and the Subsidiaries relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or the Member, any extensions thereof) of the respective taxable period, and to abide by all record retention agreements entered into with any taxing authority, and (ii) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company and the Subsidiaries or the Member, as the case may be, shall allow the other party to take possession of such books and records; provided that nothing in this Section shall require the Member to provide any books or records relating to any consolidated returns of the Member. In addition, the Member shall assist Buyer in determining the Tax attributes allocable or apportionable to the Company within 60 days following the filing of the U.S. federal income Tax Return for the Company’s taxable year ending on the Closing Date. Without limiting the foregoing, the Company shall deliver to Buyer within 30 days from the date of this Agreement, but in no event later than the Closing Date, correct and complete copies of all Tax Returns not otherwise previously provided, including any federal and state non-income Tax Returns and all foreign Tax Returns, in each case relating to the Company and the Subsidiaries for each of its three (3) taxable years immediately preceding the Closing Date. The Company shall also deliver to Buyer within 30 days from the date of this Agreement, but in no event later than the Closing Date, any revenue agents’ reports and other notices from the Internal Revenue Service, or state, local or foreign taxing authorities relating to the Company and the Subsidiaries, for each of its three (3) taxable years immediately preceding the Closing Date.

(g) All tax-sharing agreements or similar agreements with respect to or involving the Company and the Subsidiaries shall be terminated as of the Closing Date and, after the Closing Date, the Company and the Subsidiaries shall not be bound thereby or have any liability thereunder.

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(h) Buyer shall not file an amended Tax Return for the Company or any of the Subsidiaries for any Pre-Closing Taxable Period without the prior written consent of Member, which consent shall not be unreasonably withheld or delayed.

(i) Buyer shall elect to waive any carryback of net operating losses under Section 172(b)(3) of the Code for losses attributable to taxable periods beginning after the Closing Date.

(j) Whenever any taxing authority asserts a claim, makes an assessment, or otherwise disputes the amount of Taxes for which Member is or may be liable under this Agreement, Buyer shall, if informed of such an assertion, promptly inform Member, and Member shall have the right to control any resulting proceedings and to determine whether and when to settle any such claim, assessment or dispute to the extent such proceedings or determinations affect the amount of Taxes for which Member may be liable under this Agreement; provided, however, that if such settlement could reasonably be expected to adversely affect the liability of the Company or the Subsidiaries for Taxes for any taxable period (or portion thereof) beginning after the Closing Date, such settlement shall not be agreed to without the consent of Buyer, which consent will not be unreasonably withheld or delayed. Failure to make such notification shall not alter Member’s liability therefore, except to the extent Member is actually prejudiced by Buyer’s failure to notify Member.

(k) Whenever any taxing authority asserts a claim, makes an assessment, or otherwise disputes the amount of Taxes for which the Company and/or any of the Subsidiaries is or may be liable under this Agreement, Member shall, if informed of such an assertion, promptly inform Buyer, and Buyer shall have the right to control any resulting proceedings and to determine whether and when to settle any such claim, assessment or dispute to the extent such proceedings or determinations affect the amount of Taxes for which the Company and/or any of the Subsidiaries may be liable under this Agreement; provided, however, that if such settlement could reasonably be expected to adversely affect the liability of the Member for Taxes for any taxable period (or portion thereof) ending on or before the Closing Date, such settlement shall not be agreed to without the consent of Member, which consent will not be unreasonably withheld or delayed. Failure to make such notification shall not alter the Company’s liability therefore, except to the extent the Company is actually prejudiced by Member’s failure to notify Buyer.

(l) The Member shall be solely liable for and shall pay when due any transfer, value added, excise, stock transfer, stamp, recording, registration and similar Taxes that become payable in connection with the transactions contemplated hereby, if any.

(m) Upon request of the Buyer (which request shall be made not later than the 90th day following the Closing Date), the Member shall join with the Buyer in making an election under Section 338(h)(10) of the Code (and, at Buyer’s election, any corresponding elections under appropriate state, local or foreign laws) with respect to the purchase and sale set forth in this Agreement (the “(h)(10) Election”), including, where designated by Buyer, elections

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at the subsidiary level. Buyer may make the corresponding state, local or foreign elections referred to in the parenthetical of the previous sentence on a jurisdiction by jurisdiction basis. Upon request of the Buyer, the Company shall cause three (3) IRS Forms 8023 and any other appropriate election forms pursuant to applicable state, local or foreign elections being made to be prepared, executed by the Member and submitted to the Buyer on or before the Closing Date. The Buyer and the Member shall cooperate fully with each other and make available to each other such Tax data and other information as may be reasonably required by the Buyer or the Member in order to timely file the (h)(10) Election and any other required statements or schedules. In addition, if an (h)(10) Election is made, (i) Buyer shall deliver copies of the filed election forms to the Member with thirty (30) days of filing such forms with the appropriate taxing authorities, (ii) the Member and Buyer shall file all Tax Returns in a manner consistent with the (h)(10) Election, including the reasonable determination of the fair market value of the assets of the Company and the Subsidiaries, and will not take any position contrary thereto, (iii) the parties agree that the Consideration and the liabilities of the Company and the Subsidiaries (plus other relevant items) will be allocated to the assets of the Company and the Subsidiaries as provided on Schedule 5.11(m), prepared jointly by Buyer and the Member in accordance with Sections 338 and 1060 of the Code and Treasury Regulations thereunder, as may be amended by the joint agreement of Buyer and the Member in good faith to reflect the operations of the Company and the Subsidiaries through the Closing Date, or in the event any adjustment is required to be made as a result of the payment of any additional Consideration for the Company Units or otherwise, (iv) Buyer and the Member shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with Schedule 5.11(m), as amended, and will not take any position contrary thereto, and (v) all Taxes that are attributable to the making of the (h)(10) Election (or any similar state, local or foreign Section 338(h)(10) (but not Section 338(g)) election) will be borne and paid by the Member (and the Member shall indemnify Buyer, the Company and the Subsidiaries against any loss, claim, liability, expense or other damage attributable to or arising out of any failure to pay such Taxes).

(n) To the extent permissible under applicable Law, at Buyer’s election, the parties shall treat Buyer, the Company or an Affiliate (as applicable) as a “successor employer” within the meaning Treasury Regulations Sections 31.3121(a)(1)-1(b)(2) and 31.3306(b)(1)-1(b)(2) with respect to Company Employees who are not employed by the Company or any Subsidiary as of the Closing Date. Upon making such election, the Member shall provide Buyer payroll and other information necessary to treat Buyer as such a successor employer (to the extent not already provided to Buyer in accordance with this Agreement) and file all returns and reports consistent with such treatment.

Section 5.12 Exclusivity. Each of the Member and the Company agree that between the date of this Agreement and the earlier of the Closing and the termination of this Agreement, neither party shall, and shall take all action necessary to ensure that none of their respective Subsidiaries or any of their respective Affiliates shall (i) solicit, initiate, consider, encourage or accept any proposal or offer that constitutes an Acquisition Proposal or (ii) participate in any discussions, conversations, negotiations or other communications regarding, or furnish to any other Person information with respect to, or otherwise cooperate, assist or participate in, facilitate or encourage the submission of, any proposal that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal. Each of the Member and the Company shall, and shall cause the Subsidiaries to: (a) immediately cease and cause to be terminated all existing discussions,

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conversations, negotiations and other communications with any Persons conducted heretofore by each of them or their respective Subsidiaries or any of their respective Affiliates with respect to any of the foregoing, (b) not release any Person from, or waive any provision of, any confidentiality or standstill agreement to which each of them or their respective Subsidiaries is a party, without the prior written consent of Buyer and (c) notify Buyer immediately if any Person makes any proposal, offer, inquiry or contact with respect to any of (i) or (ii) of the foregoing sentence. For purposes of this Agreement, “Acquisition Proposal” means any offer or proposal for, or any indication of interest in, any of the following (other than the transactions contemplated herein): (A) any direct or indirect acquisition or purchase of equity in the Company or any of the Subsidiaries or all or substantially all of the assets of the Company or any of the Subsidiaries, (B) any merger, consolidation or other business combination relating to the Company or any of the Subsidiaries or (C) any recapitalization, reorganization or any other extraordinary business transaction involving or otherwise relating to the Company or any of the Subsidiaries.

Section 5.13 Non-Competition; Non-Solicitation.

(a) Member covenants and agrees that:

(i) during the period beginning on the Closing Date and ending on the fifth anniversary of the Closing Date (the “Restricted Period”), Member shall not, and shall cause its Affiliates to not, other than on behalf of Buyer, Buyer Ultimate Parent and their respective subsidiaries, engage, directly or indirectly, anywhere in the world in the development, sale, resale or license of Terminal Operating Systems or Marine Terminal Software; provided that, nothing herein shall prohibit the acquisition or ownership of up to two percent (2%) of the outstanding stock of a publicly-traded company that develops, sells, resells or licenses Terminal Operating Systems; or

(ii) during the period beginning on the Closing Date and ending on the second anniversary of the Closing Date (the “Solicitation Restricted Period”), Member shall not, other than on behalf of Buyer, Buyer Ultimate Parent and their respective Subsidiaries, directly or indirectly: (a) solicit, entice or induce any Person employed or engaged during the Solicitation Restricted Period in the Business as conducted by Buyer, Buyer Ultimate Parent or any of their respective Subsidiaries (including, from and after the Closing, the Company), to terminate his or her employment or engagement with, or not accept an employment or consulting arrangement with, Buyer, Buyer Ultimate Parent or any of their respective Subsidiaries (including, from and after the Closing, the Company), except for general solicitations of employment (such as a newspaper advertisement or on radio or television) not specifically directed to any Person employed during the Solicitation Restricted Period in the Business as conducted by Buyer, Buyer Ultimate Parent or any of their respective Subsidiaries or (b) hire any Person identified on Schedule 5.16(a) who at the time of hiring, or at any time within the 12 months before such hiring is or was an employee of the Company or any of its Affiliates. The obligations described in clause (b) of the immediately preceding sentence shall not apply to any Person who is terminated without cause by Buyer, Buyer Ultimate Parent or any of their respective Subsidiaries after the Closing.

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(b) Member acknowledges and agrees that the restrictions contained in Section 5.13(a) are a reasonable and necessary protection of the immediate interests of Buyer, Buyer Ultimate Parent and the Company, and that Buyer and Buyer Ultimate Parent would not have entered into this Agreement without receiving the consideration offered by Member in binding Member and its Affiliates to these restrictions. If any provision contained in Section 5.13(a) shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of Section 5.13(a), but Section 5.13(a) shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the parties that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time that is not permitted by applicable Law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable Law, a court of competent jurisdiction shall construe and interpret or reform Section 5.13(a) to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable Law. The parties agree that Section 5.13(a)(i) is not intended to restrict Member or its Affiliates from any activities with respect to products or services offered by Member and/or its Affiliates (other than the Subsidiaries) other than Terminal Operating Systems or Marine Terminal Software.

Section 5.14 Buyer Ultimate Parent Guarantee. Buyer Ultimate Parent unconditionally and irrevocably guarantees each and every representation, warranty, covenant, agreement and obligation of the Buyer to the Member, and the full and timely performance of the Buyer’s obligations (including all payment obligations), in each case under the provisions of this Agreement. This is a guarantee of payment and performance and Buyer Ultimate Parent acknowledges and agrees that this guarantee is full and unconditional, and no release or extinguishment of the Buyer’s obligations or liability (other than in accordance with the terms of this Agreement), whether by decree in any bankruptcy Action or otherwise, shall affect the continuing validity and enforceability of this guarantee. Nothing herein is intended to, nor shall, confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 5.15 Change of Name; Use of Trademarks.

(a) At least two (2) Business Days prior to Closing, Member shall effect the change of the names of the Company and the Subsidiaries so that each name does not include the word ‘Zebra’ and to otherwise remove any other reference or indicia associated with Member, and any confusingly similar variations, derivations or abbreviations of any of the foregoing.

(b) From and after the Closing Date, and except as expressly authorized under the Transition Services Agreement, the Transitional Trademark License and the Reseller Agreement, Buyer shall not, and shall cause its Affiliates (including Company and the Subsidiaries), members and shareholders not to, use the words ‘Zebra,’ ‘WhereNet,’ and any confusingly similar variations, derivations or abbreviations of the words ‘Zebra’ or ‘WhereNet,’ including any ‘Where’ formative words (e.g., WhereSoft, WhereTag, WhereCell, WhereLan, WhereDome, WherePort, WhereCall, WhereWand, WhereTrack) in connection with any business activity anywhere in the world.

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Section 5.16 Transfers with Respect to the WhereNet Marine Business. The Member shall cause the transfer of the WhereNet Marine Business to the Company or its Subsidiaries, including transferring or assigning the Intellectual Property, contracts and personnel identified in, and taking the actions identified in, Schedule 5.16(a) on or prior to Closing. The Member shall not be required by this Section 5.16 to: (1) transfer any contract for the resale of any third party hardware or software, or (2) except as set forth on Schedule 5.16(a) transfer or grant any licenses in, to or under any Intellectual Property of any third party, Member, or its Affiliates (other than the Company and its Subsidiaries) or transfer any licenses of Intellectual Property of any third party, including the third party contracts and Intellectual Property identified in Schedule 5.16(b); provided, that the Member and its Affiliates shall use commercially reasonable efforts to assist the Company in establishing and obtaining such contracts, relationships and rights to the extent provided in the Assignment and Assumption Agreement or upon request by the Company. For the avoidance of doubt, except to the extent provided in the Reseller Agreement and the Source Code License Agreement (TTS), the WhereNet Marine Business shall not include any rights in or to the Visibility Server Software or the Licensed TTS Application.

Section 5.17 Transition Covenants; Project Plan.

(a) General Cooperation. Notwithstanding anything in this Agreement or the Assignment and Assumption Agreement, the MTS Contribution Agreement, the Transition Services Agreement or the Licenses the contrary, nothing in such agreements will constitute an agreement to assign or transfer any contract or Intellectual Property set forth in Schedule 5.16(a) or any claim or right or any benefit arising thereunder or resulting therefrom if (i) an attempted assignment thereof, without consent of a third party thereto, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Buyer, Company or its Subsidiaries or Member or its Affiliates thereunder or (ii) such contracts, Intellectual Property or any claim or right or any benefit arising thereunder or resulting therefrom would infringe any other Person’s copyright, trade secret rights, right of privacy, right in personal data, moral right or other intellectual property right. Member, its Affiliates, Buyer, Company and its Subsidiaries will use their commercially reasonably efforts (but without any payment of money by Buyer and at no expense to Member or its Affiliates) to obtain the consent of the other parties to any such contracts, Intellectual Property or claim or right or any benefit arising thereunder for the assignment or transfer thereof to Company as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Member or its Affiliates thereunder so that Buyer or Company would not in fact receive all such rights, Member, its Affiliates, Buyer, Company and its Subsidiaries will perform the applicable obligations set forth in the Transition Services Agreement and otherwise cooperate in a mutually agreeable arrangement under which Buyer or Company would obtain the benefits and assume the obligations thereunder in accordance with this Agreement and the Transition Services Agreement, including subcontracting, sublicensing, or subleasing to or for Buyer or Company, or under which Member or its Affiliates would enforce for the benefit of Buyer or Company, Member’s and its Affiliates’ obligations, any and all rights of Member and its Affiliates against a third party thereto. Except as expressly set forth in the Transition Services Agreement to the contrary, Member will promptly pay to Buyer or Company when received all monies received by Member under any contract set forth in Section 5.16(a) or any claim or right or any benefit arising thereunder.

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(b) Reseller Agreement. With respect to the Reseller Agreements set forth in Schedule 5.16(b), in the event that Buyer or Company, despite using commercially reasonable efforts, fails to enter into an agreement with any licensor counter party of such Reseller Agreements, then from the Closing Date until the expiration of the applicable service obligation under the Transition Service Agreement, Member and its Affiliates will use commercially reasonable efforts to (i) maintain each such Reseller Agreement in effect in accordance with its terms, (ii) assist the Company in establishing and obtaining new contracts with the counter party to each such Reseller Agreement, (iii) upon Company’s request, fill orders from and resell the applicable products to, Company or Company’s customers, and (iv) provide to Company the applicable financial benefit of such orders, in a manner consistent with past practices and otherwise in accordance with the terms and conditions of each such Reseller Agreement and the Transition Services Agreement.

(c) Source Code Escrow Agreement. With respect to the Source Code Escrow Agreement set forth in Schedule 5.16(b), Member, its Affiliates and Company will use commercially reasonable efforts to (i) separate the Transferred MTS Application and the Visibility Server Software from the ‘Source Materials’ on deposit under such Source Code Escrow Agreement, (ii) have Member or an Affiliate of Member deposit the Visibility Server Software in a separate source code escrow account for the benefit of the applicable customer on terms substantially similar to the terms and conditions in such existing Source Code Escrow Agreement, (iii) have Company deposit the Transferred MTS Application in a separate source code escrow account for the benefit of the applicable customer on terms substantially similar to the terms and conditions in such existing Source Code Escrow Agreement, (iv) until such separate source code escrow agreements are established, Member, its Affiliates, and Company will cooperate in a mutually agreeable arrangement and take all necessary actions to prevent any release of the Source Materials under such existing Source Code Escrow Agreement and to comply with the obligations thereunder to protect the Source Materials, and (v) obtain any necessary consents of the applicable customer beneficiaries under such existing Source Code Escrow Agreement.

(d) Third Party Components. With respect to the Intellectual Property set forth in Schedule 5.16(b), Member, its Affiliates, and Company will, at Member’s expense, use commercially reasonable efforts and otherwise cooperate to obtain the licenses to each such item of Intellectual Property in the name of Company prior to the Closing Date, and in the event that such licenses are not obtained in the name of Navis by the Closing Date, then (i) Member and its Affiliates will use commercially reasonable efforts to provide to the Company the benefits and rights under such licenses, whether by subcontracting, sublicensing, or subleasing, and (ii) Member, its Affiliates, and Company will use commercially reasonable efforts to assist the Company in establishing and obtaining such licenses in the name of Company as soon as practicable thereafter.

(e) Shared Software Modules and Libraries. Member, its Affiliates, the Company and the Subsidiaries will use commercially reasonable efforts to identify the proprietary software modules or libraries owned by Member or its Affiliates and called by or linked to the Visibility Server Software and either or both of the Transferred MTS Application and the Licensed TTS Application within 15 days, and such shared software will be licensed to the Company in accordance with the terms and conditions of the Source Code License

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Agreement (TTS), provided, however, that Member, its Affiliates, Buyer and Company will use commercially reasonable efforts to determine whether any such shared software is primarily related to or used by the Transferred MTS Application and in which case such shared software will be transferred to Company under the MTS Contribution Agreement and licensed back to Member and its Affiliates under the Source Code License Agreement (MTS).

(f) Transition Services. Within 15 days, Member, its Affiliates, Buyer the Company and the Subsidiaries, will use commercially reasonable efforts to finalize and deliver a mutually agreed and determined schedule of services to the Transition Services Agreement based on the form of such schedule in existence as of the date hereof.

Section 5.18 Covenant Not to Sue. Member will not, and will cause its Affiliates to not, sue, assert any claim against, or otherwise participate in any allegation, action, or proceeding against Company or any of its Subsidiaries, or any of their customers, importers, manufacturers, resellers or distributors (collectively, “Company Entities”), or cause, support, allow, or authorize any Person to do any of the foregoing, to the extent claiming that:

(a) the manufacture, use, sale, offer for sale, or importation of any Marine Terminal Software by or on behalf of Company and/or any of its Subsidiaries, or the use or authorized resale by any Company Entity of any Marine Terminal Software sold, licensed or made available to such Company Entity by Company and/or any of its Subsidiaries, infringes any ‘848 Application Patent;

(b) the manufacture, use, sale, offer for sale, or importation by or on behalf of Company and/or any of its Subsidiaries of a Covered Application on a stand alone basis (or the use or authorized resale by any Company Entity of a Covered Application on a stand alone basis) directly infringes any Member Patent; or

(c) the manufacture, use, sale, offer for sale, or importation by or on behalf of Company and/or any of its Subsidiaries of a Covered Application as a component of a Marine Telematics Solution (or the use or authorized resale by any Company Entity of a Covered Application as a component of a Marine Telematics Solution) directly or contributorily infringes any Member Patent or induces the infringement of any Member Patent provided that such Marine Telematics Solution excluding the Covered Application does not infringe or has a substantial non-infringing use under such Member Patent. The covenant not to sue in this clause (c) will apply to hardware and software not provided by Member and/or any of its Affiliates only to the extent that such hardware and software on a stand alone basis would have substantial non-infringing use under such Member Patent.

For purposes of this Section 5.18, “Marine Telematics Solutions” also includes hardware and/or software provided by Company Entities. The covenant not to sue in this Section 5.18 will not apply to hardware and software provided by any Person other than Member and/or any of its Affiliates to the extent that such hardware and software (y) directly infringes any Member Patent or (z) on a stand alone basis would not have any substantial non-infringing use under the applicable Member Patent.

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Section 5.19 Letters of Credit. Until the earlier of the expiration of the term of the Transition Services Agreement or such time after Closing as the Company and the Subsidiaries establish their own letters of credit or comparably satisfactory arrangements, Member and its Affiliates (other than the Company and the Subsidiaries) shall maintain and provide to the Company and the Subsidiaries the benefit of any letters of credit that support the contractual obligations of the Company or any Subsidiary as of the Closing. Company will remain responsible for any obligations arising under such letters of credit.

Section 5.20 Netherlands Lease. Prior to Closing, Member or its Affiliates shall effect the assignment of the lease for Herengracht 174 Amsterdam, Netherlands dated July 30, 2003, by and between Museum Herengracht Monumenten III B.V. and Zebra Enterprise Solutions International LLC (the “Netherlands Lease”) at no cost or expense to the Company or the Subsidiaries.

ARTICLE VI - CONDITIONS TO CLOSING

Section 6.1 Conditions to the Obligations of the Company, Member, the Buyer and Buyer Ultimate Parent. The respective obligations of each of the Company, the Member, the Buyer and Buyer Ultimate Parent to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, at or prior to the Closing, of each of the following conditions (each of which is provided for the benefit of each of the parties hereto and may be waived by a party with respect to the other in whole or in part):

(a) Hart-Scott-Rodino Act. The waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated.

(b) Governmental Consents. All licenses, permits, consents, authorizations, approvals, qualifications and orders of Governmental Authorities set forth in Schedule 6.1(b) of this Agreement shall have been obtained, including CFIUS Clearance.

(c) No Injunctions, Orders or Restraints; Illegality. No preliminary or permanent injunction or other order, decree or ruling issued by a court or other Governmental Authority of competent jurisdiction nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority of competent jurisdiction shall be in effect which would have the effect of (i) making the consummation of the transactions contemplated hereby illegal or (ii) otherwise prohibiting the consummation of the transactions contemplated hereby.

Section 6.2 Conditions to Obligations of the Member and the Company. The obligations of the Member and the Company to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, at or prior to the Closing, of each of the following conditions (each of which is provided for the exclusive benefit of the Company and the Member and may be waived solely by the Member in whole or in part):

(a) All covenants contained in this Agreement to be performed and complied with by Buyer or Buyer Ultimate Parent on or before the Closing shall have been performed and complied with in all material respects, except to the extent that such covenants are qualified by the term “material,” in which case Buyer and Buyer Ultimate Parent shall have performed and complied with all of such covenants in all respects through the Closing.

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(b) Each of the representations and warranties contained in Article IV shall be true and correct in all material respects as of the Closing Date (except that those representations and warranties that address matters only as of a particular date shall be true and correct in all material respects as of such date), except to the extent that such representations and warranties are qualified by the term “material,” in which case such representations and warranties shall be true and correct in all respects as of the Closing Date (except that those representations and warranties that address matters only as of a particular date shall be true and correct in all respects as of such date).

(c) The Member shall have received a certificate signed on behalf of each of Buyer and Buyer Ultimate Parent by an officer of each of Buyer and Buyer Ultimate Parent to the effect that each of the conditions specified in Section 6.2(a) and Section 6.2(b) is satisfied in all respects.

(d) Each of Buyer and Buyer Ultimate Parent shall have executed and delivered to each of the Company and the Member counterparts of the Transition Services Agreement, the Reseller Agreement and the License Agreements.

Section 6.3 Conditions to Obligations of Buyer and Buyer Ultimate Parent. The obligations of Buyer and Buyer Ultimate Parent to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, at or prior to the Closing, of each of the following conditions (each of which is provided for the exclusive benefit of Buyer and Buyer Ultimate Parent and may be waived by them in whole or in part):

(a) All covenants contained in this Agreement to be performed and complied with by the Company or the Member on or before the Closing shall have been performed and complied with in all material respects, except to the extent that such covenants are qualified by the term “material” or contain the term “Material Adverse Effect,” in which case the Company and the Member shall have performed and complied with all of such covenants in all respects through the Closing.

(b) Each of the representations and warranties contained in Article II and Article III shall be true and correct in all material respects as of the Closing Date (except that those representations and warranties that address matters only as of a particular date shall be true and correct in all material respects as of such date), except to the extent that such representations and warranties are qualified by the term “material” or contain the term “Material Adverse Effect,” in which case such representations and warranties shall be true and correct in all respects as of the Closing Date (except that those representations and warranties that address matters only as of a particular date shall be true and correct in all respects as of such date).

(c) Since the date of this Agreement: (i) no event shall have occurred which constitutes a Material Adverse Effect and (ii) no condition, event, fact, circumstances or other occurrence shall have occurred that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

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(d) Buyer shall have received a certificate signed on behalf of each of the Company and the Member by an officer of each of the Company and the Member to the effect that each of the conditions specified in Section 6.3(a), Section 6.3(b) and Section 6.3(c) is satisfied in all respects.

(e) Buyer shall have received a certificate of the Secretary of the Company, dated as of the Closing Date: (i) attaching a copy of the Governing Documents for the Company and each of the Subsidiaries, certified by such officer to be correct and complete, (ii) attaching a copy of resolutions duly adopted by the Member and the unanimous consent of the Member approving the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, certified by such officer as correct and complete, (iii) certifying the incumbency of each signatory of the Member and the Company to this Agreement and the other documents, instruments or certificates to be delivered pursuant to this Agreement by the Member or the Company or any of their respective officers, together with the true signatures of such officers and (iv) attaching good standing (or similar) certificates for the Member and the Company and each of the Subsidiaries from each jurisdiction where the Member or the Company and each of the Subsidiaries are incorporated or doing business, issued by the respective authorities from such jurisdictions.

(f) Additional Filings. To the extent Buyer, pursuant to Section 5.4(a), in its reasonable discretion, deems it necessary or advisable to file any Antitrust Filings or other competition-related filings in connection with the transactions contemplated by this Agreement in any additional jurisdictions, including, without limitation, the jurisdictions identified in Section 5.4(a), the waiting period (or any extension thereof) shall have expired or terminated or the necessary clearance shall have been obtained, as applicable, under the applicable Laws of such jurisdictions.

(g) Each of the Company and the Member shall have executed and delivered to the Buyer and Buyer Ultimate Parent counterparts of the Transition Services Agreement, the Reseller Agreement and the License Agreements. The Company and the Member shall also have delivered to the Buyer the following, each duly executed by all parties thereto other than Buyer or Buyer Ultimate Parent:

(i) a withdrawal and release agreement effecting the withdrawal of the Company and the Subsidiaries from, and the release of any obligations of the Company and the Subsidiaries under, that certain Distribution and Services Agreement, dated December 15, 2008, by and between Navis LLC and Zebra Technologies Corporation, Zebra Technologies Europe Limited, WhereNet Corp., proveo GmbH and Multispectral Solutions, Inc. in a form reasonably satisfactory to Buyer;

(ii) the third-party consents listed on Schedule 6.3(g)(i);

(iii) letters of resignation for each of the directors and each of the officers of the Company and the Subsidiaries in substantially the form attached as Exhibit J; and

(iv) a FIRPTA affidavit in substantially the form attached as Exhibit K.

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(h) The Company and the Member shall also have delivered to the Buyer a complete copy of the VDR on DVD-ROM as of: (i) the date hereof and (ii) the Closing Date.

ARTICLE VII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

Section 7.1 Survival. Subject to the limitations and other provisions of this Agreement, and except in the event of fraud, the representations and warranties of the parties hereto contained herein, as the case may be, shall survive the Closing and shall remain in full force and effect until the date that is 18 months after the Closing Date (the “Indemnification Termination Date”), after which such time they shall expire and terminate and be of no further force and effect; provided, however, that the representations and warranties contained in Section 2.1, Section 2.2, Section 2.3, Section 3.1, Section 3.2 and Section 4.1 shall not expire and the representations and warranties of the Company contained in Section 2.9 (collectively, the “Statutory Representations”) shall survive until the expiration of the applicable statute of limitations (as applied to Statutory Representation, the “Statutory Termination Date”); provided further, that, as provided in Section 7.2(c)(iii) and Section 7.3(b), any written claim for breach made prior to the applicable expiration date shall survive thereafter and, as to any such claim, such expiration will not affect the rights to indemnification of the party making such claim.

Section 7.2 Indemnification by the Member.

(a) The Member agrees, subject to the other terms and conditions of this Agreement and without duplication, to indemnify Buyer, Buyer Ultimate Parent and their respective Affiliates, officers, directors and employees (each a “Buyer Indemnified Party”) against and hold them harmless from all Losses resulting from any:

(i) breach of any representation or warranty of the Company contained in Article II above;

(ii) breach of any covenant or agreement of the Company contained in this Agreement or any of the other agreements entered into in connection herewith;

(iii) Taxes with respect to any Pre-Closing Taxable Period including any and all Liability to any Governmental Authority for the failure to pay any Tax or file any Tax Return or qualify to do business in any jurisdiction where the operation of the Company’s or any of the Subsidiaries’ business would require the payment of any Tax and/or the filing of any Tax Return;

(iv) Taxes of (a) any member of an affiliated, consolidated, combined, or unitary group of which the Company or any of the Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any corresponding or similar state, local, or foreign Tax law or regulation and (b) any Person (other than the Company and the Subsidiaries) imposed on the Company or any of the Subsidiaries as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing; and

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(v) items set forth on Schedule 7.2(a)(v).

(b) The Member also agrees, subject to the other terms and conditions of this Agreement, to indemnify the Buyer Indemnified Parties against and hold them harmless from all Losses resulting from: (i) the breach of any representation or warranty of the Member contained in Article III above and (ii) any breach of any covenant or agreement of the Member or any of its Affiliates contained in this Agreement or any of the other agreements entered into in connection herewith.

(c) Except in the event of fraud, the indemnification obligations of the Member pursuant to Section 7.2(a)(i) and Section 7.2(b)(i) shall be limited as follows:

(i) The Member shall have no obligation to provide any indemnification until the aggregate dollar amount of all Losses that would otherwise be indemnifiable exceeds 0.5% of the Closing Consideration (the “Deductible Amount”), at which point the Member shall be obligated to indemnify the Buyer Indemnified Parties against and hold them harmless from all Losses to the extent such Losses exceed 0.25% of the Closing Consideration; provided, however, that: (a) the Member shall have no obligation to provide any indemnification for any individual claim or series of related claims for Losses of less than $25,000 and (b) this Section 7.2(c)(i) shall not apply to any Losses arising out of breaches of Section 2.1, Section 2.2, Section 2.3, Section 2.9, Section 2.16, Section 3.1 or Section 3.2; and

(ii) The Member shall not be obligated to indemnify any Buyer Indemnified Party for any amount of indemnifiable Losses in excess of 15% of the Closing Consideration in the aggregate (the “Cap”); provided, however, that this section Section 7.2(c)(ii) shall not apply to any Losses arising out of breaches of Section 2.1, Section 2.2, Section 2.3, Section 2.9, Section 2.16, Section 3.1 or Section 3.2; and

(iii) No indemnification shall be payable to a Buyer Indemnified Party with respect to claims asserted by such Buyer Indemnified Party pursuant to Section 7.2(a)(i) or Section 7.2(b)(i) after the Indemnification Termination Date or, in the case of claims that arise from or result from, or are directly or indirectly connected with, any breach of the Statutory Representations, after the applicable Statutory Termination Date; provided, that in the event a claim has been properly made on or prior to the Indemnification Termination Date or the applicable Statutory Termination Date, as the case may be, and such claim is unresolved as of the Indemnification Termination Date or the applicable Statutory Termination Date, as the case may be, then the right to indemnification with respect to such claim shall remain in effect until such matter shall have been finally determined.

(d) For purposes of calculating Losses under this Section 7.2 for any breach of any representation, warranty or covenant, any qualification contained in such representation, warranty or covenant using words “material,” “materially” or “material adverse effect” shall be disregarded and deemed not to include such words. In no event shall the aggregate Losses recoverable by the Buyer Indemnified Parties pursuant to this Section 7.2 exceed the Consideration.

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(e) The amount of any and all Losses recoverable under this Section 7.2 shall be determined net of any amounts actually recovered by any Buyer Indemnified Party with respect thereto under or pursuant to any insurance policy, title insurance policy, indemnity, reimbursement arrangement or contract pursuant to which or under which such Buyer Indemnified Party is a party or has rights.

(f) A Buyer Indemnified Party shall give the Member written notice of any Action by or in respect of a third party as to which such Buyer Indemnified Party may request indemnification hereunder or as to which the Deductible Amount may be applied as soon as is practicable. If the document evidencing such Action is a court pleading, the Buyer Indemnified Party shall give such notice, including a copy of such pleading, within 15 days of receipt of such pleading; otherwise, it shall give such notice within 30 days of the date it receives written notice of such Action; provided, however, that the failure to notify the Member within such time periods shall not affect rights to indemnification hereunder except to the extent that the Member is actually prejudiced by such failure. The Member shall notify the Buyer Indemnified Party whether it elects to assume the defense of such Action within 20 days of the Buyer Indemnified Party’s notice of such Action. Failure by the Member to so notify the Buyer Indemnified Party shall be deemed an election by the Member not to assume the defense of such Action and a waiver by the Member of any right to assume such defense. If the Member timely notifies the Buyer Indemnified Party that it elects to assume the defense of such Action, it shall have the right to direct, through counsel of its own choosing, the defense or settlement of any such Action at its own expense; provided, it shall take all reasonable steps necessary in such defense and shall hold Buyer Indemnified Parties, to the extent provided in this Section 7.2, harmless from and against all Losses arising out of or resulting from any settlement approved by the Member or any judgment in connection with such Action. Without limiting the foregoing, if the Member elects to assume the defense of any such Action:

(i) the Member shall consult with the Buyer Indemnified Party for the purpose of allowing the Buyer Indemnified Party to participate in such defense, but in such case the expenses of the Buyer Indemnified Party shall be paid by the Buyer Indemnified Party;

(ii) a Buyer Indemnified Party shall provide and shall cause the Company and Subsidiaries to provide, as applicable, the Member and counsel with access to its records and personnel relating to any such Action during normal business hours and shall otherwise cooperate with the Member in the defense or settlement thereof, and the Member shall reimburse the Buyer Indemnified Party for all its reasonable out of pocket expenses in connection therewith to the extent provided in this Section 7.2;

(iii) the Buyer Indemnified Party shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability unless the Member consents in writing to such payment; and

(iv) the Member shall not, except with the prior written consent of the Buyer Indemnified Party (which shall not be unreasonably withheld, conditioned or delayed) enter into any settlement or compromise or consent to the entry of any judgment with respect to such Action if such settlement, compromise or judgment (a) involves a

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finding or admission of wrongdoing, (b) does not include an unconditional written release by the claimant or plaintiff of the Buyer Indemnified Party from all liability in respect of such Action or (c) imposes equitable remedies or any obligation on the Buyer Indemnified Party other than solely the payment of money damages for which the Buyer Indemnified Party will be indemnified hereunder.

If the Member does not elect to assume such defense, fails to defend or if, after commencing or undertaking any such defense, fails to prosecute or withdraws from such defense, the Buyer Indemnified Party shall have the right to undertake the defense or settlement thereof, and in such case, the Buyer Indemnified Parties shall be indemnified hereunder to the extent provided in this Section 7.2.

(g) Notwithstanding anything to the contrary in the foregoing, if: (i) defendants in any action include any of Buyer Indemnified Parties and the Member, and if any Buyer Indemnified Party shall have been advised by counsel that there may be material legal defenses available to such Buyer Indemnified Party that are not available to the Member or (ii) if a conflict of interest exists between any Buyer Indemnified Party and the Member with respect to such claim or the defense thereof, then in either case, such Buyer Indemnified Party shall have the right to employ its own counsel in such action, and in such case, the Buyer Indemnified Parties shall be indemnified hereunder for the reasonable fees and expenses of such counsel to the extent provided in this Section 7.2.

(h) Buyer and each Buyer Indemnified Party shall take reasonable steps to mitigate Losses for which indemnification may be claimed by them pursuant to this Agreement upon and after becoming aware of any event that could reasonably be expected to give rise to any such Losses.

(i) Any liability for indemnification under this Section 7.2 shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement. Anything herein to the contrary notwithstanding, the Member shall not have any liability under any provision of this Agreement for any punitive, special or exemplary damages.

(j) Anything herein to the contrary notwithstanding, any indemnification with respect to Taxes shall be limited to Taxes attributable to Pre-Closing Taxable Periods and Member shall not be liable for any Taxes resulting from Buyer’s actions taken outside the ordinary course of business not contemplated by this Agreement after the Closing on the Closing Date.

(k) Payment. The assets held in escrow pursuant to the Escrow Agreement shall be used to satisfy the indemnification obligations of the Member under Section 7.2 in the following manner:

(i) Buyer Indemnified Parties shall proceed first against the funds held in escrow pursuant to the Escrow Agreement until such time as either: (a) Buyer Indemnified Parties have made claims under the Escrow Agreement in the aggregate equal to or greater than the Escrow Funds or (b) the Escrow Funds have been otherwise distributed pursuant to the terms of the Escrow Agreement.

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(ii) After the occurrence of either condition described in Section 7.2(k)(i), Buyer Indemnified Parties, or any of them, shall be entitled to proceed directly against the Member for all claims for indemnification under Section 7.2. Notwithstanding the foregoing, if Buyer Indemnified Parties’ obligation under Section 7.2(k)(i) terminates because Buyer Indemnified Parties have made claims under the Escrow Agreement in the aggregate equal to or greater than the Escrow Funds, Buyer Indemnified Parties shall nevertheless have the right, but not the obligation, to proceed against the assets held in escrow in connection with additional claims for indemnification under Section 7.2 until such time as all assets held in escrow have been distributed pursuant to the terms of the Escrow Agreement.

(l) Release. Upon the Initial Escrow Release Date, the amount in the Escrow Account in excess of an amount equal to 50% of the Escrow Amount shall be delivered to the Member; provided, however, any such amounts that are reasonably necessary to satisfy any outstanding unsatisfied claims specified in any notice delivered under Section 7.2 shall also be retained in the Escrow Account in addition to an amount equal to 50% of the Escrow Amount. Upon the Second Escrow Release Date, the remaining balance of the Escrow Account shall promptly be delivered to the Member; provided, however, that the Escrow Account shall not terminate with respect to, and to the extent of, and there shall be retained in the Escrow Account, any such amounts reasonably necessary to satisfy any outstanding unsatisfied claims specified in any notice delivered under Section 7.2 on or prior to the Second Escrow Release Date with respect to facts and circumstances existing on or prior to the Second Escrow Release Date. As soon as any such claims have been fully resolved and satisfied, the Escrow Agent shall deliver to the Member the remaining portion of the Escrow Account not required to satisfy any remaining claims.

Section 7.3 Indemnification by Buyer.

(a) Buyer agrees, subject to the other terms and conditions of this Agreement and without duplication, to indemnify the Member and its respective Affiliates, officers, directors and employees (each a “Member Indemnified Party”) against and hold them harmless from all Losses resulting from: (i) the breach of any representation or warranty of Buyer contained herein and (ii) any breach of any covenant or agreement of Buyer or any of its Affiliates contained herein or any of the other agreements entered into in connection herewith.

(b) Except in the event of fraud, the indemnification obligations of Buyer pursuant to Section 7.3(a)(i) shall not be effective until the aggregate dollar amount of all Losses that would otherwise be indemnifiable pursuant to Section 7.3(a)(i): (i) exceeds the Deductible Amount, at which point Buyer shall be obligated to indemnify the Member Indemnified Parties against and hold them harmless from all Losses to the extent such Losses exceed 0.25% of the Closing Consideration, and (ii) does not exceed the Cap; provided, however, that: (y) the Member shall have no obligation to provide any indemnification for any individual claim or series of related claims for Losses of less than $25,000 and (z) the Deductible Amount and the Cap shall not apply to claims for breaches of Section 4.1. No indemnification shall be payable to

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a Member Indemnified Party with respect to claims asserted by such Member Indemnified Party pursuant to Section 7.3(a)(i) after the Indemnification Termination Date; provided, that in the event a claim has been properly made on or prior to the Indemnification Termination Date, and such claim is unresolved as of the Indemnification Termination Date, then the right to indemnification with respect to such claim shall remain in effect until such matter shall have been finally determined.

(c) For purposes of calculating Losses under this Section 7.3 for any breach of any representation, warranty or covenant, any qualification contained in such representation, warranty or covenant using words “material,” “materially” or “material adverse effect” shall be disregarded and deemed not to include such words. In no event shall the aggregate Losses recoverable by the Member Indemnified Parties pursuant to this Section 7.3 exceed the Consideration.

(d) The amount of any and all Losses recoverable under this Section 7.3 shall be determined net of any amounts actually recovered by any Member Indemnified Party with respect thereto under or pursuant to any insurance policy, title insurance policy, indemnity, reimbursement arrangement or contract pursuant to which or under which such Member Indemnified Party is a party or has rights.

(e) A Member Indemnified Party shall give Buyer written notice of any Action by or in respect of a third party as to which such Member Indemnified Party may request indemnification hereunder or as to which the Deductible Amount may be applied as soon as is practicable. If the document evidencing such Action is a court pleading, the Member Indemnified Party shall give such notice, including a copy of such pleading, within 15 days of receipt of such pleading; otherwise, it shall give such notice within 30 days of the date it receives written notice of such Action; provided, however, that the failure to notify Buyer within such time periods shall not affect rights to indemnification hereunder except to the extent that Buyer is actually prejudiced by such failure. Buyer shall notify the Member Indemnified Party whether it elects to assume the defense of such Action within 20 days of the Member Indemnified Party’s notice of such Action. Failure by Buyer to so notify the Member Indemnified Party shall be deemed an election by Buyer not to assume the defense of such Action and a waiver by Buyer of any right to assume such defense. If Buyer timely notifies the Member Indemnified Party that it elects to assume the defense of such Action, it shall have the right to direct, through counsel of its own choosing, the defense or settlement of any such Action at its own expense; provided, it shall take all reasonable steps necessary in such defense and shall hold Member Indemnified Parties, to the extent provided in this Section 7.3, harmless from and against all Losses arising out of or resulting from any settlement approved by Buyer or any judgment in connection with such Action. Without limiting the foregoing, if Buyer elects to assume the defense of any such Action:

(i) Buyer shall consult with the Member Indemnified Party for the purpose of allowing the Member Indemnified Party to participate in such defense, but in such case the expenses of the Member Indemnified Party shall be paid by the Member Indemnified Party;

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(ii) the Member Indemnified Party shall provide and shall cause the Member to provide, as applicable, Buyer and counsel with access to its records and personnel relating to any such Action during normal business hours and shall otherwise cooperate with Buyer in the defense or settlement thereof, and Buyer shall reimburse the Member Indemnified Party for all its reasonable out of pocket expenses in connection therewith to the extent provided in this Section 7.3;

(iii) the Member Indemnified Party shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability unless Buyer consents in writing to such payment; and

(iv) Buyer shall not, except with the prior written consent of the Member Indemnified Party (which shall not be unreasonably withheld, conditioned or delayed) enter into any settlement or compromise or consent to the entry of any judgment with respect to such Action if such settlement, compromise or judgment (a) involves a finding or admission of wrongdoing, (b) does not include an unconditional written release by the claimant or plaintiff of the Member Indemnified Party from all liability in respect of such Action or (c) imposes equitable remedies or any obligation on the Member Indemnified Party other than solely the payment of money damages for which the Member Indemnified Party will be indemnified hereunder

If Buyer does not elect to assume such defense, fails to defend or if, after commencing or undertaking any such defense, fails to prosecute or withdraws from such defense, the Member Indemnified Party shall have the right to undertake the defense or settlement thereof, and in such case, the Member Indemnified Parties shall be indemnified hereunder to the extent provided in this Section 7.3.

(f) Notwithstanding anything to the contrary in the foregoing, if: (i) defendants in any action include any of Member Indemnified Parties and Buyer, and if any Member Indemnified Party shall have been advised by counsel that there may be material legal defenses available to such Member Indemnified Party that are not available to Buyer or (ii) if a conflict of interest exists between any Member Indemnified Party and Buyer with respect to such claim or the defense thereof, then in either case, such Member Indemnified Party shall have the right to employ its own counsel in such action, and in such case, the Member Indemnified Party shall be indemnified hereunder for the reasonable fees and expenses of such counsel to the extent provided in this Section 7.3.

(g) Each Member Indemnified Party shall take reasonable steps to mitigate Losses for which indemnification may be claimed by them pursuant to this Agreement upon and after becoming aware of any event that could reasonably be expected to give rise to any such Losses.

(h) Anything herein to the contrary notwithstanding, neither Buyer nor Buyer Ultimate Parent shall have any liability under any provision of this Agreement for any punitive, special or exemplary damages. Any liability for indemnification under this Section 7.3 shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement.

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Section 7.4 Treatment of Indemnity Payments. All payments made by the Member or Buyer, as the case may be, to or for the benefit of the other parties pursuant to this Article VII shall be treated as adjustments to the Consideration for Tax purposes, and such agreed treatment shall govern for purposes of this Agreement unless otherwise required by Law.

Section 7.5 Remedies Exclusive. From and after Closing, except in the event of fraud, the rights of the parties to indemnification relating to this Agreement or the transactions contemplated hereby shall be strictly limited to those contained in this Article VII and such indemnification rights shall be the exclusive remedies of the parties subsequent to the Closing Date with respect to any matter in any way relating to this Agreement or arising in connection herewith. Except in the event of fraud or as provided in this Article VII, no Action shall be brought or maintained by any party against any other party and no recourse shall be brought or granted against any of them, by virtue of or based upon any alleged misstatement or omission respecting an inaccuracy in or breach of any of the representations, warranties or covenants of any of the parties hereto set forth or contained in this Agreement.

Section 7.6 Subrogation. After any indemnification payment is made to any indemnified party pursuant to this Article VII, the indemnifying party shall, to the extent of such payment, be subrogated to all rights, if any, of the indemnified party against any third party in connection with the Losses to which such payment relates. Without limiting the generality of the preceding sentence, any indemnified party receiving an indemnification payment pursuant to the preceding sentence shall execute, upon the written request of the indemnifying party, any instrument reasonably necessary to evidence such subrogation rights.

ARTICLE VIII - TERMINATION

Section 8.1 Termination. Except as provided in Section 8.2, this Agreement may be terminated:

(a) at any time, by the mutual written consent of the Member, the Company, Buyer and Buyer Ultimate Parent;

(b) by the Member, if the Company and the Member are not then in material breach of any term of this Agreement, upon written notice to Buyer, upon a material breach of any representation, warranty or covenant of Buyer and/or Buyer Ultimate Parent contained in this Agreement; provided that such breach is not capable of being cured or has not been cured within thirty (30) days after the giving of written notice thereof by the Member to Buyer;

(c) by Buyer, if each of Buyer and Buyer Ultimate Parent is not then in material breach of any term of this Agreement, upon written notice to the Member, upon a material breach of any representation, warranty or covenant of the Company or the Member contained in this Agreement; provided that such breach is not capable of being cured or has not been cured within thirty (30) days after the giving of written notice thereof by Buyer to the Member; and

(d) by Buyer or the Member at any time after the 120^th day following the date hereof, if the Closing has not occurred as of such date and the Buyer and Buyer Ultimate Parent or the Company and the Member, as applicable, is not then in material breach of any

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representation, warranty or covenant, as applicable, contained in this Agreement; provided, however, that notwithstanding anything to the contrary in this Agreement, if on the 120^th day following the date hereof the conditions to Closing set forth in Section 6.1 or Section 6.3(f) with respect to the receipt of regulatory approvals or consents from Governmental Authorities have not been satisfied, then each of Buyer and the Member shall have the right to extend such date to a date that is five (5) Business Days following the receipt of such approvals or consents by providing written notice of such election to the other party; provided further, that, it is reasonably likely at such time that the Company or Buyer, as applicable, will receive such approvals or consents in the foreseeable future.

Section 8.2 Effect of Termination In the event of termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no further liability or obligations hereunder on the part of any party hereto or their respective Affiliates except for the obligations of the parties pursuant to this Section 8.2 and Section 5.2(b) (Access to Information), Section 5.3 (Confidentiality), and Section 9.9 (Fees and Expenses); provided, however, that nothing herein shall relieve either party from liability for any breach of this Agreement existing at the time of such termination.

ARTICLE IX - GENERAL PROVISIONS

Section 9.1 Notices. All notices, requests, claims, demands and other communications under this Agreement will be written in English and will be deemed given if delivered personally, sent by overnight courier (providing proof of delivery) or via facsimile to the parties at the following addresses (or at such other address for a party as specified by like notice):

if to the Company prior to Closing, to:

Zebra Enterprise Solutions Holdings LLC

1000 Broadway, Suite 150

Oakland, California 94607

Attention:	William Walsh
Facsimile:	(510) 267-5100

with a copy to:

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, California 94025

Attention:	Caine T. Moss, Esq.
	Kathy A. Fields, Esq.
Facsimile:	(650) 853-1038

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If to the Member, to:

Zebra Technologies Corporation

475 Half Day Road, Suite 500

Lincolnshire, Illinois 60069

Attention:	General Counsel
Facsimile:	(847) 821-1492

with a copy to:

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, California 94025

Attention:	Caine T. Moss, Esq.
	Kathy A. Fields, Esq.
Facsimile:	(650) 853-1038

if to Buyer or Buyer Ultimate Parent, to:

Cargotec Corporation

Sörnäisten rantatie 23

00500 Helsinki

Finland

Attention:	General Counsel
Facsimile:	+358-204-55-4232

with a copy to:

Cargotec Solutions LLC

415 East Dundee Street

Ottawa, Kansas 66067

Attention:	Senior Counsel
Facsimile:	(785) 229-1143

with a copy to:

Reinhart Boerner Van Deuren s.c.

1000 North Water Street, Suite 1700

Milwaukee, Wisconsin 53202

Attention:	Kevin J. Howley, Esq.
Facsimile:	(414) 298-8097

Section 9.2 Disclosure Schedules. The disclosure of any information in the Schedules shall not be deemed to constitute an acknowledgment that such information is material, nor shall such information be deemed to establish a standard of materiality, nor shall it be deemed an admission of any liability of, or concession as to any defense available to, Buyer, Buyer Ultimate Parent, the Member or the Company, as applicable. The section number

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headings in the Schedules correspond to the section numbers in this Agreement and any information disclosed in any section of the Schedules shall be deemed to be disclosed and incorporated into any other section of the Schedules to the extent that applicability of such disclosure to such other section is appropriate and reasonably apparent on its face.

Section 9.3 Entire Agreement. This Agreement, together with the Schedules and Exhibits hereto, and any documents executed by the parties simultaneously herewith or pursuant thereto, constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, written and oral, among the parties with respect to the subject matter hereof, other than the Confidentiality Agreement (excluding the provisions of this Agreement), which shall survive the execution of this Agreement and any termination of this Agreement.

Section 9.4 No Other Representations, Warranties, Covenants and Agreements. No party hereto has made any representations, warranties, covenants or agreements, express or implied, of any nature whatsoever other than those representations, warranties, covenants and agreements expressly set forth in this Agreement.

Section 9.5 Amendment; Waivers. This Agreement may not be amended or modified, nor may compliance with any condition or covenant set forth herein be waived, except by a writing duly and validly executed by Buyer, Buyer Ultimate Parent, the Company and the Member, or in the case of a waiver, Buyer, Buyer Ultimate Parent or the Member, whoever is waiving compliance. Waiver of any term or condition of this Agreement by a party shall not be construed as a waiver of any subsequent breach or waiver of the same term or condition by such party, or a waiver of any other term or condition of this Agreement by such party.

Section 9.6 Assignment. Except as expressly permitted by the terms hereof, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties.

Section 9.7 No Agreement Until Executed. Irrespective of negotiations among the parties or the exchanging of drafts of this Agreement, this Agreement shall not constitute or be deemed to evidence a contract, agreement, arrangement or understanding among the parties hereto unless and until this Agreement is executed by the parties hereto.

Section 9.8 Interpretation. When a reference is made in this Agreement to an Article, Section, Schedule or Exhibit, such reference will be to an Article or Section of, or a Schedule or Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms used herein with initial capital letters have the meanings ascribed to them herein and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the

70

singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein, or in any agreement or instrument that is referred to herein, means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

Section 9.9 Fees and Expenses. Except as otherwise expressly agreed herein, as among the parties, Buyer and Buyer Ultimate Parent shall be solely liable for all legal, financial advisory, accounting, investment banking and other fees and expenses incurred by or on behalf of Buyer and Buyer Ultimate Parent in connection with the negotiation, preparation and execution of this Agreement and the performance or consummation of the transactions contemplated by this Agreement, including any such fees or expenses payable to Reinhart Boerner Van Deuren s.c. or Fredericks Michael & Co. In the event of termination of this Agreement as provided in Section 8.1, the Member shall be solely liable for all Transaction Expenses.

Section 9.10 Governing Law. This Agreement will be governed by, and construed in accordance with, the internal Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflict of laws.

Section 9.11 Dispute Resolution.

(a) Pre-Closing Disputes.

(i) Unless and until the Closing occurs, each of the Company, Buyer, Buyer Ultimate Parent, the Member hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of the Court of Chancery of the State of Delaware (the “Chosen Court”) for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in the Chosen Court), waives any objection to the laying of venue of any such litigation in the Chosen Court and agrees not to plead or claim in the Chosen Court that such litigation brought therein has been brought in any inconvenient forum.

(ii) Each of the parties hereto agrees, (a) to the extent such party is not otherwise subject to service of process in the state of Delaware, to appoint and maintain an agent in the state of Delaware as such party’s agent for acceptance of legal process with respect to the litigation of matters described in Section 9.11(a)(i) and to provide notice to the other parties hereto of such appointment and (b) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by United States Postal Service constituting evidence of valid service. Solely for purposes of implementing the parties’ agreement to appoint and maintain an agent for service of process in the state of Delaware, Buyer and Buyer Ultimate Parent do hereby appoint The Corporation Trust Company, 1209 Orange Street in the City of Wilmington, Delaware, as such agent.

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(b) Post-Closing Disputes.

(i) If the Closing occurs, any controversy, claim or dispute arising out of or relating to this Agreement, the negotiation, validity or performance of this Agreement or the transactions contemplated hereby shall be resolved through binding arbitration.

(ii) The arbitration shall be administered by the American Arbitration Association (“AAA”) in accordance with its International Arbitration Rules. The arbitration shall be conducted by a single, neutral arbitrator selected by mutual agreement of the parties or, if the parties cannot reach an agreement, by AAA under its standard selection procedures. The arbitration shall take place in New York, New York, or such other place as mutually agreed by the parties. Reasonable discovery shall be permitted for the production of documents and the taking of depositions for a reasonable period after the filing of the request for arbitration. All discovery shall be governed by the Federal Rules of Civil Procedure. Any discovery disputes shall be resolved by the arbitrator. Judgment on any arbitration award rendered by the arbitrator may be entered in any court of competent jurisdiction. All fees and expenses of the arbitration shall be borne by the parties equally. However, each party shall bear the expense of its own counsel, experts, witnesses, and preparation and presentation of proof. Neither party nor the arbitrator may disclose the existence, content or results of any arbitration under this Section 9.11 without prior written consent of both parties. This arbitration provision shall survive if this Agreement should be adjudged null and void or should be canceled or terminated for any reason.

Section 9.12 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the Chosen Court, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 9.13 Mutual Drafting. The parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of Law relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.

Section 9.14 Miscellaneous. This Agreement (a) shall be binding upon and inure to the benefits of the parties hereto and their respective successors and assigns and (b) may be executed in two or more counterparts which together shall constitute a single agreement. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto.

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Section 9.15 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other persons or circumstances, shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

BUYER:
CARGOTEC U.S. MANUFACTURING OY
By:
	Name:
	Title:
BUYER PARENT:
CARGOTEC CORPORATION
By:
	Name:
	Title:
COMPANY:
ZEBRA ENTERPRISE SOLUTIONS HOLDINGS LLC
By:
	Name:
	Title:
MEMBER:
ZEBRA TECHNOLOGIES CORPORATION
By:
	Name:
	Title:

Signature Page

ANNEX A

Defined Terms

Term	Section Reference
409A Plan	Section 2.9(t)
848 Application Patents	Section 1.1(a)
AAA	Section 9.11(b)(ii)
Action	Section 1.1(b)
Acquisition Proposal	Section 5.12
Affiliate	Section 1.1(a)
Agreement	Preamble
Antitrust Authorities	Section 1.1(d)
Antitrust Filings	Section 1.1(e)
Antitrust Laws	Section 1.1(f)
Assignment and Assumption Agreement	Section 1.1(g)
Base Balance Sheet	Section 2.5(a)
Benefit Plans	Section 2.10(a)
Business	Section1.1(g)
Business Continuity Plan	Section 2.24
Business Day	Section 1.1(i)
Buyer	Preamble
Buyer Ultimate Parent	Preamble
Buyers FSA	Section 5.8(e)(iv)
Buyer Indemnified Party	Section 7.2(a)
Buyer’s Savings Plan	Section 5.8(e)(vi)
Cash and Cash Equivalents	Section 1.1(j)
CFIUS	Section 1.1(k)
CFIUS Clearance	Section 1.1(l)
Chosen Court	Section 9.11(a)
Closing	Section 1.1(m)
Closing Balance Sheet	Section 1.7(a)
Closing Cash	Section 1.7(a)
Closing Consideration	Section 1.3
Closing Date	Section 1.4
Closing Indebtedness	Section 1.1(n)
Closing Statement	Section 1.7(a)
Closing Working Capital	Section 1.7(a)
COBRA	Section 5.8(e)(ii)
Code	Section 1.1(o)
Company	Preamble
Company Assets	Section 2.11(c)
Company Benefit Plans	Section 2.10(a)
Company Employees	Section 5.8(a)
Company Entities	Section 5.18
Company Intellectual Property	Section 2.14(a)

Term	Section Reference
Company Licenses	Section 2.19
Company Units	Preamble
Confidentiality Agreement	Section 5.3
Consideration Continuing Company Employees	Section 1.1(p) Section 5.8(a)
Counsel	Section 5.7
Covered Application	Section 1.1(q)
Current Assets	Section 1.1(r)
Current Liabilities	Section 1.1(s)
Deductible Amount	Section 7.2(c)(i)
Designated International Plan	Section 5.8(h)
Dispute Notice	Section 1.7(b)
DOJ	Section 5.4(a)
Encumbrances	Section 2.11(c)
Environment	Section 2.15(f)(i)
Environmental Laws	Section 2.15(f)(ii)
ERISA	Section 2.10(a)
ERISA Affiliate	Section 2.10(a)
Escrow Account	Section 1.1(t)
Escrow Agent	Section 1.1(u)
Escrow Agreement	Section 1.1(v)
Escrow Amount	Section 1.1(w)
Escrow Funds	Section 1.8
Estimated Cash and Cash Equivalents	Section 1.6
Estimated Indebtedness	Section 1.6
Estimated Working Capital	Section 1.6
Final Closing Adjustment Amount	Section 1.7(d)
Financial Statements	Section 2.5(a)
FSA	Section 5.8(e)(iv)
FTC	Section 5.4(a)
GAAP	Section 1.1(p)
Governing Documents	Section 1.1(y)
Governmental Authority	Section 1.1(z)
(h)(10)Election	Section 5.11(m)
Hazardous Material	Section 2.15(f)(iii)
HSR Act	Section 2.4
Incentive Plans	Section 5.8(d)
Indebtedness	Section 1.1(aa)
Indemnification Termination Date	Section 7.1
Independent Accountant	Section 5.11(b)
Initial Escrow Release Date	Section 1.1(bb)
Intellectual Property	Section 2.14(a)
International Employee Plan	Section 2.10(e)
IRS	Section 2.9(h)
Law	Section 1.1(bb)

Term	Section Reference
Lease	Section 2.11(b)
Leased Real Property	Section 2.11(b)
Liability	Section 1.1(dd)
License Agreements	Section 1.1(ee)
Licensed TTS Application	Section 1.1(ff)
Licenses-In	Section 2.14(b)
Losses	Section 1.1(dd)
Marine Telematics Solutions	Section 1.1(hh)
Marine Terminal Software	Section 1.1(ii)
Material Adverse Effect	Section 1.1(hh)
Material Contracts	Section 2.13(b)
Member	Preamble
Member Equity Rights	Section 2.10(g)
Member Indemnified Party	Section 7.3(a)
Member Patents	Section 1.1(kk)
Member Plans	Section 5.8(f)
Member’s Savings Plan	Section 5.8(e)(vi)
Member’s Severance Plan	Section 5.8(e)(iii)
MTS Contribution Agreement	Section 1.1(ll)
Netherlands Lease	Section 5.20
Neutral Auditor	Section 1.7(b)
Open Source Software	Section 2.14(c)(vi)
Person	Section 1.1(kk)
Pre-Closing Taxable Period	Section 1.1(nn)
Regulatory Filings	Section 5.4(a)
Reseller Agreement	Section 1.1(oo)
Restricted Period	Section 5.13(a)
Schedules	Article II preamble
Second Escrow Release Date	Section 1.1(pp)
Securities Act	Section 1.1(oo)
Solicitation Restricted Period	Section 5.13(a)
Source Code License Agreement (Carina Framework)	Section 1.1(rr)
Source Code License Agreement (MTS)	Section 1.1(ss)
Source Code License Agreement (TTS)	Section 1.1(tt)
Statutory Representations	Section 7.1
Statutory Termination Date	Section 7.1
Straddle Period	Section 1.1(rr)
Straddle Returns	Section 5.11(b)
Subsidiaries	Section 1.1(vv)
Systems	Section 2.24
Target Working Capital	Section 1.1(ww)
Tax Returns	Section 1.1(xx)
Taxes	Section 1.1(yy)
Terminal Operating System	Section 1.1(zz)

Term	Section Reference
Trade Secrets	Section 2.14(a)
Transaction Expenses	Section 1.1(zz)
Transfer Date	Section 5.8(a)
Transferred Company Employees	Section 5.8(a)
Transferred MTS Application	Section 1.1(bbb)
Transitional Trademark License	Section 1.1(ccc)
Transition Services Agreement	Section 1.1(zz)
VDR	Section 2.29(b)
WARN	Section 2.12(c)
WhereNet Marine Business	Section 1.1(eee)
Working Capital	Section 1.1(fff)
Working Capital Adjustment Amount	Section 1.1(eee)

EXHIBIT A

Assignment and Assumption Agreement

EXHIBIT B

Escrow Agreement

EXHIBIT C

MTS Contribution Agreement

EXHIBIT D

Reseller Agreement

EXHIBIT E

Source Code License Agreement (Carina Framework)

EXHIBIT F

Source Code License Agreement (MTS)

EXHIBIT G

Source Code License Agreement (TTS)

EXHIBIT H

Transitional Trademark License

EXHIBIT I

Transition Services Agreement

EXHIBIT J

Form of Resignation

EXHIBIT K

Form of FIRPTA Affidavit

EX-10.72

AMENDMENT TO

MANUFACTURING SERVICES AGREEMENT

BETWEEN

JABIL CIRCUIT, INC.

AND

ZEBRA TECHNOLOGIES CORPORATION

This Amendment (this “Amendment”) to that certain Manufacturing Services Agreement dated May 30, 2007 (together with all amendments and modifications thereto, the “Agreement”) between Jabil Circuit, Inc. (“Manufacturer”) and Zebra Technologies Corporation (“Zebra”) is made and entered into on November     , 2008.

The Parties hereby agree to amend the Agreement in order to reflect changes to the business relationship since entering into the Agreement.

The Agreement shall be amended as follows (the double-underlined words being added to the original and previously amended text and the strike through words being deleted from the original and previously amended text).

(A) The text of Section 3.8c shall be deleted in its entirety and replaced with “Intentionally Deleted.”

(B) Section 3.20 shall be added to the Agreement as follows:

3.20 Zebra Owned Inventory.

a. Consigned Inventory. In connection with the transfer of production of a Box Build from Zebra to Manufacturer, Zebra may provide Materials used in the manufacture of such Box Build to Manufacturer, which Materials, together with any Excess Inventory purchased by Zebra pursuant to Section 4.3 of the Agreement, shall be deemed Zebra Owned Inventory (“ZOI”).

i. Location of Inventory. Manufacturer may accept and hold the ZOI at the Designated Facility. The location at the Designated Facility of such stock of ZOI will be referred to as the Zebra Inventory Location (“ZIL”).

ii. Pricing. The price for ZOI will be the then current cost of Materials for such ZOI set forth in the cost model for the applicable Product in accordance with Section 5.2 in effect on the date that ZOI is withdrawn from the ZIL area.

iii. Delivery. Prior to shipping ZOI to Manufacturer, Zebra shall identify and notify Manufacturer of the part number, price, and quantity of ZOI intended to be shipped. Manufacturer shall evaluate the identified ZOI, and to the extent Manufacturer agrees to accept shipment of the ZOI, the parties shall mutually agree on the dates and methods of shipment of the ZOI to Manufacturer. Manufacturer shall issue a consignment purchase order.

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iv. Title/Risk of Loss. Subject to Manufacturer’s obligations under Section 3.20a.vi, all right, title and interest in, to and under ZOI delivered hereunder will remain with Zebra until such ZOI is removed from the ZIL by Manufacturer. Notwithstanding the foregoing, all risk of loss, including the risk of accidental loss or destruction, while ZOI is in the ZIL or otherwise in the care, custody or control of Manufacturer, including while in transit from Hong Kong to the Designated Facility, shall be borne by Manufacturer. Upon removal of any ZOI from the ZIL or any other agreed upon consumption transfer point, title to such ZOI will pass to Manufacturer at the time of such removal. Once title has passed from Zebra to Manufacturer, Manufacturer will be deemed to have purchased and to own such ZOI.

v. Invoicing. Manufacturer will notify Zebra electronically on or before Wednesday of every week of the amount of each ZOI Manufacturer has removed from the ZIL during the previous week.

vi. Identification and Storage. Manufacturer shall take the necessary precautions to store ZOI in a clean, dry area separate from non-ZOI Materials so as to identify Zebra as the legal title holder of the ZOI. Manufacturer shall make sure that ZOI are properly stored and protected from the elements in a manner which shall be no less than reasonable and in compliance with Manufacturer’s customary inventory storage standards. Any costs associated with the care of the ZOI, while in the possession of Manufacturer, shall be borne by Manufacturer, however if the volume of space required to store the ZOI exceeds 5,000 square feet, the parties will agree to discuss in good faith the terms under which Zebra will reimburse any storage and handling costs incurred by Manufacturer. ZOI shall be covered by Manufacturer’s insurance as provided in Section 7.9. Manufacturer agrees to include all ZOI in the ZIL in Manufacturer’s cycle count program to verify part count accuracy. Manufacturer will make sure that it provides Zebra’s employees and agents with reasonable access to the ZIL and ZOI during normal business hours so as to provide an ability to audit compliance with the terms of this Amendment.

vii. Consumption of Components. Manufacturer will remove components in full case or skid quantities from the ZIL solely for use in manufacturing Box Builds. Manufacturer will efficiently manage ZOI stocked at the ZIL and shall rotate ZOI on a first in, first out basis. In the event Manufacturer has Materials that are

2

ZOI and non-ZOI, Manufacturer shall use those Materials that are ZOI prior to using those that are non-ZOI. Manufacturer will report to Zebra the quantity and description of all ZOI removed from the ZIL weekly. Zebra may also, at its option, make a cycle count of 100% of ZOI stored at the ZIL provided that such cycle count does not negatively impact Manufacturer’s ability to produce end products. Zebra may perform a cycle count pursuant to the terms of Section 3.14 hereof.

b. Direct Purchases. From time to time, Manufacturer may purchase Materials (“Zebra Materials”) directly from Zebra other than through a consignment arrangement set forth in Section 3.20a.

i. Pricing. Prior to Manufacturer purchasing Zebra Materials, Zebra will identify the price for such Zebra Materials. Zebra shall base the price for Zebra Materials on Zebra’s standard cost for such Zebra Materials.

ii. Title/Risk of Loss. In accordance with the applicable Incoterm in Section 3.20c, title to, and risk of loss of, all Zebra Materials shall occur when such Zebra Materials are delivered to the Zebra Forwarder (as defined in Section 3.20c).

c Shipment and Customs. All ZOI (other than Excess Inventory) and Zebra Materials shall be shipped by Zebra DDU Zebra named freight forwarder in Hong Kong (the “Zebra Forwarder”). The terms of delivery refer to Incoterms 2000. Zebra shall determine the carrier or forwarder for shipment of ZOI or Zebra Materials; provided, however, subject to the next succeeding sentence, Manufacturer shall be responsible for payment of and arrangement for transportation from the Zebra Forwarder to the Designated Facility and shall have the risk of loss for the ZOI or Zebra Materials while in transit from the Zebra Forwarder to the Designated Facility. Zebra shall be responsible for and pay directly the costs of shipment to the Zebra Forwarder and shall reimburse Manufacturer for the reasonable and documented transportation costs from the Zebra Forwarder to the Designated Facility. The parties shall handle customs formalities in accordance with Section 4.5g with Zebra acting as the exporter of record and Manufacturer acting as the importer of record for the ZOI (other than Excess Inventory) and Zebra Materials. Manufacturer represents that it maintains a process for amending initial customs declarations in China. In the event of a difference between the declared value of ZOI and the amount that Manufacturer actually pays Zebra for such ZOI, Manufacturer shall amend, or cause its customs broker to amend, its customs declaration with the appropriate Chinese customs officials and notify Zebra of such amendment.

3

d. Inspection and Acceptance. In accordance with the procedures set forth in Section 3.8e, Manufacturer shall inspect all ZOI delivered to the ZIL for physical damage and obvious packing list discrepancies within seven (7) calendar days after receipt at the Zebra Forwarder. Acceptance of ZOI will occur once Manufacturer removes ZOI from the ZIL or any agreed upon consumption transfer point. Manufacturer may, at its option, reject any ZOI or Zebra Materials which contain defective material or workmanship or which does not conform to the purchase order, applicable drawings, specifications, or samples. Rejected ZOI or Zebra Materials shall be treated as Scrap and destroyed pursuant to Section 3.10.

e. Payment. Manufacturer will issue a credit memo for (i) the amount of ZOI removed each month within 30 days after the end of the month in which the ZOI is removed from the ZIL and/or (ii) the amount of Zebra Materials within thirty (30) days after the invoice date for such Zebra Materials. Manufacturer shall issue such credit memo against amounts due from Zebra for the Products. Manufacturer may withhold issuing a credit memo for any portion of an invoice disputed by Manufacturer in good faith, provided that Manufacturer timely pays any undisputed portion of the invoice and provides Zebra with written notice describing the basis of the dispute in reasonable detail.

(C) The text of Section 5.3 shall be amended as follows:

5.3 Invoice and Payment Procedure. For each shipment of Products delivered hereunder, Manufacturer shall provide to Zebra an invoice (a) referencing the purchase order set forth in Section 4.2 and, for components, subassemblies and assemblies, the Transfer Plan or relevant Release number, and (b) specifying the amount of each Product delivered, the price of each Product, the total invoice amount (in U.S. dollars) and date of delivery of the Products. Manufacturer shall not issue any such invoice earlier than the respective date of shipment of the corresponding Products. For Services performed hereunder pursuant to an SOW or COR/COA, Manufacturer shall invoice Zebra upon Zebra’s acceptance of associated deliverables or Services delivered by Manufacturer to Zebra according to acceptance criteria set forth in such SOW or COR/COA, for all fees and NRE Costs (excluding those non-depreciable NRE Costs for which Manufacturer is responsible pursuant to Section 3.6) under such SOW or COR/COA that are consistent with the budget set forth therein and other fees and NRE Costs (excluding those non-depreciable NRE Costs for which Manufacturer is responsible pursuant to Section 3.6) pre-approved by Zebra. Manufacturer shall also invoice Zebra for its actual cost of any (a) Unique Tooling for which Zebra has agreed to pay in connection with any SOW or COR/COA, or pursuant to Section

4

3.4a, (b) rework of any WIP or finished Products pursuant to a COR/COA, or (c) Excess or Obsolete Inventory pursuant to Section 4.3. Provided that Manufacturer has complied with the foregoing invoicing guidelines and there is no good faith dispute related to such invoice or acceptance of such deliverables or Services, Zebra shall pay each such invoice according to the terms set forth in the Transfer Plan or relevant Release, SOW or COR/COA or, if no such terms are stated therein, within ten (10) days for a sixth-tenths percent (0.6%) discount or otherwise within forty-five (45) days after its receipt of such invoice.

(D) The text of Section 8.6e shall be amended as follows:

e. Materials Transfer. Upon expiration or termination of this Agreement for any reason, in Zebra’s sole discretion and upon full payment by Zebra of all amounts due and owing for such items, Manufacturer shall promptly transfer to Zebra according to Zebra’s reasonable instructions, all Unique Tooling, Materials (including ZOI), orders for Materials, Obsolete Inventory, WIP and finished Products in Manufacturer’s possession or control. If the Agreement expires without renewal or is terminated by Manufacturer for cause pursuant to Section 8.2 or is terminated by Zebra pursuant to Section 8.3a(i) or terminated pursuant to Section 8.5 as a result of Zebra’s bankruptcy or insolvency, then Zebra shall pay the cost of transferring such materials. If the Agreement is terminated for any other reason, then Manufacturer shall pay the cost of transferring such materials. In addition, Manufacturer shall consent to Zebra, or any Person on Zebra’s behalf, contracting directly with any vendor on the Approved Vendor List.

(E) All capitalized words not otherwise defined in this Amendment shall have the meanings ascribed to them in the Agreement. Except as amended herein, all terms and conditions of the Agreement shall remain in full force and effect. Notwithstanding anything to the contrary set forth in the Agreement, in the event of a conflict between the terms of the Agreement and the terms of this Amendment, this Amendment shall control.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first written above.

Zebra Technologies Corporation	Jabil Circuit, Inc.
By:	By:
Name:	Name:
Title:	Title:

5

EX-21.1

Exhibit 21.1

Subsidiaries of Registrant

DDD, LLC - a Delaware limited liability company

ecoGSE GmbH - a German limited liability company

Genuine Zebra Technologies Trading (Shanghai) Co., Ltd. - a PRC limited liability company

Multispectral Solutions, Inc. - a Delaware corporation

Navis India Technologies Private Limited - a registered Indian limited liability company

Proveo Middle East FZC - a Ras Al Khaimah, UAE company

Swecoin AB - a Swedish corporation

ZES B.V.B.A. - - a Belgian limited liability company

Zebra Enterprise Solutions GmbH- a German limited liability company (formerly proveo GmbH)

Zebra Enterprise Solutions Corp. - a California corporation (formerly WhereNet Corp.))

Zebra Enterprise Solutions Holdings LLC - a Delaware limited liability company (formerly Navis Holdings LLC)

Zebra Enterprise Solutions International Inc. - a Delaware corporation (formerly Navis International Inc)

Zebra Enterprise Solutions International LLC - a Delaware limited liability company (formerly Navis International LLC)

Zebra Enterprise Solutions LLC - a Delaware limited liability company (formerly Navis LLC)

Zebra Technical Services (Guangzhou) Co., Ltd. - a PRC limited liability company

Zebra Technologies AB - a Swedish corporation

Zebra Technologies Asia Holding Limited - a Mauritius company

Zebra Technologies Asia Pacific Pte. Ltd. - a Singapore limited liability company

Zebra Technologies Asia Pacific, LLC - a Delaware limited liability company

Zebra Technologies B.V. - a Netherlands limited liability company

Zebra Technologies Brazil, LLC - a Delaware limited liability company

Zebra Technologies de México, S. de R.L. de C.V. - a Mexican limited liability company

Zebra Technologies do Brasil – Comércio de Produtos de Informática Ltda. - a Brazilian limited liability company

Zebra Technologies Europe Limited - a U.K. corporation

Zebra Technologies India LLC - a Delaware limited liability company

Zebra Technologies India Private Limited - a India limited liability company

Zebra Technologies International, LLC - an Illinois limited liability company

Zebra Technologies Latin America, LLC - a Delaware limited liability company

Zebra Technologies Malaysia Sdn. Bhd. - a Malaysia limited liability company

Zebra Technologies Mexico, LLC - a Delaware limited liability company

Zebra Technologies Services S.r.l - an Italian corporation

Zebra Technologies Services Sp. Zoo - a Polish corporation

Zebra Technologies Sp. Zoo - a Polish corporation

Zebra Technologies Thailand LLC - a Delaware limited liability company

ZIH Corp. - a Delaware corporation

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements on Form S-8 (333-63009, 333-84512, 333-102050, 333-135179, 333-140207 and 333-148183) of Zebra Technologies Corporation of our reports dated February 24, 2011, with respect to the consolidated financial statements and schedule listed at Item 15 of Zebra Technologies Corporation and the effectiveness of internal control over financial reporting of Zebra Technologies Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2010.

/s/Ernst & Young LLP

Chicago, Illinois

February 24, 2011

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Anders Gustafsson, certify that:

1. I have reviewed this report on Form 10-K of Zebra Technologies Corporation (the “Company”);

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    February 24, 2011	By:	/s/ Anders Gustafsson
		Anders Gustafsson
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Michael C. Smiley, certify that:

1. I have reviewed this report on Form 10-K of Zebra Technologies Corporation (the “Company”);

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2011	By:	/s/ Michael C. Smiley
		Michael C. Smiley
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Zebra Technologies Corporation (the “Company”) on Form 10-K for the period that ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof, I, Anders Gustafsson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 24, 2011	By:	/s/ Anders Gustafsson
		Anders Gustafsson
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Zebra Technologies Corporation (the “Company”) on Form 10-K for the period that ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof, I, Michael C. Smiley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 24, 2011	By:	/s/ Michael C. Smiley
		Michael C. Smiley
		Chief Financial Officer