EMPLOYMENT AGREEMENT
Exhibit 10.34
AGREEMENT by and between Motorola, Inc. (the “Company”), and Xxxxxx X. Xxxxxx (the
“Executive”) dated as of the 15th day of December 2003, as amended as of the 27th day of July, 2005
and the 2nd day of May, 2006.
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the
best interests of the Company and its shareholders to employ the Executive as the Company’s Chief
Executive Officer and to have the Executive serve as Chairman of the Board;
WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment; and
WHEREAS, the Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the Company
and the Executive (individually a “Party” and together the “Parties”) agree as follows:
1. Effective Date. The “Effective Date” shall mean January 5, 2004.
2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to be employed by the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the fifth anniversary
thereof (the “Initial Term”), provided that, on the fourth anniversary and each anniversary
of the Effective Date thereafter, the employment period shall be extended by one year unless at
least 30 days prior to such anniversary, the Company or the Executive delivers a written notice (a
“Notice of Non-Renewal”) to the other Party that the employment period shall not be extended (the
Initial Term as so extended, the “Employment Period”).
3. Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, (A) the Executive shall serve as the Chief Executive Officer, with such duties and
responsibilities as are commensurate with such positions, reporting directly to the Board, and (B)
the Executive’s principal location of employment shall be at the principal headquarters of the
Company; provided, that the Executive may be required under reasonable business
circumstances to travel outside of such location in connection with performing his duties under
this Agreement. In addition, the Company shall cause the Executive to be elected as Chairman of
the Board as of the Effective Date, and during the Employment Period, the Executive shall remain on
the Board and as Chairman of the Board, subject to Section 4(g), and shall perform his duties as a
director of the Company conscientiously and faithfully.
(ii) The Executive agrees that during the Employment Period, he shall devote substantially all
of his business time, energies and talents to serving as the Company’s Chief Executive Officer and
Chairman of the Board, perform his duties conscientiously and
faithfully subject to the lawful
directions of the Board, and in accordance with each of the Company’s corporate governance and
ethics guidelines, conflict of interests policies and code of conduct (collectively, the “Company
Policies”). During the Employment Period, it shall not be a violation of this Agreement for the
Executive, subject to the requirements of Section 7, to (A) serve on corporate, civic or charitable
boards or committees, provided, that, without the written approval of the Board, the
Executive shall be permitted to serve on no more than one such corporate board, (B) deliver
lectures or fulfill speaking engagements and (C) manage personal investments, so long as such
activities do not interfere with the performance of the Executive’s responsibilities as the Chief
Executive Officer or as Chairman of the Board of the Company or violate any Company Policies.
(iii) The Executive acknowledges and agrees that he shall at all times during his service with
the Company be subject to the Motorola Stock Ownership Requirements, as may be in effect from time
to time, which currently require that the Executive maintain holdings of the Company’s common stock
(“Common Stock”) in an amount at least equal to four times the Executive’s Annual Base Salary (as
defined below). In connection with such requirements, the Executive shall purchase 75,000 shares
of Common Stock on or prior to July 31, 2005, provided, that, 25,000 of such shares shall be
purchased on or prior to July 31, 2004 and another 25,000 of such shares shall be purchased on or
prior to January 31, 2005.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive an
annualized base salary (“Annual Base Salary”) of not less than $1,500,000, payable pursuant to the
Company’s normal payroll practices. During the Employment Period, the current Annual Base Salary
shall be reviewed for increase only at such time as the salaries of senior officers of the Company
are reviewed generally, provided that, the Executive’s first such review shall occur no
earlier than calendar year 2005.
(ii) Annual Bonus. For each fiscal year completed during the Employment Period, the
Executive shall be eligible to receive an annual cash bonus (“Annual Bonus”) based upon performance
targets that are established by the Compensation and Leadership Committee of the Board (the
“Committee”), provided that, the Executive’s target Annual Bonus shall be not less than
135% of his Annual Base Salary (the “Target Bonus”). Payment of the Target Bonus shall be
guaranteed for fiscal year 2004 (the “Guaranteed Bonus”). The Executive has agreed to defer
receipt of the Guaranteed Bonus pursuant to the terms of the Company’s Management Deferred
Compensation Plan until after the Executive’s Date of Termination (as defined below). However,
notwithstanding the immediately preceding sentence, the Executive shall not be required to defer
receipt of the Guaranteed Bonus beyond the first day on which the deductibility of the Guaranteed
Bonus by the Company is no longer precluded by the provisions of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), and in no event shall the Executive be required to
defer receipt beyond January 1 of the year following the year in which his Date of Termination (as
defined below) occurs.
(iii) Mid-Range Incentive Plan. For each multi-year period (as recommended by
management and determined by the Committee) completed during the Employment Period, the Executive
shall be eligible to receive an award (“Mid-Range Incentive Plan Award”)
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based upon performance
targets that are established by the Committee, provided that, the Executive’s target
Mid-Range Incentive Plan Award shall be not less than 250% of his Annual Base Salary.
(iv) Long-Term Incentive Awards. As determined by the Committee, the Executive shall
be eligible for grants of equity compensation awards under the Company’s long term incentive
compensation arrangements in accordance with the Company’s policies, as in effect from time to
time. Except for grants with respect to fiscal year 2004 as set forth below, all grants of equity
compensation awards shall be made in the discretion of the Committee based upon performance of the
Executive and the Company and the Company’s compensation philosophy.
A. 2004 Stock Option. In May 2004, the Executive shall be granted an option
(the “2004 Stock Option”) to purchase a number of shares of common stock of the Company (the
“Common Stock”) for fiscal year 2004 pursuant to the Company’s Omnibus Incentive Plan of
2003 (the “Incentive Plan”) having an aggregate Black-Scholes value of $6,250,000. The
Black-Scholes value to be calculated under this Section 3(b)(iv)(A) shall be determined on
the 2004 Stock Option grant date in a manner consistent with the methodology used by Xxxxxx
Associates for valuing stock options granted to employees of its publicly traded clients
during the year 2003. The 2004 Stock Option shall have a per share exercise price equal to
the closing price of a share of Common Stock on the last trading day prior to the date of
grant as reported in the Wall Street Journal (the “Fair Market Value”), a ten-year term and
a vesting schedule such that the 2004 Stock Option will become exercisable in four equal
annual installments commencing on the first anniversary of the date of grant, provided that,
the Executive remains in the employ of the Company through each such date. Except as
specifically provided herein, the terms and conditions of the 2004 Stock Option shall be
subject to the terms of the Incentive Plan and the award agreement evidencing the grant of
the 2004 Stock Option, as provided to senior executives of the Company generally.
B. 2004 Restricted Stock Units. In May 2004, the Executive shall be granted an
award of a number of restricted stock units (the “Restricted Stock Units”) based on shares
of Common Stock for fiscal year 2004 pursuant to the Incentive Plan equal to the quotient
obtained by dividing (i) $2,000,000 by (ii) the Fair Market Value on the date of grant. The
Restricted Stock Units shall vest 10% on the first anniversary of the date of grant, 20% on
the second anniversary of the date of grant, 30% on the third anniversary of the date of
grant and 40% on the fourth anniversary of the date of grant, provided that, the
Executive remains in the employ of the Company through each such date. The Executive has
agreed to defer receipt of the settlement of any Restricted Stock Units until the later of
(i) the first day on which the deductibility of the settlement by the Company is no longer
precluded by the provisions of Section 162(m) of the Code, or (ii) the six-month anniversary
of the date of the Executive’s Separation from Service (as defined in Section
409A(a)(2)(A)(i) of the Code), if deferral to such anniversary date is required to comply
with the provisions of Section 409A of the Code. Except as specifically provided herein,
the terms and conditions of the Restricted Stock Units shall be subject to the terms of the
Incentive Plan and the award agreement evidencing the grant of the Restricted Stock Units,
as provided to senior executives of the Company generally. Not-
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withstanding anything in this
Section 3(b)(iv)(B) to the contrary, the Executive shall be entitled to immediate settlement
of any outstanding Restricted Stock Units to the extent such Restricted Stock Units are
required to be included in the Executive’s income pursuant to Section 409A of the Code.
C. Effective Date Stock Option. On the Effective Date, the Company shall grant
to the Executive a stock option pursuant to the Incentive Plan to purchase 1,350,000 shares
of Common Stock (the “Effective Date Stock Option”). The Effective Date Stock Option shall
have a per share exercise price equal to the Fair Market Value on the Effective Date, a
ten-year term and will vest in four equal annual installments commencing on the first
anniversary of the date of grant, provided that, the Executive remains in the employ
of the Company through each such date. Except as specifically provided herein, the terms
and conditions of the Effective Date Stock Option shall be subject to the terms of the
Incentive Plan and the award agreement evidencing the grant of the Effective Date Stock
Option, as provided to senior executives of the Company generally.
D. Effective Date Restricted Stock Units. On the Effective Date, the Company
shall grant to the Executive 400,000 Restricted Stock Units under the Incentive Plan (the
“Effective Date Restricted Stock Units”). The restrictions with respect to the Effective
Date Restricted Stock Units shall lapse 50% on the second anniversary of the Effective Date
and the remainder shall lapse on the fourth anniversary of the Effective Date,
provided that, the Executive remains in the employ of the Company through each such
date. The Executive has agreed to defer receipt of the settlement of any Effective Date
Restricted Stock Units until the later of (i) the first day on which the deductibility of
the settlement by the Company is no longer precluded by the provisions of Section 162(m) of
the Code, or (ii) the six-month anniversary of the date of the Executive’s Separation from
Service, if deferral to such anniversary date is required to comply with the provisions of
Section 409A. Except as specifically provided herein, the terms and conditions of the
Effective Date Restricted Stock Units shall be subject to the terms of the Incentive Plan
and the award agreement evidencing the grant of the Effective Date Restricted Stock Units,
as provided to senior executives of the Company generally. Notwithstanding anything in this
Section 3(b)(iv)(D) to the contrary, the Executive shall be entitled to immediate settlement
of any outstanding Restricted Stock Units to the extent such Restricted Stock Units are
required to be included in the Executive’s income pursuant to Section 409A of the Code.
(v) Pension Plans. During the Employment Period, the Executive shall be eligible for
participation in the qualified pension plans, practices, policies and programs of the Company, as
may be in effect from time to time, for senior executives of the Company generally.
(vi) Other Benefits. During the Employment Period, the Executive shall be eligible
for participation in the welfare, perquisites, fringe benefit, and other benefit plans, practices,
policies and programs, as may be in effect from time to time, for senior executives of the Company
generally; provided, that, any severance payments or benefits to be received under any severance
benefit plans, practices, policies and programs shall be offset and reduced by any severance
benefits or payments received under this Agreement. The fringe bene-
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fits and perquisites described
in the preceding sentence shall include: reasonable use of Company aircraft for personal and
business purposes (not less than 100 flight hours annually for personal use); participation in the
Company’s Elected Officer Life Insurance Program; relocation benefits on a tax-neutral basis
(including, but not limited to, providing a suitable, furnished apartment to the Executive for
transition housing for up to 12 months); and, at the level generally provided for the chief
executive officer of the Company, financial planning; an automobile allowance; personal security;
and a home security system.
(vii) Change in Control Benefits. The Executive shall be eligible for participation
in the Motorola, Inc. Senior Officer Change in Control Severance Plan or any successor change in
control plan or program (the “Change in Control Plan”), as may be in effect from time to time, for
senior executives of the Company generally. At all times during the Employment Period, the Company
will maintain the Change in Control Plan as in effect on the Effective Date, or provide the
Executive with no less favorable benefits and protection under an alternative program or
arrangement. Additionally, upon a Change in Control (as defined in the Change in Control Plan),
all equity-based awards granted to the Executive on or after the Effective Date (including, without
limitation, the 2004 Stock Option, the Restricted Stock Units, the Effective Date Stock Option and
the Effective Date Restricted Stock Units) shall become fully vested and exercisable (or, if
applicable, all restrictions shall lapse), all performance goals shall be deemed achieved at target
levels, all Performance Stock (as defined in the Incentive Plan) shall be delivered as promptly as
practicable and all performance units, restricted stock units and other incentive awards shall be
paid out as promptly as practicable; provided, however, that the treatment of outstanding awards
set forth above (referred to herein as “Accelerated Treatment”) shall not apply if and to the
extent that such awards are assumed by the successor corporation (or parent thereof) or are
replaced with awards that preserve the existing value of such awards at the time of the Change in
Control and provide for subsequent payout in accordance with the same vesting schedule applicable
to the original awards; provided, further, that with respect to any awards that are assumed or
replaced, such assumed or replaced awards shall provide for the Accelerated Treatment if the
Executive is involuntarily terminated (for a reason other than Cause) or if the Executive quits for
Good Reason within 24 months of the Change in Control. Notwithstanding the foregoing, if the
Company adopts an equity incentive plan with Change in Control benefits more generous than the
benefits provided in this Section 3(b)(vii) or a Change in Control severance plan for senior
executives generally with more generous benefits than the Change in Control Plan, the Executive
will be entitled to those more generous benefits to the extent Executive’s awards are granted under
such plan or such Change in Control severance plan is adopted, as applicable.
(viii) Expenses. During the Employment Period, the Executive shall be eligible for
prompt reimbursement for business expenses reasonably incurred by the Executive in accordance with
the Company’s policies, as may be in effect from time to time, for its senior executives generally.
(ix) Vacation. During the Employment Period, the Executive shall be eligible for paid
vacation in accordance with the Company’s policies, as may be in effect from time to time, for its
senior executives generally.
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(x) Signing Bonus. In connection with the replacement of outstanding amounts at his
current employer that will be forfeited, on the Effective Date, the Company shall pay to the
Executive a lump sum cash payment of $600,000. In addition, on the Effective Date, the Company
shall grant to the Executive the number of restricted shares of Company Common Stock under the
Incentive Plan (the “Effective Date Restricted Stock”) determined by dividing (a) $1,400,000 by (b)
the per-share fair market value of Company Common Stock as of the close of market on the Effective
Date, rounded up to the nearest whole share. The restrictions with respect to the Effective Date
Restricted Stock shall lapse 100% on the second anniversary of the Effective Date, provided
that, the Executive remains in the employ of the Company through such date. Except as specifically
provided herein, the terms and conditions of the Effective Date Restricted Stock shall be subject
to the terms of the Incentive Plan and the award agreement evidencing the grant of the Effective
Date Restricted Stock, as provided to senior executives of the Company generally.
(c) Other Entities. The Executive agrees to serve, without additional compensation,
as an officer and director for each of the Company’s subsidiaries, partnerships, joint ventures,
limited liability companies and other affiliates, including entities in which the Company has a
significant investment (collectively, the Company and such entities, the “Affiliated Group”), as
determined by the Company. As used in this Agreement, the term “affiliates” shall include any
entity controlled by, controlling, or under common control with the Company.
4. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may provide
the Executive with written notice in accordance with Section 9(b) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt of such notice by the Executive
(the “Disability Effective Date”), provided that, within the 30-day period after such
receipt, the Executive shall not have returned to full time performance of the Executive’s duties.
For purposes of this Agreement, “Disability” shall mean the inability of the Executive to perform
his duties with the Company on a full-time basis for 120 consecutive days or for 180 intermittent
days in any one-year period as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a licensed physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive’s legal representative. If
the Parties cannot agree on a licensed physician, each Party shall select a licensed physician and
the two physicians shall select a third who shall be the approved licensed physician for this
purpose.
(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period with or without Cause. For purposes of this Agreement, “Cause” shall mean:
(i) the Executive’s willful and continued failure to substantially perform his duties under
this Agreement, other than any such failure resulting from incapacity due to physical or mental
illness, which failure has continued for a period of at least
30 days follow-
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ing delivery to the
Executive of a written demand for substantial performance specifying the manner in which the
Executive has failed to substantially perform; or
(ii) the Executive’s willful engagement in (A) in any malfeasance, dishonesty or fraud that is
intended to or does result in the Executive’s substantial personal enrichment or a material
detrimental effect on the Company’s reputation or business; or (B) gross misconduct;
(iii) the Executive’s indictment for, or plea of guilty or nolo contendere to (A) a felony in
the United States or (B) to a felony outside the United States, which, regardless of where such
felony occurs, the Board reasonably believes has had or will have a detrimental effect on the
Company’s reputation or business or the Executive’s reputation; or
(iv) the Executive’s material breach of Section 7 or Section 12 of this Agreement.
A termination of employment of the Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the Board (not including
the Executive) at a meeting of the Board called and held for such purpose (after at least ten days’
written notice is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board,
the Executive is guilty of the conduct described in one or more of the clauses of Section 4(b)
above, and specifying the particulars thereof in detail.
(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason if (x) an event or circumstance set forth in the clauses of this Section 4(c) below
shall have occurred and the Executive provides the Company with written notice thereof within 15
days after the Executive has knowledge of the occurrence or existence of such event or
circumstance, which notice shall specifically identify the event or circumstance that the Executive
believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so
identified within 30 days after the receipt of such notice, and (z) the Executive resigns within 90
days after the date of delivery of the notice referred to in clause (x) above. For purposes of
this Agreement, “Good Reason” shall mean, in the absence of the Executive’s written consent (and
except in consequence of a prior termination of the Executive’s employment), the occurrence of any
of the following:
(i) a reduction by the Company in the Executive’s Annual Base Salary or a reduction in the
Executive’s Target Bonus as a percentage of the Executive’s Annual Base Salary; or
(ii) a material reduction in the aggregate level of employee benefits made available to the
Executive when compared to the benefits made available to the Executive at any time during the
Employment Period, unless such reduction is applicable to senior executives of the Company
generally; or
(iii) the failure of the Executive to be appointed as Chief Executive Officer or Chairman of
the Board or, except as required by applicable law or regulation, his re-
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moval from either of such
positions (other than pursuant to Section 4(g) or pursuant to a termination of the Executive’s
employment for death, Disability or Cause); or
(iv) the failure of the Company to elect or reelect the Executive to the Board; or
(v) a material diminution in the Executive’s duties or responsibilities (other than as
required by applicable law or regulation or as a result of the Executive’s physical or mental
incapacity which impairs his ability to materially perform his duties or responsibilities as
confirmed by a doctor reasonably acceptable to the Executive or his representative and such
diminution lasts only for so long as such doctor determines such incapacity impairs the Executive’s
ability to materially perform his duties or responsibilities) as Chief Executive Officer of the
Company; or
(vi) except as required by applicable law or regulation, a material change in the Executive’s
reporting relationship so that the Executive no longer reports solely to the Board in his position
as Chief Executive Officer; or
(vii) the Company requiring the Executive’s principal location of employment to be at any
office or location more than 35 miles from the principal headquarters of the Company (other than to
the extent agreed to or requested by the Executive).
(d) Voluntary Termination. The Executive may voluntarily terminate his employment
without Good Reason (other than due to death, Disability or retirement), and such termination shall
not be deemed to be a breach of this Agreement.
(e) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other Party hereto
given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a “Notice
of Termination” means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the Executive’s employment
under the provision so indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date (which date shall be not
more than thirty days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(f) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein within 30 days of such
notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, or if the Executive voluntarily resigns without Good Reason, the date
on which the terminating Party notifies the other Party of such termination, (iii)
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if the
Executive’s employment is terminated by reason of death, the date of death of the Executive, (iv)
if the Executive’s employment is terminated by the Company due to Disability, the Disability
Effective Date, or (v) if the Executive’s employment is terminated by the Executive or the Company
as a result of a Notice of Non-Renewal, the end of the applicable Employment Period.
(g) Resignation from All Positions. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment for any reason, unless otherwise
requested by the Board, the Executive shall immediately resign as of the Date of Termination from
all positions that he holds or has ever held with the Company and any other member of the
Affiliated Group (and with any other entities with respect to which the Company has requested the
Executive to perform services), including, without limitation, the Board and all boards of
directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and
all documentation to effectuate such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his employment, regardless of
when or whether he executes any such documentation.
5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause. If, during the Employment Period, (1) the Company shall terminate the Executive’s
employment other than for Cause, death or Disability, or (2) the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days (except as
specifically provided in Section 5(a)(i)(A)(3)) after the Date of Termination the aggregate of the
following amounts; provided that, part or all of such lump sum payment shall be deferred until the
six-month anniversary of the date of the Executive’s Separation from Service, if deferral to such
anniversary date is required to comply with the provisions of Section 409A of the Code:
A. the sum of (1) the Executive’s Annual Base Salary and any accrued vacation pay
through the Date of Termination, (2) the Executive’s business expenses that are reimbursable
pursuant to Section 3(b)(viii) but have not been reimbursed by the Company as of the Date of
Termination, and (3) the Executive’s Annual Bonus for the fiscal year immediately preceding
the fiscal year in which the Date of Termination occurs if such bonus has been determined
but not paid as of the Date of Termination (at the time such Annual Bonus would otherwise
have been paid); and
B. the amount equal to the product of (x) two and (y) the sum of (I) the Executive’s
Annual Base Salary and (II) the Target Bonus; and
(ii) for two years after the Executive’s Date of Termination (the “Continuation Period”), the
Company shall continue medical and life insurance benefits to the Executive and, if applicable, the
Executive’s family at least equal to those that would have been provided to them in accordance with
the plans, programs, practices and policies of the Company if the Executive’s employment had not
been terminated; provided, that the Executive continues to make all required contributions;
provided, however, that, if the Executive becomes re-employed with another employer
and is eligible to receive substantially equivalent health or life insurance
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benefits under another
employer-provided plan, the health benefits or life insurance described herein, whichever is
applicable, shall no longer be provided by the Company; and
(iii) the 2004 Stock Option, the Effective Date Stock Option, the Restricted Stock Units, the
Effective Date Restricted Stock Units, the Effective Date Restricted Stock and all other
outstanding equity-based awards granted to the Executive on or after the Effective Date shall
continue to vest and, with respect to stock options and other awards that are not immediately
exercisable, become exercisable pursuant to their respective terms on the applicable scheduled
vesting dates, so long as the Executive complies with the provisions of Section 7 of this Agreement
and any other applicable provisions of the applicable award agreement and the Incentive Plan (other
than continued service). Subject to the immediately preceding sentence, all such awards shall
remain exercisable by the Executive following vesting until the earlier of (A) eighteen months
following the later to occur of (x) the applicable vesting date of such award or (y) the
Executive’s Date of Termination or (B) the expiration of the scheduled term of such award, as
applicable; and
(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive any other amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or practice or contract or
agreement (other than any severance plan, program, policy or practice or contract or agreement) of
the Company and its affiliates (such amounts and benefits, the “Other Benefits”) in accordance with
the terms and normal procedures of each such plan, program, policy or practice, based on accrued
benefits through the Date of Termination.
Except with respect to payments and benefits under Sections 5(a)(i)(A)(1), 5(a)(i)(A)(2) and
5(a)(iv), all payments and benefits to be provided under this Section 5(a) shall be subject to the
Executive’s execution and non-revocation of a release substantially in the form attached hereto as
Exhibit A.
(b) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment without Good Reason during the
Employment Period, or the Executive’s employment terminates by reason of either Party providing to
the other Party a Notice of Non-Renewal, this Agreement shall terminate without further obligations
to the Executive other than the obligation to pay or provide to the Executive an amount equal to
the amount set forth in clauses (1), (2) and (3) of Section 5(a)(i)(A) above, and the timely
payment or provision of the Other Benefits, in each case to the extent theretofore unpaid, and
provide to the Executive the opportunity to continue to exercise outstanding equity awards, granted
on or after the Effective Date, to the extent vested on the date of such termination, pursuant to
the provisions of the applicable award agreement.
(c) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than the obligation to pay or
provide to the Executive’s beneficiaries an amount equal to the amount set forth in clauses (1),
(2) and (3) of Section 5(a)(i)(A) above, the vesting of each stock option, restricted share and
restricted stock unit award that is outstanding as of the Date of Termination and continued
exercisability of each stock option by the Executive’s beneficiaries until the earlier of (i)
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one
year after the Date of Termination or (ii) the end of the scheduled term of such option (the “Stock
Benefits”).
(d) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than the obligation to pay or provide to the Executive an
amount equal to the amount set forth in clauses (1), (2) and (3) of Section 5(a)(i)(A) above, the
provision of the Stock Benefits and the timely payment or provision of Other Benefits, including
any applicable disability benefits.
6. Full Settlement. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced as a result of
a mitigation duty whether or not the Executive obtains other employment. To the extent permitted
by applicable law, the Company shall pay directly to the Executive all reasonable legal fees and
expenses reasonably incurred by the Executive in connection with the negotiation and preparation of
this Agreement, subject to a maximum of $50,000, and the Company shall reimburse the Executive for
all legal costs and expenses reasonably incurred (and documented in invoices) in connection with
any dispute under this Agreement, so long as the Executive prevails in such dispute on at least one
material issue. In addition, the Company shall indemnify and hold the Executive, harmless on an
after-tax basis, for any income tax, and all other applicable taxes imposed as a result of the
Company’s payment of any legal fees contemplated herein in connection with the preparation and
negotiation of this Agreement.
7. Covenants.
(a) Confidential Information. The Executive shall hold in a fiduciary capacity for
benefit of the Affiliated Group, all secret or confidential information, knowledge or data relating
to the Affiliated Group and its businesses (including, without limitation, any proprietary and not
publicly available information concerning any processes, methods, trade secrets, research or secret
data, costs, names of users or purchasers of their respective products or services, business
methods, operating procedures or programs or methods of promotion and sale) that the Executive
obtains during the Executive’s employment by the Affiliated Group that is not public knowledge
(other than as a result of the Executive’s violation of this Section 7(a)) (“Confidential
Information”). The Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive’s employment with the Affiliated Group,
except with prior written consent of the Company, or as otherwise required by law or legal process
or as such disclosure or use may be required in the course of the Executive performing his duties
and responsibilities as the Chief Executive Officer and Chairman of the Board of the Company.
Notwithstanding the foregoing provisions, if the Executive is required to disclose any such
confidential or proprietary information pursuant to applicable law or a subpoena or court order,
the Executive shall promptly notify the Company in writing of any such requirement so that the
Company or the appropriate member of the Affiliated Group may seek an appropriate protective order
or other appropriate remedy or waive compliance with the provisions hereof. The Executive shall
reasonably cooperate with the Affiliated Group to obtain such a protective order or other remedy.
If such order or other remedy is not obtained prior to the time the Executive is required to make
the disclosure, or the Company waives compliance with the provisions hereof,
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the Executive shall
disclose only that portion of the confidential or proprietary information which he is advised by
counsel in writing (either his or the Company’s) that he is legally required to so disclose. Upon
his termination of employment with the Company for any reason, the Executive shall promptly return
to the Company, all records, files, memoranda, correspondence, notebooks, notes, reports, customer
lists, drawings, plans, documents, and other documents and the like relating to the business of the
Affiliated Group or containing any trade secrets relating to the Affiliated Group or that the
Executive uses, prepares or comes into contact with during the course of the Executive’s employment
with the Company, and all keys, credit cards and passes, and such materials shall remain the sole
property of the Company and/or the Affiliated Group, as applicable. For purposes of the preceding
sentence, the term “trade secrets” shall have the meaning ascribed to it under the Illinois Trade
Secrets Act or, if such act is repealed, the Uniform Trade Secrets Act (on which the Illinois Trade
Secrets Act is based). The Executive agrees to represent in writing to the Company upon
termination of employment that he has complied with the foregoing provisions.
(b) Non-Recruitment of Affiliated Group Employees. The Executive shall not, at any
time during the Restricted Period (as defined in this Section 7(b)), without the prior written
consent of the Company, directly or indirectly, solicit, recruit, or employ (whether as an
employee, officer, agent, consultant or independent contractor) any person who is or was at any
time during the 120 days prior to Executive’s termination of employment, an employee,
representative, officer or director of any member of the Affiliated Group and who possesses
confidential information of the Affiliated Group. Further, during the Restricted Period, the
Executive shall not take any action that could reasonably be expected to have the effect of
directly encouraging or inducing any person to cease their relationship with any member of the
Affiliated Group for any reason, except for terminations of employment in the ordinary course of
business. This Section 7(b) shall not apply to (i) recruitment of employees for the Affiliated
Group, (ii) the Executive’s personal administrative staff who perform secretarial-type functions or
(iii) the hiring of any person (in the absence of a solicitation or recruitment by the Executive)
unless (A) the person was one of the Executive’s direct reports, (B) the Executive had material or
frequent contact with such person in furtherance of the performance of the duties of such person or
the Executive, or (C) the Executive, prior to the Date of Termination, actively participated in the
recruitment or hiring of such person at the Company other than merely approving any of the terms of
such person’s employment. Additionally, a general employment advertisement by an entity of which
the Executive is a part will not constitute solicitation or recruitment. The “Restricted Period”
shall mean the period of the Executive’s employment with the Company and its subsidiaries through
the second anniversary of the Date of Termination for any reason.
(c) No Competition — Solicitation of Business. During the Restricted Period, the
Executive shall not, either directly or indirectly, compete with the business of the Company by (i)
becoming an officer, agent, employee, partner or director of any other corporation, partnership or
other entity, or otherwise render services to or assist or hold an interest (except as a less than
3-percent shareholder of a publicly traded corporation or as a less than 5-percent shareholder of a
corporation that is not publicly traded) in any Competitive Business (as defined below), or (ii)
soliciting, servicing, or accepting the business of (A) any active customer of any member of the
Affiliated Group, or (B) any person or entity who is or was at any time during the previous twelve
months a customer of any member of the Affiliated Group, provided that such business is competitive
with any significant business of any member of the Affiliated Group.
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“Competitive Business” shall
mean any person or entity (including any joint venture, partnership, firm, corporation, or limited
liability company) that engages in any principal or significant business of the Company or any of
its subsidiaries as of the Date of Termination for any reason (or any material or significant
business being actively pursued as of the Date of Termination that the Company or any of its
subsidiaries enter during the Restricted Period).
(d) Assistance. The Executive agrees that during and after his employment by the
Company, the Executive will assist the Affiliated Group in the defense of any claims, or potential
claims that may be made or threatened to be made against any member of the Affiliated Group in any
action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (a
“Proceeding”), and will assist the Affiliated Group in the prosecution of any claims that may be
made by any member of the Affiliated Group in any Proceeding, to the extent that such claims may
relate to the Executive’s employment or the period of the Executive’s employment by the Company.
The Executive agrees, unless precluded by law, to promptly inform the Company if the Executive is
asked to participate (or otherwise become involved) in any Proceeding involving such claims or
potential claims. The Executive also agrees, unless precluded by law, to promptly inform the
Company if the Executive is asked to assist in any investigation (whether governmental or
otherwise) of any member of the Affiliated Group (or their actions), regardless of whether a
lawsuit has then been filed against any member of the Affiliated Group with respect to such
investigation. The Company agrees to reimburse the Executive for all of the Executive’s reasonable
out-of-pocket expenses associated with such assistance, including travel expenses and any
attorneys’ fees and shall pay a reasonable per diem fee for the Executive’s service. In addition,
the Executive agrees to provide such services as are reasonably requested by the Company to assist
any successor to the Executive in the transition of duties and responsibilities to such successor.
Any services or assistance contemplated in this Section 7(d) shall be at mutually agreed to and
convenient times.
(e) Remedies. The Executive acknowledges and agrees that the terms of Section 7: (i)
are reasonable in geographic and temporal scope, (ii) are necessary to protect legitimate
proprietary and business interests of the Company in, inter alia, near permanent
customer relationships and confidential information. The Executive further acknowledges and agrees
that in addition to all other remedies at law and/or equity, (x) the Executive’s breach of the
provisions of Section 7 will cause the Company irreparable harm, which cannot be adequately
compensated by money damages, and (y) if the Company elects to prevent the Executive from breaching
such provisions by obtaining an injunction against the Executive, there is a reasonable probability
of the Company’s eventual success on the merits. The Executive consents and agrees that if the
Executive commits any such breach or threatens to commit any breach, the Company shall be entitled
to temporary and permanent injunctive relief from a court of competent jurisdiction, in addition
to, and not in lieu of, such other remedies as may be available to the Company for such breach,
including the recovery of money damages. The Parties further acknowledge and agree that the
provisions of Section 7(a) below are accurate and necessary because (A) this Agreement is entered
into in the State of Illinois, (B) as of the Effective Date, Illinois will have a substantial
relationship to the Parties and to this transaction, (C) as of the Effective Date, Illinois will be
the headquarters state of the Company, which has operations nationwide and has a compelling
interest in having its employees treated uniformly within the United States, (D) the use of
Illinois law provides certainty to the Parties in any covenant litigation in the United States, and
(E) enforcement of the provision of this Section 7 would not violate any fundamental public policy
of Illi-
-13-
nois or any other jurisdiction. If any of the provisions of Section 7 are determined to be
wholly or partially unenforceable, the Executive hereby agrees that this Agreement or any provision
hereof may be reformed so that it is enforceable to the maximum extent permitted by law. If any of
the provisions of this Section 7 are determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be a bar to or in any way diminish the Company’s right
to enforce any such covenant in any other jurisdiction.
(f) The covenants in this Section 7 apply in the countries in which Executive has physically
been present performing work for the Company at any time during the two years preceding termination
of his employment.
8. Successors. (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(b) The Company shall cause any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all or a substantial portion of its business
and/or assets to assume expressly and agree to perform this Agreement immediately upon such
succession in the same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois, without reference to principles of conflict of laws. The
Parties hereto irrevocably agree to submit to the jurisdiction and venue of the courts of the State
of Illinois, in any action or proceeding brought with respect to or in connection with this
Agreement. The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified otherwise than by a written
agreement executed by the Parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other Party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
At the most recent address on file for the Executive at the Company.
With a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Xxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
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000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxx Xxxx, XX 00000
If to the Company:
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as either Party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
writing in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Company may withhold from any
amounts payable or benefits provided under this Agreement any Federal, state, and local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
(e) Subject to the provisions of Section 4(c), the Executive’s or the Company’s failure to
insist upon strict compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) From and after the Effective Date, this Agreement shall supersede any other employment
agreement or understanding between the Parties, provided that, notwithstanding any other provision
of this Agreement to the contrary, in the event of a Change in Control (as defined in the Change in
Control Plan), the Change in Control Plan shall supersede this Agreement; provided, that, the
provisions in Section 3(b)(vii) will continue to apply.
(g) The Company may not issue a press release or otherwise publicly disclose the Executive’s
employment or potential employment with the Company without Executive’s consent as to the content
and timing of such disclosure, which approval shall not be unreasonably withheld.
10. Director’s and Officer’s Insurance. The Company shall provide the Executive with
reasonable Director’s and Officer’s insurance coverage that is at least as favorable
-15-
as the
coverage provided to other directors and officers of the Company. Such insurance coverage shall
continue in effect both during the Employment Period and, while potential liability exists,
thereafter.
11. Indemnification. The Company shall indemnify the Executive and hold him harmless
to the fullest extent permitted by law and under the by-laws of the Company against, and in respect
to, any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including
reasonable attorney fees), losses and damages resulting from the Executive’s good faith performance
of his duties and obligations with the Company.
12. Representations. The Executive hereby represents and warrants to the Company that
the Executive is not party to any contract, understanding, agreement or policy, whether or not
written, with his current employer (or any other previous employer) or otherwise, that would be
breached by the Executive’s entering into, or performing services under, this Agreement. The
Executive further represents that he has disclosed to the Company in writing all material
threatened, pending, or actual claims that are unresolved and still outstanding as of the Effective
Date, in each case, against the Executive of which he is aware, if any, as a result of his
employment with his current employer (or any other previous employer) or his membership on any
boards of directors. Executive agrees that he has not, will not and cannot rely on any
representations not expressly made herein and the only consideration for signing this Employment
Agreement are the terms stated herein and no other promises or representations of any kind have
been made by any person or entity whatsoever to cause him to sign this Employment Agreement.
-16-
IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
| /s/ Xxxxxx X. Xxxxxx | ||||
| EXECUTIVE | ||||
| MOTOROLA, INC. |
||||
| By: | Xxxxxx X. Xxxxx III | |||
| Title: | Chair, Compensation and Leadership Committee | |||
-17-
EXHIBIT A
Form of Release
(a) In consideration for the payment of the severance described in the Executive employment
agreement with the Company (the “Employment Agreement”), dated as of [ ], the Executive for
himself, and for his heirs, administrators, representatives, executors, successors and assigns
(collectively “Releasers”) does hereby irrevocably and unconditionally release, acquit and forever
discharge the Company, its subsidiaries, affiliates and divisions and their respective, current and
former, trustees, officers, directors, partners, shareholders, agents, employees, consultants,
independent contractors and representatives, including without limitation all persons acting by,
through under or in concert with any of them (collectively, “Releasees”), and each of them from any
and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies,
damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether
in law or equity and whether arising under federal, state or local law and in particular including
any claim for discrimination based upon race, color, ethnicity, sex, age (including the Age
Discrimination in Employment Act of 1967), national origin, religion, disability, or any other
unlawful criterion or circumstance, which the Executive and Releasers had, now have, or may have in
the future against each or any of the Releasees, including under the Illinois Law Against
Discrimination (collectively “Executive/Releaser Actions”) from the beginning of the world until
the date hereof.
(b) The Executive acknowledges that: (i) this entire Release is written in a manner
calculated to be understood by him; (ii) he has been advised to consult with an attorney before
executing this Release; (iii) he was given a period of twenty-one days within which to consider
this Release; and (iv) to the extent he executes this Release before the expiration of the
twenty-one day period, he does so knowingly and voluntarily and only after consulting his attorney.
The Executive shall have the right to cancel and revoke this Release by delivering notice to the
Company pursuant to the notice provision of Section 9 of the Employment Agreement prior to the
expiration of the seven-day period following the date hereof, and the severance benefits under the
Employment Agreement shall not become effective, and no payments or benefits shall be made or
provided thereunder, until the day after the expiration of such seven-day period (the “Revocation
Date”). Upon such revocation, this Release and the severance provisions of the Employment
Agreement shall be null and void and of no further force or effect.
(c) Notwithstanding anything herein to the contrary, the sole matters to which the Release do
not apply are: (i) the Executive’s rights of indemnification and directors and officers liability
insurance coverage to which he was entitled immediately prior to ___with regard to his
service as an officer of the Company; (ii) the Executive’s rights under any tax-qualified pension
or claims for accrued vested benefits or rights under any other employee benefit plan, policy or
arrangement (whether tax-qualified or not) maintained by the Company or under COBRA; or (iii) the
Executive’s rights under Section 5 of the Employment Agreement which is intended to survive
termination of employment.
(d) This Release is the complete understanding between the Executive and the Company in
respect of the subject matter of this Release and supersedes all prior agreements relating
to the
same subject matter. The Executive has not relied upon any representations, promises or agreements
of any kind except those set forth herein in signing this Release.
(e) In the event that any provision of this Release should be held to be invalid or
unenforceable, each and all of the other provisions of this Release shall remain in full force and
effect. If any provision of this Release is found to be invalid or unenforceable, such provision
shall be modified as necessary to permit this Release to be upheld and enforced to the maximum
extent permitted by law.
(f) This Release shall be governed by and construed in accordance with the laws of the State
of Illinois, without reference to principles of conflict of laws.
(g) This Release inures to the benefit of the Company and its successors and assigns.
| EXECUTIVE | ||||
