10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended July 3, 2004

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: 1-7221

MOTOROLA, INC.

(Exact name of registrant as specified in its charter)

Delaware	36-1115800
(State of Incorporation)	(I.R.S. Employer Identification No.)
1303 E. Algonquin Road Schaumburg, Illinois	60196
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (847) 576-5000

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  ¨

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on July 3, 2004:

Class	Number of Shares
Common Stock; $3 Par Value	2,362,541,169

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Index

		Page
Part I Financial Information
Item 1	Financial Statements
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months and Six Months Ended July 3, 2004 and June 28, 2003	3
	Condensed Consolidated Balance Sheets as of July 3, 2004 (Unaudited) and December 31, 2003	4
	Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Six Months Ended July 3, 2004	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended July 3, 2004 and June 28, 2003	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4	Controls and Procedures	60
	Business Risks	60
Part II Other Information
Item 1	Legal Proceedings	61
Item 2	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	67
Item 3	Defaults Upon Senior Securities	67
Item 4	Submission of Matters to Vote of Security Holders	67
Item 5	Other Information	67
Item 6	Exhibits and Reports on Form 8-K	68

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DRAFT - this data is NOT final

Part I—Financial Information

Motorola, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Net sales	$	8,700		$	6,163		$	17,261		$	12,206
Costs of sales		5,531			4,155			11,224			8,222
Gross margin		3,169			2,008			6,037			3,984
Selling, general and administrative expenses		1,321			937			2,465			1,834
Research and development expenditures		990			951			1,957			1,898
Reorganization of businesses		(21	)		(42	)		(41	)		21
Freescale Semiconductor separation costs		41			—			50			—
Other charges (income)		(7	)		(9	)		(61	)		(70	)
Operating earnings		845			171			1,667			301
Other income (expense):
Interest expense, net		(60	)		(59	)		(127	)		(152	)
Gains on sales of investments and businesses		15			28			196			307
Other		—			(28	)		(20	)		(87	)
Total other income (expense)		(45	)		(59	)		49			68
Earnings before income taxes		800			112			1,716			369
Income tax expense (benefit)		1,003			(7	)		1,310			81
Net earnings (loss)	$	(203	)	$	119		$	406		$	288
Net earnings (loss) per common share
Basic	$	(0.09	)	$	0.05		$	0.17		$	0.12
Diluted	$	(0.09	)	$	0.05		$	0.17		$	0.12
Weighted average common shares outstanding
Basic		2,351.7			2,319.6			2,345.1			2,316.1
Diluted		2,351.7			2,337.0			2,432.9			2,332.5
Dividends per share	$	0.04		$	0.04		$	0.08		$	0.08

See accompanying notes to condensed consolidated financial statements.

Motorola Confidential Proprietary

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Motorola, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions, except per share amounts)

	July 3, 2004			December 31, 2003
	(Unaudited)
Assets
Cash and cash equivalents	$	8,667		$	7,877
Short-term investments		138			139
Accounts receivable, net		5,143			4,436
Inventories, net		2,816			2,792
Deferred income taxes		1,140			1,678
Other current assets		1,323			985
Total current assets		19,227			17,907
Property, plant and equipment, net		4,613			5,164
Investments		3,205			3,335
Deferred income taxes		2,995			3,349
Other assets		2,131			2,343
Total assets	$	32,171		$	32,098
Liabilities and Stockholders’ Equity
Notes payable and current portion of long-term debt	$	352		$	896
Accounts payable		3,182			2,789
Accrued liabilities		6,104			5,748
Total current liabilities		9,638			9,433
Long-term debt		6,697			6,675
Other liabilities		2,712			2,815
Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company-guaranteed debentures (TOPrS)		—			486
Stockholders’ Equity
Preferred stock, $100 par value		—			—
Common stock, $3 par value		7,088			7,017
Additional paid-in capital		2,722			2,362
Retained earnings		3,321			3,103
Non-owner changes to equity		(7	)		207
Total stockholders’ equity		13,124			12,689
Total liabilities and stockholders’ equity	$	32,171		$	32,098

See accompanying notes to condensed consolidated financial statements.

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Motorola, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(In millions, except per share amounts)

			Non-Owner Changes To Equity
	Common Stock and Additional Paid-In Capital		Fair Value Adjustment to Available for Sale Securities			Foreign Currency Translation Adjustments			Other Items			Retained Earnings			Comprehensive Earnings (Loss)
Balances at December 31, 2003	$	9,379	$	1,499		$	(217	)	$	(1,075	)	$	3,103
Net earnings													406		$	406
Net unrealized losses on securities (net of tax of $115)				(185	)											(185	)
Foreign currency translation adjustments (net of tax of $10)							(47	)								(47	)
Issuance of common stock and stock options exercised		325
Net gains on derivative instruments (net of tax of $10)										18						18
Dividends declared ($.04 per share)													(188	)
Other		106
Balances at July 3, 2004	$	9,810	$	1,314		$	(264	)	$	(1,057	)	$	3,321		$	192

See accompanying notes to condensed consolidated financial statements.

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Motorola, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In millions)

	Six Months Ended
	July 3, 2004			June 28, 2003
Operating
Net earnings	$	406		$	288
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		693			837
Reorganization of businesses and other		(111	)		(13	)
Gains on sales of investments and businesses, net		(196	)		(307	)
Deferred income taxes		1,012			(166	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(713	)		760
Inventories		(29	)		115
Other current assets		(342	)		154
Accounts payable and accrued liabilities		903			(1,063	)
Other assets and liabilities		229			171
Net cash provided by operating activities		1,852			776
Investing
Acquisitions and investments, net		(158	)		(238	)
Proceeds from sales of investments and businesses		367			355
Capital expenditures		(428	)		(328	)
Proceeds from sale of property, plant and equipment		114			80
Sales of short-term investments		1			—
Net cash used for investing activities		(104	)		(131	)
Financing
Repayment of commercial paper and short-term borrowings		(14	)		(40	)
Repayment of debt		(508	)		(832	)
Repayment of TOPrS		(500	)		—
Issuance of common stock		266			74
Payment of dividends		(188	)		(185	)
Net cash used for financing activities		(944	)		(983	)
Effect of exchange rate changes on cash and cash equivalents		(14	)		44
Net increase (decrease) in cash and cash equivalents		790			(294	)
Cash and cash equivalents, beginning of period		7,877			6,507
Cash and cash equivalents, end of period	$	8,667		$	6,213
Cash paid during the period for:
Interest, net	$	165		$	248
Income taxes, net of refunds	$	200		$	177

See accompanying notes to condensed consolidated financial statements.

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Motorola, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In millions, except as noted)

1. Basis of Presentation

The condensed consolidated financial statements as of July 3, 2004 and for the three months and six months ended July 3, 2004 and June 28, 2003, include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as of July 3, 2004 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2003. The results of operations for the three months and six months ended July 3, 2004 are not necessarily indicative of the operating results to be expected for the full year. Certain amounts in prior periods’ financial statements and related notes have been reclassified to conform to the 2004 presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Other Financial Data

Statement of Operations Information

Other Charges (Income)

Other Charges (Income) included in Operating Earnings consist of the following:

	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Other Charges (Income):
In-process research and development	$	15		$	32		$	15		$	32
Reserves related to previously-received incentives		—			—			(52	)		—
Iridium settlements		—			(33	)					(92	)
Reversal of finance receivable reserves		(21	)		—			(21	)		—
Other		(1	)		(8	)		(3	)		(10	)
	$	(7	)	$	(9	)	$	(61	)	$	(70	)

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Other Income (Expense)

The following table displays the amounts comprising Interest Expense, net, and Other included in Other Income (Expense) in the Company’s condensed consolidated statements of operations:

	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Interest Expense, net:
Interest expense	$	(92	)	$	(108	)	$	(195	)	$	(225	)
Interest income		32			49			68			73
	$	(60	)	$	(59	)	$	(127	)	$	(152	)
Other:
Partial recovery of previously-impaired investment	$	20		$	—		$	20		$	—
Investment impairments		(2	)		(12	)		(9	)		(59	)
TOPrS redemption costs		—			—			(14	)		—
Foreign currency losses		(16	)		(28	)		(19	)		(40	)
Other		(2	)		12			2			12
	$	—		$	(28	)	$	(20	)	$	(87	)

Earnings Per Common Share

The following table presents the computation of basic and diluted earnings (loss) per common share:

	Three Months Ended					Six Months Ended
	July 3, 2004			June 28, 2003		July 3, 2004		June 28, 2003
Basic earnings (loss) per common share:
Net earnings (loss)	$	(203	)	$	119	$	406	$	288
Weighted average common shares outstanding		2,351.7			2,319.6		2,345.1		2,316.1
Per share amount	$	(.09	)	$	.05	$	.17	$	.12
Diluted earnings (loss) per common share:
Net earnings (loss)	$	(203	)	$	119	$	406	$	288
Add: Interest on equity security units, net		—			—		—		—
Net earnings (loss) as adjusted	$	(203	)	$	119	$	406	$	288
Weighted average common shares outstanding		2,351.7			2,319.6		2,345.1		2,316.1
Add effect of dilutive securities:
Stock options/restricted stock		—			14.0		87.1		13.0
Zero coupon notes due 2009		—			—		.6		—
Zero coupon notes due 2013		—			3.4		.1		3.4
Diluted weighted average common shares outstanding		2,351.7			2,337.0		2,432.9		2,332.5
Per share amount	$	(.09	)	$	.05	$	.17	$	.12

In the computation of diluted loss per common share for the three months ended July 3, 2004, the assumed conversions of the equity security units and out-of-the-money stock options were excluded because their inclusion would have been antidilutive. For the six months ended July 3, 2004, the equity security units and out-of-the-money stock options were excluded because their inclusion would have been antidilutive. In the

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computation of diluted earnings per common share for the three months and six months ended ended June 28, 2003, the assumed conversions of the zero coupon notes due 2009, the equity security units and out-of-the-money stock options were excluded because their inclusion would have been antidilutive.

Balance Sheet Information

Accounts Receivable

Accounts Receivable, net, consists of the following:

	July 3, 2004			December 31, 2003
Accounts receivable	$	5,340		$	4,664
Less allowance for doubtful accounts		(197	)		(228	)
	$	5,143		$	4,436

Inventories

Inventories, net, consist of the following:

	July 3, 2004			December 31, 2003
Finished goods	$	1,189		$	1,069
Work-in-process and production materials		2,318			2,459
		3,507			3,528
Less inventory reserves		(691	)		(736	)
	$	2,816		$	2,792

Property, Plant, and Equipment

Property, Plant and Equipment, net, consists of the following:

	July 3, 2004			December 31, 2003
Land	$	295		$	301
Building		4,441			4,865
Machinery and equipment		13,187			13,513
		17,923			18,679
Less accumulated depreciation		(13,310	)		(13,515	)
	$	4,613		$	5,164

Depreciation expense for the three months ended July 3, 2004 and June 28, 2003 was $325 million and $380 million, respectively. Depreciation expense for the six months ended July 3, 2004 and June 28, 2003 was $651 million and $786 million, respectively.

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Investments

Investments consist of the following:

	July 3, 2004			December 31, 2003
Available-for-sale securities:
Cost basis	$	615		$	500
Gross unrealized gains		2,140			2,438
Gross unrealized losses		(10	)		(8	)
Fair value		2,745			2,930
Other securities, at cost		321			254
Equity method investments		139			151
	$	3,205		$	3,335

The Company recorded impairment charges of $2 million and $12 million for the three months ended July 3, 2004 and June 28, 2003, respectively, and $9 million and $59 million for the six months ended July 3, 2004 and June 28, 2003, respectively. These impairment charges represent other-than-temporary declines in the value of the Company’s investment portfolio and are included in Other within Other Income (Expense) in the Company’s condensed consolidated statements of operations.

The $59 million charge for the six months ended June 28, 2003, was primarily comprised of a $29 million charge to write down to zero the Company’s debt holding in a European cable operator, a portion of which was recovered during the three months ended July 3, 2004. The amount recovered has been included in Other within Other Income (Expense) in the Company’s condensed consolidated statements of operations.

Gains on Sales of Investments and Businesses, net, consist of the following:

	Three Months Ended				Six Months Ended
	July 3, 2004		June 28, 2003		July 3, 2004		June 28, 2003
Gains on sales of investments	$	3	$	22	$	182	$	297
Gains on sales of businesses		12		6		14		10
	$	15	$	28	$	196	$	307

The $196 million in gains for the six months ended July 3, 2004 are primarily comprised of a $130 million gain on the sale of shares in Broadcom Corporation and a $41 million gain on the sale of shares in Semiconductor Manufacturing International Corporation. The $307 million gain for the six months ended June 28, 2003 was primarily comprised of a $255 million gain on the sale of shares in Nextel Communications, Inc.

Other Assets

Other Assets consist of the following:

	July 3, 2004		December 31, 2003
Long-term finance receivables, net of allowances of $1,993 and $2,095	$	118	$	209
Goodwill		1,442		1,416
Intangible assets, net of accumulated amortization of $366 and $339		196		184
Interest rate swaps		18		150
Notes receivable		5		52
Other		352		332
	$	2,131	$	2,343

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Accrued Liabilities

Accrued Liabilities consist of the following:

	July 3, 2004		December 31, 2003
Compensation	$	1,034	$	1,154
Customer reserves		873		584
Customer downpayments		466		429
Warranty reserves		468		366
Other		3,263		3,215
	$	6,104	$	5,748

Other Liabilities

Other Liabilities consist of the following:

	July 3, 2004		December 31, 2003
Defined benefit plans	$	1,617	$	1,527
Nextel hedge		277		310
Postretirement health care plan		211		218
Other		607		760
	$	2,712	$	2,815

Stockholders’ Equity Information

Comprehensive Earnings (Loss)

The net unrealized gains (losses) on securities included in Comprehensive Earnings (Loss) are comprised of the following:

	Three Months Ended					Six Months Ended
	July 3, 2004			June 28, 2003		July 3, 2004			June 28, 2003
Gross unrealized gains (losses) on securities, net of tax	$	(2	)	$	374	$	(73	)	$	518
Less: Realized (gains) losses, net of tax		—			—		(112	)		(156	)
Net unrealized gains (losses) on securities, net of tax	$	(2	)	$	374	$	(185	)	$	362

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3. Stock Compensation Costs

The Company measures compensation cost for stock options and restricted stock using the intrinsic value-based method. Compensation cost, if any, is recorded based on the excess of the quoted market price at grant date over the amount an employee must pay to acquire the stock. The Company has evaluated the pro forma effects of using the fair value-based method of accounting and as such, net earnings, basic earnings per common share and diluted earnings per common share would have been as follows:

	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Net earnings (loss):
Net earnings (loss) as reported	$	(203	)	$	119		$	406		$	288
Add: Stock-based employee compensation expense included in reported net earnings (loss), net of related tax effects		5			3			9			9
Deduct: Stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effects		(55	)		(71	)		(95	)		(137	)
Pro forma	$	(253	)	$	51		$	320		$	160
Basic earnings (loss) per common share:
As reported	$	(.09	)	$	.05		$	.17		$	.12
Pro forma	$	(.11	)	$	.02		$	.14		$	.07
Diluted earnings (loss) per common share:
As reported	$	(.09	)	$	.05		$	.17		$	.12
Pro forma	$	(.11	)	$	.02		$	.13		$	.07

On May 4, 2004, the Company granted approximately 50 million options to approximately 32,000 eligible employees. The options were granted at fair market value and, in general, vest and become exercisable in 25% increments, annually, over the four years after the grant date.

4. Debt and Credit Facilities

On July 26, 2004, the Company announced plans to retire up to $1.7 billion of its outstanding debt. On that date, the Company commenced a cash tender offer for any and all of its $300 million aggregate principal amount of outstanding 7.60% Notes due 2007 (2007 Notes). The tender offer expired on August 5, 2004 and an aggregate principal amount of approximately $182 million of 2007 Notes were validly tendered. On August 10, 2004, the Company repurchased the validly tendered 2007 Notes for an aggregate purchase price of approximately $202 million. In addition, on July 26, 2004, the Company called for the redemption of all of its $1.4 billion aggregate principal amount of outstanding 6.75% Notes due 2006 (2006 Notes). The 2006 Notes will be redeemed on August 26, 2004.

In June 2004, the Company repaid, at maturity, the $500 million 6.75% debentures due 2004.

In May 2004, the Company signed a new multi-year revolving credit agreement for $1 billion, replacing two existing facilities totaling $1.6 billion. One significant change to the new facility from the previous facilities is the elimination of the requirement whereby the Company would have been obligated to provide the lenders with a pledge of, and security interest in, domestic inventories and receivables if the Company’s credit ratings would have dropped below certain levels.

In March 2004, Motorola Capital Trust I, a Delaware statutory business trust and wholly-owned subsidiary of the Company (the “Trust”), redeemed all outstanding Trust Originated Preferred Securities^sm (“TOPrS”). In February 1999, the Trust sold 20 million TOPrS to the public for an aggregate offering price of $500 million. The Trust used the proceeds from that sale, together with the proceeds from its sale of common stock to the

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Company, to buy a series of 6.68% Deferrable Interest Junior Subordinated Debentures due March 31, 2039 (“Subordinated Debentures”) from the Company with the same payment terms as the TOPrS. The sole assets of the Trust were the Subordinated Debentures. Historically, the TOPrS have been reflected as “Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Company-Guaranteed Debentures” in the Company’s consolidated balance sheets. On March 26, 2004, all outstanding TOPrS were redeemed for an aggregate redemption price of $500 million plus accrued interest. No TOPrS or Subordinated Debentures remain outstanding.

In March 2004, the Company also redeemed all outstanding Liquid Yield Option Notes due September 7, 2009 (the “2009 LYONs”) and all outstanding Liquid Yield Option Notes due September 27, 2013 (the “2013 LYONs”). On March 26, 2004, all then-outstanding 2009 LYONs and 2013 LYONs, not validly exchanged for stock, were redeemed for an aggregate redemption price of approximately $4 million. No 2009 LYONs or 2013 LYONs remain outstanding.

In December 2002, the Company entered into an agreement with Goldman, Sachs & Co. (“Goldman”) to repurchase all of the Company’s $825 million of Puttable Reset Securities (PURS)^sm due February 1, 2011 from Goldman. At that time, the Company paid Goldman $106 million to terminate Goldman’s annual remarketing rights associated with the PURS. In February 2003, the Company purchased the $825 million of PURS from Goldman with cash on hand.

In order to manage the mix of fixed and floating rates in its debt portfolio, the Company has entered into interest rate swaps to change the characteristics of interest rate payments from fixed-rate payments to short-term LIBOR-based variable rate payments. The principal amount of outstanding interest rate hedges was $4.0 billion and $4.5 billion at July 3, 2004 and December 31, 2003, respectively.

The short-term LIBOR-based variable rate payments for each of the above interest rate swaps were 2.9% and 3.0% for the three months ended July 3, 2004 and June 28, 2003, respectively. The fair value of all interest rate swaps at July 3, 2004 and December 31, 2003 was approximately $18 million and $150 million, respectively. Except for these interest rate swaps, the Company had no outstanding commodity derivatives, currency swaps or options relating to debt instruments at July 3, 2004 and December 31, 2003.

The Company is exposed to credit loss in the event of nonperformance by the counterparties in swap contracts. The Company minimizes its credit risk on these transactions by only dealing with leading, credit-worthy financial institutions having long-term debt ratings of “A” or better and, therefore, does not anticipate nonperformance. In addition, the contracts are distributed among several financial institutions, thus minimizing credit risk concentration.

5. Income Taxes

During the three months ended July 3, 2004, the Company recorded an $898 million non-cash tax charge to establish a deferred tax valuation allowance against the net deferred tax asset balances of Freescale Semiconductor, Inc. (Freescale Semiconductor). The valuation allowance was required when it became more likely than not that the Freescale Semiconductor IPO would occur, thereby, requiring Freescale Semiconductor to value its deferred tax asset balances as a stand alone taxpayer. The valuation allowance reduced the Company’s net deferred tax asset balance to $4.1 billion at July 3, 2004. The Company’s net deferred tax asset balance at December 31, 2003 was $5.0 billion.

During the three months ended July 3, 2004, the Company recorded the reversal of $272 million of previously-accrued income taxes as the result of settlements reached with taxing authorities and a reassessment of tax exposures based on the status of current audits. Of this amount, $197 million was recorded as a reduction in tax expense and $75 million, which related to previously-issued warrants, was reflected as an increase in Additional Paid-In Capital in the Company’s condensed consolidated balance sheets. During the three months ended June 28, 2003, the Company recorded the reversal of $61 million of previously-accrued income taxes related to the settlement of tax audits.

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In June 2004, the Internal Revenue Service (IRS) completed their field examination of the Company’s 1996 through 2000 tax returns. In connection with this examination, the Company received notices of certain adjustments proposed by the IRS, primarily related to transfer pricing. The Company disagrees with these proposed transfer pricing-related adjustments and intends to vigorously dispute this matter through applicable IRS and judicial procedures, as appropriate. However, if the IRS were to ultimately prevail on all matters relating to transfer pricing for the period of the examination, it could result in additional income for the years 1996 through 2000 of approximately $1.4 billion, which could result in additional income tax liability for the Company of approximately $500 million. The IRS may make similar claims for years subsequent to 2000 in future audits. Although the final resolution of the proposed adjustments is uncertain, based on current information, in the opinion of the Company’s management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations. However, an unfavorable resolution could have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations in the period in which the matter is ultimately resolved.

6. Employee Benefit Plans

Pension Benefits

Net periodic pension cost for the U.S. regular pension plan, officers’ plan, MSPP, and Non U.S. plans was as follows:

	Three Months Ended
	July 3, 2004									June 28, 2003
	Regular			Officers’ and MSPP			Non U.S.			Regular			Officers’ and MSPP			Non U.S.
Service cost	$	45		$	5		$	14		$	41		$	5		$	11
Interest cost		67			4			16			62			4			9
Expected return on plan assets		(71	)		(1	)		(11	)		(69	)		(1	)		(6	)
Amortization of:
Unrecognized prior service cost		(2	)		—			—			(2	)		—			—
Unrecognized net loss		5			1			6			—			1			3
Settlement/curtailment loss		—			2			—			—			2			—
Net periodic pension cost	$	44		$	11		$	25		$	32		$	11		$	17

	Six Months Ended
	July 3, 2004									June 28, 2003
	Regular			Officers’ and MSPP			Non U.S.			Regular			Officers’ and MSPP			Non U.S.
Service cost	$	90		$	10		$	27		$	83		$	11		$	20
Interest cost		135			7			33			123			7			17
Expected return on plan assets		(142	)		(2	)		(23	)		(139	)		(2	)		(12	)
Amortization of:
Unrecognized prior service cost		(4	)		—			—			(4	)		—			—
Unrecognized net loss		10			2			11			—			1			6
Settlement/curtailment loss		—			5			—			—			4			—
Net periodic pension cost	$	89		$	22		$	48		$	63		$	21		$	31

The Company expects to make a total cash contribution of between $150 million and $250 million to the U.S. regular pension plan during 2004. During the three months ended July 3, 2004, the Company made a $50 million contribution to the plan. In addition, a $50 million contribution was made in July 2004 bringing the total contribution in 2004 to $100 million.

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Postretirement Health Care Benefits

Net retiree health care expenses was as follows:

	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Service Cost	$	4		$	3		$	7		$	7
Interest Cost		12			13			24			25
Expected return on plan assets		(5	)		(6	)		(10	)		(12	)
Amortization of:
Unrecognized prior service cost		—			—			(1	)		—
Unrecognized net loss		3			3			7			63
Net retiree health care expense	$	14		$	13		$	27		$	26

7. Financing Arrangements

Finance receivables consist of the following:

	July 3, 2004			December 31, 2003
Gross finance receivables	$	2,203		$	2,396
Less allowance for losses		(1,993	)		(2,095	)
		210			301
Less current portion		(92	)		(92	)
Long-term finance receivables	$	118		$	209

Current finance receivables are included in Accounts Receivable and long-term finance receivables are included in Other Assets in the Company’s condensed consolidated balance sheets. Interest income recognized on finance receivables for the three months ended July 3, 2004 and June 28, 2003 was $1 million and $12 million, respectively. Interest income recognized on finance receivables for the six months ended July 3, 2004 and June 28, 2003 was $3 million and $13 million, respectively.

An analysis of impaired finance receivables included in total finance receivables is as follows:

	July 3, 2004		December 31, 2003
Impaired finance receivables:
Requiring allowance for losses	$	1,999	$	2,083
Expected to be fully recoverable		—		125
		1,999		2,208
Less allowance for losses on impaired finance receivables		1,991		2,075
Impaired finance receivables, net	$	8	$	133

At July 3, 2004 and December 31, 2003, the Company had $1.9 billion and $2.0 billion, respectively, of gross receivables from one customer, Telsim, in Turkey (the “Telsim Loan”) with the decline representing partial recovery of amounts owed due to collection efforts. As a result of difficulties in collecting the amounts due from Telsim, the Company has previously recorded charges reducing the net receivable from Telsim to zero. At both July 3, 2004 and December 31, 2003, the net receivable from Telsim was zero. Although the Company continues to vigorously pursue its recovery efforts, it believes the litigation, collection and/or settlement process will be very lengthy in light of the Uzans’ (the family which previously controlled Telsim) continued resistance to

15

satisfy the judgment against them and their decision to violate various courts’ orders, including orders holding them in contempt of court.

The Company sells short-term receivables through the Motorola Receivables Corporation (“MRC”) short-term receivables program, which provides for up to $425 million of short-term receivables to be outstanding with third parties at any time. In addition, the Company sells short-term receivables directly to third parties. Total short-term receivables sold by the Company (including those sold directly to third parties and those sold through the MRC short-term receivables program) were $992 million and $664 million during the three months ended July 3, 2004 and June 28, 2003, respectively, and $1.9 billion and $1.4 billion during the six months ended July 3, 2004 and June 28, 2003, respectively. There were $1.0 billion and $771 million of short-term receivables outstanding under these arrangements at July 3, 2004 and December 31, 2003, respectively (including $189 million and $170 million, respectively, under the MRC program). The Company’s total credit exposure to outstanding short-term receivables that have been sold was $20 million and $25 million at July 3, 2004 and December 31, 2003, respectively, with reserves of $3 million and $13 million recorded for potential losses on this exposure at July 3, 2004 and December 31, 2003, respectively.

Certain purchasers of the Company’s infrastructure equipment continue to request that suppliers provide financing in connection with equipment purchases. Financing may include all or a portion of the purchase price of the equipment as well as working capital. The Company had outstanding commitments to extend credit to third-parties totaling $144 million and $149 million at July 3, 2004 and December 31, 2003, respectively.

In addition to providing direct financing to certain equipment customers, the Company also assists customers in obtaining financing directly from banks and other sources to fund equipment purchases. The amount of loans from third parties for which the Company has committed to provide financial guarantees totaled $12 million and $10 million at July 3, 2004 and December 31, 2003, respectively. For the six months ended July 3, 2004 and June 28, 2003, no payments were made under the terms of these guarantees. At July 3, 2004, these financial guarantees are to two customers in the amounts of $6 million each and are scheduled to expire in 2005 and 2014. Customer borrowings outstanding under these third-party loan arrangements were $9 million and $10 million at July 3, 2004 and December 31, 2003, respectively. Accrued liabilities of $1 million at both July 3, 2004 and December 31, 2003 have been recorded to reflect management’s best estimate of probable losses of unrecoverable amounts should these guarantees be called.

8. Goodwill and Other Intangible Assets

Amortized intangible assets, excluding goodwill were comprised of the following:

	July 3, 2004				December 31, 2003
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets:
Licensed technology	$	102	$	101	$	102	$	101
Completed technology		399		240		378		217
Other Intangibles		61		25		43		21
	$	562	$	366	$	523	$	339

Amortization expense on intangible assets was $14 million and $16 million for the three months ended July 3, 2004 and June 28, 2003, respectively, and $27 million and $31 million for the six months ended July 3, 2004 and June 28, 2003, respectively. Amortization expense is estimated to be $56 million for 2004, $47 million in 2005, $39 million in 2006, $33 million in 2007, and $19 million in 2008.

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The following table displays a rollforward of the carrying amount of goodwill from January 1, 2004 to July 3, 2004, by business segment:

Segment	January 1, 2004		Acquired		Adjustments			July 3, 2004
Personal Communications	$	17	$	—	$	—		$	17
Semiconductor Products		202		—		(5	)		197
Global Telecom Solutions		97		—		—			97
Commercial, Government and Industrial Solutions		123		—		—			123
Integrated Electronic Systems		71		—		—			71
Broadband Communications		782		30		1			813
Other Products		124		—		—			124
	$	1,416	$	30	$	(4	)	$	1,442

In May 2004, the Company acquired Quantum Bridge Communications, Inc. (“Quantum Bridge”), a leading provider of fiber-to-the-premises (FTTP) solutions, for approximately $55 million in cash. The results of operations of Quantum Bridge have been included in the Broadband Communications segment in the Company’s condensed consolidated financial statements subsequent to the date of acquisition. As a result of the acquisition, the Company recorded approximately $30 million in goodwill and $15 million in other intangible assets.

9. Commitments and Contingencies

Legal

Iridium Program: Motorola has been named as one of several defendants in putative class action securities lawsuits pending in the District of Columbia arising out of alleged misrepresentations or omissions regarding the Iridium satellite communications business. The plaintiffs seek an unspecified amount of damages. On March 15, 2001, the federal district court judge consolidated the various securities cases under Freeland v. Iridium World Communications, Inc., et al., originally filed on April 22, 1999. Motorola moved to dismiss the plaintiffs’ complaint on July 15, 2002, and that motion has not yet been decided.

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

The Company has not reserved for any potential liability that may arise as a result of litigation related to the Iridium program. While the still pending cases are in various stages and the outcomes are not predictable, an unfavorable outcome of one or more of these cases could have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.

Other: The Company is a defendant in various other lawsuits, including environmental and product-related suits, and is subject to various claims which arise in the normal course of business. In the opinion of management, and other than discussed above with respect to the still pending Iridium cases, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.

Other

The Company is also a party to a variety of agreements pursuant to which it is obligated to indemnify the other party with respect to certain matters. Some of these obligations arise as a result of divestitures of the Company’s assets or businesses and require the Company to hold the other party harmless against losses arising from adverse tax outcomes. The total amount of indemnification under these types of provisions is $79 million and the Company has accrued $26 million as of July 3, 2004 for certain claims that have been asserted under these provisions.

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In addition, the Company may provide indemnifications for losses that result from the breach of general warranties contained in certain commercial, intellectual property and divestiture agreements. Historically, the Company has not made significant payments under these agreements, nor have there been significant claims asserted against the Company as of July 3, 2004.

In all cases, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claims. Further, the Company’s obligations under these agreements are generally limited in terms of duration, typically not more than 24 months and or amounts not in excess of the contract value, and in some instances, the Company may have recourse against third parties for certain payments made by the Company.

10. Segment Information

Summarized below are the Company’s segment sales and operating earnings (loss) for the three months ended July 3, 2004, and June 28, 2003 and six months ended July 3, 2004, and June 28, 2003. In January 2004, a decision was made to realign the operations of Next Level Communications, Inc. (Next Level), a wholly-owned subsidiary of Motorola, within the Broadband Communications segment (BCS). The financial results of Next Level have been reclassified from the Other Products segment to BCS for all periods presented.

	Three Months Ended								Six Months Ended
	July 3, 2004			June 28, 2003			% Change		July 3, 2004			June 28, 2003			Change
Segment Sales:
Personal Communications Segment	$	3,883		$	2,331		67	%	$	7,964		$	4,778		67	%
Semiconductor Products Segment		1,461			1,115		31			2,857			2,266		26
Global Telecom Solutions Segment		1,443			1,046		38			2,760			1,998		38
Commercial, Govt. and Industrial Solutions Segment		1,124			996		13			2,144			1,859		15
Integrated Electronic Systems Segment		656			516		27			1,310			1,037		26
Broadband Communications Segment		567			430		32			1,055			851		24
Other Products Segment		91			78		17			173			157		10
Adjustments & Eliminations		(525	)		(349	)	50			(1,002	)		(740	)	35
Segment Totals	$	8,700		$	6,163		41		$	17,261		$	12,206		41

	Three Months Ended
	July 3, 2004			% Of Sales		June 28, 2003			% Of Sales
Segment Operating Earnings (Loss):
Personal Communications Segment	$	394		10	%	$	91		4	%
Semiconductor Products Segment		55		4			(125	)	(11	)
Global Telecom Solutions Segment		208		14			19		2
Commercial, Govt. and Industrial Solutions Segment		183		16			114		11
Integrated Electronic Systems Segment		44		7			45		9
Broadband Communications Segment		20		4			5		1
Other Products Segment		(9	)	(10	)		(16	)	(21	)
Adjustments & Eliminations		—		—			3		(1	)
		895					136
General Corporate		(50	)				35
Operating earnings		845		10			171		3
Total other income (expense)		(45	)				(59	)
Earnings before income taxes	$	800				$	112

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	Six Months Ended
	July 3, 2004			% Of Sales		June 28, 2003			% Of Sales
Segment Operating Earnings (Loss):
Personal Communications Segment	$	792		10	%	$	205		4	%
Semiconductor Products Segment		162		6			(246	)	(11	)
Global Telecom Solutions Segment		327		12			48		2
Commercial, Govt. and Industrial Solutions Segment		361		17			176		9
Integrated Electronic Systems Segment		87		7			70		7
Broadband Communications Segment		44		4			18		2
Other Products Segment		(34	)	(20	)		(16	)	(10	)
Adjustments & Eliminations		—		—			(8	)	(1	)
		1,739					247
General Corporate		(72	)				54
Operating earnings		1,667		10			301		2
Total other income		49					68
Earnings before income taxes	$	1,716				$	369

11. Reorganization of Businesses

In an effort to reduce costs, the Company has implemented plans to reduce its workforce, discontinue product lines, exit businesses and consolidate manufacturing and administrative operations. The Company records provisions for employee separation costs and exit costs when they are probable and estimable based on estimates prepared at the time the restructuring plans are approved by management. Employee separation costs consist primarily of ongoing termination benefits, principally severance payments. Exit costs primarily consist of future minimum lease payments on vacated facilities and facility closure costs. At each reporting date, the Company evaluates its accruals for exit costs and employee separation costs to ensure that the accruals are still appropriate. In certain circumstances, accruals are no longer required because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance or were redeployed due to circumstances not foreseen when the original plans were initiated. The Company reverses accruals to income when it is determined they are no longer required.

2004 Charges

Three months ended July 3, 2004

For the three months ended July 3, 2004, the Company recorded reversals of $24 million for reserves no longer needed, of which $3 million was included in Costs of Sales and $21 million was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. Included in the aggregate $24 million are $22 million of reversals for employee separation and exit cost reserves which were no longer needed and $2 million of fixed asset adjustments.

Six months ended July 3, 2004

For the six months ended July 3, 2004, the Company recorded reversals of $45 million for reserves no longer needed, of which $4 million was included in Costs of Sales and $41 million was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. Included in the aggregate $45 million are $37 million of reversals for employee separation and exit cost reserves which were no longer needed and $8 million of fixed asset adjustments.

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Reorganization of Businesses Charges—by Segment

The following table displays the employee separation and exit cost reserve reversals by segment for the three months and six months ended July 3, 2004:

Segment	Three Months Ended July 3, 2004			Six Months Ended July 3, 2004
Personal Communications	$	(8	)	$	(11	)
Semiconductor Products		(1	)		(3	)
Global Telecom Solutions		(1	)		(5	)
Commercial, Government and Industrial Solutions		(1	)		(4	)
Integrated Electronic Systems		—			—
Broadband Communications		(4	)		(6	)
Other Products		—			—
		(15	)		(29	)
General Corporate		(7	)		(8	)
	$	(22	)	$	(37	)

Reorganization of Businesses Accruals

The following table displays a rollforward of the accruals established for exit costs and employee separation costs from January 1, 2004 to July 3, 2004:

	Accruals at January 1, 2004		2004 Additional Charges		2004 Adjustments			2004 Amount Used			Accruals at July 3, 2004
Exit costs – lease terminations	$	143	$	—	$	(3	)	$	(25	)	$	115
Employee separation costs		149		—		(26	)		(84	)		39
	$	292	$	—	$	(29	)	$	(109	)	$	154

Exit Costs – Lease Terminations

At January 1, 2004, the Company had an accrual of $143 million for exit costs. The 2004 adjustments of $(3) million represent reversals of $11 million for accruals no longer needed, partially offset by an $8 million translation adjustment. The $25 million used in 2004 reflects cash payments. The remaining accrual of $115 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, represents future cash payments for lease termination obligations which will extend over several years.

Employee Separation Costs

At January 1, 2004, the Company had an accrual of $149 million for employee separation costs, representing the severance costs for approximately 2,300 employees. The 2004 adjustments of $26 million represent reversals of accruals no longer needed.

During the six months ended July 3, 2004, approximately 1,900 employees were separated from the Company. The $84 million used in 2004 reflects cash payments to these separated employees. The remaining accrual of $39 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, is expected to be paid to approximately 400 separated employees.

2003 Charges

Three months ended June 28, 2003

For the three months ended June 28, 2003, the Company recorded net reversals of $56 million, of which $14 million was included in Costs of Sales and $42 million was recorded under Reorganization of Businesses in the

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Company’s condensed consolidated statements of operations. The aggregate $56 million net reversal is comprised of the following:

	Exit Costs			Employee Separations			Asset Writedowns			Total
Discontinuation of product lines	$	(1	)	$	—		$	—		$	(1	)
Business exits		(2	)		—			—			(2	)
Manufacturing and administrative consolidations		(13	)		(16	)		(24	)		(53	)
	$	(16	)	$	(16	)	$	(24	)	$	(56	)

Discontinuation of Product Lines

For the three months ended June 28, 2003, the Semiconductor Products segment reversed exit cost accruals of $1 million.

Business Exits

For the three months ended June 28, 2003, the Other Products segment reversed exit cost accruals of $2 million.

Manufacturing and Administrative Consolidations

The Company’s actions to consolidate manufacturing operations and to implement strategic initiatives to streamline its global organization resulted in additional charges of $37 million for the three months ended June 28, 2003. The $37 million charge relates to employee separation accruals, primarily in the Semiconductor Products and Commercial, Government and Industrial Solutions segments. These charges were offset by reversals of previous accruals of $90 million, consisting primarily of: (i) $53 million of unused accruals relating to previously expected employee separation costs across all segments, (ii) $24 million, primarily for reserves previously established to cover decommissioning costs which were no longer needed due to the sale of a facility in the Semiconductor Products segment, as well as for the correction in classification of assets which the Company intends to use which were previously classified as held-for-sale, and (iii) $13 million for exit cost accruals no longer required across all segments.

Reorganization of Businesses Charges—by Segment

The following table displays the net charges (reversals) incurred by segment for the three months ended June 28, 2003:

Segment	Exit Costs			Employee Separations			Asset Writedowns			Total
Personal Communications	$	—		$	(13	)	$	—		$	(13	)
Semiconductor Products		(6	)		9			(12	)		(9	)
Global Telecom Solutions		(2	)		(14	)		(4	)		(20	)
Commercial, Government and Industrial Solutions		—			9			—			9
Integrated Electronic Systems		(1	)		(10	)		—			(11	)
Broadband Communications		—			(2	)		(4	)		(6	)
Other Products		(2	)		8			—			6
		(11	)		(13	)		(20	)		(44	)
General Corporate		(5	)		(3	)		(4	)		(12	)
	$	(16	)	$	(16	)	$	(24	)	$	(56	)

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Six months ended June 28, 2003

For the six months ended June 28, 2003, the Company recorded net charges of $10 million, of which $11 million of reversals was included in Costs of Sales and $21 million of net charges was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. The aggregate $10 million net charge is comprised of the following:

	Exit Costs			Employee Separations			Asset Writedowns		Total
Discontinuation of product lines	$	(1	)	$	—		$	—	$	(1	)
Business exits		(2	)		—			—		(2	)
Manufacturing and administrative consolidations		(16	)		(9	)		38		13
	$	(19	)	$	(9	)	$	38	$	10

Discontinuation of Product Lines

For the six months ended June 28, 2003, the Semiconductor Products segment reversed exit cost accruals of $1 million.

Business Exits

For the six months ended June 28, 2003, the Other Products segment reversed exit cost accruals of $2 million.

Manufacturing and Administrative Consolidations

The Company’s actions to consolidate manufacturing operations and to implement strategic initiatives to streamline its global organization resulted in additional charges of $154 million for the six months ended June 28, 2003. These charges consisted primarily of: (i) $77 million in the Semiconductor Products segment primarily for fixed asset impairments related to a manufacturing facility in Texas and employee separation accruals, (ii) $30 million in the Commercial, Government and Industrial Solutions segment related to employee separation costs, and (iii) $26 million in General Corporate for the impairment of assets classified as held-for-sale. These charges were partially offset by reversals of previous accruals of $141 million, consisting primarily of: (i) $87 million relating to unused accruals of previously-expected employee separation costs across all segments, (ii) $36 million, primarily for assets which the Company intends to use that were previously classified as held-for-sale, as well as for reserves previously established to cover decommissioning costs which were no longer needed due to the sale of a facility in the Semiconductor Products segment, and (iii) $18 million for exit cost accruals no longer required across all segments.

Reorganization of Businesses Charges—by Segment

The following table displays the net charges (reversals) incurred by segment for the six months ended June 28, 2003:

Segment	Exit Costs			Employee Separations			Asset Writedowns			Total
Personal Communications	$	(1	)	$	(11	)	$	(7	)	$	(19	)
Semiconductor Products		(6	)		11			33			38
Global Telecom Solutions		(3	)		(17	)		(6	)		(26	)
Commercial, Government and Industrial Solutions		(2	)		20			—			18
Integrated Electronic Systems		(1	)		(12	)		—			(13	)
Broadband Communications		2			(6	)		(4	)		(8	)
Other Products		(2	)		7			—			5
		(13	)		(8	)		16			(5	)
General Corporate		(6	)		(1	)		22			15
	$	(19	)	$	(9	)	$	38		$	10

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Reorganization of Businesses Accruals

The following table displays a rollforward of the accruals established for exit costs from January 1, 2003 to June 28, 2003:

Exit Costs

	Accruals at January 1, 2003		2003 Additional Charges		2003 Adjustments			2003 Amount Used			Accruals at June 28, 2003
Discontinuation of product lines	$	6	$	—	$	(1	)	$	(5	)	$	—
Business exits		82		—		(2	)		(11	)		69
Manufacturing & administrative consolidations		129		2		(18	)		(19	)		94
	$	217	$	2	$	(21	)	$	(35	)	$	163

The 2003 adjustments of $21 million represent reversals for reserves no longer needed. The $35 million used in 2003 reflects cash payments of $30 million and non-cash utilization of $5 million. The remaining accrual of $163 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, represents future cash payments, primarily for lease termination obligations, which will extend over several years.

The following table displays a rollforward of the accruals established for employee separation costs from January 1, 2003 to June 28, 2003:

Employee Separation Costs

	Accruals at January 1, 2003		2003 Additional Charges		2003 Adjustments			2003 Amount Used			Accruals at June 28, 2003
Manufacturing & administrative consolidations	$	419	$	78	$	(87	)	$	(235	)	$	175

At January 1, 2003, the Company had an accrual of $419 million for employee separation costs, representing the severance costs for approximately 7,200 employees. The 2003 net reversals of $9 million represent additional charges of $78 million and reversals of $87 million. The additional charges for employee separation costs represent the severance costs for approximately an additional 1,700 employees.

During the first half of 2003, approximately 5,400 employees were separated from the Company. The $235 million used in 2003 reflects cash payments of $229 million and non-cash utilization of $6 million to these separated employees. The remaining accrual of $175 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, is expected to be paid to approximately 3,500 employees.

12. Acquisitions of Businesses

Quantum Bridge

In May 2004, the Company acquired Quantum Bridge Communications, Inc. (“Quantum Bridge”), a leading provider of fiber-to-the-premises (FTTP) solutions, for $55 million in cash. Terms of the acquisition include contingent purchase price payments, to be made by Motorola to the sellers, not to exceed $143 million. The payments are contingent upon certain milestones being met primarily related to future revenue targets. Certain milestones extend through 2007. These contingent payments will be included as part of the purchase price if and when the milestones are met. The Company recorded $30 million in goodwill, none of which is expected to be deductible for tax purposes, a $15 million charge for acquired in-process research and

23

development costs and $15 million in other intangible assets. The acquired in-process research and development will have no alternative future uses if the products are not feasible. The allocation of value to in-process research and development was determined using expected future cash flows discounted at average risk adjusted rates reflecting both technological and market risk as well as the time value of money. These research and development costs were written off at the date of acquisition and have been included in Other Charges in the Company’s condensed consolidated statements of operations. Goodwill and other intangible assets are included in Other Assets in the Company’s condensed consolidated balance sheets. The intangible assets will be amortized over periods ranging from four to 14 years on a straight-line basis.

The results of operations of Quantum Bridge have been included in the Broadband Communications segment in the Company’s condensed consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this acquisition on the Company’s financial statements were not significant.

At the date of the acquisition, two projects were in process, ranging from 28% to 56% complete. The average risk adjusted rate used to value these projects was 45%. Both projects are expected to begin generating revenue in 2005.

Winphoria

In May 2003, the Company acquired Winphoria Networks, Inc. (“Winphoria”), a core infrastructure provider of next-generation packet-based mobile switching centers for wireless networks, for $179 million in cash. The Company recorded $93 million in goodwill, none of which is expected to be deductible for tax purposes, a $32 million charge for acquired in-process research and development costs, and $54 million in other intangible assets. The acquired in-process research and development will have no alternative future uses if the products are not feasible. The allocation of value to in-process research and development was determined using expected future cash flows discounted at average risk adjusted rates reflecting both technological and market risk as well as the time value of money. These research and development costs were written off at the date of acquisition and have been included in Other Charges in the Company’s condensed consolidated statements of operations. Goodwill and intangible assets are included in Other Assets in the Company’s condensed consolidated balance sheets. The intangible assets are being amortized over periods ranging from 3 to 5 years on a straight-line basis.

The results of operations of Winphoria have been included in the Global Telecom Solutions segment in the Company’s condensed consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this acquisition on the Company’s financial statements were not significant.

At the date of the acquisition, a total of eight projects were in process, ranging from 29% to 82% complete. The average risk adjusted rate used to value these projects ranged from 25% to 28%. Four of these projects began generating revenue in 2004 with one to generate revenue in 2005 and the remaining three in 2006.

13. Freescale Semiconductor, Inc. Separation

During the three months ended July 3, 2004, the Company completed the separation of its Semiconductor Products segment into Freescale Semiconductor, Inc. (Freescale Semiconductor). In conjunction with the separation, the Company incurred separation costs of $41 million and $50 million for the three months and six months ended July 3, 2004, respectively. These costs relate to third-party legal fees, information technology, transaction taxes and other services. Additionally, the separation of legal entities created a basis difference for statutory purposes resulting in the recording of $31 million of deferred taxes with the offset recorded as an increase in Additional Paid-In Capital included in the Company’s condensed consolidated balance sheets.

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In July 2004, Freescale Semiconductor completed an initial public offering (IPO) of approximately 121.6 million shares of Freescale Semiconductor Class A common stock. The net proceeds to Freescale Semiconductor from the IPO, as well as the subsequent sale of an additional 8.4 million shares of Class A common stock in connection with the partial exercise of the overallotment option, were $1.6 billion. Following these transactions, approximately 32.5% of the total outstanding common stock of Freescale Semiconductor is held by the general public and 67.5% is held by Motorola. Motorola owns all of Freescale Semiconductor’s Class B common stock, which is entitled to five votes per share on all matters to be voted on by Freescale Semiconductor’s stockholders and represents approximately 91.2% of Freescale Semiconductor’s total voting power.

At the same time as the IPO, Freescale Semiconductor issued senior debt securities in an aggregate principal amount of $1.25 billion, consisting of $400 million of floating rate notes due 2009, $350 million of 6.875% notes due 2011 and $500 million of 7.125% notes due 2014. In conjunction with this public offering of senior debt securities, Freescale Semiconductor entered into interest rate swaps to change the characteristics of the interest rate payments from fixed-rate payments to short-term variable rate LIBOR-based payments on the $350 million of 6.875% notes due 2011 and the $500 million of 7.125% notes due 2014. Freescale Semiconductor distributed approximately $1.1 billion of proceeds to Motorola.

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Motorola, Inc. And Subsidiaries

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

This commentary should be read in conjunction with the Company’s condensed consolidated financial statements for the three months and six months ended July 3, 2004 and June 28, 2003, as well as the Company’s consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2003.

Executive Overview

Our Business

Motorola, Inc. is a global leader in wireless, broadband and automotive communications technologies and embedded electronic products.

• Wireless

Handsets: We are one of the world’s leading providers of wireless handsets, which transmit and receive voice, text, images and other forms of information and communication.

Wireless Networks: We also develop, manufacture and market public and enterprise wireless infrastructure communications systems, including hardware, software and service.

Mission-Critical Information Systems: In addition, we are a leading provider of customized, mission-critical radio communications and information systems.

• Broadband

We are a global leader in developing and deploying end-to-end digital broadband entertainment, communication and information systems for the home and for the office. Motorola broadband technology enables network operators and retailers to deliver products and services that connect consumers to what they want, when they want it.

• Automotive

We are the world’s market leader in embedded telematics systems that enable automated roadside assistance, navigation and advanced safety features for automobiles. Motorola also provides integrated electronics for the powertrain, chassis, sensors and interior controls.

• Semiconductor

We also are a leading producer of embedded processing and connectivity products for the automotive, networking and wireless communications industries, through our majority-owned subsidiary, Freescale Semiconductor, Inc. (Freescale Semiconductor). In July 2004, an initial public offering of a minority interest of approximately 32.5% of Freescale Semiconductor was completed.

Second Quarter Highlights

Our net sales were $8.7 billion in the second quarter of 2004, up 41% from $6.2 billion in the second quarter of 2003. Net sales in all six of the Company’s major operating segments increased in the second quarter of 2004 compared to the second quarter of 2003. The overall increase in net sales was primarily due to a $1.6 billion, or 67%, increase in net sales by our wireless handset business, driven by strong demand for new products, reflected by a 52% increase in unit shipments and a 16% increase in average selling price (ASP) compared to the second

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quarter of 2003. Our wireless infrastructure business had increased net sales in all regions, particularly in Asia and North America, and in all technologies. We believe that our sales growth in the wireless infrastructure business outpaced the industry, resulting in increased market share for the second straight quarter. Our semiconductor business had increased net sales in all end-market user groups, particularly in the networking and wireless markets. Net sales in this business were also positively impacted by the success of our wireless handset business, which is the semiconductor business’ largest customer. Our broadband business had increased net sales due to increased purchases of cable set-tops and modems by cable operators and a mix shift in digital set-top boxes towards higher-end products.

We had pre-tax earnings of $800 million in the second quarter of 2004, compared to pre-tax earnings of $112 million in the second quarter of 2003. After taxes, we reported a net loss of $203 million in the second quarter of 2004, compared to net earnings of $119 million in the second quarter of 2003. The net loss in the second quarter of 2004 was due to the non-cash tax expense of $898 million related to the establishment of a deferred tax asset valuation reserve associated with the initial public offering of Freescale Semiconductor. All six of the Company’s major segments had increased earnings before income tax in the second quarter of 2004 compared to the second quarter of 2003, driven primarily by increased net sales in all segments. Improved manufacturing capacity utilization and other manufacturing efficiencies contributed to the gross margin improvement in our semiconductor business. A favorable product mix, due to a higher proportion of higher-margin subscriber sales, supply-chain efficiencies and overall cost structure improvements resulted in increased earnings for our public safety and enterprise business. Overall R&D expenditures decreased as a percentage of net sales, which is in-line with our continued focus on engineering effectiveness throughout the Company. In addition, a decrease in investment impairment charges, largely due to a recovery of a previously-impaired investment, contributed to the improvement in earnings before income tax in the second quarter of 2004 compared to the second quarter of 2003.

In the second quarter of 2004, we had $22 million in reversals of accruals no longer needed related to reorganization of businesses. The $22 million of reversals constitute less than 3% of the Company’s $800 million in earnings before income tax in the second quarter of 2004.

We continued to strengthen our balance sheet in the second quarter of 2004. In the second quarter, we had positive operating cash flow of $994 million. This increase in operating cash flow gave the Company a net cash* position of $1.8 billion at the end of the quarter. We reduced our gross debt** by an additional $464 million in the second quarter and have reduced it by over $1 billion in the first half of 2004.

Looking Forward

As we said at the beginning of 2004, first and foremost, we are focused on increasing profitable sales and growing market share. Demand for many of our products was quite strong in the second quarter, reflected by increased net sales and pre-tax earnings in the second quarter of 2004. We remain cautiously optimistic about the economic recovery for information technology products, especially in the areas of communications and related industries. We believe we are well positioned to take advantage of these positive market conditions. Our unique advantage is providing compelling communication products for the mobile user, connecting the auto, the home and the enterprise, including the public safety market. Seamless mobility is our unique core competency and one that will continue to differentiate Motorola from our competitors over the next several years.

We are excited about the range of our new product offerings this year in our wireless handset, network infrastructure, broadband communications, semiconductor, automotive and government and public safety businesses, and we are optimistic about continued demand for our products. It remains challenging to manage manufacturing capacity and component supplies.

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  * Net Cash = Cash and Cash Equivalents + Short-term Investments – Notes Payable and Current Portion of Long-term Debt – Long-term Debt – Trust Originated Preferred Securities (“TOPrS”)

** Gross Debt = Notes Payable and Current Portion of Long-term Debt + Long-term Debt + TOPrS

We are in extremely competitive businesses and face new and established competitors regularly. In Asia, our wireless handset business has experienced increased competition throughout 2003 and continuing in 2004, particularly in China. We continue to introduce compelling new products in order to remain a leading supplier.

The programs described below are designed to address some of the key challenges we face as we focus on increasing profitable sales and growing market share:

• Improved Execution. We have various programs in place to accelerate our timely delivery of products with higher levels of quality that will result in increased levels of customer delight.

• Improved Cost Structure. We will continue to focus on programs and operational efficiencies that drive down our fixed and discretionary costs. This includes minimizing cost of poor quality, managing costs of purchased materials and services through an improved procurement process, and improving the new product introduction process and engineering effectiveness throughout our business.

• Improved Customer Focus. We are implementing new company-wide programs to further embrace our customers on both a strategic and tactical basis. We believe our customers, together with our employees, are the Company’s most important assets and must be treated as such every day.

• Increased Brand Recognition. We are investing in the Motorola corporate brand as well as broadening our efforts for our consumer handset and broadband products. We believe this is critical to establish Motorola as the preeminent supplier of communications technology products and devices for the connected world.

• Increased Investment in Our Long-Term Technology Portfolio. We are continuing to identify and resource our core competencies and disruptive technologies to ensure that we can continue to lead in our markets over the next decade.

We believe that we have the resources in place to drive further improvement on these initiatives throughout 2004.

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Results of Operations

(Dollars in millions, except per share amounts)	Three Months Ended										Six Months Ended
	July 3, 2004			% of Sales		June 28, 2003			% of Sales		July 3, 2004			% of Sales		June 28, 2003			% of Sales
Net sales	$	8,700				$	6,163				$	17,261				$	12,206
Costs of sales		5,531		63.6	%		4,155		67.4	%		11,224		65.0	%		8,222		67.4	%
Gross margin		3,169		36.4	%		2,008		32.6	%		6,037		35.0	%		3,984		32.6	%
Selling, general and administrative expenses		1,321		15.2	%		937		15.2	%		2,465		14.3	%		1,834		15.0	%
Research and development expenditures		990		11.4	%		951		15.4	%		1,957		11.3	%		1,898		15.5	%
Reorganization of businesses		(21	)	(0.2	)%		(42	)	(0.7	)%		(41	)	(0.2	)%		21		0.2	%
Freescale Semiconductor separation costs		41		0.4	%		—		—			50		0.3	%		—		—
Other income		(7	)	(0.1	)%		(9	)	(0.1	)%		(61	)	(0.4	)%		(70	)	(0.6	)%
Operating earnings		845		9.7	%		171		2.8	%		1,667		9.7	%		301		2.5	%
Other income (expense):
Interest expense, net		(60	)	(0.7	)%		(59	)	(1.0	)%		(127	)	(0.7	)%		(152	)	(1.3	)%
Gains on sales of investments and businesses, net		15		0.2	%		28		0.5	%		196		1.1	%		307		2.5	%
Other		—		—			(28	)	(0.5	)%		(20	)	(0.1	)%		(87	)	(0.7	)%
Total other income (expense)		(45	)	(0.5	)%		(59	)	(1.0	)%		49		0.3	%		68		0.5	%
Earnings before income taxes		800		9.2	%		112		1.8	%		1,716		10.0	%		369		3.0	%
Income tax expense		1,003		11.5	%		(7	)	(0.1	)%		1,310		7.6	%		81		0.7	%
Net earnings (loss)	$	(203	)	(2.3	)%	$	119		1.9	%	$	406		2.4	%	$	288		2.4	%
Diluted earnings (loss) per common share	$	(.09	)			$	0.05				$	0.17				$	0.12

Results of Operations—Three months ended July 3, 2004 compared to three months ended June 28, 2003

Net sales

Net sales were $8.7 billion in the second quarter of 2004, up 41% from $6.2 billion in the second quarter of 2003. Net sales increased in all six of the Company’s major segments in the second quarter of 2004 compared to the second quarter of 2003. The overall increase in net sales was due to: (i) a $1.6 billion increase in net sales by the Personal Communications segment (PCS), driven by a 52% increase in unit shipments and a 16% increase in average selling price (ASP), reflecting strong sales of new products, (ii) a $397 million increase in net sales by the Global Telecom Solutions segment (GTSS), driven by an increase in capital expenditures by the segment’s wireless service provider customers and reflecting sales growth in all technologies and all regions, (iii) a $346 million increase in net sales by the Semiconductor Products segment (SPS), reflecting increased sales in all end-market groups, particularly in the networking and wireless markets, driven by increased demand from wireless customers, in particular the Company’s wireless handset business, (iv) a $140 million increase in net sales by the Integrated Electronics Systems segment (IESS), primarily due to increased sales in the automotive electronics market, particularly of telematics products, and increased sales of portable energy storage products, reflecting the success of the Company’s wireless handset business, (v) a $137 million increase in net sales by the Broadband Communications segment (BCS), primarily due to increased purchases of cable set-tops and modems by cable operators and a mix shift in digital set-top boxes towards higher-end products, and (vi) a $128 million increase in

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net sales by the Commercial, Government and Industrial Solutions segment (CGISS), reflecting increased spending by customers in the segment’s government market in response to global homeland security initiatives, and increased sales in the segment’s enterprise business.

Gross margin

Gross margin was $3.2 billion, or 36.4% of net sales, in the second quarter of 2004, compared to $2.0 billion, or 32.6% of net sales, in the second quarter of 2003. All six of the Company’s major segments had a higher gross margin in the second quarter of 2004 compared to the second quarter of 2003, and four of the six major segments had a higher gross margin as a percentage of net sales. The improvement in gross margin in the second quarter of 2004 compared to the second quarter of 2003 was primarily due to the 41% increase in net sales. Improvements in gross margin were also driven by: (i) improvements in SPS, primarily due to increased manufacturing capacity utilization, and (ii) improvements in CGISS, due to a favorable product mix, reflecting a higher proportion of higher-margin subscriber sales, and supply-chain efficiencies.

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenditures were $1.3 billion, or 15.2% of net sales, in the second quarter of 2004, compared to $937 million, or 15.2% of net sales, in the second quarter of 2003. General expenditures increased in the second quarter of 2004 compared to the second quarter of 2003, primarily due to an increase in employee incentive program accruals in all six major segments. Selling expenditures also increased, primarily due to: (i) increased advertising and promotional expenditures, primarily in PCS, and increased marketing expenditures in all six major segments, and (ii) increased selling and sales support expenditures in all six major segments, primarily due to an increase in sales commissions relating to the increase in net sales.

Research and development expenditures

Research and development (R&D) expenditures were $990 million, or 11.4% of net sales, in the second quarter of 2004, compared to $951 million, or 15.4% of net sales, in the second quarter of 2003. The slight increase in R&D expenditures was primarily due to increased developmental engineering expenditures by PCS and CGISS. These increases were partially offset by decreased R&D expenditures by GTSS and SPS, primarily due to improved engineering efficiencies.

Reorganization of businesses

The Company recorded income of $24 million related to reorganization of businesses in the second quarter of 2004, reflecting reversals of accruals no longer needed, of which $21 million was recorded in the condensed consolidated statements of operations under Reorganization of Businesses and $3 million was recorded in Costs of Sales. Included in the aggregate $24 million are $22 million of reversals of employee separation and exit cost reserves, which were no longer needed, and $2 million of fixed asset adjustments. The $22 million in reversals constitutes less than 3% of the Company’s $800 million in earnings before income taxes in the second quarter of 2004.

The Company recorded income of $56 million related to reorganization of businesses in the second quarter of 2003, reflecting reversals of accruals no longer needed, of which $42 million was recorded in the condensed consolidated statements of operations under Reorganization of Businesses and $14 million was recorded in Costs of Sales. Included in the aggregate $56 million were $32 million of reversals of employee separation and exit cost reserves, which were no longer needed, and $24 million of fixed asset adjustments. These reversals are discussed in further detail in the “Reorganization of Businesses Charges” section below.

Freescale Semiconductor separation costs

In the second quarter of 2004, the Company incurred $41 million in costs relating to the separation of its semiconductor operations into a wholly-owned subsidiary, Freescale Semiconductor. These costs are incremental and non-recurring and include transaction taxes, third-party legal fees, information technology and other services.

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As further described below under “Liquidity—Freescale Semiconductor, Inc.”, in July 2004, 32.5% of the total outstanding common stock was sold for approximately $1.6 billion in an initial public offering.

Other charges (income)

The Company recorded income of $7 million in Other Charges (Income) in the second quarter of 2004, compared to income of $9 million in the second quarter of 2003. The income of $7 million in the second quarter of 2004 primarily consisted of $21 million in income from the reversal of financing receivable reserves due to the partial collection of a previously-uncollected receivable, partially offset by a $15 million charge for in-process research and development related to the acquisition of Quantum Bridge Communications, Inc. (Quantum Bridge). The income of $9 million in the second quarter of 2003 primarily consisted of: (i) $33 million in income from the sale of assets related to the Iridium program that had been previously written down, and (ii) $7 million in income from the reversal of accruals no longer needed due to a settlement with the Company’s insurer on items related to previous environmental claims, partially offset by a $32 million charge for in-process research and development related to the acquisition of Winphoria Networks, Inc.

Net interest expense

Net interest expense was $60 million in the second quarter of 2004, compared to $59 million in the second quarter of 2003. Net interest expense in the second quarter of 2004 included interest expense of $92 million, partially offset by interest income of $32 million. Net interest expense in the second quarter of 2003 included interest expense of $108 million, partially offset by $49 million of interest income. The slight increase in net interest expense in the second quarter of 2004 compared to the second quarter of 2003 is attributable to the reduction in interest income. Second quarter 2003 interest income exceeded 2004 interest income due to: (i) interest received on a tax refund in the second quarter of 2003 that was not repeated in the second quarter of 2004, and (ii) greater interest income earned on long-term finance receivables during the second quarter of 2003 than during the second quarter of 2004, partially offset by a higher average balance of cash and cash equivalents in the second quarter of 2004. The reduction in interest income was partially offset by a reduction in interest expense due to: (i) additional benefits derived during the second quarter of 2004 from fixed-to-floating interest rate swaps, and (ii) a reduction in total debt at the end of the second quarter of 2004 compared to the end of the second quarter of 2003.

Gains on sales of investments and businesses

Gains on sales of investments and businesses in the second quarter of 2004 were $15 million, compared to gains of $28 million in the second quarter of 2003. In the second quarter of 2004, the net gains were primarily related to: (i) a $20 million gain resulting from the reversal of indemnification reserves relating to a business previously sold, and (ii) the sale of equity securities of other companies held for investment purposes, partially offset by an $11 million loss on the sale of a BCS manufacturing facility in Nuremberg, Germany. In the second quarter of 2003, the net gains primarily resulted from the recognition of a deferred gain from the 2001 sale of cellular properties upon receipt of final payment.

Other

Charges classified as Other, as presented in Other Income (Expense), resulted in net charges of less than $1 million in the second quarter of 2004, compared to net charges of $28 million in the second quarter of 2003. Charges classified as Other in the second quarter of 2004 were primarily comprised of: (i) foreign currency losses of $16 million, and (ii) $5 million in minority interest charges, partially offset by $20 million in income related to the recovery of a previously impaired debt holding in a European cable operator. Charges classified as Other in the second quarter of 2003 were primarily comprised of: (i) foreign currency losses of $28 million, and (ii) investment impairment charges of $12 million, partially offset by $11 million of equity in net earnings of affiliated companies.

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Effective tax rate

The effective tax rate was 125% in the second quarter of 2004, representing a $1.0 billion net tax expense, compared to a (6)% effective tax rate, representing a $7 million net tax benefit, in the second quarter of 2003.

The Company’s effective tax rate in the second quarter of 2004 was significantly impacted by: (i) the recording of a $898 million non-cash tax charge for the establishment of a valuation reserve on Freescale Semiconductor’s net deferred tax assets, (ii) the reversal of $197 million of previously-accrued income taxes as the result of settlements reached with taxing authorities and a reassessment of tax exposures based on the status of current audits, (iii) the recording of non-deductible costs relating to the Freescale Semiconductor separation, and (iv) the recording of non-deductible charges related to the acquisition of Quantum Bridge. The Company’s tax rate for the second quarter of 2004, excluding the above items, would have been 35%. The Company’s tax rate for the second quarter of 2003, excluding tax reversals and impact from non-deductible acquisition charges, would have been 37%.

The Company expects the effective tax rate for the full year 2004 to be approximately 35%, excluding the non-cash tax charge for Freescale Semiconductor’s deferred tax valuation allowance and the reversal of previously-accrued income taxes.

Earnings/(Loss)

The Company had earnings before income taxes of $800 million in the second quarter of 2004, compared with earnings before income taxes of $112 million in the second quarter of 2003. After taxes, the Company recorded a net loss of $203 million, or $(0.09) per diluted share, in the second quarter of 2004, compared with net earnings of $119 million, or $0.05 per diluted share, in the second quarter of 2003.

The $688 million increase in earnings before income taxes in the second quarter of 2004 compared to the second quarter of 2003 is primarily attributed to: (i) a $1.2 billion increase in gross margin, primarily due to (a) a $2.5 billion increase in net sales, (b) improved manufacturing utilization rates and manufacturing efficiencies in SPS, and (c) favorable product mix and supply-chain efficiencies in CGISS, and (ii) a $28 million decrease in charges classified as Other, primarily due to: (a) $20 million in income in the second quarter of 2004 related to the recovery of a previously-impaired debt holding in a European cable operator, and (b) a reduction in foreign currency losses and investment impairment charges. These improvements in earnings before income taxes were partially offset by: (i) a $384 million increase in SG&A expenditures, which was driven by: (a) an increase in general expenditures, primarily due to an increase in employee incentive program accruals, and (b) an increase in selling expenditures, driven by an increase in advertising and promotional expenditures, particularly in PCS, as well as increased selling and sales support expenditures in all six major segments, primarily due to an increase in sales commissions relating to the increase in net sales, (ii) $41 million in costs associated with the separation of the Company’s semiconductor operations into Freescale Semiconductor, (iii) a $39 million increase in R&D expenditures, due primarily to the increase in developmental engineering expenditures by PCS, as the segment continues to focus on developing compelling new products, and increased developmental engineering expenditures by CGISS, (iv) a $21 million decrease in income related to reorganization of businesses, primarily due to a decline in reversals of accruals no longer needed in the second quarter of 2004, and (v) a $13 million decrease in gains on the sales of investments.

Results of Operations—Six months ended July 3, 2004 compared to six months ended June 28, 2003

Net sales

Net sales were $17.3 billion in the first half of 2004, up 41% from $12.2 billion in the first half of 2003. Net sales increased in all six of the Company’s major segments in the first half of 2004 compared to the first half of 2003. The overall increase in net sales was due to: (i) a $3.2 billion increase in net sales by PCS, reflecting a 51% increase in unit shipments and a 16% increase in ASP, driven primarily by strong sales of new products, (ii) a

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$762 million increase in net sales by GTSS, driven by an increase in capital expenditures by the segment’s wireless service provider customers and reflecting sales growth in all technologies and all regions, (iii) a $591 million increase in net sales by SPS, reflecting increased net sales in all end-market groups, particularly in the networking and wireless markets, (iv) a $285 million increase in net sales by CGISS, reflecting increased spending by customers in the segment’s government market, in response to global homeland security initiatives, and reflecting increased sales in all regions, (v) a $273 million increase in net sales by IESS, primarily due to increased sales in the automotive electronics market, particularly of telematic products, and increased sales of portable energy storage products, are reflecting the success of the Company’s wireless handset business, and (vi) a $204 million increase in net sales by BCS, primarily due to increased purchases of cable set-tops and modems by cable operators, a mix shift in digital set-top boxes towards higher-end products and an increase in retail sales.

Gross margin

Gross margin was $6.0 billion, or 35.0% of net sales, in the first half of 2004, compared to $4.0 billion, or 32.6% of net sales, in the first half of 2003. All six of the Company’s major segments had a higher gross margin in the first half of 2004 compared to the first half of 2003, and five of the six major segments had a higher gross margin as a percentage of net sales. The improvement in gross margin in the first half of 2004 compared to the first half of 2003 was primarily due to the 41% increase in net sales. Improvements in gross margin were also driven by: (i) improvements in SPS, primarily due to increased manufacturing capacity utilization, and (ii) improvements in CGISS, due to a favorable product mix, reflecting a higher proportion of higher-margin subscriber sales, and supply-chain efficiencies.

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenditures were $2.5 billion, or 14.3% of net sales, in the first half of 2004, compared to $1.8 billion, or 15.0% of net sales, in the first half of 2003. General expenditures increased in the first half of 2004 compared to the first half of 2003, primarily due to an increase in employee incentive program accruals in all six major segments. Selling expenditures also increased, primarily due to: (i) increased advertising and promotional expenditures, primarily in PCS, and increased marketing expenditures in all six major segments, and (ii) increased selling and sales support expenditures, primarily due to an increase in sales commissions relating to the increase in net sales.

Research and development expenditures

Research and development (R&D) expenditures were $2.0 billion, or 11.3% of net sales, in the first half of 2004, compared to $1.9 billion, or 15.5% of net sales, in the first half of 2003. The increase in R&D expenditures was primarily due to increased developmental engineering expenditures by PCS and CGISS. These increases were partially offset by decreased R&D expenditures by GTSS and SPS, primarily due to improved engineering efficiencies.

Reorganization of businesses

The Company recorded income of $45 million related to reorganization of businesses in the first half of 2004, reflecting reversals of accruals no longer needed, of which $41 million was recorded in the condensed consolidated statements of operations under Reorganization of Businesses and $4 million was recorded in Costs of Sales. Included in the aggregate $45 million are $37 million of reversals of employee separation and exit cost reserves, which were no longer needed, and $8 million of fixed asset adjustments. The $37 million in reversals constitutes approximately 2% of the Company’s $1.7 billion in earnings before income taxes in the first half of 2004.

Total reorganization of businesses charges in the first half of 2003 were $10 million, of which $21 million in charges was recorded in the condensed consolidated statements of operations under Reorganization of Businesses and $11 million of income from the reversal of accruals no longer needed was recorded in Costs of

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Sales. Included in the aggregate $10 million of charges are $28 million of reversals of employee separation and exit cost reserves, which were no longer needed, and $38 million of fixed asset adjustments. These charges and reversals are discussed in further detail in the “Reorganization of Businesses Charges” section below.

Freescale Semiconductor separation costs

In the first half of 2004, the Company incurred $50 million in costs relating to the separation of its semiconductor product business into a wholly-owned subsidiary, Freescale Semiconductor. These costs are incremental and non-recurring and include transaction taxes, third-party legal fees, information technology and other services.

Other charges (income)

The Company recorded income of $61 million in Other Charges (Income) in the first half of 2004, compared to income of $70 million in the first half of 2003. The income of $61 million in the first half of 2004 primarily consisted of: (i) $52 million in income from the reversal of reserves for previously-received incentives related to impaired semiconductor facilities, and (ii) $21 million in income from the reversal of financing receivable reserves due to the partial collection of a previously-uncollected receivable, partially offset by a $15 million charge for in-process research and development related to the acquisition of Quantum Bridge. The income of $70 million in the first half of 2003 was primarily comprised of: (i) $59 million in income due to the reassessment of remaining reserve requirements as a result of a litigation settlement with the Chase Manhattan Bank regarding Iridium, (ii) $33 million in income from the sale of assets related to the Iridium program that had been previously written down, and (iii) $7 million in income from the reversal of accruals no longer needed due to a settlement with the Company’s insurer on items related to previous environmental claims, partially offset by a $32 million charge for in-process research and development related the acquisition of Winphoria Networks, Inc.

Net interest expense

Net interest expense was $127 million in the first half of 2004, compared to $152 million in the first half of 2003. Net interest expense in the first half of 2004 included interest expense of $195 million, partially offset by interest income of $68 million. Net interest expense in the first half of 2003 included interest expense of $225 million, partially offset by $73 million of interest income. The decrease in net interest expense in the first half of 2004 compared to the first half of 2003 is attributable to the reduction in interest expense. The reduction in interest expense was primarily due to: (i) additional benefits derived during the first half of 2004 from fixed-to-floating interest rate swaps, and (ii) a reduction in total debt at the end of the first half of 2004 compared to the end of the first half of 2003.

Gains on sales of investments and businesses

Gains on sales of investments and businesses in the first half of 2004 were $196 million, compared to $307 million in the first half of 2003. In the first half of 2004, the net gains were primarily related to: (i) a $130 million gain on the sale of the Company’s remaining investment in Broadcom Corporation, and (ii) a $41 million gain on the sale of a portion of the Company’s investment in Semiconductor Manufacturing International Corporation. In the first half of 2003, the gains primarily resulted from the sale of 25 million shares of Nextel Communications, Inc. held by the Company for investment purposes.

Other

Charges classified as Other, as presented in Other Income (Expense), resulted in net charges of $20 million in the first half of 2004, compared to net charges of $87 million in the first half of 2003. Charges classified as Other in the second quarter of 2004 were primarily comprised of: (i) foreign currency losses of $19 million, (ii) $13 million in minority interest charges, and (iii) $9 million in investment impairment charges, partially offset by

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$20 million in income related to the recovery of a previously-impaired debt holding in a European cable operator. Charges classified as Other in the second quarter of 2003 were primarily comprised of: (i) $59 million in investment charges, primarily comprised of a $29 million charge to write down to zero the Company’s debt holding in a European cable operator, and (ii) foreign currency losses of $40 million, partially offset by $14 million of equity in net earnings of affiliated companies.

Effective tax rate

The effective tax rate was 76% in the first six months of 2004, representing a $1.3 billion net tax expense, compared to a 22% effective tax rate, representing an $81 million net tax expense, in the first six months of 2003.

The Company’s effective tax rate in the first six months of 2004 was significantly impacted by: (i) the recording of a $898 million non-cash tax charge for the establishment of a valuation reserve on the Freescale Semiconductor’s net deferred tax assets, (ii) the reversal of $197 million of previously-accrued income taxes as the result of settlements reached with taxing authorities and a reassessment of tax exposures based on the status of current audits, (iii) the recording of non-deductible costs relating to the Freescale Semiconductor separation, and (iv) the recording of non-deductible charges related to the acquisition of Quantum Bridge. The Company’s tax rate for the first half of 2004, excluding the above items, would have been 34%. The Company’s tax rate for the first half of 2003, excluding tax reversals and impact from non-deductible acquisition charges, would have been 35%.

Earnings

The Company had earnings before income taxes of $1.7 billion in the first half of 2004, compared to earnings before income taxes of $369 million in the first half of 2003. After taxes, the Company had net earnings of $406 million, or $0.17 per diluted share, in the first half of 2004, compared to net earnings of $288 million, or $0.12 per diluted share, in the first half of 2003.

The $1.3 billion increase in earnings before income taxes in the first half of 2004 compared to the first half of 2003 is primarily attributed to: (i) a $2.1 billion increase in gross margin, primarily due to (a) a $5.1 billion increase in net sales, (b) improved manufacturing utilization rates and manufacturing efficiencies in SPS, and (c) favorable product mix and supply-chain efficiencies in CGISS, (ii) a $67 million decrease in charges classified as Other, primarily due to: (a) a reduction in foreign currency losses and investment impairment charges, and (b) $20 million in income in the first half of 2004 related to the recovery of a previously-impaired debt holding in a European cable operator, (iii) a $62 million decrease in reorganization of business charges, and (iv) a $25 million decrease in net interest expense. These improvements in operating earnings were partially offset by: (i) a $631 million increase in SG&A expenditures, which was driven by: (a) an increase in general expenditures, primarily due to an increase in employee incentive program accruals, and (b) an increase in selling expenditures, driven by an increase in advertising and promotional expenditures, particularly in PCS, as well as increased selling and sales support expenditures in all six major segments, primarily due to an increase in sales commissions relating to the increase in net sales, (ii) a $111 million decrease in gains on the sales of investments, (iii) a $59 million increase in R&D expenditures, due primarily to the increase in developmental engineering expenditures by PCS, reflected in the high volume of new product offerings, and by CGISS, and (iv) $50 million in costs associated with the separation of the Company’s semiconductor operations into Freescale Semiconductor.

Reorganization of Businesses Charges

In an effort to reduce costs, the Company has implemented plans to reduce its workforce, discontinue product lines, exit businesses and consolidate manufacturing and administrative operations. The Company records provisions for employee separation costs and exit costs when they are probable and estimable based on estimates prepared at the time the restructuring plans are approved by management. Employee separation costs

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consist primarily of ongoing termination benefits, principally severance payments. Exit costs primarily consist of future minimum lease payments on vacated facilities and facility closure costs. At each reporting date, the Company evaluates its accruals for exit costs and employee separation costs to ensure that the accruals are still appropriate. In certain circumstances, accruals are no longer required because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance or were redeployed due to circumstances not foreseen when the original plans were initiated. The Company reverses accruals to income when it is determined they are no longer required.

2004 Charges

Three months ended July 3, 2004

For the three months ended July 3, 2004, the Company recorded reversals of $24 million for reserves no longer needed, of which $3 million was included in Costs of Sales and $21 million was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. Included in the aggregate $24 million are $22 million of reversals for employee separation and exit cost reserves which were no longer needed and $2 million of fixed asset adjustments.

Six months ended July 3, 2004

For the six months ended July 3, 2004, the Company recorded reversals of $45 million for reserves no longer needed, of which $4 million was included in Costs of Sales and $41 million was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. Included in the aggregate $45 million are $37 million of reversals for employee separation and exit cost reserves which were no longer needed and $8 million of fixed asset adjustments.

Reorganization of Businesses Charges—by Segment

The following table displays the employee separation and exit cost reserve reversals by segment for the three months and six months ended July 3, 2004:

Segment	Three Months Ended July 3, 2004			Six Months Ended July 3, 2004
Personal Communications	$	(8	)	$	(11	)
Semiconductor Products		(1	)		(3	)
Global Telecom Solutions		(1	)		(5	)
Commercial, Government and Industrial Solutions		(1	)		(4	)
Integrated Electronic Systems		—			—
Broadband Communications		(4	)		(6	)
Other Products		—			—
		(15	)		(29	)
General Corporate		(7	)		(8	)
	$	(22	)	$	(37	)

Reorganization of Businesses Accruals

The following table displays a rollforward of the accruals established for exit costs and employee separation costs from January 1, 2004 to July 3, 2004:

	Accruals at January 1, 2004		2004 Additional Charges		2004 Adjustments			2004 Amount Used			Accruals at July 3, 2004
Exit costs – lease terminations	$	143	$	—	$	(3	)	$	(25	)	$	115
Employee separation costs		149		—		(26	)		(84	)		39
	$	292	$	—	$	(29	)	$	(109	)	$	154

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Exit Costs – Lease Terminations

At January 1, 2004, the Company had an accrual of $143 million for exit costs. The 2004 adjustments of $(3) million represent reversals of $11 million for accruals no longer needed, partially offset by an $8 million translation adjustment. The $25 million used in 2004 reflects cash payments. The remaining accrual of $115 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, represents future cash payments for lease termination obligations which will extend over several years.

Employee Separation Costs

At January 1, 2004, the Company had an accrual of $149 million for employee separation costs, representing the severance costs for approximately 2,300 employees. The 2004 adjustments of $26 million represent reversals of accruals no longer needed.

During the six months ended July 3, 2004, approximately 1,900 employees were separated from the Company. The $84 million used in 2004 reflects cash payments to these separated employees. The remaining accrual of $39 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, is expected to be paid to approximately 400 separated employees.

2003 Charges

Three months ended June 28, 2003

For the three months ended June 28, 2003, the Company recorded net reversals of $56 million, of which $14 million was included in Costs of Sales and $42 million was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. The aggregate $56 million net reversal is comprised of the following:

	Exit Costs			Employee Separations			Asset Writedowns			Total
Discontinuation of product lines	$	(1	)	$	—		$	—		$	(1	)
Business exits		(2	)		—			—			(2	)
Manufacturing and administrative consolidations		(13	)		(16	)		(24	)		(53	)
	$	(16	)	$	(16	)	$	(24	)	$	(56	)

Discontinuation of Product Lines

For the three months ended June 28, 2003, the Semiconductor Products segment reversed exit cost accruals of $1 million.

Business Exits

For the three months ended June 28, 2003, the Other Products segment reversed exit cost accruals of $2 million.

Manufacturing and Administrative Consolidations

The Company’s actions to consolidate manufacturing operations and to implement strategic initiatives to streamline its global organization resulted in additional charges of $37 million for the three months ended June 28, 2003. The $37 million charge relates to employee separation accruals, primarily in the Semiconductor Products and Commercial, Government and Industrial Solutions segments. These charges were offset by reversals of previous accruals of $90 million, consisting primarily of: (i) $53 million of unused accruals relating to previously expected employee separation costs across all segments, (ii) $24 million, primarily for reserves

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previously established to cover decommissioning costs which were no longer needed due to the sale of a facility in the Semiconductor Products segment, as well as for the correction in classification of assets which the Company intends to use which were previously classified as held-for-sale, and (iii) $13 million for exit cost accruals no longer required across all segments.

Reorganization of Businesses Charges—by Segment

The following table displays the net charges (reversals) incurred by segment for the three months ended June 28, 2003:

Segment	Exit Costs			Employee Separations			Asset Writedowns			Total
Personal Communications	$	—		$	(13	)	$	—		$	(13	)
Semiconductor Products		(6	)		9			(12	)		(9	)
Global Telecom Solutions		(2	)		(14	)		(4	)		(20	)
Commercial, Government and Industrial Solutions		—			9			—			9
Integrated Electronic Systems		(1	)		(10	)		—			(11	)
Broadband Communications		—			(2	)		(4	)		(6	)
Other Products		(2	)		8			—			6
		(11	)		(13	)		(20	)		(44	)
General Corporate		(5	)		(3	)		(4	)		(12	)
	$	(16	)	$	(16	)	$	(24	)	$	(56	)

Six months ended June 28, 2003

For the six months ended June 28, 2003, the Company recorded net charges of $10 million, of which $11 million of reversals was included in Costs of Sales and $21 million of net charges was recorded under Reorganization of Businesses in the Company’s condensed consolidated statements of operations. The aggregate $10 million net charge is comprised of the following:

	Exit Costs			Employee Separations			Asset Writedowns		Total
Discontinuation of product lines	$	(1	)	$	—		$	—	$	(1	)
Business exits		(2	)		—			—		(2	)
Manufacturing and administrative consolidations		(16	)		(9	)		38		13
	$	(19	)	$	(9	)	$	38	$	10

Discontinuation of Product Lines

For the six months ended June 28, 2003, the Semiconductor Products segment reversed exit cost accruals of $1 million.

Business Exits

For the six months ended June 28, 2003, the Other Products segment reversed exit cost accruals of $2 million.

Manufacturing and Administrative Consolidations

The Company’s actions to consolidate manufacturing operations and to implement strategic initiatives to streamline its global organization resulted in additional charges of $154 million for the six months ended June 28, 2003. These charges consisted primarily of: (i) $77 million in the Semiconductor Products segment primarily

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for fixed asset impairments related to a manufacturing facility in Texas and employee separation accruals, (ii) $30 million in the Commercial, Government and Industrial Solutions segment related to employee separation costs, and (iii) $26 million in General Corporate for the impairment of assets classified as held-for-sale. The Company expected total cost-saving benefits of approximately $205 million for these plans implemented in the first half of 2003. These charges were partially offset by reversals of previous accruals of $141 million, consisting primarily of: (i) $87 million relating to unused accruals of previously-expected employee separation costs across all segments, (ii) $36 million, primarily for assets which the Company intends to use that were previously classified as held-for-sale, as well as for reserves previously established to cover decommissioning costs which were no longer needed due to the sale of a facility in the Semiconductor Products segment, and (iii) $18 million for exit cost accruals no longer required across all segments.

Reorganization of Businesses Charges—by Segment

The following table displays the net charges (reversals) incurred by segment for the six months ended June 28, 2003:

Segment	Exit Costs			Employee Separations			Asset Writedowns			Total
Personal Communications	$	(1	)	$	(11	)	$	(7	)	$	(19	)
Semiconductor Products		(6	)		11			33			38
Global Telecom Solutions		(3	)		(17	)		(6	)		(26	)
Commercial, Government and Industrial Solutions		(2	)		20			—			18
Integrated Electronic Systems		(1	)		(12	)		—			(13	)
Broadband Communications		2			(6	)		(4	)		(8	)
Other Products		(2	)		7			—			5
		(13	)		(8	)		16			(5	)
General Corporate		(6	)		(1	)		22			15
	$	(19	)	$	(9	)	$	38		$	10

Reorganization of Businesses Accruals

The following table displays a rollforward of the accruals established for exit costs from January 1, 2003 to June 28, 2003:

Exit Costs

	Accruals at January 1, 2003		2003 Additional Charges		2003 Adjustments			2003 Amount Used			Accruals at June 28, 2003
Discontinuation of product lines	$	6	$	—	$	(1	)	$	(5	)	$	—
Business exits		82		—		(2	)		(11	)		69
Manufacturing & administrative consolidations		129		2		(18	)		(19	)		94
	$	217	$	2	$	(21	)	$	(35	)	$	163

The 2003 adjustments of $21 million represent reversals for reserves no longer needed. The $35 million used in 2003 reflects cash payments of $30 million and non-cash utilization of $5 million. The remaining accrual of $163 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, represents future cash payments, primarily for lease termination obligations, which will extend over several years.

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The following table displays a rollforward of the accruals established for employee separation costs from January 1, 2003 to June 28, 2003:

Employee Separation Costs

	Accruals at January 1, 2003		2003 Additional Charges		2003 Adjustments			2003 Amount Used			Accruals at June 28, 2003
Manufacturing & administrative consolidations	$	419	$	78	$	(87	)	$	(235	)	$	175

At January 1, 2003, the Company had an accrual of $419 million for employee separation costs, representing the severance costs for approximately 7,200 employees. The 2003 net reversals of $9 million represent additional charges of $78 million and reversals of $87 million. The additional charges for employee separation costs represent the severance costs for approximately an additional 1,700 employees.

During the first half of 2003, approximately 5,400 employees were separated from the Company. The $235 million used in 2003 reflects cash payments of $229 million and non-cash utilization of $6 million to these separated employees. The remaining accrual of $175 million, which is included in Accrued Liabilities in the Company’s condensed consolidated balance sheets, is expected to be paid to approximately 3,500 employees.

Liquidity and Capital Resources

As highlighted in the condensed consolidated statements of cash flows, the Company’s liquidity and available capital resources are impacted by four key components: (i) current cash and cash equivalents, (ii) operating activities, (iii) investing activities, and (iv) financing activities.

Cash and Cash Equivalents

At July 3, 2004, the Company’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) aggregated $8.7 billion, compared to $7.9 billion at December 31, 2003 and $6.2 billion at June 28, 2003. On July 3, 2004, $2.5 billion of this amount was held in the U.S. and $6.2 billion was held by the Company or its subsidiaries in other countries. Repatriation of some of these funds could be subject to delay and could have potential adverse tax consequences.

Operating Activities

In the first half of 2004, the Company generated positive cash flow from operations of $1.9 billion, compared to $776 million generated in the first half of 2003. The primary contributors to cash flow from operations in the first half of 2004 were: (i) net earnings, adjusted for non-cash items, of $1.8 billion, (ii) a net increase of $903 million in accounts payable and accrued liabilities, primarily attributed to an increase in accounts payable, as well as increased customer incentive and warranty reserves, and (iii) a decrease in other net operating assets of $229 million. These positive contributors to operating cash flow were partially offset by: (i) a $713 million increase in accounts receivable, (ii) a $342 million increase in other current assets, and (iii) a $29 million increase in inventories.

Accounts Receivable: The Company’s net accounts receivable were $5.1 billion at July 3, 2004, compared to $4.4 billion at December 31, 2003 and $3.6 billion at June 28, 2003. The Company’s days sales outstanding (DSO), excluding net long-term finance receivables, were 53.2 days at July 3, 2004, compared to 49.8 days at December 31, 2003 and 52.3 days at June 28, 2003. The increase in net accounts receivable and DSO at July 3, 2004 compared to December 31, 2003 were primarily due to higher net sales late in the second quarter of 2004, compared to sales late in the second quarter of 2003. Improved receivables management remains a priority to the Company.

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Inventory: The Company’s net inventory was $2.8 billion at each of July 3, 2004, December 31, 2003, and June 28, 2003. The Company’s inventory turns improved to 7.6 at July 3, 2004, compared to 6.3 at December 31, 2003 and 6.0 at June 28, 2003. The increase in inventory turns is evidence of benefits from the Company’s continued focus on inventory and supply-chain management processes. Inventory management continues to be an area of focus as the Company balances the need to maintain strategic inventory levels to ensure competitive delivery performance to its customers with the risk of inventory obsolescence due to rapidly changing technology and customer spending requirements.

Reorganization of Business: In an effort to reduce costs, the Company has implemented plans to reduce its workforce, discontinue product lines, exit businesses and consolidate manufacturing and administrative operations. Cash payments for exit costs and employee separations in connection with the Company’s various reorganization plans were $109 million in the first half of 2004, compared to $30 million in the first half of 2003. Of the $154 million reorganization of business accrual at July 3, 2004, $39 million relates to employee separation costs, the majority of which is expected to be paid in 2004. The remaining $115 million in accruals relate to exit costs, primarily for lease termination obligations, and will result in future cash payments that will extend over several years.

Pension Plan Contributions: A cash contribution of $50 million was made to the U.S. regular pension plan during the second quarter of 2004. In addition, a $50 million contribution was made in July 2004 bringing the total contribution in 2004 to $100 million. The Company expects to make aggregate cash contributions of between $150 million and $250 million to this plan during 2004.

Investing Activities

The most significant components of the Company’s investing activities include: (i) capital expenditures, (ii) strategic acquisitions of, or investments in, other companies, and (iii) proceeds from dispositions of investments and businesses.

Net cash used for investing activities was $104 million for the first half of 2004, as compared to $131 million used in the first half of 2003. The $27 million decrease in cash used for investing activities in the first half of 2004, compared to the first half of 2003, was primarily due to: (i) an $80 million decrease in cash used for acquisitions and investments, (ii) a $34 million increase in proceeds received from dispositions of property, plant and equipment, and (iii) a $12 million increase in proceeds received from dispositions of investments and businesses. These decreases were partially offset by a $100 million increase in capital expenditures in the first half of 2004 compared to the first half of 2003.

Capital Expenditures: Capital expenditures in the first half of 2004 were $428 million, compared to $328 million in the first half of 2003. The increase in capital expenditures was primarily driven by increased capital spending by the Semiconductor Products segment, which continues to make focused, strategic capital investments to ensure adequate internal and external capacity.

Strategic Acquisitions and Investments: Cash used by the Company for acquisitions and new investment activities was $158 million in the first half of 2004, compared to $238 million used in the first half of 2003. The cash used in the first half of 2004 was primarily for: (i) the acquisition of Quantum Bridge Communications, Inc. (Quantum Bridge), a leading provider of fiber-to-the-premises (FTTP) solutions, acquired by the Broadband Communications segment, (ii) the acquisition of the remaining interest of Appeal Telecom of Korea, a leading designer of CDMA handsets for the global market, acquired by the Personal Communications segment, and (iii) the transfer of cash as part of a strategic relationship with Semiconductor Manufacturing International Corporation (SMIC). In addition to the cash, the Company transferred a wafer fabrication facility in Tianjin, China in exchange for SMIC shares. The cash used in the first half of 2003 was primarily for: (i) $179 million for the acquisition of Winphoria Networks, Inc., a core infrastructure provider of next-generation packet-based mobile switching centers for wireless networks, acquired by the Global Telecom Solutions segment, and (ii) the acquisition of the remaining outstanding shares of Next Level Communications, Inc.

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Sales of Investments and Businesses: The Company received $367 million in proceeds from the dispositions of investments and businesses in the first half of 2004, compared to proceeds of $355 million in the first half of 2003. The proceeds generated in the first half of 2004 were primarily: (i) $216 million from the sale of the Company’s remaining shares in Broadcom Corporation, and (ii) $100 million from the sale of a portion of the Company’s shares in SMIC. The proceeds generated in the first half of 2003 were primarily from the sale of 25 million shares of Nextel Communications, Inc. for approximately $335 million in gross proceeds.

Short-Term Investments: At July 3, 2004, the Company had $138 million, in short-term investments (which are highly-liquid fixed-income investments with an original maturity greater than three months but less than one year), compared to $139 million at December 31, 2003.

Available-For-Sale Securities: In addition to available cash and cash equivalents, the Company views its available-for-sale securities as an additional source of liquidity. The majority of these securities represent investments in technology companies and, accordingly, the fair market values of these securities are subject to substantial price volatility. In addition, the realizable value of these securities is subject to market and other conditions. At July 3, 2004, the Company’s available-for-sale securities portfolio had an approximate fair market value of $2.7 billion, which represented a cost basis of $615 million and an unrealized net gain of $2.1 billion. At December 31, 2003, the Company’s available-for-sale securities portfolio had an approximate fair market value of $2.9 billion, which represented a cost basis of $500 million and an unrealized net gain of $2.4 billion.

Financing Activities

The most significant components of the Company’s financing activities are: (i) net proceeds from (or repayment of) commercial paper and short-term borrowings, (ii) net proceeds from (or repayment of) long-term debt securities, (iii) the payment of dividends, and (iv) proceeds from the issuances of stock due to the exercise of employee stock options and purchases under the employee stock purchase plan.

Net cash used for financing activities was $944 million in the first half of 2004, compared to $983 million used in the first half of 2003. Cash used for financing activities in the first half of 2004 was primarily used: (i) to redeem all outstanding Trust Originated Preferred Securities (the “TOPrS”) for $500 million, (ii) to repay, at maturity, the $500 million 6.75% debentures due 2004, and (iii) to pay dividends of $188 million. This cash usage was partially offset by proceeds of $266 million from the issuance of common stock in connection with the Company’s employee stock option plans and employee stock purchase plan. Net cash used for financing activities in the first half of 2003 was primarily used: (i) to repay $872 million of total debt (including commercial paper), mainly reflecting the redemption of all of the Company’s $825 million of Puttable Reset Securities (PURS)^sm in the first quarter of 2003, and (ii) to pay dividends of $185 million, partially offset by proceeds of $74 million from the issuance of common stock in connection with the Company’s employee stock option plan and employee stock purchase plan.

Short-term Debt: At July 3, 2004, the Company’s outstanding notes payable and current portion of long-term debt was $352 million, compared to $896 million at December 31, 2003 and $1.3 billion at June 28, 2003. The decrease in short-term debt compared to December 31, 2003 is primarily due to the repayment, at maturity, of the $500 million of 6.75% debentures due 2004. At July 3, 2004, the Company had $300 million of outstanding commercial paper, compared to $304 million at December 31, 2003 and $501 million at June 28, 2003. The Company currently expects its outstanding commercial paper balances to average approximately $300 million throughout 2004.

The Company expects that from time to time outstanding commercial paper balances may be replaced with short or long-term borrowings. Although the Company believes that it can continue to access the capital markets in 2004 on acceptable terms and conditions, its flexibility with regard to long-term financing activity could be limited by: (i) the Company’s current levels of outstanding long-term debt, and (ii) the Company’s credit ratings. In addition, many of the factors that affect the Company’s ability to access the capital markets, such as the

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liquidity of the overall capital markets and the current state of the economy, in particular the telecommunications industry, are outside of the Company’s control. There can be no assurances that the Company will continue to have access to the capital markets on favorable terms.

Long-term Debt: At July 3, 2004, December 31, 2003 and June 28, 2003, the Company had outstanding long-term debt of $6.7 billion. As further described below under “Redemptions and Repurchases of Outstanding Securities”, on July 26, 2004, the Company announced its intention to further reduce its outstanding long-term debt by up to $1.7 billion during the third quarter of 2004. As further described below under “Freescale Semiconductor, Inc.”, on July 21, 2004, Freescale Semiconductor, a majority-owned subsidiary of the Company, issued senior debt securities in an aggregate principal amount of $1.25 billion.

Redemptions and Repurchases of Outstanding Securities

$500 Million of TOPrS: In March 2004, Motorola Capital Trust I, a Delaware statutory business trust and wholly-owned subsidiary of the Company (the “Trust”), redeemed all outstanding TOPrS. In February 1999, the Trust sold 20 million TOPrS to the public for an aggregate offering price of $500 million. The Trust used the proceeds from that sale, together with the proceeds from its sale of common stock to the Company, to buy a series of 6.68% Deferrable Interest Junior Subordinated Debentures due March 31, 2039 (“Subordinated Debentures”) from the Company with the same payment terms as the TOPrS. The sole assets of the Trust were the Subordinated Debentures. Historically, the TOPrS have been reflected as “Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Company-Guaranteed Debentures” in the Company’s consolidated balance sheets. On March 26, 2004, all outstanding TOPrS were redeemed for an aggregate redemption price of $500 million plus accrued interest. No TOPrS or Subordinated Debentures remain outstanding.

$4 Million of LYONS: In March 2004, the Company also redeemed all the 2009 LYONs and the 2013 LYONs. On March 26, 2004, all then-outstanding 2009 LYONs and 2013 LYONs, not validly exchanged for stock, were redeemed for an aggregate redemption price of approximately $4 million. No 2009 LYONs or 2013 LYONs remain outstanding.

$500 Million of 5-Year Notes: In June 2004, the Company repaid, at maturity, the $500 million 6.75% debentures due 2004.

Up to $1.7 Billion of Long-Term Debt During Third Quarter 2004: On July 26, 2004, the Company announced plans to retire up to $1.7 billion of its outstanding debt. On that date, the Company commenced a cash tender offer for any and all of its $300 million aggregate principal amount of outstanding 7.60% Notes due 2007 (the “2007 Notes”). The tender offer expired on August 5, 2004 and an aggregate principal amount of approximately $182 million of 2007 Notes were validly tendered. On August 10, 2004, the Company repurchased the validly tendered 2007 Notes for an aggregate purchase price of approximately $202 million.

In addition, on July 26, 2004, the Company called for the redemption of all of its $1.4 billion aggregate principal amount of outstanding 6.75% Notes due 2006 (the “2006 Notes”). The 2006 Notes will be redeemed on August 26, 2004. These repurchases of debt will be paid partially through proceeds distributed to the Company by Freescale Semiconductor and partially through available cash balances.

Given the Company’s cash position, it may from time to time seek to opportunistically retire certain of its outstanding debt through open market cash purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.

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Equity Security Units: During the fourth quarter of 2001, the Company sold $1.2 billion of 7.00% Equity Security Units (the “MEUs”). On November 16, 2004, the holders of the MEUs are obligated to pay the Company $1.2 billion to purchase shares of the Company’s common stock. Pursuant to the terms of the MEUs, the price paid per share by the holders of the MEUs is based on the applicable market value of the Company’s common stock at the purchase date, but the effective purchase price per share will not be any lower than $17.28 per share nor any higher than $21.08 per share. The gross proceeds to the Company in connection with this purchase will be $1.2 billion and the total number of shares of the Company’s common stock sold to the holders of the MEUs will be between 56.9 million and 69.4 million shares.

Credit Ratings: Three independent credit rating agencies, Standard & Poor’s (“S&P”), Moody’s Investor Services (“Moody’s”) and Fitch Investors Service (“Fitch”), assign ratings to the Company’s short-term and long-term debt.

The following chart reflects the current ratings assigned to the Company’s senior unsecured non-credit enhanced long-term debt and the Company’s commercial paper by each of these agencies.

Name of Rating Agency	Long-Term Debt		Commercial Paper	Date of Last Action
	Rating	Outlook
S&P	BBB	positive	A-2	August 2, 2004
Moody’s	Baa3	positive	P-3	July 21, 2004
Fitch	BBB	stable	F-2	June 3, 2003

The Company’s credit ratings are considered “investment grade.” If the Company’s senior long-term debt were rated lower than “BBB-” by S&P or Fitch or “Baa3” by Moody’s (which would be a decline of one level from current Moody’s ratings), the Company’s long-term debt would no longer be considered “investment grade.” If this were to occur, the terms on which the Company could borrow money would become more onerous. The Company would also have to pay higher fees related to its domestic revolving credit facility.

The Company continues to have access to the commercial paper and long-term debt markets. However, the Company generally has had to pay a higher interest rate to borrow money than it would have if its credit ratings were higher. The Company has greatly reduced the amount of its commercial paper outstanding in comparison to historical levels and expects its outstanding commercial paper balances to average approximately $300 million throughout 2004. The market for commercial paper rated “A-2 / P-3 / F-2” is much smaller than that for commercial paper rated “A-1 /P-1 / F-1” and commercial paper or other short-term borrowings may be of limited availability to participants in the “A-2 / P-3 / F-2” market from time-to-time or for extended periods.

As further described under “Customer Financing Arrangements” below, for many years the Company has utilized a receivables program to sell a broadly-diversified group of short-term receivables, through Motorola Receivables Corporation (“MRC”), to third parties. The obligations of the third parties to continue to purchase receivables under the MRC short-term receivables program could be terminated if the Company’s long-term debt was rated lower than “BB+” by S&P or “Ba1” by Moody’s (which would be a decline of two levels from the current Moody’s rating). If the MRC short-term receivables program were terminated, the Company would no longer be able to sell its short-term receivables in this manner, but it would not have to repurchase previously-sold receivables.

Credit Facilities

At July 3, 2004, the Company’s total domestic and non-U.S. credit facilities totaled $3.0 billion, of which $123 million was considered utilized. These facilities are principally comprised of: (i) a $1.0 billion three-year revolving domestic credit facility (maturing in May 2007), which is not utilized, and (ii) $2.0 billion of non-U.S. credit facilities (of which $123 million was considered utilized at July 3, 2004). Unused availability under the existing credit facilities, together with available cash and cash equivalents and other sources of liquidity, are

44

generally available to support outstanding commercial paper, which was $300 million at July 3, 2004. In order to borrow funds under the domestic revolving credit facility the Company must be in compliance with various conditions, covenants and representations contained in the agreements. Important terms of the revolving domestic credit agreements include covenants relating to net interest coverage and total debt-to-equity capitalization ratios. The Company was in compliance with the terms of the credit agreements at July 3, 2004. The Company has never borrowed under its domestic revolving credit facilities.

In May 2004, the Company replaced its existing $700 million 364-day revolving domestic credit facility (maturing May 2004) and its $900 million three-year revolving domestic credit facility (maturing May 2005) with a $1.0 billion three-year revolving domestic credit facility (maturing May 2007). One significant change to this facility from the previous facilities is the elimination of the requirement whereby the Company would have been obligated to provide the lenders with a pledge of, and security interest, in domestic inventories and receivables if the Company’s credit ratings would have dropped below certain levels.

Customer Financing Commitments and Guarantees

Outstanding Commitments: Although the Company has greatly reduced the level of long-term financing it provides to customers over the past few years, certain purchasers of the Company’s infrastructure equipment continue to request that suppliers provide financing in connection with equipment purchases. Financing may include all or a portion of the purchase price of the equipment and working capital. The Company had outstanding commitments to extend credit to third parties totaling $144 million at July 3, 2004, as compared to $149 million at December 31, 2003. The Company made no loans to customers during the second quarter of 2004 as compared to loans of $6 million during the second quarter of 2003.

Guarantees of Third-Party Debt: In addition to providing direct financing to certain equipment customers, the Company also assists customers in obtaining financing directly from banks and other sources to fund equipment purchases. The amount of loans from third parties for which the Company has committed to provide financial guarantees totaled $12 million at July 3, 2004, compared to $10 million at December 31, 2003. Customer borrowings outstanding under these third-party loan arrangements were $9 million at July 3, 2004 and $10 million at December 31, 2003.

The Company evaluates its contingent obligations under these financial guarantees by assessing the customer’s financial status, account activity and credit risk, as well as the current economic conditions and historical experience. The $12 million of guarantees discussed above are to two customers in the amounts of $6 million each and expire in 2005 and 2014. Management’s best estimate of probable losses of unrecoverable amounts, should these guarantees be called, was $1 million at both July 3, 2004 and December 31, 2003.

Customer Financing Arrangements

Outstanding Finance Receivables: The Company had net finance receivables of $210 million at July 3, 2004, compared to $301 million at December 31, 2003 (net of allowances for losses of $2.0 billion at July 3, 2004 and $2.1 billion at December 31, 2003). These finance receivables are generally interest bearing, with rates ranging from 4% to 12%. Interest income on impaired finance receivables is recognized only when payments are received. Total interest income recognized on finance receivables was $1 million and $12 million for the three months ended July 3, 2004 and June 28, 2003, respectively, and $3 million and $13 million for the six months ended July 3, 2004 and June 28, 2003, respectively.

Telsim Loan: At July 3, 2004 and December 31, 2003, the Company had $1.9 billion and $2.0 billion, respectively, of gross receivables from one customer, Telsim, in Turkey (the “Telsim Loan”), with the decline representing partial recovery of amounts owed due to collection efforts. As a result of difficulties in collecting the amounts due from Telsim, the Company has previously recorded charges that reduce the net receivable from Telsim to zero. At both July 3, 2004 and December 31, 2003, the net receivable from Telsim was zero. Although the Company continues to vigorously pursue its recovery efforts, it believes the litigation, collection and/or

45

settlement process will be very lengthy in light of the Uzans’ (the family which formerly controlled Telsim) continued resistance to satisfy the judgment against them and their decision to violate various courts’ orders, including orders holding them in contempt of court. In addition, the Turkish government has asserted control over Telsim and certain other interests of the Uzans and this may make the Company’s collection efforts more difficult.

Sales of Receivables and Loans: From time to time, the Company sells short-term receivables and long-term loans to third parties in transactions that qualify as “true-sales.” Certain of these receivables are sold through a separate legal entity, Motorola Receivables Corporation (“MRC”). The financial results for MRC are fully consolidated in the Company’s financial statements. This receivables funding program is administered through multi-seller commercial paper conduits. Under FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (revised), the Company is not required to consolidate those entities.

The MRC short-term receivables program provides for up to $425 million of short-term receivables to be outstanding with third parties at any time. Total receivables sold through the MRC short-term program were $308 million and $205 million for the three months ended July 3, 2004 and June 28, 2003, respectively, and $612 million and $384 million for the six months ended July 3, 2004 and June 28, 2003, respectively. There were approximately $189 million of short-term receivables outstanding under the MRC short-term receivables program at July 3, 2004, as compared to $170 million at December 31, 2003. Under the MRC short-term receivables program, 90% of the value of the receivables sold is covered by credit insurance obtained from independent insurance companies. The credit exposure on the remaining 10% is covered by a retained interest in the sold receivables.

In addition to the MRC short-term receivables program, the Company also sells other short-term receivables directly to third parties. Total short-term receivables sold by the Company (including those sold directly to third parties and those sold through the MRC short-term receivables program) were $992 million and $664 million for the three months ended July 3, 2004 and June 28, 2003, respectively, and $1.9 billion and $1.4 billion during the six months ended July 3, 2004 and June 28, 2003, respectively. There were $1.0 billion of short-term receivables outstanding (under both the MRC program and pursuant to direct sales to third parties) at July 3, 2004, as compared to $771 million at December 31, 2003. The Company’s total credit exposure to outstanding short-term receivables that have been sold was $20 million and $25 million at July 3, 2004 and December 31, 2003, respectively, with reserves of $3 million and $13 million recorded for potential losses on this exposure at July 3, 2004 and December 31, 2003, respectively.

Other Contingencies

Potential Contractual Damage Claims in Excess of Underlying Contract Value: In certain circumstances, our businesses may enter into contracts with customers pursuant to which the damages that could be claimed by the other party for failed performance might exceed the revenue the Company receives from the contract. Contracts with these sorts of uncapped damage provisions are fairly rare. Although it has not previously happened to the Company, there is a possibility that a damage claim by a counterparty to one of these contracts could result in expenses to the Company that are far in excess of the revenue received from the counterparty in connection with the contract.

Legal Matters: The Company has several lawsuits filed against it relating to the Iridium program, as further described under “Part II—Item 1: Legal Proceedings.” The Company has not reserved for any potential liability that may arise as a result of litigation related to the Iridium program. While the still pending cases are in various stages and the outcomes are not predictable, an unfavorable outcome of one or more of these cases could have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.

The Company is a defendant in various other lawsuits, including environmental and product-related suits, and is subject to various claims which arise in the normal course of business. In the opinion of management, and other than discussed above with respect to the still-pending Iridium cases, the ultimate disposition of these

46

matters will not have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.

Freescale Semiconductor, Inc.

During the second quarter of 2004, Motorola completed the separation of its semiconductor operations into a separate subsidiary, Freescale Semiconductor, Inc. (Freescale Semiconductor). In July 2004, Freescale Semiconductor completed an initial public offering (IPO) of approximately 121.6 million shares of Freescale Semiconductor Class A common stock. The net proceeds to Freescale Semiconductor from the IPO, as well as the subsequent sale of an additional 8.4 million shares of Class A common stock in connection with the partial exercise of the overallotment option, were approximately $1.6 billion. Following these transactions, approximately 32.5% of the total outstanding common stock of Freescale Semiconductor is held by the general public and 67.5% is held by Motorola. Motorola owns all of Freescale Semiconductor’s Class B common stock, which is entitled to five votes per share on all matters to be voted on by Freescale Semiconductor’s stockholders and represents approximately 91.2% of Freescale Semiconductor’s total voting power.

At the same time as the IPO, Freescale Semiconductor issued senior debt securities in an aggregate principal amount of $1.25 billion, consisting of $400 million of floating rate notes due 2009, $350 million of 6.875% notes due 2011 and $500 million of 7.125% notes due 2014. In conjunction with this public offering of senior debt securities, Freescale Semiconductor entered into interest rate swaps to change the characteristics of the interest rate payments from fixed-rate payments to short-term variable rate LIBOR-based payments on the $350 million of 6.875% notes due 2011 and the $500 million of 7.125% notes due 2014. Freescale Semiconductor distributed approximately $1.1 billion of proceeds to Motorola. Motorola intends to use the proceeds it received from Freescale Semiconductor to partially effect the tender offer for, and redemption of, debt during the third quarter of 2004 as described above under “Redemptions and Repurchases of Outstanding Securities.”

As a majority-owned subsidiary, Freescale Semiconductor’s financial results are currently consolidated into Motorola’s financial results. Motorola currently intends to distribute the remaining 67.5% ownership interest in Freescale Semiconductor to our common stockholders before the end of 2004. However, the completion of the distribution is subject to conditions, some of which are beyond Motorola’s control. Subsequent to such a distribution, Freescale Semiconductor will no longer constitute a part of Motorola’s business operations and the related operating results of Freescale Semiconductor would be reflected as discontinued operations for all periods presented.

Segment Information

The following commentary should be read in conjunction with the financial results of each reporting segment for the three months and six months ended July 3, 2004 as detailed in Note 10, “Segment Information,” of the Company’s condensed consolidated financial statements.

Net sales and operating results for the Company’s major operations for the three months and six months ended July 3, 2004 and June 28, 2003 are presented below. As indicated in previous filings, beginning in 2004, the Company is no longer reporting order information for its major operating segments because changes in business process cycle time have reduced the usefulness of order reporting as an indicator of future periods’ net sales.

Personal Communications Segment

The Personal Communications segment (PCS) designs, manufactures, sells and services wireless handsets, with integrated software and accessory products. For the second quarters of 2004 and 2003, the segment’s net sales represented 45% and 38% of the Company’s consolidated net sales, respectively. For the first halves of 2004 and 2003, the segment’s net sales represented 46% and 39% of the Company’s consolidated net sales, respectively.

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	Three Months Ended						Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003		% Change		July 3, 2004		June 28, 2003		% Change
Segment net sales	$	3,883	$	2,331	67	%	$	7,964	$	4,778	67	%
Operating earnings		394		91	*	**		792		205	*	**

*** greater than 100%

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 67% to $3.9 billion, compared to $2.3 billion in the second quarter of 2003. The increase in net sales in the second quarter of 2004 reflects continued strong consumer demand for new handsets, particularly for GSM handsets with integrated cameras. The strong demand for new handsets was reflected by increased net sales in all regions, particularly in the Europe, Middle East and Africa (EMEA) region, Asia and Latin America. Continued strong demand for iDEN handsets contributed to the sales growth in the Americas.

The increase in net sales in second quarter of 2004 was primarily driven by a large increase in unit shipments, which were 24.1 million in the second quarter of 2004, up 52% from 15.8 million units in the second quarter of 2003. For the second quarter of 2004 compared with the second quarter of 2003, the segment believes it increased its overall global market share. Sequentially, compared to the first quarter of 2004, the segment estimates that its global market share decreased slightly. This slight sequential decrease is primarily attributed to decreases in market share in North America, EMEA and China. These decreases in market share were largely offset by an increase in market share in Latin America.

Also contributing to the increase in net sales was an improvement in the segment’s average selling price (ASP). In the second quarter of 2004, ASP increased approximately 16% compared to the second quarter of 2003 and remained relatively flat sequentially from the first quarter of 2004. The increase in ASP was primarily driven by a continuing shift in product mix towards higher-tier handsets. These higher-tier handsets are feature-rich units, with features including integrated cameras, large color displays, extended software applications, messaging functionality, advanced gaming features and an increased opportunity for personalization.

The segment’s operating earnings increased to $394 million in the second quarter of 2004, compared to operating earnings of $91 million in the second quarter of 2003. The improvement in operating results was due to an increase in gross margin, which was primarily due to the 67% increase in net sales. This improvement in gross margin was partially offset by: (i) an increase in overall SG&A expenditures, reflecting (a) an increase in general costs, primarily due to the increase in employee incentive program accruals, and (b) increased selling expenditures, primarily due to increased advertising and promotions expenditures, and (ii) an increase in R&D expenditures, primarily reflecting increased developmental engineering expenditures due to new product offerings. The segment’s industry typically experiences short life cycles for new products and, therefore, it is vital to the segment’s success that new, compelling products are constantly introduced. Accordingly, a strong commitment to R&D is required to fuel long-term growth.

The Company and Nextel Communications, Inc. (Nextel) continue to negotiate a long-term master supply agreement relating to products, software licensing and software support. However, the Company cannot be assured at this time of the terms of a supply contract renewal or Nextel’s continued exclusive long-term use of iDEN technology in its wireless business as it considers next-generation technology options. The Company’s current handset and infrastructure supply agreements with Nextel extend through the end of 2004.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 67% to $8.0 billion, compared to $4.8 billion in the first half of 2003. The increase in net sales in the first half of 2004 reflects continued strong consumer demand for new handsets, particularly GSM handsets with integrated cameras. The strong demand for new

48

handsets was reflected by increased net sales in all regions, particularly in EMEA, Asia and Latin America. The continued strong demand for iDEN handsets also contributed to the sales growth in the Americas.

The increase in net sales in first half of 2004 was primarily driven by a large increase in unit shipments, which were 49.4 million in the first half of 2004, up 51% from 32.6 million units in the first half of 2003. In the first half of 2004, ASP increased approximately 16% compared to the first half of 2003. The increase in ASP was primarily driven by a continuation of the shift in product mix towards higher-tier handsets that began in the fourth quarter of 2003.

The segment’s operating earnings increased to $792 million in the first half of 2004, compared to operating earnings of $205 million in the first half of 2003. The improvement in operating results was due to an increase in gross margin, which was primarily due to the 67% increase in net sales. This improvement in gross margin was partially offset by: (i) an increase in overall SG&A expenditures, reflecting (a) an increase in general costs, primarily due to the increase in employee incentive program accruals, and (b) increased selling expenditures, primarily due to increased advertising and promotions expenditures, and (ii) an increase in R&D expenditures, primarily reflecting increased developmental engineering expenditures due to new product offerings.

Semiconductor Products Segment

During the second quarter of 2004, the Company completed the separation of its semiconductor operations into a separate subsidiary, Freescale Semiconductor, Inc. (Freescale Semiconductor). In July 2004, an initial public offering of a minority interest of approximately 32.5% of Freescale Semiconductor was completed. As a majority-owned subsidiary, Freescale Semiconductor’s financial results are currently consolidated into Motorola’s financial results. Motorola currently intends to distribute the remaining 67.5% ownership interest in Freescale Semiconductor to our common stockholders before the end of 2004. However, the completion of the distribution is subject to conditions, some of which are beyond Motorola’s control. Subsequent to such a distribution, Freescale Semiconductor will no longer constitute a part of Motorola’s business operations and the related operating results of Freescale Semiconductor would be reflected as discontinued operations for all periods presented.

The Semiconductor Products segment (SPS) designs, develops, manufactures and sells a broad range of semiconductor products that are based on its core capabilities in embedded processing. In addition, the segment offers a broad portfolio of devices that complement its families of embedded processors, including sensors, radio frequency semiconductors, power management and other analog and mixed-signal integrated circuits. For the second quarters of 2004 and 2003, the segment’s net sales represented 17% and 18% of the Company’s consolidated net sales, respectively. For the first halves of 2004 and 2003, the segment’s net sales represented 17% and 19% of the Company’s consolidated net sales, respectively.

	Three Months Ended							Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003			% Change		July 3, 2004		June 28, 2003			% Change
Segment net sales	$	1,461	$	1,115		31	%	$	2,857	$	2,266		26	%
Operating earnings (loss)		55		(125	)		***		162		(246	)		***

*** Percent change not meaningful

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 31% to $1.5 billion, compared to $1.1 billion in the second quarter of 2003. The increase in overall net sales reflects increased sales in all end-market groups. The increase was primarily driven by: (i) increased demand from wireless customers, in particular the Company’s wireless handset business, which is the segment’s largest customer, and (ii) strong demand in the

49

networking business from wireless infrastructure and networking customers. Sales to other Motorola segments accounted for 28% of the segment’s net sales in the second quarter of 2004 as compared to 19% in the second quarter of 2003.

On an end-market basis, in the second quarter of 2004, compared to the second quarter of 2003, net sales were up 114% in the Wireless and Mobile Solutions group, up 28% in the Networking and Computing Systems group, and up 7% in the Transportation and Standard Products group.

The segment had operating earnings of $55 million in the second quarter of 2004, compared to an operating loss of $125 million in the second quarter of 2003. The improvement in operating results is primarily due to an increase in gross margin, driven by: (i) improved manufacturing capacity utilization in the second quarter of 2004 compared to the second quarter of 2003, (ii) the 31% increase in net sales, and (iii) manufacturing efficiencies from prior cost-reduction actions, including facility closures. A decrease in R&D expenditures also contributed to the improvement in operating results. These items were partially offset by: (i) an increase in SG&A expenditures, primarily driven by an increase in employee incentive program accruals and (ii) $41 million in costs associated with the separation of the Company’s semiconductor operations into Freescale Semiconductor.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 26% to $2.9 billion, compared to $2.3 billion in the first half of 2003. The increase in overall net sales reflects increased net sales in all end-market groups. The increase was primarily driven by: (i) increased demand from wireless customers, in particular the Company’s wireless handset business, which is the segment’s largest customer, and (ii) strong demand in the networking business from wireless infrastructure and networking customers, partially offset by a decline in sales to the pervasive computing market. Sales to other Motorola segments accounted for 27% of the segment’s net sales in the first half of 2004, as compared to 21% in the first half of 2003.

On an end-market basis, in the first half of 2004 compared to the first half of 2003, net sales were up 74% in the Wireless and Mobile Solutions group, up 28% in the Networking and Computing Systems group, and up 8% in the Transportation and Standard Products group.

The segment had operating earnings of $162 million in the first half of 2004, compared to an operating loss of $246 million in the first half of 2003. The improvement in operating results is primarily due to an increase in gross margin, driven by: (i) improved manufacturing capacity utilization in the first half of 2004 compared to the first half of 2003, (ii) the 26% increase in net sales, and (iii) manufacturing efficiencies from prior cost-reduction actions, including facility closures. Other reasons for the improvement in operating results included: (i) a decrease in reorganization of business and other charges, and (ii) a decrease in R&D expenditures. These items were partially offset by: (i) an increase in SG&A expenditures, which was primarily due to (a) an increase in employee incentive program accruals, and (b) an increase in selling expenditures, due primarily to the increase in net sales, and (ii) $50 million in costs associated with the separation of SPS into Freescale Semiconductor.

In the first half of 2004, the segment recorded net income of $62 million related to reorganization of business and other charges, primarily due to: (i) $52 million reversal of reserves for previously-received incentives related to impaired facilities, (ii) $10 million in net reversals of reserves no longer needed, related to decommissioning costs for impaired facilities and employee severance programs. In the first half of 2003, the segment recorded reorganization of business and other charges of $38 million, primarily consisting of fixed asset impairments relating to the planned closure of a facility in Texas.

Global Telecom Solutions Segment

The Global Telecom Solutions segment (GTSS) designs, manufactures, sells, installs, and services wireless infrastructure communication systems, including hardware and software. The segment provides end-to-end wireless networks, including radio base stations, base site controllers, associated software and services, mobility

50

soft switching, application platforms and third-party switching for CDMA, GSM, iDEN^® and UMTS technologies. For the second quarter of both 2004 and 2003, the segment’s net sales represented 17% of the Company’s consolidated net sales. For the first half of both 2004 and 2003, the segment’s net sales represented 16% of the Company’s consolidated net sales.

	Three Months Ended						Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003		% Change		July 3, 2004		June 28, 2003		% Change
Segment net sales	$	1,443	$	1,046	38	%	$	2,760	$	1,998	38	%
Operating earnings		208		19	***			327		48	***

*** greater than 100%

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 38% to $1.4 billion, compared to $1.0 billion in the second quarter of 2003. The increase in net sales was primarily due to an increase in capital expenditures by the segment’s wireless service provider customers, which resulted in sales growth in all technologies and all regions. Sales growth was particularly strong in China, India, Japan and North America. The segment believes that its sales growth outpaced sales growth in the overall wireless infrastructure industry, resulting in increased market share for the segment for the second straight quarter.

The segment’s operating earnings increased to $208 million in the second quarter of 2004, compared to operating earnings of $19 million in the second quarter of 2003. The improvement in operating results was primarily due to: (i) an increase in gross margin, primarily attributed to the 38% increase in net sales, (ii) a $32 million charge for in-process research and development related to the Winphoria acquisition that occurred in the second quarter of 2003, and (iii) a decrease in R&D expenditures, reflecting benefits from improved efficiencies in developmental engineering. These improvements were partially offset by an increase in SG&A expenditures, primarily due to an increase in employee incentive program accruals.

The Company and Nextel Communications, Inc. (Nextel) continue to negotiate a long-term master supply agreement relating to products, software licensing and software support. However, the Company cannot be assured at this time of the terms of a supply contract renewal or Nextel’s continued exclusive long-term use of iDEN technology in its wireless business as it considers next-generation technology options. The Company’s current handset and infrastructure supply agreements with Nextel extend through the end of 2004.

The segment continues to build on its industry-leading position in push-to-talk over cellular (PoC) technology. In the second quarter, additional PoC contracts have been signed, bringing the total to 15 contracts covering 21 countries. These contracts offer PoC solutions for both CDMA2000 and GSM/GPRS networks.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 38% to $2.8 billion, compared to $2.0 billion in the first half of 2003. The increase in net sales was primarily due to an increase in capital expenditures by the segment’s wireless service provider customers which resulted in sales growth in all technologies and regions. Sales growth was particularly strong in China, India, Japan and North America.

The segment’s operating earnings increased to $327 million in the first half of 2004, compared to operating earnings of $48 million in the first half of 2003. The improvement in operating results was primarily due to: (i) an increase in gross margin, primarily attributed to the 38% increase in net sales, (ii) a $32 million charge for in-process research and development related to the Winphoria acquisition that occurred in the second quarter of

51

2003, and (iii) a decrease in R&D expenditures, reflecting benefits from improved efficiencies in developmental engineering. These improvements were partially offset by an increase in SG&A expenditures, primarily due to: (i) an increase in employee incentive program accruals, and (ii) an increase in selling expenditures, primarily due to the increase in net sales.

Commercial, Government and Industrial Solutions Segment

The Commercial, Government and Industrial Solutions segment (CGISS) designs, manufactures, sells, installs, and services analog and digital two-way radio, voice and data communications products and systems to a wide range of public-safety, government, utility, transportation and other worldwide markets. In addition, the segment participates in the expanding market for integrated information management, mobile and biometric applications and services. For the second quarters of 2004 and 2003, the segment’s net sales represented 13% and 16% of the Company’s consolidated net sales, respectively. For the first half of 2004 and 2003, the segment’s net sales represented 12% and 15% of the Company’s consolidated net sales, respectively.

	Three Months Ended						Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003		% Change		July 3, 2004		June 28, 2003		% Change
Segment net sales	$	1,124	$	996	13	%	$	2,144	$	1,859	15	%
Operating earnings		183		114	61	%		361		176	***

*** greater than 100%

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 13% to $1.1 billion, compared to $996 million in the second quarter of 2003. The increase in net sales is primarily due to increased spending by customers in the segment’s government market, in response to global homeland security initiatives, primarily in the Americas and Asia. Increased sales in the segment’s enterprise business also contributed to the overall sales increase. Net sales in the Americas accounted for 71% and 69% of the segment’s total net sales in the second quarter of 2004 and 2003, respectively.

The segment’s operating earnings increased to $183 million in the second quarter of 2004, compared to operating earnings of $114 million in the second quarter of 2003. The improvement in operating results was primarily due to an increase in gross margin, which was due to: (i) the 13% increase in net sales, (ii) a favorable product mix, reflecting a higher proportion of sales of higher-margin subscriber equipment, and (iii) supply-chain efficiencies and overall cost structure improvements. The improvement in gross margin was partially offset by: (i) an increase in SG&A expenditures, primarily due to: (a) an increase in selling expenditures, due primarily to the increase in net sales, (b) an increase in employee incentive program accruals, and (ii) an increase in R&D expenditures.

With continued focus on global homeland security, the segment continues to monitor the funding for homeland security initiatives closely. The segment continues to work with its state and local government customers to facilitate homeland security funding.

The systems requested by some of the segments customers continue to reflect increased scope and size. Some customers want large systems, including country-wide and statewide systems. These larger systems, or “mega-systems,” are more complex and include a wide range of capabilities. Mega-system projects will impact how contracts are bid, which companies compete for bids and how companies partner on projects.

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Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 15% to $2.1 billion, compared to $1.9 billion in the first half of 2003. The increase in net sales is primarily due to increased spending by customers in the segment’s government market, in response to global homeland security initiatives, and reflects sales growth in all regions.

The segment’s operating earnings increased to $361 million in the first half of 2004, compared to operating earnings of $176 million in the first half of 2003. The improvement in operating results was primarily due to an increase in gross margin, which was due to: (i) the 15% increase in net sales, (ii) a favorable product mix, reflecting a higher proportion of sales of higher-margin subscriber equipment, and (iii) supply-chain efficiencies and overall cost structure improvements. The improvement in gross margin was partially offset by: (i) an increase in SG&A expenditures, primarily due to: (a) an increase in selling expenditures, due primarily to the increase in net sales, and (b) an increase in employee incentive program accruals, and (ii) an increase in R&D expenditures.

Integrated Electronic Systems Segment

The Integrated Electronic Systems segment (IESS) designs, manufactures and sells: (i) automotive and industrial electronics systems, (ii) telematics systems that enable automated roadside assistance, navigation and advanced safety features for automobiles, (iii) portable energy storage products and systems, and (iv) embedded computing systems. For the second quarter of both 2004 and 2003, the segment’s net sales represented 8% of the Company’s consolidated net sales. For the first half of both 2004 and 2003, the segment’s net sales represented 8% of the Company’s consolidated net sales.

	Three Months Ended						Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003		% Change		July 3, 2004		June 28, 2003		% Change
Segment net sales	$	656	$	516	27	%	$	1,310	$	1,037	26	%
Operating earnings		44		45	(2	)%		87		70	24	%

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 27% to $656 million, compared to $516 million in the second quarter of 2003.

There are three primary business groups within the segment: (i) the Automotive Communications and Electronic Systems Group (ACES), which sells automotive and industrial electronics systems, including telematics, (ii) the Energy Systems Group (ESG), which sells portable energy storage products and systems, and (iii) the Motorola Computer Group (MCG), which sells embedded computing systems. As further described below, for subsequent quarters MCG will be renamed the Embedded Communications Computing Group. In the second quarter of 2004, ACES, ESG and MCG represented 65%, 21% and 14% of the segment’s net sales, respectively, compared to 65%, 20% and 15% of the segment’s net sales, respectively, in the second quarter of 2003.

In the second quarter of 2004, compared to the second quarter of 2003, ACES’ net sales increased 28%. The increase in sales was primarily due to the continuing success of telematics products, as well as other new products introduced in the second half of 2003.

In the second quarter of 2004, compared to the second quarter of 2003, ESG’s net sales increased 33%. The increase in net sales was primarily due to the increased demand from Motorola’s wireless handset business, to which ESG’s sales are strongly linked.

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In the second quarter of 2004, compared to the second quarter of 2003, MCG’s net sales increased 16%. The increase in sales was primarily due to increased demand for integrated, standards-based embedded computing systems, most notably in the telecommunications industry.

In August 2004, the Company acquired Force Computers, a worldwide designer and supplier of open, standards-based and custom embedded computing solutions for original equipment manufacturers (OEMs) in a wide range of applications. Force Computers will be integrated with MCG, and the two combined entities will be renamed the Embedded Communications Computing Group. This acquisition is expected to enable the group to provide solutions for a wider range of customer application needs, supported by a broader portfolio of boards, systems and services.

The segment’s operating earnings were $44 million in the second quarter of 2004, compared to operating earnings of $45 million in the second quarter of 2003. The segment had an increase in gross margin in the second quarter of 2004 compared to the second quarter of 2003, driven primarily by the 27% increase in net sales. This increase in gross margin was offset by: (i) an increase in SG&A expenditures, driven by an increase in general expenditures, which was primarily due to an increase in employee incentive program accruals, (ii) income of $11 million from reversal of accruals no longer needed related to employee separation costs, which occurred in the second quarter of 2003, and (iii) an increase in R&D expenditures, primarily due to a reduction in customer-funded R&D.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 26% to $1.3 billion, compared to $1.0 billion in the first half of 2003.

In the first half of 2004, ACES, ESG and MCG represented 65%, 21% and 14% of the segment’s net sales, respectively, compared to 66%, 21% and 13% of the segment’s net sales, respectively, in the first half of 2003.

In the first half of 2004, compared to the first half of 2003, ACES’ net sales increased 25%. The increase in net sales was primarily due to the success of the telematics products, as well as other new products introduced in the second half of 2003.

In the first half of 2004, compared to the first half of 2003, ESG’s net sales increased 27%. The increase in net sales was primarily due to the increased demand from Motorola’s wireless handset business, to which ESG’s sales are strongly linked.

In the first half of 2004, compared to the first half of 2003, MCG’s net sales increased 29%. The increase in net sales was primarily due to increased demand for integrated, standards-based embedded computing systems, most notably in the telecommunications industry.

The segment’s operating earnings increased to $87 million in the first half of 2004, compared to operating earnings of $70 million in the first half of 2003. The improvement in operating results was primarily due to an increase in gross margin, driven by the 26% increase in net sales, partially offset by: (i) an increase in SG&A expenditures, due primarily to: (a) an increase in general expenditures, primarily due to an increase in employee incentive program accruals, and (b) an increase in expenditures to support substantial new business wins across the segment, (ii) income of $13 million from reversal of accruals no longer needed related to employee separation costs, which occurred in the first half of 2003, and (iii) an increase in R&D expenditures, primarily due to a reduction in customer-funded R&D.

Broadband Communications Segment

The Broadband Communications segment (BCS) designs, manufactures and sells a wide variety of broadband products, including: (i) digital systems and set-top terminals for cable television networks; (ii) high speed data products, including cable modems and cable modem termination systems (CMTS), as well as Internet

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Protocol (IP)-based telephony products; (iii) hybrid fiber coaxial network transmission systems used by cable television operators; (iv) digital satellite television systems; (v) direct-to-home (DTH) satellite networks and private networks for business communications; (vi) digital broadcast products for the cable and broadcast industries; and (vii) high-speed data, video and voice broadband systems over existing phone lines. For the second quarter of both 2004 and 2003, the segment’s net sales represented 7% of the Company’s consolidated net sales. For the first halves of 2004 and 2003, the segment’s net sales represented 6% and 7% of the Company’s consolidated net sales, respectively.

In January 2004, a decision was made to realign the operations of Next Level Communications, Inc. (Next Level), a wholly-owned subsidiary of Motorola, within BCS. Next Level provides high-speed data, video and voice broadband systems over existing phone lines. The financial results of Next Level have been reclassified from the Other Products segment to BCS for all periods presented.

	Three Months Ended						Six Months Ended
(Dollars in millions)	July 3, 2004		June 28, 2003		% Change		July 3, 2004		June 28, 2003		% Change
Segment net sales	$	567	$	430	32	%	$	1,055	$	851	24	%
Operating earnings		20		5	***			44		18	***

*** greater than 100%

Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, the segment’s net sales increased 32% to $567 million, compared to $430 million in the second quarter of 2003. The increase in net sales was primarily due to: (i) increased purchases of cable set-tops and modems by cable operators, (ii) an increase in average selling price (ASP) due to a mix shift in digital set-top boxes towards higher-end products, (iii) an increase in retail sales, and (iv) an increase in net sales by Next Level. The segment experienced net sales growth in all regions. In the second quarter of 2004, 83% of the segment’s net sales were in the North America region, compared to 85% in the second quarter of 2003.

In the second quarter of 2004, compared to the second quarter of 2003, net sales of digital set-top boxes increased 38%, due to increases in both ASP and unit shipments. The increase in ASP reflects a product mix shift towards higher-end products, particularly high definition/digital video recording (HD/DVR) set-tops. This increase was partially offset by increased competition and by continued pricing pressures from major customers. The increase in unit shipments is primarily due to increased spending by the segment’s cable operator customers, driven by the increase in digital subscribers. The segment retained its leading market share for digital set-top boxes in North America.

In the second quarter of 2004, compared to the second quarter of 2003, net sales of cable modems increased 38%. The increase in net sales was a result of a large increase in unit shipments, partially offset by a decrease in ASP. The increase in unit shipments was primarily due to increased purchases of cable modems by cable operators, as well as an increase in retail sales, as consumer demand for high-speed cable access continues to increase. The decline in ASP is consistent with the overall decline in ASP’s in the industry during the period.

The segment’s operating earnings increased to $20 million in the second quarter of 2004, compared to operating earnings of $5 million in the second quarter of 2003. The increase in operating earnings was due to an increase in gross margin, driven primarily by the 32% increase in net sales. The improvement in operating earnings was partially offset by a $15 million charge for in-process research and development related to the acquisition of Quantum Bridge Communications, Inc. (Quantum Bridge).

In May 2004, the Company completed the acquisition of Quantum Bridge, a leading provider of fiber-to-the-premises (FTTP) solutions. The acquisition complements Motorola’s existing multiservice technology, enhancing the Company’s ability to offer a full-service access platform that broadband network operators can

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deploy to deliver the next generation of advanced services. Motorola plans to integrate Quantum Bridge’s field-proven passive optical networking (PON) and carrier-class switching technology into its suite of network infrastructure solutions, enhancing the Company’s market position in the end-to-end delivery of broadband products.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, the segment’s net sales increased 24% to $1.1 billion, compared to $851 million in the first half of 2003. The increase in net sales was primarily due to: (i) increased purchases of cable set-tops and modems by cable operators, (ii) an increase in ASP due to a mix shift in digital set-top boxes towards higher-end products, (iii) an increase in retail sales, and (iv) an increase in net sales by Next Level. The segment experienced net sales growth in all regions. In the first half of 2004, 83% of the segment’s net sales were in the North America region, compared to 85% in the first half of 2003.

In the first half of 2004, compared to the first half of 2003, net sales of digital set-top boxes increased 15%, due to increases in both ASP and unit shipments. The increase in ASP reflects a product mix shift towards higher-end products in the second quarter, particularly HD/DVR set-tops. This increase was partially offset by increased competition and by continued pricing pressures from major customers. The increase in unit shipments is primarily due to increased spending by the segment’s cable operator customers, driven by the increase in digital subscribers.

In the first half of 2004, compared to the first half of 2003, net sales of cable modems increased 26%. The increase in net sales was a result of a large increase in unit shipments, partially offset by a decline in ASP. The increase in shipments was primarily due to increased purchases of cable modems by cable operators, as well as an increase in retail sales, as consumer demand for high-speed cable access continues to increase.

The segment’s operating earnings increased to $44 million in the first half of 2004, compared to operating earnings of $18 million in the first half of 2003. The increase in operating earnings was primarily due to: (i) an increase in gross margin, driven primarily by the 24% increase in net sales, and (ii) a decrease in SG&A expenditures, which was primarily due to: (a) reversal of a bad debt reserve as a result of the collection of receivables related to a bankrupt customer, (b) a decrease in intangible amortization, and (c) a decrease in administrative expenditures due to prior cost reductions by Next Level. These improvements in operating earnings were partially offset by a $15 million charge for in-process research and development related to the acquisition of Quantum Bridge.

Other

Other is comprised of the Other Products segment and general corporate items. The Other Products segment includes: (i) various corporate programs representing developmental businesses and research and development projects, which are not included in any major segment, (ii) the Motorola Credit Corporation (MCC), the Company’s wholly-owned finance subsidiary, and (iii) the Company’s holdings in cellular operating companies outside the U.S.

	Three Months Ended							Six Months Ended
(Dollars in millions)	July 3, 2004			June 28, 2003		% Change		July 3, 2004			June 28, 2003		% Change
Segment net sales	$	91		$	78	17	%	$	173		$	157	10	%
Operating earnings (loss)		(59	)		19		***		(106	)		38		***

*** Percent change not meaningful

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Three months ended July 3, 2004 compared to three months ended June 28, 2003

In the second quarter of 2004, Other Products segment net sales increased 17% to $91 million, compared to $78 million in the second quarter of 2003.

The segment had an operating loss of $59 million in the second quarter of 2004, compared to operating earnings of $19 million in the second quarter of 2003. The decline in operating results was primarily due to: (i) an increase in SG&A expenditures, primarily due to increased employee incentive program accruals, (ii) an increase in R&D expenditures, due to increased spending on developmental business and R&D projects, (iii) income of $33 million due to a reversal of accruals no longer needed related to the Iridium project that occurred in the second quarter of 2003, and (iv) income of $7 million from the reversal of accruals no longer needed due to a settlement with the Company’s insurer on items related to previous environmental claims that occurred in the second quarter of 2003. These items were partially offset by an increase in gross margin, due primarily to the 17% increase in net sales.

Six months ended July 3, 2004 compared to six months ended June 28, 2003

In the first half of 2004, Other Products segment net sales increased 10% to $173 million, compared to $157 million in the first half of 2003.

The segment had an operating loss of $106 million in the first half of 2004, compared to operating earnings of $38 million in the first half of 2003. The decline in operating results was primarily due to: (i) income of $59 million due to a reversal of accruals no longer needed related to the Iridium project that occurred in the first half of 2003, (ii) income of $33 million on the gain on the sale of Iridium-related assets that were previously written down that occurred in the first half of 2003, (iii) income of $7 million from the reversal of accruals no longer needed due to a settlement with the Company’s insurer on items related to previous environmental claims that occurred in the first half of 2003, (iv) an increase in SG&A expenditures, primarily due to increased employee incentive program accruals, and (v) an increase in R&D expenditures, due to increased spending on developmental business and R&D projects. These items were partially offset by: (i) a decrease in reorganization of business charges in the first half of 2004 compared to the first half of 2003, and (ii) an increase in gross margin, due primarily to the 10% increase in net sales.

In the first half of 2004, the segment recorded income of $8 million from the reversal of accruals no longer needed related to employee severance programs and the exit of a research and development facility in Tempe, Arizona. In the first half of 2003, the segment recorded reorganization of business charges of $20 million, primarily relating to fixed asset impairments of assets classified as held for sale.

Significant Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management bases its estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. This forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following significant accounting policies require significant judgment and estimates:

• Deferred tax asset valuation

• Valuation of investments and long-lived assets

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• Restructuring activities

• Allowance for losses on finance receivables

• Retirement-related benefits

• Long-term contract accounting

• Inventory valuation reserves

In the second quarter of 2004, there has been no change in the above critical accounting policies. With the exception of deferred tax asset valuation, there has been no significant change in the underlying accounting assumptions and estimates used in the above significant accounting policies.

Deferred Tax Asset Valuation

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax-planning strategies. If the Company is unable to generate sufficient future taxable income in certain tax jurisdictions, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, the Company could be required to increase its valuation allowance against its deferred tax assets resulting in an increase in its effective tax rate and an adverse impact on operating results.

In the second quarter of 2004, the Company completed the separation of its semiconductor operations into a separate legal entity, Freescale Semiconductor, Inc. (Freescale Semiconductor). In July 2004, the initial public offering (IPO) of stock of Freescale Semiconductor was completed resulting in Freescale Semiconductor becoming a stand-alone taxpayer, separate from the Company. During the second quarter of 2004, when it became more likely than not that the IPO would occur, the Company reevaluated Freescale Semiconductor’s net deferred tax assets and recorded a non-cash tax charge of $898 million to reduce its deferred tax assets, via a valuation allowance, to the value more likely than not to be realized in the future. If the remaining shares of Freescale Semiconductor are distributed to Motorola stockholders, the related operating results of Freescale, including the charge to establish the valuation allowance for deferred tax assets, would be reflected as discontinued operations for all periods presented. The distribution of Freescale Semiconductor shares to Motorola stockholders is subject to many conditions, including final approval of the Motorola board of directors, suitable market conditions and regulatory and governmental approvals.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

As a multinational company, the Company’s transactions are denominated in a variety of currencies. The Company uses financial instruments to hedge, and therefore attempts to reduce its overall exposure to the effects of currency fluctuations on cash flows. The Company’s policy is not to speculate in financial instruments for profit on the exchange rate price fluctuation, trade in currencies for which there are no underlying exposures, or enter into trades for any currency to intentionally increase the underlying exposure. Instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the contract. Accordingly, changes in market values of hedge instruments must be highly correlated with changes in market values of underlying hedged items both at inception of the hedge and over the life of the hedge contract.

The Company’s strategy in foreign exchange exposure issues is to offset the gains or losses of the financial instruments against losses or gains on the underlying operational cash flows or investments based on the operating business units’ assessment of risk. Almost all of the Company’s non-functional currency receivables

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and payables, which are denominated in major currencies that can be traded on open markets, are hedged. The Company uses forward contracts and options to hedge these currency exposures. In addition, the Company hedges some firmly committed transactions and some forecasted transactions. The Company expects that it may hedge investments in foreign subsidiaries in the future. A portion of the Company’s exposure is from currencies that are not traded in liquid markets, such as those in Latin America, and these are addressed, to the extent reasonably possible, through managing net asset positions, product pricing, and component sourcing.

At July 3, 2004 and December 31, 2003, the Company had net outstanding foreign exchange contracts totaling $3.2 billion and $2.7 billion, respectively. Management believes that these financial instruments should not subject the Company to undue risk due to foreign exchange movements because gains and losses on these contracts should offset losses and gains on the assets, liabilities, and transactions being hedged. The following table shows, in millions of U.S. dollars, the five largest net foreign exchange hedge positions as of July 3, 2004 and December 31, 2003:

Buy (Sell)	July 3, 2004			December 31, 2003
Euro	$	(1,350	)	$	(1,114	)
Chinese Renminbi		(576	)		(341	)
Brazilian Real		(270	)		(172	)
Canadian Dollar		259			187
Taiwan Dollar		(141	)		(166	)

The Company is exposed to credit-related losses if counterparties to financial instruments fail to perform their obligations. However, it does not expect any counterparties, which presently have high credit ratings, to fail to meet their obligations.

Interest Rate Risk

At July 3, 2004, the Company’s short-term debt consisted primarily of $300 million of commercial paper, priced at short-term interest rates. The Company has $6.7 billion of long-term debt, including current maturities, which is primarily priced at long-term, fixed interest rates. To change the characteristics of a portion of these interest rate payments, the Company has entered into a number of interest rate swaps.

In order to manage the mix of fixed and floating rates in its debt portfolio, the Company has entered into interest rate swaps to change the characteristics of interest rate payments from fixed-rate payments to short-term LIBOR-based variable rate payments. The following table displays the interest rate swaps that were in place at July 3, 2004:

Date Executed	Principal Amount Hedged (in millions)		Underlying Debt Instrument
September 2003	$	725	7.625% debentures due 2010
September 2003		600	8.0% notes due 2011
May 2003		200	6.5% notes due 2008
May 2003		325	5.8% debentures due 2008
May 2003		475	7.625% debentures due 2010
March 2002		1,400	6.75% debentures due 2006
March 2002		300	7.6% notes due 2007
	$	4,025

In addition, in June 1999, the Company’s finance subsidiary entered into interest rate swaps to change the characteristics of interest rate payments on all $500 million of its 6.75% Guaranteed Bonds due 2004 from fixed-rate payments to short-term LIBOR-based variable rate payments in order to match the funding with its underlying assets. This interest rate swap expired on June 21, 2004, when the underlying fixed-rate debt matured and was repaid.

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The short-term LIBOR-based variable rate payments on each of the above interest rate swaps was 2.9% for the three months ended July 3, 2004. The fair value of all interest rate swaps at July 3, 2004 and December 31, 2003, was approximately $18 million and $150 million, respectively. Except for these interest rate swaps, the Company had no outstanding commodity derivatives, currency swaps or options relating to debt instruments at July 3, 2004 or December 31, 2003.

The Company designates its interest rate hedge agreements as hedges for the underlying debt. Interest expense on the debt is adjusted to include the payments made or received under such hedge agreements.

The Company is exposed to credit loss in the event of nonperformance by the counterparties to its swap contracts. The Company minimizes its credit risk on these transactions by only dealing with leading, credit-worthy financial institutions having long-term debt ratings of “A” or better and, therefore, does not anticipate nonperformance. In addition, the contracts are distributed among several financial institutions, thus minimizing credit risk concentration.

Investment Hedge

In March 2003, the Company entered into three agreements with multiple investment banks to hedge up to 25 million of its remaining 83.2 million shares of common stock of Nextel Communications, Inc. (Nextel). The three agreements are to be settled over periods of three, four and five years, respectively. Under these agreements, the Company received no initial proceeds, but has retained the right to receive, at any time during the contract periods, the present value of the aggregate contract “floor” price. Pursuant to these agreements, and exclusive of any present value discount, the Company is entitled to receive aggregate proceeds of approximately $333 million. The precise number of shares of Nextel common stock that the Company will deliver to satisfy the contracts is dependent upon the price of Nextel common stock on the various settlement dates. The maximum aggregate number of shares the Company would be required to deliver under these agreements is 25 million and the minimum number of shares is 18.5 million. Alternatively, the Company has the exclusive option to settle the contracts in cash. The Company will retain all voting rights associated with the up to 25 million hedged Nextel shares. Pursuant to customary market practice, the covered shares are pledged to secure the hedge contracts. As a result of the increase in the price of Nextel common stock since March 2003, the Company has recorded a $277 million liability in Other Liabilities in the consolidated balance sheet to reflect the fair value of the Nextel hedge.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, 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, as amended, as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to Motorola, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Motorola’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended July 3, 2004 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Business Risks

Statements that are not historical facts are forward-looking statements based on current expectations that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements in the

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“Looking Forward” section of our Executive Summary and statements about: (1) expected economic recovery in communications and related industries, (2) expected effective tax rates, (3) future payments, charges, use of accruals and expected cost-saving benefits in connection with reorganization of businesses programs, (4) the Company’s ability and cost to repatriate funds, (5) future contributions by the Company to pension plans or retiree health benefit plans, (6) the level of outstanding commercial paper borrowings, (7) redemptions and repurchases of outstanding securities, (8) the Company’s ability to access the capital markets, (9) the impact on the Company from changes in credit ratings, (10) the adequacy of reserves relating to long-term finance receivables and other contingencies, (11) the outcome of ongoing and future legal proceedings, including without limitation, those relating to Iridium and Telsim, (12) the timing and outcome of the Company’s plans relating to the complete separation of Freescale Semiconductor, (13) the completion and/or impact of acquisitions or divestitures, (14) the impact of ongoing currency policy in foreign jurisdictions and other foreign currency exchange risks, (15) future hedging activity and expectations of the Company, (16) the ability of counterparties to financial instruments to perform their obligations, and (17) the impact of recent accounting pronouncements on the Company.

The Company wishes to caution the reader that the factors below and those on pages 76 through 85 of the Company’s 2003 Annual Report on Form 10-K and in its other SEC filings could cause the Company’s results to differ materially from those stated in the forward-looking statements. These factors include: (1) the uncertainty of current economic and political conditions, as well as the economic outlook for the telecommunications, semiconductor, broadband and automotive industries, (2) the Company’s ability to increase profitability and market share in its wireless handset business, particularly in light of intense competition in numerous world markets, (3) demand for the Company’s products, including products related to new technologies, (4) the Company’s ability to introduce new products and technologies in a timely manner, (5) the impact of ongoing consolidations in the telecommunications and cable industries, (6) risks related to dependence on certain key manufacturing suppliers, (7) risks related to the Company’s high volume of manufacturing and sales in Asia, (8) the Company’s ability to purchase sufficient materials, parts and components to meet customer demand, including without limitation semiconductor products, (9) the creditworthiness of the Company’s customers, particularly purchasers of large infrastructure systems, (10) the demand for vendor financing and the Company’s ability to provide that financing in order to remain competitive, (11) unexpected liabilities or expenses, including unfavorable outcomes to any currently pending or future litigation, including without limitation any relating to Iridium, (12) the levels at which design wins become actual orders and sales, (13) the impact of foreign currency fluctuations, (14) the impact on the Company from continuing hostilities in Iraq and conflict in other countries, (15) the Company’s ability to realize expected savings from cost-reduction actions, (16) unforeseen limitations to the Company’s continuing ability to access the capital markets on favorable terms, (17) volatility in the market value of securities held by the Company, (18) the success of alliances and agreements with other companies to develop new products, technologies and services, (19) difficulties in integrating the operations of newly-acquired businesses and achieving strategic objectives, cost savings and other benefits, (20) the Company’s ability to use its valuable deferred tax assets, (21) changes regarding the actual or assumed performance of the Company’s pension plan, (22) the impact of changes in governmental policies, laws or regulations, (23) unexpected effects on the Company or Freescale Semiconductor, Inc. as a result of the recent initial public offering of Freescale Semiconductor, (24) the satisfaction of numerous conditions to consummating the full separation of Freescale Semiconductor, some of which are outside of the Company’s control, and (25) the outcome of currently ongoing and future tax matters with the IRS.

Part II-Other Information

Item 1. Legal Proceedings

Personal Injury Cases

Cases relating to Wireless Telephone Usage

Motorola has been a defendant in several cases arising out of its manufacture and sale of wireless telephones. Jerald P. Busse, et al. v. Motorola, Inc. et al., filed October 26, 1995 in the Circuit Court of Cook County, Illinois, Chancery Division, is a class action alleging that defendants have failed to adequately warn

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consumers of the alleged dangers of cellular telephones and challenging ongoing safety studies as invasions of privacy. On October 9, 2002, the Circuit Court entered summary judgment in defendants’ favor. On June 22, 2004, the Illinois Appellate Court affirmed the lower court’s entry of summary judgment and dismissal of the case. On July 13, 2004, plaintiffs filed a petition for rehearing with the Illinois Appellate Court. On August 3, 2004, the Illinois Appellate Court denied the petition for rehearsing. Medica et al., v. Motorola, Inc., et al., filed September 7, 1999 in the District Court of Clark County, Nevada, alleges that use of a cellular phone caused a malignant brain tumor. On July 7, 2004, the district court dismissed the case without prejudice.

During 2002, the multi-district litigation panel transferred and consolidated several cases, Murray v. Motorola, Inc., et al., Agro et. al., v. Motorola, Inc., et al., Cochran et. al., v. Audiovox Corporation, et al., Schofield et. al., v. Matsushita Electric Corporation of America, et al., each of which alleges that use of a cellular phone caused a malignant brain tumor, to the United States District Court for the District of Maryland for coordinated or consolidated pretrial proceedings in the matter called In re Wireless Telephone Radio Frequency Emissions Products Liability Litigation. On July 19, 2004, the District Court for the District of Maryland found that there was no federal court jurisdiction over those four cases and remanded those cases to the Superior Court for the District of Columbia.

Iridium-Related Cases

Iridium India Lawsuits

Motorola and certain of its current and former officers and directors were named as defendants in a private criminal complaint filed by Iridium India Telecom Ltd. (“Iridium India”) in October 2001 in the Court of the Extra Judicial Magistrate, First Class, Khadki, Pune, India. Iridium India is the purchaser of certain rights from Iridium LLC (“Iridium”) to set up, develop and operate a gateway for the Iridium system in South Asia. The Iridium India Telecom Ltd. v. Motorola, Inc. et al. complaint alleges that the defendants conspired to, and did, commit the criminal offense of “cheating” by fraudulently inducing Iridium India to purchase gateway equipment from Motorola, acquire Iridium stock, and invest in developing a market for Iridium services in India.

In September 2002, Iridium India also filed a civil suit in the Bombay High Court against Motorola and Iridium. The suit alleges fraud, intentional misrepresentation and negligent misrepresentation by Motorola and Iridium in inducing Iridium India to purchase gateway equipment from Motorola, acquire Iridium stock, and invest in developing a market for Iridium services in India. Iridium India claims in excess of $200 million in damages and interest. In conjunction with the filing of the civil suit, Iridium India moved for interim relief and obtained, without notice to Motorola, an order prohibiting Motorola from removing assets from India. In April 2004, the appellate division of the Bombay High Court entered an order restraining Motorola from removing, transferring or encumbering any of its assets in India until $120 million has been deposited with the Bombay High Court or secured by a bank guarantee, to be held pending trial. Toward that end, the order directed four Motorola customers in India to deposit with the court certain amounts owed to Motorola allegedly totaling approximately $90 million, rather than paying them to Motorola. Motorola petitioned the Indian Supreme Court for discretionary review and a stay. Pending additional action by the Indian courts, Motorola informed the four customers named in the Bombay High Court order of their obligation to deposit certain amounts with the court and instructed its other customers in India to direct their payments to a special Motorola bank account in India where they are required to remain pending further court orders. At an initial hearing in July, the Supreme Court stayed the Bombay High Court order pending further proceedings, subject to Motorola’s bringing the total amount deposited in the special account and a similar, previously-established account to approximately $44 million by no later than August 23, 2004. A further hearing is scheduled in October.

Shareholder Derivative Case

M&C Partners III v. Galvin, et al., filed January 10, 2002, in the Circuit Court of Cook County, Illinois, is a shareholder derivative suit filed derivatively on behalf of Motorola against fifteen current and former members of the Motorola Board of Directors and Motorola as a nominal defendant. The lawsuit alleges that the Motorola

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directors breached their fiduciary duty to the Company and/or committed gross mismanagement of Motorola’s business and assets by allowing Motorola to engage in improper practices with respect to Iridium. The suit seeks an unspecified amount of damages.

In October 2003, the court dismissed plaintiff’s amended complaint in its entirety without prejudice. On April 13, 2004, the court denied plaintiff’s motion to stay the litigation, with leave to file an amended complaint. On May 21, 2004, plaintiff made a demand on the Motorola Board of Directors to investigate the alleged wrongful conduct at issue in the lawsuit, and concurrently filed a motion for leave to file a Second Amended Complaint.

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

Telsim-Related Cases

Motorola is owed approximately $2 billion under loans to Telsim Mobil Telekomunikasyon Hizmetleri A.S. (“Telsim”), a wireless telephone operator in Turkey. Telsim defaulted on the payment of these loans in April 2001. The Company fully reserved the carrying value of the Telsim loans in the second quarter of 2002. The Company is involved in the following legal proceedings related to Telsim. The Uzan family formerly controlled Telsim. Telsim and its related companies are now under the control of the Turkish government.

U.S. Case

On January 28, 2002, Motorola Credit Corporation (“MCC”), a wholly-owned subsidiary of Motorola, initiated a civil action with Nokia Corporation (“Nokia”), Motorola Credit Corporation and Nokia Corporation v. Kemal Uzan, et al., against several members of the Uzan family, as well as one of their employees and controlled companies, alleging that the defendants engaged in a pattern of racketeering activity and violated various state and federal laws. The suit alleged 13 separate counts of wrongdoing, including (i) three counts alleging violations of Illinois fraud and conspiracy laws; (ii) three federal statutory counts alleging computer hacking; (iii) one count alleging violations of the Illinois Trade Secrets Act; (iv) one count seeking imposition of an equitable lien and constructive trust; (v) one count seeking declaratory relief; and (vi) four counts of criminal activity in violation of the Racketeer Influenced and Corrupt Organizations Act, commonly known as “RICO”. The suit was filed in the United States District Court for the Southern District of New York (the “U.S. District Court”). The U.S. District Court issued its final ruling on July 31, 2003 as described below.

Upon filing the action, MCC and Nokia were able to attach various Uzan-owned real estate in New York. Subsequently, this attachment order was expanded to include a number of bank accounts, including those owned indirectly by the Uzans. On May 9, 2002, the U.S. District Court entered a preliminary injunction confirming the prejudgment relief previously granted. These attachments remain in place.

The U.S. District Court tried the case without a jury to conclusion on February 19, 2003. Subsequent to the trial of the case, and before a final ruling had been issued, the U.S. Court of Appeals for the Second Circuit (“the Appellate Court”) issued an opinion on March 7, 2003 regarding a series of appeals filed by the Uzans from the U.S. District Court’s earlier rulings. In its opinion, the Appellate Court remanded the case back to the U.S. District Court on the grounds that the RICO claims were premature and not yet ripe for adjudication, but concluded that the claims might become timely at some future point. The Appellate Court directed that the RICO claims be dismissed without prejudice to their being later reinstated. The Appellate Court, however, upheld the May 2002 Preliminary Injunction, finding that it was sufficiently supported by the fraud claims under Illinois law, and did not rule on the merits of the Uzans’ claim that this matter may only be resolved through arbitration in Switzerland. A discussion of the arbitration in Switzerland can be found in the section below entitled “Foreign Proceedings.”

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In accordance with the mandate from the Appellate Court, on April 3, 2003, the U.S. District Court dismissed the RICO claims without prejudice. On July 8, 2003, MCC filed a motion seeking to have its RICO claims reinstated on the grounds that pursuing further actions against Telsim would be “futile.”

On July 31, 2003, the U.S. District Court entered a judgment in favor of MCC for $4.26 billion. The U.S. District Court declined to reinstate the RICO claims, but held that the court had jurisdiction to decide the merits of the Illinois fraud claims. MCC’s fraud claims under Illinois common law fraud and civil conspiracy were sufficient to support a full judgment on behalf of MCC in the amount of $2.13 billion in compensatory damages. The U.S. District Court also awarded $2.13 billion in punitive damages. In addition, the preliminary injunction was converted into a permanent injunction, essentially unaltered in scope, and the U.S. District Court also ordered the Uzans arrested and imprisoned if they are found within 100 miles of the court’s jurisdiction for being in contempt of court.

On August 8, 2003, the U.S. District Court denied the Uzans’ request for a stay of execution of the judgment pending appeal. To stay execution, the Uzans were required to post a bond of $1 billion by August 15, 2003. The Uzans did not post the bond and instead appealed the U.S. District Court decision to the Appellate Court. On August 18, 2003, the Appellate Court assigned the appeal to a three-judge panel of the Appellate Court (“the motions panel”) and MCC and Nokia requested that the motions panel dismiss the Uzans’ appeal, based on the Uzans’ repeated failures to comply with court orders and their fugitive status.

On September 26, 2003, the motions panel granted MCC’s and Nokia’s motion, in part, dismissed the individual Uzans’ appeals and denied any stay of execution on the judgment against the individual Uzans. In addition, the Appellate Court vacated the judgment against the three corporate defendants and remanded certain questions to the U.S. District Court to decide in connection with the proceedings against the corporate defendants. The stay of execution was kept in place as against the corporate defendants.

On February 6, 2004, the motions panel of the Appellate Court denied the individual Uzans’ motion for reconsideration and stay of execution and issued a mandate.

While the Defendants’ motion for rehearing by the entire Appellate Court was pending, on April 16, 2004, the motions panel vacated the orders entered by the Appellate Court on September 26, 2003 and February 6, 2004 and referred the matter to a “merits panel in the normal course.” In addition, the motions panel of the Appellate Court referred the Uzans’ motion for a stay, previously filed in August 2003, to the “said merits panel” and ordered that the stay previously entered by the Appellate Court on August 18 “shall remain in force until the merits panel reaches a decision on the motion for a stay or on the merits.” The motions panel of the Appellate Court further ordered that the motion to dismiss the appeal previously filed by MCC and Nokia be denied without prejudice to its “renewal before the merits panel.”

By orders dated May 7, 2004 and May 13, 2004, the Appellate Court denied the Company’s motion to vacate the stay, but granted the Company’s motion to expedite the appeal. The case was argued before a three-judge merits panel of the Appellate Court in June 2004. The Appellate Court asked for additional briefing on certain legal issues. Such additional briefing was completed at the end of July 2004.

Until the Appellate Court resolves the Uzans’ application for a stay, MCC’s efforts to execute on its judgment against the Uzans are stayed and the previously-begun efforts to liquidate Uzan assets in the United States, the United Kingdom, France and Switzerland are halted. Regardless of the outcome of the Uzans’ stay application, the Company continues to believe that the litigation, collection and/or settlement processes will be very lengthy in light of the Uzans’ continued resistance to satisfy the judgment against them and their decision to violate various courts’ orders, including orders holding them in contempt of court. In addition, the Turkish government has asserted control over Telsim and certain other interests of the Uzans and this may make Motorola’s collection efforts more difficult.

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Foreign Proceedings

In 2002, the United Kingdom’s High Court of Justice, Queen’s Bench Division (the “UK Court”), on motion of MCC, entered a worldwide freezing injunction against Cem Uzan, Hakan Uzan, Kemal Uzan and Aysegul Akay, freezing each of their assets up to a value of $200 million. The Uzans were ultimately held in contempt of court and ordered to be incarcerated for failing to make a full disclosure concerning their worldwide assets. On June 12, 2003, the UK Court of Appeal affirmed the lower court’s decision against Cem Uzan and Aysegul Akay, but concluded that MCC was not able to enforce the freezing order against Hakan Uzan and Kemal Uzan because they had no assets in England and Wales. Consequently, the lower court’s rulings as to Hakan Uzan and Kemal Uzan were reversed. MCC has appealed this aspect of the Court of Appeal’s decision. The Court of Appeal agreed to stay its Orders in relation to Hakan Uzan and Kemal Uzan, so that the Worldwide Freezing Orders remain effective against them and their worldwide assets, pending MCC’s appeal to the House of Lords. As a result of the Court of Appeal’s decision, the UK assets of Cem Uzan and Aysegul Akay, which total approximately $12.7 million, remain frozen and MCC has commenced the execution process in satisfaction of the New York judgment. In December 2003, the House of Lords issued a final judgment, declining to hear an appeal from the Court of Appeal’s decision, thus keeping the Court of Appeals’ decision in place. These execution proceedings are now stayed.

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

On February 5, 2002, Telsim initiated arbitration against MCC in Switzerland at the Zurich Chamber of Commerce. In Telsim’s request for arbitration, Telsim acknowledged its debt, but has alleged that the disruption in the Turkish economy during 2001 should excuse Telsim’s failure to make payments on the MCC loans as required under the agreements between the parties. Telsim seeks a ruling excusing its failure to adhere to the original payment schedule and establishing a new schedule for repayment of Telsim’s debt to MCC. Telsim has failed to comply with its proposed new schedule, missing the first three payments totaling approximately $85 million. In August 2003, MCC moved the arbitration panel for a partial award, seeking a judgment for the $85 million. Telsim opposed the motion. On January 26, 2004, the arbitral tribunal granted MCC’s request and entered a Partial Final Award in favor of MCC and against Telsim in the amount of $85 million. MCC has initiated proceedings to enforce this award against Telsim in Turkey. On May 4, 2004, Telsim filed an opposition to this enforcement petition in Turkey. This proceeding has been discontinued (without prejudice) while MCC appeals the Turkish court’s ruling that MCC pay a multi-million dollar court fee. MCC has requested a second partial award of $40 million from the arbitration panel to account for a loan payment that would have been due at year-end 2003 even under Telsim’s proposed loan repayment schedule. On May 10, 2004, Telsim filed an opposition to this request for a partial award. In the opposition, Telsim claimed that since it is under new management subject to certain Turkish court orders prohibiting payment to private creditors (Telsim was taken over by the Turkish government from the Uzans in February 2004 pursuant to these court orders obtained by the Turkish government), it is no longer bound by the prior proposed debt re-scheduling. In June 2004, MCC filed a request for a further award of $1.73 billion based on alleged further breaches of the financing agreements and a reply in support of MCC’s request for the $40 million partial award. A hearing was held on these matters in June 2004. Telsim filed an opposition to this $1.73 billion request in July 2004.

On June 7, 2002, Rumeli Telfon (“Rumeli”) initiated arbitration against MCC in the Zurich Chamber of Commerce seeking a ruling requiring that MCC consent to Rumeli’s request to place the Diluted Stock into an escrow account in Switzerland. Pursuant to the request of Rumeli, this arbitration is now stayed.

On June 19, 2002, Telsim initiated arbitration against Motorola, Ltd. and Motorola Komunikasyon Ticaret v.p. Servis Ltd. Sti., both wholly-owned subsidiaries of Motorola, before the International Chamber of Commerce in Zurich, Switzerland, initially seeking approximately 179 million pounds as damages for the defendants’ alleged sale of defective products to Telsim. Telsim increased the amount of its claim to

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approximately 300 million pounds. Motorola has denied the claims and has filed a counterclaim. Hearings were held in January and March 2004 and further hearings are scheduled for October 2004.

In re Adelphia Communications Corp. Securities and Derivative Litigation

On December 22, 2003, Motorola was named as a defendant in two cases relating to the In re Adelphia Communications Corp. Securities and Derivative Litigation (the “Adelphia MDL”). The Adelphia MDL consists of at least eleven individual cases and one purported class action that were filed in or have been transferred to the United States District Court for the Southern District of New York. First, Motorola was named as a defendant in the Second Amended Complaint in the individual case of W.R. Huff Asset Management Co. L.L.C. v. Deloitte & Touche, et al. This case was originally filed by W.R. Huff Asset Management Co. L.L.C. on June 7, 2002, in the United States District Court for the Western District of New York and was subsequently transferred to the Southern District of New York as related to the Adelphia MDL. Several other individual and corporate defendants are also named in the amended complaint along with Motorola.

As to Motorola, the complaint alleges a claim arising under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks recovery of the consideration paid by plaintiff for Adelphia debt securities, compensatory damages, costs and expenses of litigation and other relief. Motorola has recently been served with this complaint, the case is in its early stages, and fact discovery has not yet begun. Motorola filed a motion to dismiss this complaint on March 8, 2004.

Also on December 22, 2003, Motorola was named as a defendant in Stocke v. John J. Rigas, et al. This case was originally filed in Pennsylvania and was subsequently transferred to the Southern District of New York as related to the Adelphia MDL. Several other individual and corporate defendants are also named in the amended complaint along with Motorola. As to Motorola, the complaint alleges a federal law claim arising under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and a state law claim of aiding and abetting fraud relating to Adelphia securities. The complaint seeks return of the consideration paid by plaintiff for Adelphia securities, punitive damages, pre-judgment and post-judgment interest, costs and expenses of litigation and other relief. Motorola filed a motion to dismiss this complaint on April 12, 2004.

On July 23, 2004, Motorola was named as a defendant in Argent Classic Convertible Arbitrage Fund L.P., et al. v. Scientific-Atlanta, Inc., et al. (the “Argent Complaint”), which was filed in the United States District Court for the Southern District of New York. The Argent Complaint is a purported class action lawsuit on behalf of all persons who purchased or otherwise acquired the publicly-traded securities of Adelphia Communications Corporation (“Adelphia”) from October 1, 2000 through June 10, 2002. As to Motorola, the Argent Complaint alleges that certain commercial transactions between Adelphia and Motorola relating to Adelphia’s purchases of digital set-top boxes and marketing support agreement(s) purportedly resulted in violations of the anti-fraud provisions of the federal securities laws with respect to investors in Adelphia securities. With respect to Motorola, the Argent Complaint alleges a federal law claim arising under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Argent Complaint seeks compensatory damages of an undisclosed amount on behalf of all class members, costs and expenses of litigation and other relief. The Argent Complaint has been identified by the United States District Court for the Southern District of New York as potentially related to the currently ongoing Adelphia MDL proceeding and is likely to be coordinated and/or consolidated in the Adelphia MDL.

See Item 3 of the Company’s Form 10-K for the fiscal year ended December 31, 2003, as well as Part II, Item 1 of the Company’s Form 10-Q for the fiscal quarter ended April 3, 2004, for additional disclosures regarding pending matters.

Motorola is a defendant in various other suits, claims and investigations that arise in the normal course of business. In the opinion of management, and other than discussed in the Company’s most recent Form 10-K with respect to the Iridium cases, the ultimate disposition of the Company’s pending legal proceedings will not have a material adverse effect on the consolidated financial position, liquidity or results of operations.

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Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

The following table provides information with respect to acquisitions by the Company of shares of its common stock during the second fiscal quarter of 2004.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Repurchased (1)	(b) Average Price Paid per Share (1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
4/4/04 to 5/1/04	3,048	$	17.01	—	—
5/2/04 to 5/29/04	46,530	$	18.74	—	—
5/30/04 to 7/3/04	4,522	$	19.05	—	—
Total	54,100	$	18.67	—	—

(1) All transactions involved the delivery to the Company of shares of Motorola common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock granted to Company employees under the Company’s equity compensation plans.

Item 3. Defaults Upon Senior Securities.

Not applicable

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

Not applicable

Item 5. Other Information.

Not applicable

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No.	Description
10 (a)*	Master Separation and Distribution Agreement between Motorola, Inc. and Freescale Semiconductor, Inc. entered into as of April 4, 2004.
10(b)(i)*	Tax Sharing Agreement dated as of April 4, 2004 by and among Motorola, Inc. and Freescale Semiconductor, Inc.
10 (b)(ii)*	Amendment No. 1 to the Tax Sharing Agreement between Motorola, Inc. and Freescale Semiconductor, Inc. entered into as of June 18, 2004.
10 (c)*	Employee Matters Agreement (as Amended and Restated entered into as of June 18, 2004) between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (d)*	Intellectual Property Assignment Agreement entered into as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (e)*	Intellectual Property License Agreement entered into as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (f)*	Transition Services Agreement entered into on April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (g)*	Semiconductor Purchase Agreement effective as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (h)*	Registration Rights Agreement entered into as of July 18, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10.10**	Form of Motorola, Inc. Award Document—Terms and Conditions Related to Employee Nonqualified Stock Options, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000, the Motorola Amended and Restated Incentive Plan of 1998, and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.11**	Form of Motorola, Inc. Restricted Stock Agreement, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.12**	Form of Motorola, Inc. Restricted Stock Unit Agreement (Cliff Vesting), relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.13**	Form of Restricted Stock Unit Award (Tax Deferred-Periodic Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.14**	Form of Restricted Stock Unit Award (Tax Deferred-Cliff Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.17*	2004 Motorola Incentive Plan.
10.18**	Motorola Mid-Range Incentive Plan (MRIP) of 2003, as amended through August 5, 2004.

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10.34*	Form of Motorola, Inc. Restricted Stock Unit Agreement (Periodic Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000.
10.35*	Form of Deferred Stock Units Agreement between Motorola, Inc. and its non-employee directors.
12*	Statement regarding Computation of Ratio of Earnings to Fixed Charges.
31.1*	Certification of Edward J. Zander pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of David W. Devonshire pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Edward J. Zander pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of David W. Devonshire pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Document is filed herewith.

** Amendment to previously filed document is filed herewith.

(b) Reports on Form 8-K

The Company filed Current Reports on Form 8-K on June 24, 2004 and July 19, 2004 and furnished Current Reports on Form 8-K on June 21, 2004 and July 20, 2004.

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SIGNATURE

Pursuant to the requirements 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.

	MOTOROLA, INC.
Date: August 10, 2004	By:	/S/    STEVEN J. STROBEL
		Steven J. Strobel Senior Vice President and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer pf the Registrant)

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EXHIBIT INDEX

Exhibit No.	Description
10 (a)*	Master Separation and Distribution Agreement between Motorola, Inc. and Freescale Semiconductor, Inc. entered into as of April 4, 2004.
10(b)(i)*	Tax Sharing Agreement dated as of April 4, 2004 by and among Motorola, Inc. and Freescale Semiconductor, Inc.
10 (b)(ii)*	Amendment No. 1 to the Tax Sharing Agreement between Motorola, Inc. and Freescale Semiconductor, Inc. entered into as of June 18, 2004.
10 (c)*	Employee Matters Agreement (as Amended and Restated entered into as of June 18, 2004) between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (d)*	Intellectual Property Assignment Agreement entered into as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (e)*	Intellectual Property License Agreement entered into as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (f)*	Transition Services Agreement entered into on April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (g)*	Semiconductor Purchase Agreement effective as of April 4, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10 (h)*	Registration Rights Agreement entered into as of July 18, 2004 between Motorola, Inc. and Freescale Semiconductor, Inc.
10.10**	Form of Motorola, Inc. Award Document—Terms and Conditions Related to Employee Nonqualified Stock Options, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000, the Motorola Amended and Restated Incentive Plan of 1998, and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.11**	Form of Motorola, Inc. Restricted Stock Agreement, relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.12**	Form of Motorola, Inc. Restricted Stock Unit Agreement (Cliff Vesting), relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.13**	Form of Restricted Stock Unit Award (Tax Deferred-Periodic Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.14**	Form of Restricted Stock Unit Award (Tax Deferred-Cliff Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000, as amended through July 29, 2004.
10.17*	2004 Motorola Incentive Plan.
10.18**	Motorola Mid-Range Incentive Plan (MRIP) of 2003, as amended through August 5, 2004.

II-1

10.34*	Form of Motorola, Inc. Restricted Stock Unit Agreement (Periodic Vesting) relating to the Motorola Omnibus Incentive Plan of 2003, the Motorola Omnibus Incentive Plan of 2002, the Motorola Omnibus Incentive Plan of 2000 and the Motorola Compensation/Acquisition Plan of 2000.
10.35*	Form of Deferred Stock Units Agreement between Motorola, Inc. and its non-employee directors.
12*	Statement regarding Computation of Ratio of Earnings to Fixed Charges.
31.1*	Certification of Edward J. Zander pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of David W. Devonshire pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Edward J. Zander pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of David W. Devonshire pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Document is filed herewith.

** Amendment to previously filed document is filed herewith.

II-2

EX-10.(A)

EXHIBIT 10(a)

MASTER SEPARATION AND DISTRIBUTION AGREEMENT

THIS MASTER SEPARATION AND DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into as of April 4, 2004, by and between Motorola, Inc., a Delaware corporation (“Motorola”), and Freescale Semiconductor, Inc., a Delaware corporation (“Freescale”). Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in Article 1 of this Agreement.

RECITALS

WHEREAS, Motorola has determined that it would be appropriate, desirable and in the best interests of Motorola and Motorola’s stockholders to separate the SPS Business from Motorola;

WHEREAS, in connection with the separation of the SPS Business from Motorola, Motorola desires to contribute or otherwise transfer, and to cause certain of its Subsidiaries to contribute or otherwise transfer, certain Assets and Liabilities associated with the SPS Business, including the stock or other equity interests of certain of Motorola’s Subsidiaries dedicated to the SPS Business, to Freescale and certain of Freescale’s Subsidiaries (collectively, the “Contribution”);

WHEREAS, Freescale intends to offer and sell for its own account a limited number of shares of Freescale Class A Common Stock pursuant to an initial public offering of such shares (the “IPO”), and in furtherance thereof, Freescale has previously filed the IPO Registration Statement with the SEC which has not yet become effective;

WHEREAS, in connection with the Contribution and in exchange for the SPS Assets contributed by Motorola directly to Freescale, Freescale intends to (i) convert the Freescale Common Stock held by Motorola into shares of Freescale Class B Common Stock such that Motorola will own all of the outstanding Freescale Class B Common Stock immediately following the consummation of the IPO, (ii) distribute to Motorola a portion of the IPO proceeds and Freescale Borrowing proceeds, which Motorola intends to transfer to creditors of Motorola, and (iii) assume the SPS Liabilities;

WHEREAS, Motorola intends, after the IPO, to distribute to holders of shares of Motorola Common Stock the outstanding shares of Freescale Common Stock then owned by Motorola (the “Distribution”);

WHEREAS, Motorola and Freescale intend that the contribution of Assets by Motorola to Freescale pursuant to Section 2.1 of this Agreement and the Distribution, taken together, will qualify as a reorganization for U.S. federal income tax purposes pursuant to which no gain or loss will be recognized by Motorola or its stockholders under Section 355, 361(b)(3), 368(a)(1)(D) and related provisions of the Code, and that this Agreement is intended to be, and is hereby adopted as, a plan of reorganization under Section 368 of the Code; and

WHEREAS, the parties intend in this Agreement and the Ancillary Agreements to set forth the principal arrangements between them regarding the Contribution, the IPO and the Distribution:

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

The following terms, as used in this Agreement, have the following meanings:

“Action” means any suit, arbitration, inquiry, proceeding or investigation by or before any court, governmental or other regulatory or administrative agency or commission or any arbitration tribunal asserted by a Person.

“ADR” has the meaning set forth in Section 9.3(b) of this Agreement.

“Affiliate” of any specified Person means any other Person directly or indirectly “controlling,” “controlled by,” or “under common control with” (within the meaning of the Securities Act), such specified Person; provided, however, that for purposes of this Agreement, unless this Agreement expressly provides otherwise, the determination of whether a Person is an Affiliate of another Person will be made assuming that no member of the Motorola Group is an Affiliate of any member of the Freescale Group.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Ancillary Agreements” means each of the Contribution Agreements, the Employee Matters Agreement, the Freescale Transition Services Agreement, the Intellectual Property Assignment Agreement, the Intellectual Property License Agreement, the Motorola Transition Services Agreement, the Registration Rights Agreement and the Tax Sharing Agreement, including any exhibits, schedules, attachments, tables or other appendices thereto, and each agreement and other instrument contemplated herein or therein.

“Annual Financial Statements” has the meaning set forth in Section 5.1(a)(v) of this Agreement.

“Assets” means assets, properties and rights (including goodwill and rights arising under Contracts), wherever located (including in the possession of vendors, other Persons or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

“Bad Act” has the meaning set forth in Section 2.2 of this Agreement.

“Business Day” means a day other than a Saturday, a Sunday or a day on which banking institutions located in Chicago, Illinois or New York, New York are authorized or obligated by law or executive order to close.

“Claimed Amount” has the meaning set forth in Section 8.3(a) of this Agreement.

“Claim Notice” has the meaning set forth in Section 8.3(a) of this Agreement.

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

“Contracts” means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable law.

“Contribution” has the meaning set forth in the Recitals to this Agreement.

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“Contribution Agreements” means the agreements entered into by and between Motorola and certain of the Motorola Subsidiaries, on the one hand, and Freescale and certain of the Freescale Subsidiaries, on the other hand, pursuant to which the Contribution will be effected.

“Controlling Party” has the meaning set forth in Section 8.3(d)(ii) of this Agreement.

“Covered Subsidiary” means a corporation or other legal entity controlled or owned, directly or indirectly, by Motorola or Freescale, as applicable, that satisfies the definition of “Subsidiary” under a Motorola insurance policy.

“Damages” means all losses, claims, demands, damages, Liabilities, judgments, dues, penalties, assessments, fines (civil, criminal or administrative), costs, liens, forfeitures, settlements, fees or expenses (including reasonable attorneys’ fees and expenses and any other expenses reasonably incurred in connection with investigating, prosecuting or defending a claim or Action), of any nature or kind, whether or not the same would properly be reflected on a balance sheet.

“Dispute” has the meaning set forth in Section 9.3(a) of this Agreement.

“Distribution” has the meaning set forth in the Recitals to this Agreement.

“Distribution Agent” has the meaning set forth in Section 4.4(a) of this Agreement.

“Distribution Date” means the date on which the Distribution occurs.

“Effective Date” means April 4, 2004.

“Employee Matters Agreement” means that certain Employee Matters Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, as such Employee Matters Agreement may be amended from time to time.

“Environmental Law” means any federal, state, local, foreign or international statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, common law (including tort and environmental nuisance law), legal doctrine, order, judgment, decree, injunction, requirement or agreement with any governmental authority, now or hereafter in effect, relating to health, safety, pollution or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or to emissions, discharges, releases or threatened releases of any substance currently or at any time hereafter listed, defined, designated or classified as hazardous, toxic, waste, radioactive or dangerous, or otherwise regulated, under any of the foregoing, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any such substances, including the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act and the Resource Conservation and Recovery Act and comparable provisions in state, local, foreign or international law.

“Environmental Liabilities” means all Liabilities relating to, arising out of, or resulting from, any Environmental Law or Contract relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, natural resources damages, property damages, personal injury damages, costs of compliance with any product take back requirements or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, together with the rules and regulations promulgated thereunder.

“Existing IP Litigation Matters” means the following pending litigation matters: (i) Motorola, Inc. v. Analog Devices, Inc., No. 1:03-CV-0131, United States District Court, Eastern District of Texas (Beaumont Division); (ii) STMicroelectronics v. Motorola, Inc., No. 4:03cv276, United States District Court, Eastern District of Texas (Sherman Division); and (iii) Motorola, Inc. v. Micron Technology, Inc., No. A04 CA 007, United States District Court, Western District of Texas (Austin Division).

“Financial Statements” means the Annual Financial Statements and Quarterly Financial Statements collectively.

“Freescale” has the meaning set forth in the preamble to this Agreement.

“Freescale Bank Facilities” means the term loan facility and revolving credit facility, if any, contemplated to be entered into by Freescale concurrently with the IPO with a syndicate of bank and institutional lenders on such terms and conditions as agreed to by Motorola, Freescale and the other parties to the Freescale Bank Facilities.

“Freescale High Yield Notes” means the senior unsecured notes contemplated to be issued by Freescale concurrently with the IPO on such terms and conditions as agreed to by Motorola, Freescale and the underwriters for the Freescale High Yield Notes.

“Freescale Borrowing” means new indebtedness of Freescale and its Subsidiaries to be incurred by the IPO pursuant to the Freescale Bank Facilities and the issuance of the Freescale High Yield Notes.

“Freescale Capital Stock” means all classes or series of capital stock of Freescale, including the Freescale Class A Common Stock, the Freescale Class B Common Stock, and all options, warrants and other rights to acquire such capital stock.

“Freescale Class A Common Stock” means the Class A common stock, $0.01 par value per share, of Freescale.

“Freescale Class B Common Stock” means the Class B common stock, $0.01 par value per share, of Freescale.

“Freescale Common Stock” means the common stock of Freescale, including the Freescale Class A Common Stock and the Freescale Class B Common Stock.

“Freescale Group” means Freescale, each Person that Freescale directly or indirectly controls (within the meaning of the Securities Act) immediately after the Effective Date, and each other Person that becomes an Affiliate of Freescale after the Effective Date.

“Freescale Indebtedness” means the aggregate principal amount of total liabilities (whether long-term or short-term) for borrowed money (including capitalized leases) of the Freescale Group collectively, as determined for purposes of its Financial Statements prepared in accordance with GAAP.

“Freescale Indemnified Parties” has the meaning set forth in Section 8.2 of this Agreement.

“Freescale Public Documents” has the meaning set forth in Section 5.1(a)(viii) of this Agreement.

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“Freescale Shared Contract” means any Contract included in the SPS Assets relating in part to the Motorola Business.

“Freescale Transfer Agent” means the transfer agent and registrar for the Freescale Class A Common Stock.

“Freescale Transition Services Agreement” means the Transition Services Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, pursuant to which one or more members of the Motorola Group will provide certain transition services to one or more members of the Freescale Group, as such Freescale Transition Services Agreement may be amended from time to time.

“Freescale Voting Stock” has the meaning set forth in Section 5.2 of this Agreement.

“Freescale’s Auditors” has the meaning set forth in Section 5.1(b)(i) of this Agreement.

“GAAP” means U.S. generally accepted accounting principles, consistently applied.

“Global Reorganization and Restructuring Plan” means the Global Reorganization and Restructuring Plan in substantially the form attached to this Agreement as Exhibit A, pursuant to which certain Assets and Liabilities will be transferred between the parties and their Affiliates in connection with the Contribution.

“Group” means either the Motorola Group or the Freescale Group, as the context requires.

“Indemnified Party” has the meaning set forth in Section 8.3(a) of this Agreement.

“Indemnifying Party” has the meaning set forth in Section 8.3(a) of this Agreement.

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“Intellectual Property” has the meaning set forth in the Intellectual Property Assignment Agreement.

“Intellectual Property Assignment Agreement” means that certain Intellectual Property Assignment Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, as such Intellectual Property Assignment Agreement may be amended from time to time.

“Intellectual Property License Agreement” means that certain Intellectual Property License Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, as such Intellectual Property License Agreement may be amended from time to time.

“Intended Transferee” has the meaning set forth in Section 2.5(b) of this Agreement.

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“Intended Transferor” has the meaning set forth in Section 2.5(b) of this Agreement.

“Inter-Group Indebtedness” means indebtedness for borrowed funds between a member of the Motorola Group and a member of the Freescale Group as set forth on the Motorola Treasury capitalization plan.

“IPO” has the meaning set forth in the Recitals to this Agreement.

“IPO Registration Statement” means the registration statement on Form S-1 (SEC File No. 111250) as filed by Freescale with the SEC in connection with the IPO, together with all amendments and supplements thereto.

“IPO Settlement Date” means the date on which the First Time of Delivery (as defined in the Underwriting Agreement) occurs.

“Iridium Claims” means any Liability in respect of any governmental, judicial or adversarial proceeding, litigation, arbitration, dispute, claim, cause of action or investigation, relating to the Iridium satellite communications business, including without limitation Freeland v. Iridium World Communications, Inc., et al., M&C Partners III v. Galvin, et al., Statutory Committee of Unsecured Creditors v. Motorola, Inc. and the proceedings relating to the private criminal complaint and the civil suit brought by Iridium India Telecom Ltd. against Motorola, Inc., et al.

“Iridium Data” means any data, disk or any other Information relating to the Iridium satellite communications business, including, but without limitation, data located on mainframe systems IBM 9672-Y36 and a 9672-R36 on enterprise storage server IBM 2105 Model F20 DASD with any of the following volume identification numbers: PCIC40, PDAB02, PDAB03, PDAB04, PDAB06, PDAB07, PDAB08, PDAB55, PDAB57, PDAB58, PDB201, PDB204, PDB205, PDBT00, PMIG40, PPRV60, PPRV61, PPRV62, PPRV63, PPRV64, PPRV65, PPRV66, PPRV67, PPRV68, PPRV69, PPRV6A, PPRV6B, PPRV6C, PPRV6D, PPRV6E, PPRV6F, PPRV6G, PPRV6H, PPRV6I, PPRV6J, PPRV6K, PPRV6L, PPRV6M, PPRV6N, PPRV6O, PPRV6P, PPRV6Q, PPRV6R, PPRV6S, PPRV6T, PPRV6U, PPRV6V, PPRV6W, PPRV6X, PPRV6Y, PPRV6Z, PPRV70, PPRV71, PPRV72, PPRV73, PPRV74, PPRV75, PPRV76, PPRV77, PPRV78, PPRV79, PPRV7A, PPRV7B, PPRV7C, PPRV7D, PPRV7E, PPRV7F, PPRV7G, PPRV7H, PPRV7I, PPRV7J, PPRV7K, PPRV7L, PPRV7M, PPRV7N, PPRV7O, PPRV7P, PPRV7Q, PPRV7R, PPRV7S, PPRV7T, PPRV7U, SGEGT1, SGEGT2, SGEGT3 and SGEGT4.

“IRS” means the United States Internal Revenue Service.

“Key Ancillary Agreements” means each of the Employee Matters Agreement, the Freescale Transition Services Agreement, the Intellectual Property Assignment Agreement, the Intellectual Property License Agreement, the Motorola Transition Services Agreement, the Registration Rights Agreement and the Tax Sharing Agreement, including any exhibits, schedules, attachments, tables or other appendices thereto.

“Liabilities” means debts, liabilities (including Environmental Liabilities), guarantees, assurances, commitments and obligations of any nature or description, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of (i) any Contract or tort based on negligence or strict liability or (ii) any act or failure to act by any past or present Representative, whether or not such act or failure to act was

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within such Representative’s authority), and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

“Motorola” has the meaning set forth in the preamble to this Agreement.

“Motorola Annual Statements” has the meaning set forth in Section 5.1(b)(ii) of this Agreement.

“Motorola Business” means the businesses or operations of the Motorola Group other than the SPS Business.

“Motorola Common Stock” means the common stock, par value $3.00 per share, of Motorola.

“Motorola Credit Agreement” means that certain Motorola, Inc. Multi-Year Credit Agreement dated as of May 30, 2002 entered into between Motorola and the lenders party thereto, as the same may be amended or replaced from time to time.

“Motorola Disclosure Portions” means all material set forth in, or incorporated by reference into, the IPO Registration Statement to the extent relating exclusively to (i) the Motorola Group, (ii) the Motorola Business, (iii) Motorola’s intentions with respect to the Distribution, or (iv) the terms of the Distribution, including, without limitation, the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution.

“Motorola Group” means Motorola and each Person that is an Affiliate of Motorola (other than any member of the Freescale Group) immediately after the Effective Date, and each other Person that becomes an Affiliate of Motorola after the Effective Date.

“Motorola Indemnified Parties” has the meaning set forth in Section 8.1 of this Agreement.

“Motorola Liabilities” means the Liabilities of Motorola other than the SPS Liabilities.

“Motorola Public Filings” has the meaning set forth in Section 5.1(a)(xii) of this Agreement.

“Motorola Shared Contract” means any Contract relating in part to the SPS Business not included in the SPS Assets.

“Motorola Transition Services Agreement” means the Transition Services Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, pursuant to which one or more members of the Freescale Group will provide certain transition services to one or more members of the Motorola Group, as such Motorola Transition Services Agreement may be amended from time to time.

“Motorola’s Auditors” has the meaning set forth in Section 5.1(b)(ii) of this Agreement.

“Non-controlling Party” has the meaning set forth in Section 8.3(d)(ii) of this Agreement.

“Ordinary Course of Business” means the ordinary course of the SPS Business as conducted by Motorola and its Subsidiaries prior to the Effective Date consistent with historical custom and practice during normal day-to-day operations and not requiring any special authorization of any nature.

“Owning Party” has the meaning set forth in Section 6.2 of this Agreement.

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“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency, or political subdivision thereof.

“Possessor” has the meaning set forth in Section 6.3 of this Agreement.

“Quarterly Financial Statements” has the meaning set forth in Section 5.1(a)(iv) of this Agreement.

“Record Date” means the close of business on the date to be determined by Motorola’s Board of Directors as the record date for determining the stockholders of Motorola entitled to receive shares of Freescale Common Stock pursuant to the Distribution.

“Registration Rights Agreement” means the Registration Rights Agreement to be entered into between Motorola and Freescale prior to the IPO, as such Registration Rights Agreement may be amended from time to time.

“Regulation S-K” means Regulation S-K of the General Rules and Regulations promulgated by the SEC pursuant to the Securities Act.

“Regulation S-X” means Regulation S-X of the General Rules and Regulations promulgated by the SEC pursuant to the Securities Act.

“Representatives” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants or attorneys.

“Requestor” has the meaning set forth in Section 6.3 of this Agreement.

“Retention Period” has the meaning set forth in Section 6.4 of this Agreement.

“SEC” means the United States Securities and Exchange Commission or any successor agency.

“Securities Act” means the Securities Act of 1933, as amended from time to time, together with the rules and regulations promulgated thereunder.

“SPS Assets” means all of Motorola’s and its Subsidiaries’ right, title and interest in and to:

(i) any and all Assets of Motorola and its Subsidiaries that are used exclusively or held for use exclusively in the SPS Business; and

(ii) any and all Assets that are expressly listed, scheduled or otherwise clearly described in a Contribution Agreement or any other Ancillary Agreement as Assets to be transferred to Freescale or any other member of the Freescale Group.

“SPS Business” means (i) the businesses and operations conducted by the Semiconductor Products Sector of Motorola and its Affiliates (including, for purposes of this definition, any member of the Freescale Group) prior to the Effective Date, including as described in the IPO Registration Statement, and (ii) except as otherwise expressly provided in this Agreement, any terminated, divested or discontinued businesses or operations that at the time of such termination, divestiture or discontinuation related to the SPS Business (as described in the foregoing clause (i)) as then conducted.

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“SPS Liabilities” means the following:

(i) any and all Liabilities to the extent arising out of or relating to the SPS Business or the SPS Assets, in each case whether such Liabilities arise or accrue prior to, on or after the Effective Date (other than Tax-related Liabilities which are specifically retained by Motorola under the Tax Sharing Agreement and employee-related Liabilities which are specifically retained by Motorola under the Employee Matters Agreement);

(ii) any and all Liabilities to the extent arising out of or relating to the operation of any business conducted by any member of the Freescale Group at any time after the Effective Date;

(iii) any and all Liabilities that are expressly listed, scheduled or otherwise clearly described in a Contribution Agreement or any other Ancillary Agreement as Liabilities to be assumed by Freescale or any member of the Freescale Group; and

(iv) all obligations of the Freescale Group under or pursuant to this Agreement, any Ancillary Agreement or any other instrument entered into in connection herewith or therewith.

“Steering Committee” has the meaning set forth in Section 9.3(a)(i) of this Agreement.

“Subsidiary” means with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interest entitled to vote on the election of the members to the board of directors or similar governing body; provided, however, that unless the context otherwise requires, references to Subsidiaries of Motorola will not include the entities that will be transferred to Freescale or other members of the Freescale Group pursuant to this Agreement, including, without limitation, the entities listed on Exhibit 21.1 to the IPO Registration Statement, whether the transfer of such entities occurs prior to or after the Effective Date.

“Tax” and “Taxes” have the meanings set forth in the Tax Sharing Agreement.

“Tax Advisor” has the meaning set forth in the Tax Sharing Agreement.

“Tax Control” means the definition of “control” set forth in Section 368(c) of the Code.

“Tax-Free Status” has the meaning set forth in the Tax Sharing Agreement.

“Tax Sharing Agreement” means that certain Tax Sharing Agreement entered into by and between Motorola and Freescale effective as of the Effective Date, as such Tax Sharing Agreement may be amended from time to time.

“Third-Party Claim” has the meaning set forth in Section 8.3(d)(i) of this Agreement.

“Underwriters” means the managing underwriters for the IPO as described in the IPO Registration Statement.

“Underwriting Agreement” means the Underwriting Agreement between Motorola, Freescale and the Underwriters relating to the IPO, as amended from time to time.

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ARTICLE 2

CONTRIBUTION AND ASSUMPTION

Section 2.1 Contribution of SPS Assets. Unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Effective Date, Motorola will (and Motorola will cause its applicable Subsidiaries to) assign, transfer and convey to Freescale and its applicable Subsidiaries, and Freescale will (and Freescale will cause its applicable Subsidiaries to) receive and accept from Motorola and its applicable Subsidiaries, all of Motorola’s and its applicable Subsidiaries’ right, title and interest in and to the SPS Assets. Such assignments, transfers and conveyances will be effective at such times as provided in each respective Ancillary Agreement and will be subject to the terms and conditions of this Agreement and any applicable Ancillary Agreement.

Section 2.2 Assumption of Liabilities. Unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Effective Date, Freescale will (and Freescale will cause its applicable Subsidiaries to) assume, and on a timely basis pay, perform, satisfy and discharge the SPS Liabilities in accordance with their respective terms. Freescale and its applicable Subsidiaries will be responsible for all SPS Liabilities, regardless of (a) when or where such Liabilities arose or arise, (b) whether the facts on which they are based occurred on, prior to or subsequent to the Effective Date, (c) where or against whom such Liabilities are asserted or determined, (d) whether asserted or determined on, prior to or subsequent to the Effective Date, or (e) whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation (each, a “Bad Act”) by any member of the Motorola Group, the Freescale Group or any of their respective past or present Representatives; provided, however, that this clause 2.2(e) will not limit Freescale’s right to make a claim against a Motorola Group member for Damages suffered by it to the extent that such Damages are a direct result of a Bad Act committed by a Motorola Group member subsequent to the Effective Date; provided further, however, that Freescale’s right to make such a claim may otherwise be limited in any Ancillary Agreement. Such assumptions of SPS Liabilities will be effective at such times as provided in each respective Ancillary Agreement and will be subject to the terms and conditions of this Agreement and any applicable Ancillary Agreement.

Section 2.3 Effective Date; Deliveries. In furtherance of the assignment, transfer and conveyance of the SPS Assets and the assumption of the SPS Liabilities as set forth in this Agreement and the Ancillary Agreements, unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Effective Date, the parties will execute and deliver, and they will cause their respective Subsidiaries and Representatives, as applicable, to execute and deliver: (a) each of the Contribution Agreements and other Ancillary Agreements; (b) such bills of sale, stock powers, certificates of title, assignments of Contracts, subleases and other instruments of transfer, conveyance and assignment as, and to the extent, necessary or convenient to evidence the transfer, conveyance and assignment to Freescale (or, as applicable, its Subsidiaries) of all of Motorola’s (or, as applicable, its Subsidiaries’) right, title and interest in and to the SPS Assets; and (c) such assumptions of Contracts and other instruments of assumption as, and to the extent, necessary or convenient to evidence the valid and effective assumption of the SPS Liabilities by Freescale (or, as applicable, its Subsidiaries).

Section 2.4 No Representations or Warranties. Freescale (on behalf of itself and each member of the Freescale Group) acknowledges and agrees that, except as expressly set forth in this Agreement or any Ancillary Agreement, (a) no member of the Motorola Group is making any representations or warranties in this Agreement or any Ancillary Agreement, express or implied, as to the condition, quality, merchantability or fitness of any SPS Asset transferred pursuant to this Agreement, any Ancillary Agreement or any other agreement contemplated hereby or thereby, (b) all such SPS Assets will be transferred on an “as is,” “where is” basis (and in the case of any real property, by means of a quitclaim or similar form deed or conveyance), and (c) Freescale and its Affiliates will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in them good and marketable title,

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free and clear of any security interest, pledge, lien, charge, claim or other encumbrance of any nature whatsoever.

Section 2.5 Transfers Not Effected On the Effective Date.

(a) The parties acknowledge and agree that some of the transfers contemplated by this Article 2 may not be effected on the Effective Date due to the inability of the parties to obtain necessary consents or approvals or the inability of the parties to take certain other actions necessary to effect such transfers on the Effective Date. To the extent any transfers contemplated by this Article 2 have not been fully effected on the Effective Date, Motorola and Freescale will cooperate and use commercially reasonable efforts (and will cause the applicable members of its respective Group to use such efforts) to obtain any necessary consents or approvals or take any other actions necessary to effect such transfers as promptly as practicable following the Effective Date.

(b) Nothing in this Agreement will be deemed to require the transfer or assignment of any Contract or other Asset by Motorola or one of its Subsidiaries (an “Intended Transferor”) to Freescale or one of its Subsidiaries (an “Intended Transferee”) to the extent that such transfer or assignment would constitute a material breach of such Contract or cause forfeiture or loss of such Asset; provided, however, that even if such Contract or other Asset cannot be so transferred or assigned, such Contract or other Asset will be deemed a SPS Asset solely for purposes of determining whether any Liability is a SPS Liability.

(c) If an attempted assignment would be ineffective or would impair an Intended Transferee’s rights under any such SPS Asset so that the Intended Transferee would not receive all such rights, then the parties will use commercially reasonable efforts to provide to, or cause to be provided to, the Intended Transferee, to the extent permitted by law, the rights of any such SPS Asset and take such other actions as may reasonably be requested by the other party in order to place the Intended Transferee, insofar as reasonably possible, in the same position as if such SPS Asset had been transferred as contemplated hereby. In connection therewith, (i) the Intended Transferor will promptly pass along to the Intended Transferee when received all benefits derived by the Intended Transferor with respect to any such SPS Asset, and (ii) the Intended Transferee will pay, perform and discharge on behalf of the Intended Transferor all of the Intended Transferor’s obligations with respect to any such SPS Asset in a timely manner and in accordance with the terms thereof which it may do without breach. If and when such consents or approvals are obtained or such other required actions have been taken, the transfer of the applicable SPS Asset will be effected in accordance with the terms of this Agreement and any applicable Ancillary Agreement.

Section 2.6 Shared Contracts. The parties agree as follows:

(a) At the written request of Freescale, Motorola will, and will cause other members of the Motorola Group to, to the extent permitted by the applicable Motorola Shared Contract and applicable law, make available to Freescale or applicable members of the Freescale Group the benefits and rights under the Motorola Shared Contracts (except where the benefits or rights under such Motorola Shared Contracts are specifically provided pursuant to an Ancillary Agreement) which are substantially equivalent to the benefits and rights enjoyed by the Motorola Group under each Motorola Shared Contract for which such request is made by Freescale, to the extent such benefits relate to the SPS Business; provided, however, that the applicable members of the Freescale Group will assume and discharge (or promptly reimburse Motorola for) the obligations and liabilities under the relevant Motorola Shared Contracts associated with the benefits and rights so made available to them.

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(b) At the written request of Motorola, Freescale will, and will cause other members of the Freescale Group to, to the extent permitted by the applicable Freescale Shared Contract and applicable law, make available to Motorola or applicable members of the Motorola Group the benefits and rights under the Freescale Shared Contracts (except where the benefits or rights under such Freescale Shared Contracts are specifically provided pursuant to an Ancillary Agreement) which are substantially equivalent to the benefits and rights enjoyed by the Freescale Group under each Freescale Shared Contract for which such request is made by Motorola, to the extent such benefits relate to the Motorola Business; provided, however, that the applicable members of the Motorola Group will assume and discharge (or promptly reimburse Freescale for) the obligations and liabilities under the relevant Freescale Shared Contracts associated with the benefits and rights so made available to them.

The parties’ rights and obligations pursuant to this Section 2.6 will terminate upon the earliest to occur of (i) the Distribution Date, (ii) the termination of Motorola’s obligation to effect the Distribution pursuant to Section 9.14(b), and (iii) with respect to any Motorola Shared Contract or Freescale Shared Contract in particular, such time that the arrangement pursuant to this Section 2.6 is no longer permitted thereunder.

Section 2.7 Inter-Group Indebtedness. On or prior to the IPO Settlement Date, each party will repay, and each party will cause each of its Subsidiaries to repay, as applicable, its respective Inter-Group Indebtedness in accordance with the terms of such Inter-Group Indebtedness.

Section 2.8 Global Reorganization and Restructuring Plan. In connection with the Contribution, each of Motorola and Freescale will take, and each party will cause each member of its respective Group to take, such action as reasonably necessary to consummate the transactions contemplated by the Global Reorganization and Restructuring Plan (whether prior to or after the Effective Date).

ARTICLE 3

THE IPO

Section 3.1 Transactions Prior to the IPO. Subject to the conditions hereof, Motorola and Freescale will use their commercially reasonable efforts to consummate the IPO, including, without limitation, by taking the actions specified in this Section 3.1.

(a) Freescale will file such amendments or supplements to the IPO Registration Statement as may be necessary in order to cause the IPO Registration Statement to become and remain effective as required by applicable law or by the Underwriters, including, without limitation, filing such amendments and supplements thereto as may be required by the Underwriting Agreement, the SEC or applicable securities laws. Motorola and Freescale will also cooperate in preparing, filing with the SEC and causing to become effective a registration statement registering the Freescale Class A Common Stock under the Exchange Act, and any registration statements or amendments thereto which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the IPO, the Distribution or the other transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Freescale and Motorola will enter into the Underwriting Agreement, in form and substance reasonably satisfactory to each party, and each party will comply with its respective obligations thereunder.

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(c) Freescale will use its commercially reasonable efforts to take all such action as may be necessary or appropriate under applicable state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) in connection with the IPO.

(d) Freescale will prepare, file and use commercially reasonable efforts to seek to make effective, an application for listing of the Freescale Class A Common Stock to be issued in the IPO on the New York Stock Exchange, subject to official notice of issuance.

(e) Freescale will participate in the preparation of materials and presentations that Motorola and the Underwriters will deem necessary or desirable.

(f) Freescale will cooperate in all respects with Motorola in connection with the pricing and timing of the Freescale Class A Common Stock to be issued in the IPO and will, at Motorola’s direction, promptly take any and all actions necessary or desirable to consummate the IPO as contemplated by the IPO Registration Statement and the Underwriting Agreement.

Section 3.2 Proceeds of the IPO;Consideration for SPS Assets. The IPO will be a primary offering of Freescale Class A Common Stock, and the net proceeds of the IPO will be used as described in the IPO Registration Statement in the section entitled “Use of Proceeds”. The contribution or other transfer of SPS Assets by Motorola to Freescale in connection with the Contribution will be in exchange for (a) the conversion of the Freescale Common Stock held by Motorola into shares of Freescale Class B Common Stock such that Motorola will own all of the outstanding Freescale Class B Common Stock immediately following the consummation of the IPO, (b) the distribution to Motorola of a portion of the IPO proceeds and Freescale Borrowing proceeds, and (c) the assumption by Freescale of SPS Liabilities. Motorola intends to transfer such IPO proceeds and Freescale Borrowing proceeds received by Motorola from Freescale to Motorola’s creditors in retirement of outstanding third-party indebtedness.

Section 3.3 Conditions Precedent to Consummation of the IPO. The obligations of the parties to consummate the IPO will be subject to such conditions as Motorola will determine in its sole and absolute discretion, which conditions will be for the sole benefit of Motorola, may be waived by Motorola in its sole and absolute discretion, and any determination by Motorola regarding the satisfaction or waiver of any of such conditions will be conclusive. Such conditions will include, without limitation, the following:

(a) The IPO Registration Statement will have been declared effective by the SEC, and there will be no stop order in effect with respect thereto and no proceeding for that purpose will have been instituted by the SEC;

(b) The actions and filings with regard to state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) referred to in Section 3.1 will have been taken and, where applicable, have become effective or been accepted;

(c) The Freescale Class A Common Stock to be issued in the IPO will have been accepted for listing on the New York Stock Exchange, on official notice of issuance;

(d) Freescale will have entered into the Underwriting Agreement and all conditions to the obligations of Freescale and the Underwriters thereunder will have been satisfied or waived;

(e) Motorola will be satisfied in its sole and absolute discretion that (i) it will possess Tax Control of Freescale immediately following the consummation of the IPO, (ii) all other matters regarding the Tax-Free Status will, to the extent applicable as of the time the IPO is consummated, be

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satisfied or can reasonably be anticipated to be satisfied, and (iii) there will be no event or condition that may cause any of such conditions not to be satisfied as of the time of the Distribution or thereafter;

(f) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the IPO or any of the other transactions contemplated by this Agreement or any Ancillary Agreement will be in effect;

(g) Motorola will have determined that the terms of the IPO, including the timing and pricing thereof, and other material matters in connection therewith, are acceptable to Motorola;

(h) Freescale will have incurred the Freescale Borrowing on terms and with lender(s) acceptable to Motorola; and

(i) This Agreement will not have been terminated.

Section 3.4 Conversion of Outstanding Freescale Common Stock into Freescale Class B Common Stock. Prior to the consummation of the IPO, Motorola and Freescale will each take all actions (including, without limitation, such actions that are required to effect the adoption by Freescale of an amended and restated certificate of incorporation) that Motorola determines, in its sole discretion, may be required to provide for the conversion of the issued and outstanding shares of Freescale Common Stock held by Motorola as of the date hereof into a number of shares of Freescale Class B Common Stock such that Motorola possesses Tax Control of Freescale at all times before, at the time of, and immediately following, the consummation of the IPO.

ARTICLE 4

THE DISTRIBUTION

Section 4.1 The Distribution. Motorola intends, following the consummation of the IPO, to complete the Distribution by December 31, 2004. Motorola will, in its sole and absolute discretion, determine the date of the consummation of the Distribution and all terms of the Distribution, including without limitation, the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution. In addition, Motorola may, at any time and from time to time until the completion of the Distribution, modify or change the terms of the Distribution, including, without limitation, by accelerating or delaying the timing of the consummation of all or part of the Distribution. Freescale will cooperate with Motorola in all respects to accomplish the Distribution and will, at Motorola’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including, without limitation, to the extent necessary, the registration under the Securities Act and the Exchange Act of the Freescale Common Stock on an appropriate registration form or forms to be designated by Motorola. Motorola will select any investment banker(s) and manager(s) in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for Motorola, provided, however, that nothing in this Agreement will prohibit Freescale from engaging (at its own expense) its own financial, legal, accounting and other advisors in connection with the Distribution.

Section 4.2 Actions Prior to the Distribution. In connection with the Distribution, the parties will take the actions set forth in this Section 4.2.

(a) Motorola and Freescale will prepare and mail, prior to any Distribution Date, to the holders of Motorola Common Stock, such information concerning Freescale and the Distribution and such other matters as Motorola reasonably determines and as may be required by law. Motorola and Freescale will prepare, and Freescale will, to the extent required by applicable law, file with the SEC any

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such documentation that Motorola determines is necessary or desirable to effect the Distribution, and Motorola and Freescale will each use its commercially reasonable efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable.

(b) Freescale will use its commercially reasonable efforts to take all such action as may be necessary or desirable under applicable state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) in connection with the Distribution.

(c) Freescale will prepare, file and use commercially reasonable efforts to seek to make effective, an application for listing of the Freescale Common Stock to be distributed in the Distribution on the New York Stock Exchange, subject to official notice of issuance.

(d) Freescale will take all reasonable steps necessary or desirable to cause the conditions set forth in Section 4.3 to be satisfied and to effect the Distribution.

Section 4.3 Conditions to Distribution. The consummation of the Distribution will be subject to the satisfaction, or waiver by Motorola in its sole and absolute discretion, of the conditions set forth in this Section 4.3. Any determination by Motorola regarding the satisfaction or waiver of any of such conditions will be conclusive. For the avoidance of doubt, in the event that Motorola determines not to consummate the Distribution because one or more of such conditions is not satisfied or for any other reason, such determination by Motorola will not impact the effectiveness of the Contribution or the IPO.

(a) The receipt by Motorola, in form and substance satisfactory to it, of either, at its option and in its sole and absolute discretion, a ruling by the IRS or an opinion from its Tax Advisor regarding the Tax-Free Status and such other matters, as it will determine to be necessary or advisable in its sole and absolute discretion.

(b) The receipt of any governmental approvals and material consents necessary to consummate the Distribution, which approvals and consents will be in full force and effect.

(c) No order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Distribution will be in effect and no other event outside the control of Motorola will have occurred or failed to occur that prevents the consummation of the Distribution.

(d) The actions and filings necessary or appropriate under applicable securities laws in connection with the Distribution will have been taken or made, and, where applicable, have become effective or been accepted.

(e) The Freescale Common Stock to be distributed in the Distribution will have been accepted for listing on the New York Stock Exchange, subject to official notice of issuance.

(f) The receipt by Motorola, in form and substance satisfactory to it, of (i) an opinion from Delaware counsel, selected by Motorola in its sole and absolute discretion, regarding the appropriateness of the determination by the Motorola Board of Directors that Motorola has sufficient surplus under Delaware law to permit the Distribution, (ii) an opinion from its financial advisor with respect to (A) the fairness, as of the date of such opinion, to holders of Motorola Common Stock, from a financial point of view, of the Distribution, and (B) the ability of Motorola and Freescale, given their respective capital structures following the Distribution, to finance their respective operating and capital requirements through a specified date based on conditions in the capital markets as of the date of such

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opinion, and (iii) appropriate certificates from Freescale and/or Freescale’s senior management with respect to factual matters required by the advisors to render the opinions referenced in (i) and (ii).

Section 4.4 Certain Stockholder Matters.

(a) Subject to Section 4.3 hereof, on or prior to the Distribution Date, Motorola will deliver to a distribution agent to be appointed by Motorola (the “Distribution Agent”) for the benefit of holders of record of Motorola Common Stock on the Record Date, a single stock certificate, endorsed by Motorola in blank, representing all of the outstanding shares of Freescale Common Stock then owned by Motorola, and Motorola will instruct the Distribution Agent to deliver to the Freescale Transfer Agent true, correct and complete copies of the stock and transfer records reflecting the holders of Motorola Common Stock entitled to receive shares of Freescale Common Stock in connection with the Distribution. Motorola will cause its transfer agent to instruct the Distribution Agent to distribute on the Distribution Date or as soon as reasonably practicable thereafter the appropriate number of shares of Freescale Common Stock to each such holder or designated transferee(s) of such holder. Motorola will cooperate, and will instruct the Distribution Agent to cooperate, with Freescale and the Freescale Transfer Agent, and Freescale will cooperate, and will instruct the Freescale Transfer Agent to cooperate, with Motorola and the Distribution Agent, in connection with all aspects of the Distribution and all other matters relating to the issuance and delivery of certificates representing, or other evidence of ownership of, the shares of Freescale Common Stock to be distributed to the holders of Motorola Common Stock in connection with the Distribution.

(b) Subject to Section 4.4(d), each holder of Motorola Common Stock on the Record Date (or such holder’s designated transferee(s)) will be entitled to receive in the Distribution a number of shares of Freescale Common Stock equal to the number of shares of Motorola Common Stock held by such holder on the Record Date, multiplied by a fraction, (i) the numerator of which is the number of shares of Freescale Common Stock beneficially owned by Motorola or any other member of the Motorola Group on the Record Date, and (ii) the denominator of which is the number of Shares of Motorola Common Stock outstanding on the Record Date. In the event that the Distribution consists of more than one class of Freescale Common Stock, each holder of Motorola Common Stock will receive shares of Freescale Common Stock, calculated as provided above, except that the calculation will be performed separately for each such class of stock.

(c) Until such Freescale Common Stock is duly transferred in accordance with applicable law, Freescale will regard the Persons entitled to receive such Freescale Common Stock as record holders of Freescale Common Stock in accordance with the terms of the Distribution without requiring any action on the part of such Persons. Freescale agrees that, subject to any transfers of such stock, (i) each such holder will be entitled to receive all dividends payable on, and exercise voting rights and all other rights and privileges with respect to, the shares of Freescale Common Stock then held by such holder, and (ii) each such holder will be entitled, without any action on the part of such holder, to receive one or more certificates representing, or other evidence of ownership of, the shares of Freescale Common Stock then held by such holder.

(d) Notwithstanding anything to the contrary in this Section 4.4, in the event that the Distribution is not made in the form of a pro rata distribution of Freescale Common Stock to holders of Motorola Common Stock, the above provisions of this Section 4.4 will not apply to the Distribution.

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ARTICLE 5

FINANCIAL AND OTHER COVENANTS

Section 5.1 Financial and Other Information.

(a) Financial Information. Freescale agrees that, for so long as Motorola is required to consolidate the results of operations and financial position of Freescale and any other members of the Freescale Group or to account for its investment in Freescale under the equity method of accounting (determined in accordance with generally accepted accounting principles consistently applied and consistent with SEC reporting requirements):

(i) Disclosure of Financial Controls. Freescale will, and will cause each other member of the Freescale Group to, maintain, as of and after the Effective Date, disclosure controls and procedures and internal control over financial reporting as defined in Exchange Act Rule 13a-15 promulgated under the Exchange Act; Freescale will cause each of its principal executive and principal financial officers to sign and deliver certifications to Freescale’s periodic reports and will include the certifications in Freescale’s periodic reports, as and when required pursuant to Exchange Act Rule 13a-14 and Item 601 of Regulation S-K; Freescale will cause its management to evaluate Freescale’s disclosure controls and procedures and internal control over financial reporting (including any change in internal control over financial reporting) as and when required pursuant to Exchange Act Rule 13a-15; Freescale will disclose in its periodic reports filed with the SEC information concerning Freescale management’s responsibilities for and evaluation of Freescale’s disclosure controls and procedures and internal control over financial reporting (including, without limitation, the annual management report and attestation report of Freescale’s independent auditors relating to internal control over financial reporting) as and when required under Items 307 and 308 of Regulation S-K and other applicable SEC rules; and, without limiting the general application of the foregoing, Freescale will, and will cause each other member of the Freescale Group to, maintain as of and after the Effective Date internal systems and procedures that will provide reasonable assurance that (A) the Financial Statements are reliable and timely prepared in accordance with GAAP and applicable law, (B) all transactions of members of the Freescale Group are recorded as necessary to permit the preparation of the Financial Statements, (C) the receipts and expenditures of members of the Freescale Group are authorized at the appropriate level within Freescale, and (D) unauthorized use or disposition of the assets of any member of the Freescale Group that could have material effect on the Financial Statements is prevented or detected in a timely manner.

(ii) Fiscal Year. Freescale will, and will cause each member of the Freescale Group organized in the U.S. to, maintain a fiscal year that commences and ends on the same calendar days as Motorola’s fiscal year commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as Motorola’s monthly accounting periods commence and end.

(iii) Monthly Financial Reports. No later than ten (10) Business Days after the end of the first three (3) monthly accounting periods of Freescale following the Effective Date Freescale will deliver to Motorola a consolidated income statement and balance sheet for Freescale for such period and an income statement and balance sheet for each Freescale Affiliate which is consolidated with Freescale, as the case may be, in such format and detail as Motorola may request, and no later than twelve (12) Business Days after the end of the first three (3) monthly accounting periods of Freescale following the Effective Date Freescale will deliver to Motorola a consolidated statement of cashflow for Freescale for such period and statement of cashflow for each Freescale Affiliate which is consolidated with Freescale, as the case may be, in such format and detail as Motorola may request. No later than five (5) Business Days after the end of each monthly accounting period of Freescale thereafter (including the last monthly accounting period of Freescale of each fiscal year), Freescale will deliver to Motorola a consolidated income statement, balance sheet and statement of cash flow for Freescale for such period and an income statement, balance sheet and statement of cash flow for each Freescale Affiliate which is consolidated with Freescale, as the case may be, in such format and detail as Motorola may request.

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(iv) Quarterly Financial Statements. As soon as practicable, and in any event no later than the earlier of (x) ten business (10) days prior to the date on which Freescale is required to file a Form 10-Q or other document containing Quarterly Financial Statements (as defined below) with the SEC for each of the first three (3) fiscal quarters in each fiscal year of Freescale and (y) five business (5) days prior to the date on which Motorola has notified Freescale that Motorola intends to file its Form 10-Q or other document containing quarterly financial statements with the SEC, Freescale will deliver to Motorola drafts of (A) the consolidated financial statements of the Freescale Group (and notes thereto) for such periods and for the period from the beginning of the current fiscal year to the end of such quarter, setting forth in each case in comparative form for each such fiscal quarter of Freescale the consolidated figures (and notes thereto) for the corresponding quarter and periods of the previous fiscal year and all in reasonable detail and prepared in accordance with Article 10 of Regulation S-X and GAAP, and (B) a discussion and analysis by management of the Freescale Group’s financial condition and results of operations for such fiscal period, including, without limitation, an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K; provided, however, that Freescale will deliver such information at such earlier time upon Motorola’s written request with thirty (30) days’ notice resulting from Motorola’s determination to accelerate the timing of the filing of its financial statements with the SEC. The information set forth in (A) and (B) above is referred to in this Agreement as the “Quarterly Financial Statements.” No later than the earlier of (x) three (3) Business Days prior to the date Freescale publicly files the Quarterly Financial Statements with the SEC or otherwise makes such Quarterly Financial Statements publicly available or (y) three (3) Business Days prior to the date on which Motorola has notified Freescale that Motorola intends to file the Motorola quarterly financial statements with the SEC, Freescale will deliver to Motorola the final form of the Freescale Quarterly Financial Statements and certifications thereof by the principal executive and financial officers of Freescale in substantially the forms required under SEC rules for periodic reports and in form and substance satisfactory to Motorola; provided, however, that Freescale may continue to revise such Quarterly Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by Freescale to Motorola as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that Motorola’s and Freescale’s financial Representatives will actively consult with each other regarding any changes (whether or not substantive) which Freescale may consider making to its Quarterly Financial Statements and related disclosures during the two (2) Business Days immediately prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon Motorola’s financial statements or related disclosures. In addition to the foregoing, no Quarterly Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect to the ownership of Freescale by Motorola, the separation of Freescale from Motorola or the Distribution will be filed with the SEC or otherwise made public by any Freescale Group member without the prior written consent of Motorola. Notwithstanding anything to the contrary in this Section 5.1(a)(iv), Freescale will file its Quarterly Financial Statements with the SEC on the same date that Motorola files the Motorola quarterly financial statements with the SEC unless otherwise required by applicable law.

(v) Annual Financial Statements. As soon as practicable, and in any event no later than the earlier of (x) ten business (10) days prior to the date on which Freescale is required to file a Form 10-K or other document containing its Annual Financial Statements (as defined below) with the SEC and (y) ten business (10) days prior to the date on which Motorola has notified Freescale that Motorola intends to file its Form 10-K or other document containing annual financial statements with the SEC, Freescale will deliver to Motorola (A) drafts of the consolidated financial statements of the Freescale Group (and notes thereto) for such year, setting forth in each case in comparative form the consolidated figures (and notes thereto) for the previous fiscal year and all in reasonable detail and prepared in accordance with Regulation S-X and GAAP and (B) a discussion and analysis by management of the Freescale Group’s financial condition and results of operations for such year,

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including, without limitation, an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Item 303(a) of Regulation S-K. The information set forth in (A) and (B) above is referred to in this Agreement as the “Annual Financial Statements.” Freescale will deliver to Motorola all revisions to such drafts as soon as any such revisions are prepared or made. No later than the earlier of (x) five (5) Business Days prior to the date Freescale publicly files the Annual Financial Statements with the SEC or otherwise makes such Annual Financial Statements publicly available or (y) five (5) Business Days prior to the date on which Motorola has notified Freescale that Motorola intends to file the Motorola annual financial statements with the SEC, Freescale will deliver to Motorola the final form of the Freescale Annual Financial Statements and certifications thereof by the principal executive and financial officers of Freescale in substantially the forms required under SEC rules for periodic reports and in form and substance satisfactory to Motorola; provided, however, that Freescale may continue to revise such Annual Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by Freescale to Motorola as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that Motorola and Freescale financial Representatives will actively consult with each other regarding any changes (whether or not substantive) which Freescale may consider making to its Annual Financial Statements and related disclosures during the three (3) Business Days immediately prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon Motorola’s financial statements or related disclosures. In addition to the foregoing, no Annual Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect, to the ownership of Freescale by Motorola, the separation of Freescale from Motorola or the Distribution will be filed with the SEC or otherwise made public by any Freescale Group member without the prior written consent of Motorola. In any event, Freescale will deliver to Motorola, no later than three (3) days prior to the date that on which Motorola has notified Freescale that Motorola intends to file the Motorola annual financial statements with the SEC, the final form of the Annual Financial Statements accompanied by an opinion thereon by Freescale’s independent certified public accountants. Notwithstanding anything to the contrary in this Section 5.1(a)(v), Freescale will file its Annual Financial Statements with the SEC on the same date that Motorola files the Motorola annual financial statements with the SEC unless otherwise required by applicable law.

(vi) Affiliate Financial Statements. Freescale will deliver to Motorola all Quarterly and Annual Financial Statements of each Freescale Affiliate which is itself required to file financial statements with the SEC or otherwise make such financial statements publicly available, with such financial statements to be provided in the same manner and detail and on the same time schedule as those financial statements of Freescale required to be delivered to Motorola pursuant to this Section 5.1.

(vii) Conformance with Motorola Financial Presentation. All information provided by any Freescale Group member to Motorola or filed with the SEC pursuant to Section 5.1(a)(iii) through (vi) inclusive will be consistent in terms of format and detail and otherwise with Motorola’s policies with respect to the application of GAAP and practices in effect on the Effective Date with respect to the provision of such financial information by such Freescale Group member to Motorola (and, where appropriate, as presently presented in financial reports to Motorola’s Board of Directors), with such changes therein as may be requested by Motorola from time to time consistent with changes in such accounting principles and practices.

(viii) Freescale Reports Generally. Each Freescale Group member that files information with the SEC will deliver to Motorola: (A) substantially final drafts, as soon as the same are prepared, of (x) all reports, notices and proxy and information statements to be sent or made available by such Freescale Group member to its respective security holders, (y) all regular, periodic and other reports to be filed or furnished under Sections 13, 14 and 15 of the Exchange Act (including Reports on Forms 10-K, 10-Q and 8-K and Annual Reports to Shareholders), and (z) all registration statements and

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prospectuses to be filed by such Freescale Group member with the SEC or any securities exchange pursuant to the listed company manual (or similar requirements) of such exchange (collectively, the documents identified in clauses (x), (y) and (z) are referred to in this Agreement as “Freescale Public Documents”), and (B) as soon as practicable, but in no event later than four (4) Business Days (other than with respect to 8-Ks) prior to the earliest of the dates the same are printed, sent or filed, current drafts of all such Freescale Public Documents and, with respect to 8-Ks, as soon as practicable, but in no event later than two (2) Business Days prior to the earliest of the dates the same are printed, sent or filed in the case of planned 8-Ks and as soon as practicable, but in no event less than 2 hours in the case of unplanned 8-Ks; provided, however, that Freescale may continue to revise such Freescale Public Documents prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by Freescale to Motorola as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that Motorola and Freescale financial Representatives will actively consult with each other regarding any changes (whether or not substantive) which Freescale may consider making to any of its Freescale Public Documents and related disclosures prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon Motorola’s financial statements or related disclosures. In addition to the foregoing, no Freescale Public Document or any other document which refers, or contains information not previously publicly disclosed with respect, to the ownership of Freescale by Motorola, the separation of Freescale from Motorola or the Distribution will be filed with the SEC or otherwise made public by any Freescale Group member without the prior written consent of Motorola.

(ix) Budgets and Financial Projections. Freescale will, as promptly as practicable, deliver to Motorola copies of all annual and other budgets and financial projections (consistent in terms of format and detail and otherwise required by Motorola) relating to Freescale on a consolidated basis and will provide Motorola an opportunity to meet with management of Freescale to discuss such budgets and projections.

(x) Other Information. With reasonable promptness, Freescale will deliver to Motorola such additional financial and other information and data with respect to the Freescale Group and their business, properties, financial positions, results of operations and prospects as from time to time may be reasonably requested by Motorola.

(xi) Press Releases and Similar Information. Freescale and Motorola will consult with each other as to the timing of their annual and quarterly earnings releases and any interim financial guidance for a current or future period and will give each other the opportunity to review the information therein relating to the Freescale Group and to comment thereon. Motorola and Freescale will make reasonable efforts to issue their respective annual and quarterly earnings releases at approximately the same time on the same date. No later than eight (8) hours prior to the time and date that a party intends to publish its regular annual or quarterly earnings release or any financial guidance for a current or future period, such party will deliver to the other party copies of substantially final drafts of all press releases and other statements to be made available by any member of that party’s Group to employees of any member of that party’s Group or to the public concerning any matters that could be reasonably likely to have a material financial impact on the earnings, results of operations, financial condition or prospects of any Freescale Group member. In addition, prior to the issuance of any such press release or public statement that meets the criteria set forth in the preceding two sentences, the issuing party will consult with the other party regarding any changes (other than typographical or other similar minor changes) to such substantially final drafts. Immediately following the issuance thereof, the issuing party will deliver to the other party copies of final drafts of all press releases and other public statements.

(xii) Cooperation on Motorola Filings. Freescale will cooperate fully, and cause Freescale’s Auditors to cooperate fully, with Motorola to the extent requested by Motorola in the

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preparation of Motorola’s public earnings or other press releases, Quarterly Reports on Form 10-Q, Annual Reports to Shareholders, Annual Reports on Form 10-K, any Current Reports on Form 8-K and any other proxy, information and registration statements, reports, notices, prospectuses and any other filings made by Motorola with the SEC, any national securities exchange or otherwise made publicly available (collectively, the “Motorola Public Filings”). Freescale agrees to provide to Motorola all information that Motorola reasonably requests in connection with any Motorola Public Filings or that, in the judgment of Motorola’s legal department, is required to be disclosed or incorporated by reference therein under any law, rule or regulation. Freescale will provide such information in a timely manner on the dates requested by Motorola (which may be earlier than the dates on which Freescale otherwise would be required hereunder to have such information available) to enable Motorola to prepare, print and release all Motorola Public Filings on such dates as Motorola will determine but in no event later than as required by applicable law. Freescale will use its commercially reasonable efforts to cause Freescale’s Auditors to consent to any reference to them as experts in any Motorola Public Filings required under any law, rule or regulation. If and to the extent requested by Motorola, Freescale will diligently and promptly review all drafts of such Motorola Public Filings and prepare in a diligent and timely fashion any portion of such Motorola Public Filing pertaining to Freescale. Prior to any printing or public release of any Motorola Public Filing, an appropriate executive officer of Freescale will, if requested by Motorola, certify that the information relating to any Freescale Group member or the SPS Business in such Motorola Public Filing is accurate, true, complete and correct in all material respects. Unless required by law, rule or regulation, Freescale will not publicly release any financial or other information which conflicts with the information with respect to any Freescale Group member or the SPS Business that is included in any Motorola Public Filing without Motorola’s prior written consent. Prior to the release or filing thereof, Motorola will provide Freescale with a draft of any portion of a Motorola Public Filing containing information relating to the Freescale Group and will give Freescale an opportunity to review such information and comment thereon; provided that Motorola will determine in its sole and absolute discretion the final form and content of all Motorola Public Filings.

(b) Auditors and Audits; Annual Statements and Accounting. Freescale agrees that, for so long as Motorola is required to consolidate Freescale’s results of operations and financial position or to account for its investment in Freescale under the equity method of accounting (in accordance with GAAP):

(i) Selection of Freescale Auditors. Unless required by law, Freescale will not select a different accounting firm than KPMG LLP (or its affiliate accounting firms) (unless so directed by Motorola in accordance with a change by Motorola in its accounting firm) to serve as its (and the Freescale Affiliates’) independent certified public accountants (“Freescale’s Auditors”) without Motorola’s prior written consent (which will not be unreasonably withheld); provided, however, that, to the extent any such Freescale Affiliates are currently using a different accounting firm to serve as their independent certified public accountants, such Freescale Affiliates may continue to use such accounting firm provided such accounting firm is reasonably satisfactory to Motorola.

(ii) Audit Timing. Freescale will use its commercially reasonable efforts to enable Freescale’s Auditors to complete their audit such that they will date their opinion on the Annual Financial Statements on the same date that Motorola’s independent certified public accountants (“Motorola’s Auditors”) date their opinion on Motorola’s audited annual financial statements (the “Motorola Annual Statements”), and to enable Motorola to meet its timetable for the printing, filing and public dissemination of the Motorola Annual Statements, all in accordance with Section 5.1(a) hereof and as required by applicable law.

(iii) Information Needed by Motorola. Freescale will provide to Motorola on a timely basis all information that Motorola reasonably requires to meet its schedule for the preparation,

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printing, filing, and public dissemination of the Motorola Annual Statements in accordance with Section 5.1(a) hereof and as required by applicable law. Without limiting the generality of the foregoing, Freescale will provide all required financial information with respect to the Freescale Group to Freescale’s Auditors in a sufficient and reasonable time and in sufficient detail to permit Freescale’s Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to Motorola’s Auditors with respect to information to be included or contained in the Motorola Annual Statements.

(iv) Access to Freescale Auditors. Freescale will authorize Freescale’s Auditors to make available to Motorola’s Auditors both the personnel who performed, or are performing, the annual audit of Freescale and work papers related to the annual audit of Freescale, in all cases within a reasonable time prior to Freescale’s Auditors’ opinion date, so that Motorola’s Auditors are able to perform the procedures they consider necessary to take responsibility for the work of Freescale’s Auditors as it relates to Motorola’s Auditors’ report on Motorola’s statements, all within sufficient time to enable Motorola to meet its timetable for the printing, filing and public dissemination of the Motorola Annual Statements.

(v) Access to Records. If Motorola determines in good faith that there may be some inaccuracy in a Freescale Group member’s financial statements or deficiency in a Freescale Group member’s internal accounting controls or operations that could materially impact Motorola’s financial statements, at Motorola’s request, Freescale will provide Motorola’s internal auditors with access to the Freescale Group’s books and records so that Motorola may conduct reasonable audits relating to the financial statements provided by Freescale under this Agreement as well as to the internal accounting controls and operations of the Freescale Group.

(vi) Notice of Changes. Subject to Section 5.1(a)(vii), Freescale will give Motorola as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, Freescale’s accounting estimates or accounting principles from those in effect on the Effective Date. Freescale will consult with Motorola and, if requested by Motorola, Freescale will consult with Motorola’s Auditors with respect thereto. Freescale will not make any such determination or changes without Motorola’s prior written consent if such a determination or a change would be sufficiently material to be required to be disclosed in Freescale’s or Motorola’s financial statements as filed with the SEC or otherwise publicly disclosed therein.

(vii) Accounting Changes Requested by Motorola. Notwithstanding clause (vi) above, Freescale will make any changes in its accounting estimates or accounting principles that are requested by Motorola in order for Freescale’s accounting practices and principles to be consistent with those of Motorola.

(viii) Special Reports of Deficiencies or Violations. Freescale will report in reasonable detail to Motorola the following events or circumstances promptly after any executive officer of Freescale or any member of the Freescale Board of Directors becomes aware of such matter: (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 Freescale’s ability to record, process, summarize and report financial information; (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Freescale’s internal control over financial reporting; (C) any illegal act within the meaning of Section 10A(b) and (f) of the Exchange Act; and (D) any report of a material violation of law that an attorney representing any Freescale Group member has formally made to any officers or directors of Freescale pursuant to the SEC’s attorney conduct rules (17 C.F.R. Part 205).

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Section 5.2 Other Covenants. In addition to the other covenants contained in this Agreement and the Ancillary Agreements, Freescale hereby covenants and agrees that, for so long as Motorola beneficially owns at least fifty percent (50%) of the total voting power of all classes of then outstanding capital stock of Freescale entitled to vote generally in the election of directors (“Freescale Voting Stock”):

(a) Freescale will not, without the prior written consent of Motorola (which Motorola may withhold in its sole and absolute discretion), take, or cause to be taken, directly or indirectly, any action, including making or failing to make any election under the law of any state, which has the effect, directly or indirectly, of restricting or limiting the ability of Motorola to freely sell, transfer, assign, pledge or otherwise dispose of shares of Freescale Common Stock or would restrict or limit the rights of any transferee of Motorola as a holder of Freescale Common Stock. Without limiting the generality of the foregoing, Freescale will not, without the prior written consent of Motorola (which Motorola may withhold in its sole and absolute discretion), take any action, or take any action to recommend to its stockholders any action, which would among other things, limit the legal rights of, or deny any benefit to, Motorola as a Freescale stockholder either (i) solely as a result of the amount of Common Stock owned by Motorola or (ii) in a manner not applicable to Freescale stockholders generally.

(b) Freescale will not, without the prior written consent of Motorola (which it may withhold in its sole and absolute discretion), issue any shares of Freescale Capital Stock or any rights, warrants or options to acquire Freescale Capital Stock (including, without limitation, securities convertible into or exchangeable for Freescale Capital Stock), if after giving effect to such issuances and considering all of the shares of Freescale Capital Stock acquirable pursuant to such rights, warrants and options to be outstanding on the date of such issuance (whether or not then exercisable), Motorola would own less than fifty percent (50%) of the Freescale Voting Stock.

(c) To the extent that Motorola is a party to any Contracts that provide that certain actions or inactions of Motorola Affiliates (which for purposes of such Contract includes any member of the Freescale Group) may result in Motorola being in breach of or in default under such Contracts and Motorola has advised Freescale of the existence, and has furnished Freescale with copies, of such Contracts (or the relevant portions thereof), Freescale will not take or fail to take, as applicable, and Freescale will cause the other members of the Freescale Group not to take or fail to take, as applicable, any actions that reasonably could result in Motorola being in breach of or in default under any such Contract. The parties acknowledge and agree that from time to time Motorola may in good faith (and not solely with the intention of imposing restrictions on Freescale pursuant to this covenant) enter into additional Contracts or amendments to existing Contracts that provide that certain actions or inactions of Motorola Subsidiaries or Affiliates (including, for purposes of this Section 5.2(c), members of the Freescale Group) may result in Motorola being in breach of or in default under such Contracts. In such event, provided Motorola has notified Freescale of such additional Contracts or amendments to existing Contracts, Freescale will not thereafter take or fail to take, as applicable, and Freescale will cause the other members of the Freescale Group not to take or fail to take, as applicable, any actions that reasonably could result in Motorola being in breach of or in default under any such additional Contracts or amendments to existing Contracts. Motorola acknowledges and agrees that Freescale will not be deemed in breach of this Section 5.2(c) to the extent that, prior to being notified by Motorola of an additional Contract or an amendment to an existing Contract pursuant to this Section 5.2(c), a Freescale Group member already has taken or failed to take one or more actions that would otherwise constitute a breach of this Section 5.2(c) had such action(s) or inaction(s) occurred after such notification, provided that Freescale does not, after notification by Motorola, take any further action or fail to take any action that contributes further to such breach or default. Freescale agrees that any Information provided to it pursuant to this Section 5.2(c) will constitute Information that is subject to Freescale’s obligations under Article 6.

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Section 5.3 Covenants Regarding the Incurrence of Indebtedness.

(a) Freescale covenants and agrees that prior to the consummation of the IPO, Freescale will not, and Freescale will not permit any other member of the Freescale Group to, without Motorola’s prior written consent (which Motorola may withhold in its sole and absolute discretion), directly or indirectly, solicit, initiate or encourage any negotiations or discussions with respect to any offer or proposal for Freescale Indebtedness, other than for (i) the Freescale High Yield Notes and (ii) the Freescale Bank Facilities.

(b) Freescale covenants and agrees, that, notwithstanding any other provision in this Agreement to the contrary, prior to the consummation of the IPO, Freescale will not, and Freescale will not permit any other member of the Freescale Group to, without Motorola’s prior written consent (which Motorola may withhold in its sole and absolute discretion), directly or indirectly, incur any Freescale Indebtedness (other than Inter-Group Indebtedness). Freescale covenants and agrees that after the consummation of the IPO and through the Distribution Date, Freescale will not, and Freescale will not permit any other member of the Freescale Group to, without Motorola’s prior written consent (which Motorola may withhold in its sole and absolute discretion), directly or indirectly, incur any Freescale Indebtedness other than in accordance with the terms of the Freescale High Yield Notes and the Freescale Bank Facilities.

(c) Freescale hereby covenants and agrees that, for so long as Freescale constitutes a “Subsidiary” as such term is defined in the Motorola Credit Agreement, Freescale will not, and Freescale will not permit any other member of the Freescale Group to, without Motorola’s prior written consent (which Motorola may withhold in its sole and absolute discretion), create, incur, assume or suffer to exist any Freescale Indebtedness if the incurrence of such Freescale Indebtedness would cause Motorola to be in breach of or in default under any Contract the existence of which Motorola has advised Freescale and of which Motorola has furnished Freescale a copy pursuant to Section 5.2(c), or if the incurrence of such Freescale Indebtedness could be reasonably likely to adversely impact the credit rating of any commercial Motorola indebtedness.

(d) In order to implement this Section 5.3, Freescale will notify Motorola in writing at least forty-five (45) Business Days prior to the time it or any other member of the Freescale Group contemplates incurring any Freescale Indebtedness of its intention to do so and will either (i) demonstrate to Motorola’s satisfaction that this Section 5.3 will not be violated by such proposed additional Freescale Indebtedness or (ii) obtain Motorola’s prior written consent to the incurrence of such proposed additional Freescale Indebtedness. Any such written notification from Freescale to Motorola will include documentation of any existing Freescale Indebtedness and estimated Freescale Indebtedness after giving effect to such proposed incurrence of additional Freescale Indebtedness. Motorola will have the right to verify the accuracy of such information and Freescale will cooperate fully with Motorola in such effort (including, without limitation, by providing Motorola with access to the working papers and underlying documentation related to any calculations used in determining such information).

ARTICLE 6

ACCESS TO INFORMATION

Section 6.1 Restrictions on Disclosure of Information.

(a) Generally. Without limiting any rights or obligations under any other existing or future agreement between the parties and/or any other members of their respective Group relating to confidentiality, for five (5) years after the Effective Date each party will, and each party will cause its respective Group members and its Representatives to, hold in strict confidence, with at least the same

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degree of care that applies to Motorola’s confidential and proprietary Information pursuant to policies in effect as of the Effective Date, all confidential and proprietary Information concerning the other Group that is either in its possession as of the Effective Date or furnished by the other Group or its respective Representatives at any time pursuant to this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby. Notwithstanding the foregoing, each party, its respective Group members and its Representatives, may disclose such Information to the extent that such party can demonstrate that such Information is or was (i) in the public domain other than by the breach of this Agreement or by breach of any other agreement between or among the parties and/or any of their respective Group members relating to confidentiality, or (ii) lawfully acquired from a third Person on a non-confidential basis or independently developed by, or on behalf of, such party by Persons who do not have access to, or descriptions of, any such Information. Each party will maintain, and will cause its respective Group members and Representatives to maintain, policies and procedures, and develop such further policies and procedures as will from time to time become necessary or appropriate, to ensure compliance with this Section 6.1.

(b) Disclosure of Third Person Information. Freescale acknowledges that it and other members of the Freescale Group may have in its or their possession confidential or proprietary Information of third Persons that was received under confidentiality or non-disclosure agreement with such third Person while part of Motorola. Freescale will, and Freescale will cause its respective Group members and its Representatives to, hold in strict confidence the confidential and proprietary Information of third Persons to which any member of the Freescale Group has access, in accordance with the terms of any agreements entered into prior to the Effective Date between members of the Motorola Group (whether acting through, on behalf of, or in connection with, the SPS Business) and such third Persons.

Section 6.2 Legally Required Disclosure of Information. If either party or any of its respective Group members or Representatives becomes legally required to disclose any Information (the “Disclosing Party”) that it is otherwise obligated to hold strict confidence pursuant to Section 6.1, such party will promptly notify the Person that owns the Information (the “Owning Party”) and will use all commercially reasonable efforts to cooperate with the Owning Party so that the Owning Party may seek a protective order or other appropriate remedy and/or waive compliance with this Section 6.2. All expenses reasonably incurred by the Disclosing Party in seeking a protective order or other remedy will be borne by the Owning Party. If such protective order or other remedy is not obtained, or if the Owning Party waives compliance with this Section 6.2, the Disclosing Party will (a) disclose only that portion of the Information which its legal counsel advises it is compelled to disclose or otherwise stand liable for contempt or suffer other similar significant corporate censure or penalty, (b) use all commercially reasonable efforts to obtain reliable assurance requested by the Owning Party that confidential treatment will be accorded such Information, and (c) promptly provide the Owning Party with a copy of the Information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such Information was disclosed.

Section 6.3 Access to Information. During the Retention Period (as defined in Section 6.4 below), each party will cooperate with and afford, and will cause its respective Group members and Representatives to cooperate with and afford, to the other party reasonable access upon reasonable advance written request to all Information (other than Information which is (a) protected from disclosure by the attorney-client privilege or work product doctrine, (b) proprietary in nature, (c) the subject of a confidentiality agreement between such party and a third Person which prohibits disclosure to the other party, or (d) prohibited from disclosure under applicable law) owned by such party or one of its Group members or within such party’s or any of its respective Group member’s or Representative’s possession which is created prior to the Distribution Date and which relates to the requesting party’s (the “Requestor”) business, assets or liabilities, and such access is reasonably required by the Requestor (i) to comply with requirements imposed on the Requestor by any governmental authority, (ii) for use in any

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proceeding (except for a litigation matter between the parties or any of their respective Group members), (iii) to satisfy audit, accounting, Tax or similar requirements, (iv) to obtain insurance, or (v) to comply with the Requestor’s obligations under this Agreement or any Ancillary Agreement. As used in this Agreement, “access” will mean the obligation of a party in possession of Information (the “Possessor”) requested by the Requestor to exert its commercially reasonable efforts to locate all requested Information that is owned and/or possessed by Possessor or any respective Group members or Representatives. The Possessor, at its own expense, will conduct a diligent search designed to identify all requested Information and will collect all such Information for inspection by the Requestor during normal business hours at the Possessor’s place of business. Subject to such confidentiality and/or security obligations as the Possessor may reasonably deem necessary, the Requestor may have all requested Information duplicated at Requestor’s expense. Alternatively, the Possessor may choose to deliver, at the Requestor’s expense, all requested Information to the Requestor in the form requested by the Requestor. The Possessor will notify the Requestor in writing at the time of delivery if such Information is to be returned to the Possessor. In such case, the Requestor will return such Information when no longer needed to the Possessor at the Possessor’s expense. In connection with providing Information pursuant to this Section 6.3, each party hereto will, upon the request of the other party and upon reasonable advance notice, make available during normal business hours its respective employees (and those employees of its respective Group members and Representatives, as applicable) to the extent that they are reasonably necessary to discuss and explain all requested Information with and to the Requestor.

Section 6.4 Record Retention. Freescale will, and Freescale will cause each of the other Freescale Group members to, adopt and comply with a record retention policy with respect to Information owned by or in the possession of the Freescale Group and which is created prior to the Distribution Date that is no less stringent than Motorola’s record retention policy in effect as of the Effective Date or as Motorola may modify such policy during the three (3) year period subsequent to the Distribution Date, provided that Motorola notifies Freescale of any such modifications. Each party will, at its sole cost and expense, preserve and retain all Information in its respective possession or control that the other party has the right to access pursuant to Section 6.3 or that it is required to preserve and retain in accordance with such record retention policy or for any longer period as may be required by (a) any government agency, (b) any litigation matter, (c) applicable law, or (d) any Ancillary Agreement (as applicable, the “Retention Period”). If either party wishes to dispose of any Information which it is obligated to retain under this Section 6.4 prior to the expiration of the Retention Period, then that party will first provide forty-five (45) days’ written notice to the other party, and the other party will have the right, at its option but at the expense of the party that desires to dispose of such Information, upon prior written notice within such 45-day period, to take possession of such Information within ninety (90) days after the date of the notice provided pursuant to this Section 6.4. Written notice of intent to dispose of such Information will include a description of the Information in detail sufficient to allow the other party to reasonably assess its potential need to retain such materials.

Section 6.5 Production of Witnesses. For no less than seven (7) years after the Effective Date, each party will use commercially reasonable efforts, and will cause each of its respective Group members to use commercially reasonable efforts, to make available to each other, upon written request, its past and present Representatives as witnesses to the extent that any such Representatives may reasonably be required (giving consideration to the business demands upon such Representatives) in connection with any legal, administrative or other proceedings in which the requesting party may from time to time be involved.

Section 6.6 Reimbursement. Unless otherwise provided in this Article 6, each party providing access to Information or witnesses to the other party pursuant to Sections 6.3, 6.4 or 6.5 will be entitled to receive from the receiving party, upon the presentation of invoices therefor, payment for all

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reasonable, out-of-pocket costs and expenses (excluding allocated compensation, salary and overhead expenses) as may be reasonably incurred in providing such Information or witnesses.

Section 6.7 Other Agreements Regarding Access to Information. The rights and obligations of the parties under this Article 6 are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in this Agreement or any Ancillary Agreement.

Section 6.8 Acquisition of Freescale by another Person. In the event Freescale enters into an agreement with a third Person to sell all or any portion of the SPS Business, together with the Information related thereto, whether pursuant to a stock or asset sale, merger or otherwise, Motorola will have the right to duplicate prior to any such disposition any Information held by Freescale that relates to either (a) the SPS Business as conducted through the Distribution Date (or the date of the disposition to such third Person if the Distribution has not occurred), or (b) the transactions contemplated by this Agreement. Freescale covenants and agrees in connection with any such disposition (x) to provide Motorola not less than sixty (60) days’ written notice prior to the consummation of such disposition, and (y) not to disclose any Information of Motorola or relating to the Motorola Business to such third Person without Motorola’s express written consent which may be withheld in Motorola’s sole discretion. In addition, Motorola will have the right, in its sole discretion, to require Freescale to destroy or return to Motorola all or any portion of such Information prior to such disposition. Freescale covenants and agrees that it will not sell all or any portion of the SPS Business to any third Person unless such third Person expressly agrees in writing to be bound by all of Freescale’s obligations under this Section 6.8. In the event Motorola enters into an agreement with a third Person to sell all or any portion of the Motorola Business, Motorola covenants and agrees in connection with any such disposition not to disclose any Information of Freescale or relating to the SPS Business to such third Person without Freescale’s express written consent which may be withheld in Freescale’s sole discretion.

Section 6.9 Iridium Data Retention and Access. Notwithstanding anything to the contrary in this Article 6, Freescale acknowledges that some Information may include Iridium Data and/or may relate to Iridium Claims. Freescale further agrees and acknowledges as follows: (a) the Iridium Data will be retained and preserved and will not be removed, modified, altered or destroyed; provided that, should such Iridium Data inadvertently be removed, modified, altered or destroyed, Freescale agrees to provide prompt written notice to Motorola, which will be provided within two (2) business days of learning of the removal, modification, alteration or destruction and will include details of same; and (b) Motorola may need access to the Iridium Data in the future, including the right to copy, retrieve and/or remove the Iridium Data for purposes of defending against the Iridium Claims. Freescale agrees to give Motorola reasonable access to the Iridium Data upon reasonable advance written notice, and the right to copy, retrieve and/or remove such Iridium Data at Motorola’s cost and expense.

Section 6.10 Iridium Claims: Cooperation. In addition to the provisions of Section 6.9, Freescale agrees that it will: (a) fully cooperate in connection with Motorola’s defense of the Iridium Claims; and (b) make available during normal business hours its Representatives (and the Representatives of its respective Group members, as applicable) to the extent reasonably necessary to discuss and explain all requested Iridium Data with and to Motorola or its Representatives.

ARTICLE 7

ADDITIONAL COVENANTS AND OTHER MATTERS

Section 7.1 Further Assurances. In addition to the Ancillary Agreements, the parties agree to execute, or cause to be executed by their appropriate Group members or Representatives, and deliver, as appropriate, such other agreements, instruments and documents as may be necessary or desirable in order

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to effect the transactions contemplated by this Agreement and the Ancillary Agreements. At the request of Freescale, Motorola will execute and deliver, and will cause applicable members of the Motorola Group to execute and deliver, to Freescale and/or applicable members of the Freescale Group such other instruments of transfer, conveyance, assignment, substitution and confirmation and take such other actions as Freescale may reasonably deem necessary or desirable in order (a) to transfer, convey and assign to Freescale and the other members of the Freescale Group, as applicable, the SPS Assets, (b) to put Freescale and the other members of the Freescale Group, as applicable, in actual possession and operating control thereof, and (c) to permit Freescale and the other members of the Freescale Group, as applicable, to exercise all rights with respect thereto. At the request of Motorola, Freescale will execute and deliver, and will cause applicable members of the Freescale Group to execute and deliver, to Motorola and/or applicable members of the Motorola Group all instruments, assumptions, novations, undertakings, substitutions or other documents and take such other action as Motorola may reasonably deem necessary or desirable in order to ensure that Freescale and the other members of the Freescale Group fully and unconditionally assume and discharge the SPS Liabilities as contemplated under this Agreement, the Ancillary Agreements or any document in connection herewith or therewith, and relieve the Motorola Group of any Liability with respect thereto and evidence the same to third Persons. Except as otherwise expressly provided in this Agreement or any Ancillary Agreement, no member of the Motorola Group will be obligated to incur any out-of-pocket costs, expenses and fees in connection with its obligations under this Section 7.1, including, without limitation, any attorneys’ fees, recording, assignment or other similar fees.

Section 7.2 Performance. Motorola will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Motorola Group. Freescale will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Freescale Group. Each party further agrees that it will cause its other Group members not to take any action or fail to take any action inconsistent with such party’s obligations under this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby.

Section 7.3 Environmental Matters. Freescale will cause to be performed and hereby guarantees the performance of all actions, agreements and obligations related to remediation at what are commonly known as the 56th Street and Earll Drive Arizona State Superfund site, the Motorola 52nd Street Superfund site and the Mesa Arizona Voluntary Remediation Program site in accordance with applicable Environmental Laws and plans approved by the responsible governmental agency, and in a manner consistent with the performance of the same by Motorola’s Semiconductor Products Sector prior to the Effective Date. Further, Freescale agrees to use reasonable efforts to obtain letters, orders or other available means to provide Motorola with the same benefit of an agency’s completion determination or finding that no further action is necessary as Freescale will receive upon completion of the same.

Section 7.4 Existing Litigation Matters. Freescale agrees that the Existing IP Litigation Matters constitute pre-existing Third Party Claims, as that term is defined below in Section 8.3(d)(i), which were initiated prior to the Effective Date and for which proper notice has been given, and Freescale hereby expressly assumes control of such Existing IP Litigation Matters pursuant to Section 8.3(d)(i) as the Indemnifying Party. The parties further agree that the Existing IP Litigation Matters will remain and be treated as Third Party Claims after the Effective Date. Notwithstanding anything to the contrary in the Intellectual Property License Agreement, Freescale agrees to indemnify Motorola for the Existing IP Litigation Matters pursuant to the terms of indemnification set forth below in Article 8 for any and all Damages incurred or suffered by Motorola whether such Damages arise or accrue prior to, on or following the Effective Date. Motorola agrees that the outside legal counsel currently retained by Freescale in the Existing IP Litigation Matters may continue to represent the interests of both Freescale

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and Motorola, subject to Motorola’s rights pursuant to Section 8.3(d)(ii) and Section 8.3(d)(iii) below. Motorola further agrees that it will cooperate and assist Freescale in preserving and enforcing any third Person intellectual property indemnification protection rights available to Motorola in connection with the Existing IP Litigation Matters.

Section 7.5 Insurance Matters.

(a) Directors’ and Officers’ Insurance. Freescale and its Covered Subsidiaries, and each of their directors and officers will be covered under Motorola’s current directors’ and officers’ insurance program until its expiration on July 1, 2004. Freescale will promptly pay or reimburse Motorola, as the case may be, for all costs and expenses associated with this coverage that are allocated by Motorola to Freescale and its Covered Subsidiaries in accordance with Motorola’s practice with respect to the SPS Business as of the Effective Date. Freescale, its Covered Subsidiaries and each of their directors and officers may review said policies upon request. In addition, Motorola will continue to provide such coverage to Freescale and its Covered Subsidiaries, and each of their directors and officers in connection with any extension of Motorola’s current directors’ and officers’ insurance program or under any new director’s and officers’ insurance program when Motorola’s current program expires on July 1, 2004. Freescale will reimburse Motorola for any incremental costs or expenses incurred by Motorola in connection with covering Freescale and its Covered Subsidiaries, and each of their directors and officers under any new insurance program or extension of the current insurance program that Motorola determines, in the exercise of its reasonable discretion, to be attributable to the coverage for Freescale, its Covered Subsidiaries or any of their directors or officers. Freescale acknowledges that such directors’ and officers’ insurance coverage will terminate as of the Distribution Date, and Freescale covenants and agrees that it will take appropriate steps to secure directors’ and officers’ insurance coverage for itself, its Subsidiaries and each of their directors and officers as of the Distribution Date.

(b) TCS Insurance. Prior to the Effective Date, TCS Insurance Company of Ireland, Ltd. (“TCS”) has provided insurance coverage for assets and/or entities that will become part of the Freescale Group as of the Effective Date. Motorola will cause TCS to continue to provide insurance to Freescale and its Covered Subsidiaries between the Effective Date and the Distribution Date that is comparable to that maintained generally for Motorola and its Covered Subsidiaries during the same period, subject to insurance market conditions and other factors beyond Motorola’s or TCS’s reasonable control. Freescale will pay Motorola for all costs and expenses associated with the provision of such TCS insurance to Freescale and its Covered Subsidiaries in accordance with Motorola’s practice with respect to the SPS Business as of the Effective Date. From and after the Distribution Date, TCS will provide no further insurance to Freescale or any member of the Freescale Group.

(c) Other Insurance. Except as set forth in Section 7.5(a) with respect to directors’ and officers’ insurance and Section 7.5(b) with respect to TCS insurance, during the period from the Effective Date through the Distribution Date, Motorola will, subject to insurance market conditions and other factors beyond Motorola’s reasonable control, maintain, for the protection of Freescale and its Covered Subsidiaries, policies of insurance that are comparable to those maintained generally for Motorola and its Covered Subsidiaries during the same period. Freescale will promptly pay or reimburse Motorola, as the case may be, for all costs and expenses associated therewith that are allocated by Motorola to Freescale and its Covered Subsidiaries in accordance with (i) Motorola’s practice with respect to the SPS Business as of the Effective Date, or (ii) the terms of the Transition Services Agreement, as applicable. To the extent Motorola purchases a new type of insurance, or an amount or level of insurance not previously purchased by Motorola in order to protect, at least in part, Freescale or any of its Covered Subsidiaries, that portion of the costs and expenses of such insurance attributable to Freescale or any of its Covered Subsidiaries, as determined in Motorola’s sole discretion, shall be reimbursed by Freescale.

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(d) Payments and Reimbursements. All payments and reimbursements by Freescale pursuant to this Section 7.5 will be made within thirty (30) days after Freescale’s receipt of an invoice therefor from Motorola.

(e) Changes in Costs or Expenses. The costs and expenses for which Freescale is obligated to pay or reimburse Motorola pursuant to this Section 7.5 will be based on Motorola’s current insurance costs and expenses as of the Effective Date and will be appropriately adjusted as a result of any changes in those costs and expenses after the Effective Date, although the methodology upon which such costs and expenses is based will remain the same.

(f) Notification of Changes. Motorola agrees to provide Freescale not less than sixty (60) days advance written notice in the event it elects (or any of its insurers notifies Motorola in writing of such insurer’s election) to cancel or effect any non-administrative modification of the terms and conditions of any Motorola insurance policy that provides coverage to Freescale or any of its Covered Subsidiaries, which notice will include the anticipated date of cancellation or a description of such modification, as applicable.

(g) Historical Loss Data. For no less than seven (7) years after the Effective Date, Motorola will use commercially reasonable efforts to make available to Freescale, upon written request, historical insurance loss Information relating to the SPS Business and any other Information relating to Motorola’s historic insurance program with respect to the SPS Business. Any such Information provided to Freescale pursuant to this provision will also be subject to the provisions of Section 6.3.

(h) Post Distribution Date. Freescale acknowledges and agrees that from and after the Distribution Date (i) no member of the Motorola Group will purchase or maintain, or cause to be purchased or maintained, any insurance policy for the protection of Freescale, its Covered Subsidiaries, any member of the Freescale Group or any of their respective directors and officers, and (ii) the Freescale Group (including Freescale and its Covered Subsidiaries) will purchase insurance coverage sufficient to protect its interests.

Section 7.6 Export Control Compliance. Freescale agrees not to, and Freescale will cause each other member of the Freescale Group not to, export, re-export or otherwise transfer any commodities or technology received from any member of the Motorola Group in connection with the Contribution or otherwise, except in accordance with applicable export control regulations, including, without limitation, the applicable export control regulations of the United States. This Section 7.6 will survive termination of this Agreement for any reason whatsoever.

Section 7.7 Conduct of SPS Business between Effective Date and the IPO Settlement Date. From the Effective Date through the IPO Settlement Date, Freescale will (and Freescale will cause each of the other Freescale Group members to) conduct its operations in the Ordinary Course of Business. Without limiting the generality of the foregoing, prior to the IPO Settlement Date, Freescale will not (and Freescale will cause each of the other Freescale Group members not to), without the written consent of Motorola, which consent may be withheld in Motorola’s sole discretion, take any action outside the Ordinary Course of Business, including, without limitation: (a) the incurrence of any capital expenditures or Liabilities not previously approved by Motorola prior to the Effective Date; (b) the acquisition of any businesses or other Assets, by means of merger, consolidation or otherwise; (c) any action that would result in the acceleration of payment of any account payable or delay in the creation or collection of any account receivable; or (d) any loans, advances or capital contributions to, or investments in, any other Person (other than members of the Freescale Group).

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Section 7.8 Conduct of SPS Business between IPO Settlement Date and Distribution Date. Subject to any additional restrictions in the Tax Sharing Agreement, during the period from the IPO Settlement Date through the Distribution Date, Freescale covenants and agrees that the Freescale Group as a whole will not, without Motorola’s prior written consent (which Motorola may withhold in its sole and absolute discretion): (a) acquire any businesses or other Assets, by means of merger, consolidation or otherwise, of any other Person, with an aggregate value of more than $100 million for all such acquisitions, (b) dispose of Assets held by the Freescale Group, by sale or otherwise, with an aggregate value of more than $100 million for all such dispositions, or (c) acquire any equity or debt securities of any other Person, with an aggregate value of more than $50 million for all such acquisitions.

ARTICLE 8

INDEMNIFICATION

Section 8.1 Indemnification by Freescale Group. Subject to the provisions hereof, Freescale will, and Freescale will cause any member of the Freescale Group that receives any SPS Asset or assumes any SPS Liability pursuant to the terms of this Agreement or any Ancillary Agreement (and each of their respective successors and assigns) to, jointly and severally indemnify, defend and hold harmless Motorola, each member of the Motorola Group, each of their respective past and present Representatives, and each of their respective successors and assigns (collectively, the “Motorola Indemnified Parties”) from and against any and all Damages incurred or suffered by the Motorola Indemnified Parties arising or resulting from the following, whether such Damages arise or accrue prior to, on or following the Effective Date:

(a) The failure of Freescale or any other member of the Freescale Group or any other Person to pay, perform or otherwise properly discharge any of the SPS Liabilities in accordance with their respective terms;

(b) The SPS Business or any SPS Liability, including without limitation, any Liabilities arising out of or relating to the Existing IP Litigation Matters;

(c) Any breach by Freescale or any member of the Freescale Group of this Agreement or any Ancillary Agreement; and

(d) Any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in, or incorporated by reference into, the IPO Registration Statement and any other documents filed with the SEC in connection with the IPO or the transactions contemplated in this Agreement, other than with respect to the Motorola Disclosure Portions.

Section 8.2 Indemnification by Motorola Group. Subject to the provisions hereof, Motorola will, and Motorola will cause any member of the Motorola Group that transfers any SPS Asset pursuant to the terms of this Agreement or any Ancillary Agreement (and each of their respective successors and assigns) to, jointly and severally indemnify, defend and hold harmless each member of the Freescale Group, each of their respective past and present Representatives, and each of their respective successors and assigns (collectively, the “Freescale Indemnified Parties”) from and against any and all Damages incurred or suffered by the Freescale Indemnified Parties arising or resulting from the following:

(a) The failure of Motorola or any other member of the Motorola Group or any other Person to pay, perform or otherwise properly discharge any of the Motorola Liabilities in accordance with their respective terms;

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(b) The Motorola Business or the Motorola Liabilities; and

(c) Any breach by Motorola or any member of the Motorola Group of this Agreement or any Ancillary Agreement.

Section 8.3 Claim Procedure.

(a) Claim Notice. A party that seeks indemnity under this Article 8 (an “Indemnified Party”) will give written notice (a “Claim Notice”) to the party from whom indemnification is sought (an “Indemnifying Party”), whether the Damages sought arise from matters solely between the parties or from Third Party Claims. The Claim Notice must contain (i) a description and, if known, estimated amount (the “Claimed Amount”) of any Damages incurred or reasonably expected to be incurred by the Indemnified Party, (ii) a reasonable explanation of the basis for the Claim Notice to the extent of facts then known by the Indemnified Party, and (iii) a demand for payment of those Damages. No delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any Liability or obligation hereunder except to the extent of any Damages caused by or arising out of such failure.

(b) Response to Notice of Claim. Within thirty (30) days after delivery of a Claim Notice, the Indemnifying Party will deliver to the Indemnified Party a written response in which the Indemnifying Party will either: (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount and, in which case, the Indemnifying Party will pay the Claimed Amount in accordance with a payment and distribution method reasonably acceptable to the Indemnified Party; or (ii) dispute that the Indemnified Party is entitled to receive all or any portion of the Claimed Amount, in which case, the parties will resort to the dispute resolution procedures set forth in Section 9.3.

(c) Contested Claims. In the event that the Indemnifying Party disputes the Claimed Amount, as soon as practicable but in no event later than ten (10) days after the receipt of the notice referenced in Section 8.3(b)(ii) hereof, the parties will begin the process to resolve the matter in accordance with the dispute resolution provisions of Section 9.3 hereof. Upon ultimate resolution thereof, the parties will take such actions as are reasonably necessary to comply with such agreement or instructions.

(d) Third Party Claims.

(i) In the event that the Indemnified Party receives notice or otherwise learns of the assertion by a Person who is not a member of either Group of any claim or the commencement of any Action (collectively, a “Third-Party Claim”) with respect to which the Indemnifying Party may be obligated to provide indemnification under this Article 8, the Indemnified Party will give written notification to the Indemnifying Party of the Third-Party Claim. Such notification will be given within five (5) days after receipt by the Indemnified Party of notice of such Third-Party Claim, will be accompanied by reasonable supporting documentation submitted by such third party (to the extent then in the possession of the Indemnified Party) and will describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such Third-Party Claim and the amount of the claimed Damages; provided, however, that no delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any Liability or obligation hereunder except to the extent of any Damages caused by or arising out of such failure. Within twenty (20) days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third-Party Claim with counsel reasonably satisfactory to the Indemnified Party. During any period in which the

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Indemnifying Party has not so assumed control of such defense, the Indemnified Party will control such defense.

(ii) The party not controlling such defense (the “Non-controlling Party”) may participate therein at its own expense; provided, however, that if the Indemnifying Party assumes control of such defense and the Indemnified Party concludes, upon the written opinion of counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to such Third-Party Claim, the reasonable fees and expenses of counsel to the Indemnified Party will be considered “Damages” for purposes of this Agreement. The party controlling such defense (the “Controlling Party”) will keep the Non-controlling Party reasonably advised of the status of such Third-Party Claim and the defense thereof and will consider in good faith recommendations made by the Non-controlling Party with respect thereto. The Non-controlling Party will furnish the Controlling Party with such Information as it may have with respect to such Third-Party Claim (including copies of any summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and will otherwise cooperate with and assist the Controlling Party in the defense of such Third-Party Claim.

(iii) The Indemnifying Party will not agree to any settlement of, or the entry of any judgment arising from, any such Third-Party Claim without the prior written consent of the Indemnified Party, which consent will not be unreasonably withheld or delayed; provided, however, that the consent of the Indemnified Party will not be required if (A) the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment, and (B) such settlement or judgment includes a full, complete and unconditional release of the Indemnified Party from further Liability. The Indemnified Party will not agree to any settlement of, or the entry of any judgment arising from, any such Third-Party Claim without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld or delayed.

Section 8.4 Survival; Limitations.

(a) All covenants and agreements of the parties contained in this Agreement will survive each of the Contribution, the IPO and the Distribution. The rights and obligations of Motorola, Freescale and each of their respective Indemnified Parties under this Agreement will survive the sale, assignment or other transfer by any party of any Assets or Liabilities.

(b) The amount of any Damages for which indemnification is provided under this Agreement will be net of any amounts actually recovered by the Indemnified Party from any third Person (including, without limitation, amounts actually recovered under insurance policies) with respect to such Damages. Any Indemnifying Party hereunder will be subrogated to the rights of the Indemnified Party upon payment in full of the amount of the relevant indemnifiable Damages. An insurer who would otherwise be obligated to pay any claim will not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provision hereof, have any subrogation rights with respect thereto. If any Indemnified Party recovers an amount from a third Person in respect of Damages for which indemnification is provided in this Agreement after the full amount of such indemnifiable Damages has been paid by an Indemnifying Party or after an Indemnifying Party has made a partial payment of such indemnifiable Damages and the amount received from the third Person exceeds the remaining unpaid balance of such indemnifiable Damages, then the Indemnified Party will promptly remit to the Indemnifying Party the excess (if any) of (X) the sum of the amount theretofore paid by such Indemnifying Party in respect of such indemnifiable Damages plus the amount received from the third Person in respect thereof, less (Y) the full amount of such indemnifiable Damages.

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(c) Notwithstanding anything to the contrary in this Article 8, in the event that a Freescale Group member is an Indemnifying Party, the initial presumption will be that there is no insurance coverage for any such Damages, and the Indemnifying Party will, upon request by Motorola, fully indemnify, defend and hold harmless the Indemnified Party from and against any and all such Damages. Once the Indemnifying Party has discharged this obligation to the Indemnified Party, the Indemnifying Party may request that the Indemnified Party pursue insurance coverage from one or more insurers in connection with such Damages. If requested, the Indemnified Party will pursue insurance coverage, including, if necessary, the filing of coverage litigation, all of which will be at the Indemnifying Party’s sole cost and expense. The Indemnifying Party will pay directly or promptly reimburse the Indemnified Party for all such costs and expenses, as directed by the Indemnified Party. The Indemnified Party will retain full and exclusive control of all such matters (including, without limitation, the settlement of underlying covered claims and/or coverage claims against insurers), and the Indemnified Party will have the right to select counsel with the concurrence of Indemnifying Party, which concurrence will not be withheld unreasonably. The net proceeds of any insurance recovery (after deducting any costs and expenses that have not yet been paid or reimbursed by the Indemnifying Party) will be paid to the Indemnifying Party. At all times, the Indemnifying Party will cooperate with the Indemnified Party’s insurers and/or with the Indemnified Party in the pursuit of insurance coverage, as and when reasonably requested to do so by the Indemnified Party. It is not the intent of this Section 8.4(c) to absolve the Indemnifying Party of any responsibility to the Indemnified Party for those Damages in connection with which the Indemnified Party actually secures insurance coverage, but to allocate the costs of pursuing such coverage to the Indemnifying Party and to provide the Indemnified Party with a full, interim indemnity from the Indemnifying Party until such time as the extent of insurance coverage is determined and is obtained. Notwithstanding anything to the contrary in this Section 8.4(c), if the Indemnified Party in its sole discretion determines that it is necessary to do so, the Indemnified Party may pursue insurance coverage for the benefit of Indemnifying Party before the Indemnifying Party has fully discharged its obligations to the Indemnified Party under this Agreement. In such event, the Indemnified Party may unilaterally take any steps it determines are necessary to preserve such insurance coverage, including, by way of example and not by way of limitation, tendering the defense of any claim or suit to an insurer or insurers of the Indemnified Party if the Indemnified Party concludes that such action may be required by the relevant insurance policy or policies. Any such actions by the Indemnified Party will not relieve Indemnifying Party of any of its obligations to the Indemnified Party under this Agreement, including the Indemnifying Party’s obligation to pay directly or reimburse the Indemnified Party for costs and expenses.

(d) Any indemnification payment made under this Agreement will be characterized for Tax purposes as a contribution or distribution or payment of an assumed or retained liability, as applicable.

(e) Notwithstanding the joint and several indemnification obligations of each Group as set forth in Sections 8.1 and 8.2, the parties agree that the indemnification obligation of any Motorola Group member or Freescale Group member, as applicable, for Damages will be satisfied by a direct payment from Motorola or Freescale, as applicable, to the other party irrespective of which Group member is found liable for Damages.

(f) Notwithstanding anything to the contrary in Section 8.1 or Section 8.2, (i) indemnification with respect to Taxes shall be governed exclusively by the Tax Sharing Agreement, (ii) to the extent the Intellectual Property License Agreement specifically provides indemnification with respect to Third-Party Claims for infringement of Intellectual Property rights (other than the Existing IP Litigation Matters), the Intellectual Property License Agreement shall govern with respect to that indemnification, and (iii) to the extent the Employee Matters Agreement specifically provides indemnification with respect to certain employee-related SPS Liabilities, the Employee Matters

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Agreement shall govern with respect to that indemnification. To the extent indemnification is not provided in such Ancillary Agreements, the terms of this Agreement shall govern.

(g) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS GROUP MEMBERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY AN INDEMNIFIED PARTY (COLLECTIVELY, “UNFORESEEN DAMAGES”), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER OR THEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT AN INDEMNIFIED PARTY IS REQUIRED TO PAY ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS TO A PERSON WHO IS NOT A MEMBER OF EITHER GROUP IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND NOT SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 8.4(g).

ARTICLE 9

MISCELLANEOUS

Section 9.1 Governing Law. The internal laws of the State of Delaware (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of or in connection with this Agreement and, unless expressly provided therein, each Ancillary Agreement, and each of the exhibits and schedules hereto and thereto (whether arising in contract, tort, equity or otherwise).

Section 9.2 Jurisdiction. If any Dispute arises out of or in connection with this Agreement or any Ancillary Agreement, except as expressly contemplated by another provision of this Agreement or any Ancillary Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group to irrevocably) (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Delaware, (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient, and (c) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

Section 9.3 Dispute Resolution.

(a) Amicable Resolution.

(i) Motorola and Freescale mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement or any Ancillary Agreement, including any amendments hereto or thereto. In furtherance thereof, in the event of any dispute or disagreement (a “Dispute”) between any Motorola Group member and any Freescale Group member as to the interpretation of any provision of this Agreement or any Ancillary Agreement executed in connection herewith or therewith (or the performance of obligations hereunder or thereunder), then unless otherwise provided in any Ancillary Agreement, the matter, upon written request of either party, will be referred for resolution to a steering committee established pursuant to this Section 9.3(a) (the “Steering Committee”). The Steering Committee will have eight (8) members, four (4) of whom will be appointed by Motorola and four (4) of whom will be appointed by Freescale. Each of Motorola and Freescale will use its good faith efforts to avoid replacing the initial members of the Steering Committee for the first year after the Effective Date. Thereafter, Motorola and Freescale will, to the extent practicable, honor the other party’s

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reasonable objections to any replacements of Steering Committee members. While any person is serving as a member of the Steering Committee, such person may not designate any substitute or proxy for purposes of attending or voting at a Steering Committee meeting. The Steering Committee will make a good faith effort to promptly resolve all Disputes referred to it. Steering Committee decisions made with the consent of at least three (3) Freescale members and at least three (3) Motorola members will be binding on Motorola and Freescale. If the Steering Committee does not agree to a resolution of a Dispute within thirty (30) days after the reference of the matter to it, each of Motorola and Freescale will be free to exercise the remedies available to it under applicable law, subject to Section 9.3(b). Notwithstanding anything to the contrary in this Article 9, any amendment to the terms of this Agreement or any Ancillary Agreement may only be effected in accordance with Section 9.10.

(ii) Between the Effective Date and the first anniversary of the Effective Date, the Steering Committee will hold meetings every six (6) weeks on dates established at the organizational meeting of the Steering Committee, which will be held as promptly as practicable after the Effective Date. Such meeting dates may be rescheduled by the Steering Committee if it becomes reasonably impracticable to hold such a meeting. After the first anniversary of the Effective Date, the Steering Committee will hold regularly scheduled meetings as determined by the Steering Committee.

(b) Mediation and Alternate Dispute Resolution. In the event any Dispute cannot be resolved in a friendly manner as set forth in Section 9.3(a), the parties intend that such Dispute be resolved by an alternative dispute resolution process (“ADR”). If the Steering Committee is unable to resolve the Dispute as contemplated by Section 9.3(a), either Motorola or Freescale may demand mediation of the Dispute by written notice to the other in which case the two parties will select a mediator within ten (10) days after the demand. Neither party may unreasonably withhold consent to the selection of the mediator. The parties may agree to replace mediation with some other form of non-binding ADR such as neutral fact finding or mini-trial. The use of any ADR procedures will not be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either party. Each of Motorola and Freescale will bear its own costs of mediation or other form of ADR, but both parties will share the costs of the mediator or other arbiter equally.

(c) Non-Exclusive Remedy. Nothing in this Section 9.3 will prevent either Motorola or Freescale from commencing formal litigation proceedings or seeking injunctive or similar relief if (i) the Dispute has not been resolved within forty-five (45) days after commencement of the applicable ADR process or (ii) any delay resulting from efforts to mediate such Dispute could result in serious and irreparable injury to either Motorola, Freescale or any member of either party’s Group.

(d) Commencement of Dispute Resolution Procedure. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, Motorola and Freescale are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, whether pursuant to Section 8.3, this Section 9.3 or otherwise, and each party will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section 9.3(d).

Section 9.4 Notices. Each party giving any notice required or permitted under this Agreement or any Ancillary Agreement will give the notice in writing and use one of the following methods of delivery to the party to be notified, at the address set forth below or another address of which the sending party has been notified in accordance with this Section 9.4: (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States of America certified or registered mail, return receipt requested. Notice to a party is

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effective for purposes of this Agreement or any Ancillary Agreement only if given as provided in this Section 9.4 and will be deemed given on the date that the intended addressee actually receives the notice.

If to Motorola:	with a copy to:
Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Chief Financial Officer Facsimile: 847.576.1402	Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: General Counsel Facsimile: 847.576.3628
If to Freescale:	with a copy to:
Freescale Semiconductor, Inc. 6501 William Cannon Drive Austin, Texas 78737 Attention: Chief Financial Officer Facsimile: 512.895.8696	Freescale Semiconductor, Inc. 7700 West Parmer Lane Austin, Texas 78729 Attention: General Counsel Facsimile: 512.996.7697

Section 9.5 Binding Effect and Assignment. This Agreement and each Ancillary Agreement binds and benefits the parties and their respective successors and assigns. Notwithstanding anything in Section 6.8 to the contrary, neither party may assign any of its rights or delegate any of its obligations under this Agreement or any Ancillary Agreement without the written consent of the other party which consent may be withheld in such party’s sole and absolute discretion and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, Motorola may assign this Agreement and any Ancillary Agreement in connection with a merger transaction in which Motorola is not the surviving entity or the sale of all or substantially all of its assets.

Section 9.6 Severability. If any provision of this Agreement or any Ancillary Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement or such Ancillary Agreement, as the case may be, remain in full force, if the essential terms and conditions of this Agreement or such Ancillary Agreement, as the case may be, for each party remain valid, binding and enforceable.

Section 9.7 Entire Agreement. This Agreement, together with the Ancillary Agreements and each of the exhibits and schedules appended hereto and thereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein and therein. All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained herein and therein are superseded by this Agreement and the Ancillary Agreements, as applicable. In the event of any conflict between any provision in this Agreement and any provision in a Contribution Agreement, the provisions of this Agreement will control over the provisions in such Contribution Agreement. In the event of any conflict between (a) any provision in this Agreement or any Contribution Agreement, on the one hand, and (b) any specific provision in any Key Ancillary Agreement, on the other hand, pertaining to the subject matter of such Key Ancillary Agreement, the specific provisions in such Key Ancillary Agreement will control over the provisions in this Agreement or such Contribution Agreement, as applicable.

Section 9.8 Counterparts. The parties may execute this Agreement and any Ancillary Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement. The signatures of both parties need not appear on

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the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

Section 9.9 Expenses. Freescale will be responsible for the payment of all costs, fees and expenses relating to the IPO, Motorola will be responsible for the payment of all costs, fees and expenses relating to the Distribution, and the responsibility for payment of costs, fees and expenses relating to the Contribution will be agreed to by the parties, including as set forth in the Tax Sharing Agreement and the Employee Matters Agreement.

Section 9.10 Amendment. The parties may amend this Agreement or any Ancillary Agreement only by a written agreement signed by each party to be bound by the amendment and that identifies itself as an amendment to this Agreement or such Ancillary Agreement, as applicable.

Section 9.11 Waiver. The parties may waive a provision of this Agreement or an Ancillary Agreement only by a writing signed by the party intended to be bound by the waiver. A party is not prevented from enforcing any right, remedy or condition in the party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and remedies in this Agreement or any Ancillary Agreement is not intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

Section 9.12 Authority. Each of the parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement and each of the Ancillary Agreements to which it is a party, (b) the execution, delivery and performance of this Agreement and each of the Ancillary Agreements to which it is a party have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement and each of the Ancillary Agreements to which it is a party, and (d) this Agreement and each of the Ancillary Agreements to which it is a party is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 9.13 Construction of Agreement.

(a) Where this Agreement or any Ancillary Agreement states that a party “will” or “shall” perform in some manner or otherwise act or omit to act, it means that the party is legally obligated to do so in accordance with this Agreement or such Ancillary Agreement, as applicable.

(b) The captions, titles and headings, and table of contents, included in this Agreement and the Ancillary Agreements are for convenience only, and do not affect this Agreement’s or such Ancillary Agreements’ construction or interpretation. When a reference is made in this Agreement or any Ancillary Agreement to an Article or a Section, exhibit or schedule, such reference will be to an Article or Section of, or an exhibit or schedule to, this Agreement unless otherwise indicated.

(c) This Agreement and the Ancillary Agreements are for the sole benefit of the parties hereto and their respective Group members and, except for the indemnification rights of the Motorola Indemnified Parties and the Freescale Indemnified Parties under this Agreement or as expressly provided in any Ancillary Agreement, do not, and are not intended to, confer any rights or remedies in

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favor of any Person (including any employee or stockholder of Motorola or Freescale) other than the parties signing this Agreement and their respective Group members.

(d) The words “including,” “includes,” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance.

(e) Any reference in this Agreement or any Ancillary Agreement to the singular includes the plural where appropriate. Any reference in this Agreement or any Ancillary Agreement to the masculine, feminine or neuter gender includes the other genders where appropriate. For purposes of this Agreement, after the Effective Date the SPS Business will be deemed to be the business of Freescale and the Freescale Group, and all references made in this Agreement to Freescale as a party which operates as of a time following the Effective Date, will be deemed to refer to all members of the Freescale Group as a single party where appropriate.

(f) Unless otherwise expressly specified in an Ancillary Agreement, all references in this Agreement or any Ancillary Agreement to “dollars” or “$” means United States Dollars. If any payment required to be made hereunder is denominated in a currency other than United States Dollars, such payment will be made in United States Dollars and the amount thereof will be computed using Motorola’s P&L rate for the current month.

(g) Any reference in this Agreement or any Ancillary Agreement to a “member” of a Group means a party to this Agreement or another Person referred to in the definition of Freescale Group or Motorola Group, as applicable.

Section 9.14 Termination.

(a) This Agreement and any Ancillary Agreement may be terminated at any time prior to the Effective Date by and in the sole discretion of Motorola without the approval of Freescale in which case neither party will have any liability of any kind to the other party.

(b) The obligations of the parties under Article 4 (including the obligation to pursue or effect the Distribution) may be terminated by Motorola if (i) at any time after the Effective Date Motorola determines, in its sole and absolute discretion, that the Distribution would not be in the best interests of Motorola or its stockholders or (ii) the Distribution has not occurred by December 31, 2005.

Section 9.15 Limitation on Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS GROUP MEMBERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS IN CONNECTION WITH ANY CLAIMS, LOSSES, DAMAGES, OR INJURIES ARISING OUT OF THE CONDUCT OF SUCH PARTY PURSUANT TO THIS AGREEMENT.

(This space intentionally left blank)

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.

“Motorola”		“Freescale”
MOTOROLA, INC., a Delaware corporation		FREESCALE SEMICONDUCTOR, INC., a Delaware corporation
By:	/s/ David W. Devonshire	By:	/s/ Alan Compbell
Name:	David W. Devonshire	Name:	Alan Campbell
Title:	Executive Vice President and Chief Financial Officer	Title:	Senior Vice President and Chief Financial Officer

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EX-10.(B)(I)

EXHIBIT 10(b)(i)

TAX SHARING AGREEMENT

DATED AS OF APRIL 4, 2004

BY AND AMONG

MOTOROLA, INC.

AND

FREESCALE SEMICONDUCTOR, INC.

TABLE OF CONTENTS

		Page
Section 1.	Definition of Terms	1
Section 2.	Allocation of Tax Liabilities	10
Section 2.01	General Rule	10
Section 2.02	Allocation of United States Federal Income Tax and Federal Other Tax	10
Section 2.03	Allocation of State Income and State Other Taxes	11
Section 2.04	Allocation of Foreign Taxes	11
Section 2.05	Certain Transaction and Other Taxes	12
Section 2.06	Foreign Stock Distributions	12
Section 3.	Proration of Taxes for Straddle Periods	13
Section 4.	Preparation and Filing of Tax Returns	13
Section 4.01	General	13
Section 4.02	MINC’s Responsibility	13
Section 4.03	Freescale Responsibility	14
Section 4.04	Tax Accounting Practices	14
Section 4.05	Consolidated or Combined Tax Returns	15
Section 4.06	Right to Review Tax Returns	15
Section 4.07	Freescale Carrybacks and Claims for Refund	16
Section 4.08	Apportionment of Earnings and Profits and Tax Attributes	16
Section 5.	Tax Payments	16
Section 5.01	Payment of Taxes with Respect to MINC Federal Consolidated Income Tax Returns	16
Section 5.02	Payment of Taxes With Respect to Joint Returns (other than a MINC Federal Consolidated Income Tax Return) and Certain Returns of Other Taxes	16

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Section 5.03	Payment of Separate Company Taxes	18
Section 5.04	Indemnification Payments	18
Section 6.	Tax Benefits	18
Section 6.01	Tax Benefits	18
Section 7.	Tax-Free Status	20
Section 7.01	Tax Opinions/Rulings and Representation Letters	20
Section 7.02	Restrictions on Freescale	20
Section 7.03	Restrictions on MINC	22
Section 7.04	Procedures Regarding Opinions and Rulings	23
Section 7.05	Liability for Tax-Related Losses	23
Section 8.	Assistance and Cooperation	25
Section 8.01	Assistance and Cooperation	25
Section 8.02	Income Tax Return Information	25
Section 8.03	Reliance by MINC	26
Section 8.04	Reliance by Freescale	26
Section 9.	Tax Records	27
Section 9.01	Retention of Tax Records	27
Section 9.02	Access to Tax Records	27
Section 10.	Tax Contests	27
Section 10.01	Notice	27
Section 10.02	Control of Tax Contests	28
Section 11.	Effective Date; Termination of Prior Intercompany Tax Allocation Agreements	29
Section 12.	Survival of Obligations	30
Section 13.	Treatment of Payments; Tax Gross Up	30
Section 13.01	Treatment of Tax Indemnity and Tax Benefit Payments	30

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Section 13.02	Tax Gross Up	30
Section 13.03	Interest Under This Agreement	30
Section 14.	Disagreements	31
Section 15.	Late Payments	31
Section 16.	Expenses	31
Section 17.	General Provisions	32
Section 17.01	Addresses and Notices	32
Section 17.02	Binding Effect	32
Section 17.03	Waiver	32
Section 17.04	Severability	33
Section 17.05	Authority	33
Section 17.06	Further Action	33
Section 17.07	Integration	33
Section 17.08	Construction	33
Section 17.09	No Double Recovery	33
Section 17.10	Counterparts	33
Section 17.11	Governing Law	34
Section 17.12	Jurisdiction	34
Section 17.13	Amendment	34
Section 17.14	Freescale Subsidiaries	34
Section 17.15	Successors	34
Section 17.16	Injunctions	34

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TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT (this “Agreement”) is entered into as of April 4, 2004 by and between Motorola, Inc., a Delaware corporation (“MINC”), and Freescale Semiconductor, Inc., a Delaware corporation and a wholly owned subsidiary of MINC (“Freescale”) (MINC and Freescale are sometimes collectively referred to herein as the “Companies”).

RECITALS

WHEREAS, the Board of Directors of MINC has determined that it would be appropriate and desirable to completely separate the Freescale Business (as defined below) from MINC;

WHEREAS, as of the date hereof, MINC is the common parent of an affiliated group of corporations, including Freescale, which has elected to file consolidated Federal income tax returns;

WHEREAS, MINC and Freescale have entered into the Master Separation and Distribution Agreement (as defined below), pursuant to which (A) MINC has agreed to contribute and otherwise transfer to Freescale, and Freescale has agreed to receive and assume, the assets and liabilities then associated with the Freescale Business as described therein; and (B) MINC and Freescale contemplate that Freescale shall consummate the IPO (as defined below);

WHEREAS, pursuant to the transactions contemplated by the Master Separation and Distribution Agreement, Freescale and its subsidiaries may cease to be members of the affiliated group (as that term is defined in Section 1504 of the Code) of which MINC is the common parent (the “Deconsolidation”);

WHEREAS, MINC intends, after the IPO, to distribute to shareholders of MINC the outstanding shares of Freescale Common Stock then owned by MINC; and

WHEREAS, the Companies desire to provide for and agree upon the allocation between the parties of liabilities for Taxes arising prior to, as a result of, and subsequent to the IPO, and to provide for and agree upon other matters relating to Taxes;

NOW THEREFORE, in consideration of the mutual agreements contained herein, the Companies hereby agree as follows:

Section 1. Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings, and capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Master Separation and Distribution Agreement:

“Accountant” shall have the meaning set forth in Section 8.02(c) of this Agreement.

“Accounting Cutoff Date” means, with respect to Freescale, any date as of the end of which there is a closing of the financial accounting records for such entity.

“Active Trade or Business” means the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) by Freescale of the Freescale Business.

“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (a) any amended Tax return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (b) any claim for equitable recoupment or other offset, and (c) any claim for refund or credit of Taxes previously paid.

“Affiliate” means any entity that is directly or indirectly “controlled” by either the person in question or an Affiliate of such person. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise. Except as otherwise provided herein, the term Affiliate shall refer to Affiliates of a person as determined immediately after the Separation.

“Agreement” shall mean this Tax Sharing Agreement.

“Board Certificate” shall have the meaning set forth in Section 7.02(e) of this Agreement.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Companies” means MINC and Freescale, collectively, and “Company”, as the context requires, means either MINC or Freescale.

“Contribution” means the contribution of assets by MINC itself directly to Freescale itself pursuant to Section 2.1 of the Master Separation and Distribution Agreement.

“Controlling Party” shall have the meaning set forth in Section 10.02(e) of this Agreement.

“Deconsolidation” shall have the meaning provided in the Recitals.

“Deconsolidation Date” means the last date on which Freescale qualifies as a member of the affiliated group (as defined in Section 1504 of the Code) of which MINC is the common parent.

“Distribution” has the meaning set forth in the Master Separation and Distribution Agreement.

“Distribution Date” has the meaning set forth in the Master Separation and Distribution Agreement.

“DGCL” means the Delaware General Corporation Law.

“Federal Income Tax” means any Tax imposed by Subtitle A of the Code, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

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“Federal Other Tax” means any Tax imposed by the federal government of the United States of America other than any Federal Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Fifty-Percent or Greater Interest” shall have the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

“Final Determination” means the final resolution of liability for any Income Tax or Other Tax, which resolution may be for a specific issue or adjustment or for a taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a State, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (b) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a State, local, or foreign taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an overpayment of Income Tax or Other Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Income Tax or Other Tax; (e) by a final settlement resulting from a treaty-based competent authority determination; or (f) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the parties.

“Foreign Income Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, which is an income tax as defined in Treasury Regulation Section 1.901-2, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Foreign Other Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, other than any Foreign Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Foreign Stock Distribution” shall have the meaning set forth in Section 2.06 of this Agreement.

“Foreign Tax” means any Foreign Income Taxes or Foreign Other Taxes.

“Freescale” shall have the meaning provided in the first sentence of this Agreement.

“Freescale Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent Freescale would be exclusively liable for any resulting Tax under this Agreement or exclusively entitled to receive any resulting Tax Benefit under this Agreement.

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“Freescale Business” has the meaning of “SPS Business” set forth in the Master Separation and Distribution Agreement.

“Freescale Capital Stock” means all classes or series of capital stock of Freescale, including (i) the “Freescale Class A Common Stock” (as defined in the Master Separation and Distribution Agreement), (ii) the “Freescale Class B Common Stock” (as defined in the Master Separation and Distribution Agreement), (iii) all options, warrants and other rights to acquire such capital stock and (iv) all instruments properly treated as stock in Freescale for U.S. federal income tax purposes.

“Freescale Carryback” means any net operating loss, net capital loss, excess tax credit, or other similar Tax item of any member of the Freescale Group which may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

“Freescale Class B Common Stock” has the meaning set forth in the Master Separation and Distribution Agreement.

“Freescale Common Stock” has the meaning set forth in the Master Separation and Distribution Agreement.

“Freescale Federal Consolidated Income Tax Return” shall mean any United States federal Income Tax Return for the affiliated group (as that term is defined in Code Section 1504) of which Freescale is the common parent.

“Freescale Group” means Freescale and its Affiliates, as determined immediately after the Separation.

“Freescale Separate Return” means any Separate Return of Freescale or any member of the Freescale Group.

“Group” means the MINC Group or the Freescale Group, or both, as the context requires.

“High-Level Dispute” means any dispute or disagreement (a) relating to liability under Section 7.05 of this Agreement or (b) in which the amount of liability in dispute exceeds $50 million.

“Income Tax” means any Federal Income Tax, State Income Tax or Foreign Income Tax.

“Indemnitee” shall have the meaning set forth in Section 13.03 of this Agreement.

“Indemnitor” shall have the meaning set forth in Section 13.03 of this Agreement.

“Internal Restructuring” shall have the meaning set forth in Section 7.02(f) of this Agreement.

“IPO” has the meaning set forth in the Master Separation and Distribution Agreement.

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“IRS” means the United States Internal Revenue Service.

“Joint Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest which is neither a Freescale Adjustment nor a MINC Adjustment.

“Joint Return” shall mean any Return of a member of the MINC Group or the Freescale Group that is not a Separate Return.

“Master Separation and Distribution Agreement” means the Master Separation and Distribution Agreement, as amended from time to time, by and between MINC and Freescale dated                     , 2004.

“MINC” shall have the meaning provided in the first sentence of this Agreement.

“MINC Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent MINC would be exclusively liable for any resulting Tax under this Agreement or exclusively entitled to receive any resulting Tax Benefit under this Agreement.

“MINC Affiliated Group” shall have the meaning provided in the definition of “MINC Federal Consolidated Income Tax Return.”

“MINC Federal Consolidated Income Tax Return” means any United States federal Income Tax Return for the affiliated group (as that term is defined in Code Section 1504 and the regulations thereunder) of which MINC is the common parent (the “MINC Affiliated Group”).

“MINC Group” means MINC and its Affiliates, excluding any entity that is a member of the Freescale Group.

“MINC Reduction” shall have the meaning set forth in Section 2.03(a)(i)(B) of this Agreement.

“MINC Separate Return” means any Separate Return of MINC or any member of the MINC Group.

“MINC State Combined Income Tax Return” means a consolidated, combined or unitary State Income Tax Return that actually includes, by election or otherwise, one or more members of the MINC Group together with one or more members of the Freescale Group.

“Motorola Business” shall have the meaning provided in the Master Separation and Distribution Agreement.

“Non-Controlling Party” shall have the meaning set forth in Section 10.02(e) of this Agreement.

“Notified Action” shall have the meaning set forth in Section 7.04(a) of this Agreement.

“Other Tax” means any Federal Other Tax, State Other Tax, or Foreign Other Tax.

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“Past Practices” shall have the meaning set forth in Section 4.04(a) of this Agreement.

“Payment Date” means (i) with respect to any MINC Federal Consolidated Income Tax Return, the due date for any required installment of estimated taxes determined under Code Section 6655, the due date (determined without regard to extensions) for filing the return determined under Code Section 6072, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

“Payor” shall have the meaning set forth in Section 5.04 of this Agreement.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal income tax purposes.

“Post-Deconsolidation Period” means any Tax Period beginning after the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning the day after the Deconsolidation Date.

“Pre-Deconsolidation Period” means any Tax Period ending on or before the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Deconsolidation Date.

“Prime Rate” means the base rate on corporate loans charged by Citibank, N.A. from time to time, compounded daily on the basis of a year of 365 or 366 (as applicable) days and actual days elapsed.

“Privilege” means any privilege that may be asserted under applicable law, including, any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7T, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by Freescale management or shareholders, is a hostile acquisition, or otherwise, as a result of which Freescale would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, from Freescale and/or one or more holders of outstanding shares of Freescale Capital Stock, a number of shares of Freescale Capital Stock that would, when combined with the number of shares of Freescale Capital Stock sold pursuant to the IPO and any other changes in ownership of Freescale Capital Stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (A) the value of all outstanding shares of stock of Freescale as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of Freescale as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition

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Transaction shall not include (A) the adoption by Freescale of a shareholder rights plan or (B) issuances by Freescale that satisfy Safe Harbor VI (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor VII (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7T(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

“Representation Letters” means the representation letters and any other materials (including, without limitation, a Ruling Request and any related supplemental submissions to the IRS) delivered or deliverable by MINC and others in connection with the rendering by Tax Advisors, and/or the issuance by the IRS, of the Tax Opinions/Rulings.

“Required Party” shall have the meaning set forth in Section 5.04 of this Agreement.

“Responsible Company” means, with respect to any Tax Return, the Company having responsibility for preparing and filing such Tax Return under this Agreement.

“Ruling” means a private letter ruling (including a supplemental private letter ruling) issued by the IRS to MINC in connection with the Contribution and Distribution.

“Ruling Request” means any letter filed by MINC with the IRS requesting a ruling regarding certain tax consequences of the Transactions (including all attachments, exhibits, and other materials submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

“Section 7.02(e) Acquisition Transaction” means any transaction or series of transactions, other than the IPO, that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

“Separate Return” means (a) in the case of any Tax Return of any member of the Freescale Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the MINC Group and (b) in the case of any Tax Return of any member of the MINC Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Freescale Group.

“Separation” means the series of transactions, including transactions that occur after the IPO, that culminate in the transfer of the Freescale Business to Freescale.

“State Income Tax” means any Tax imposed by any State of the United States or by any political subdivision of any such State which is imposed on or measured by net income, including state and local franchise or similar Taxes measured by net income, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

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“State Other Tax” means any Tax imposed by any State of the United States or by any political subdivision of any such State other than any State Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“State Tax” means any State Income Taxes or State Other Taxes.

“Steering Committee” has the meaning set forth in the Master Separation and Distribution Agreement.

“Straddle Period” means any Tax Period that begins on or before and ends after the Deconsolidation Date.

“Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Tax Advisor” means a United States tax counsel or accountant of recognized national standing.

“Tax Advisor Dispute” shall have the meaning set forth in Section 14 of this Agreement.

“Tax Attribute” or “Attribute” shall mean a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit or any other Tax Item that could reduce a Tax.

“Tax Authority” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“Tax Benefit” means any refund, credit, or other reduction in otherwise required Tax payments.

“Tax Contest” means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

“Tax Contest Committee” shall have the meaning provided in Section 10.02(d).

“Tax Control” means the definition of “control” set forth in Section 368(c) of the Code (or in any successor statute or provision), as such definition may be amended from time to time.

“Tax-Free Status” means the qualification of the Contribution and Distribution, taken together, (a) as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) as a transaction in which the stock distributed thereby is “qualified property” for purposes of

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Sections 355(d), 355(e) and 361(c) of the Code and (c) as a transaction in which MINC, Freescale and the shareholders of MINC recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than, in the case of MINC and Freescale, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code.

“Tax Item” means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit.

“Tax Law” means the law of any governmental entity or political subdivision thereof relating to any Tax.

“Tax Opinions/Rulings” means the opinions of Tax Advisors and/or the rulings by the IRS deliverable to MINC in connection with the Contribution and the Distribution.

“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

“Tax Records” means Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests, and any other books of account or records required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

“Tax-Related Losses” means (i) all federal, state and local Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise; (ii) all accounting, legal and other professional fees, and court costs incurred in connection with such Taxes; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by MINC (or any MINC Affiliate) or Freescale (or any Freescale Affiliate) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from the failure of the Contribution and the Distribution to have Tax-Free Status.

“Tax Return” or “Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

“Transactions” means the Contribution, the Distribution and the other transactions contemplated by the Master Separation and Distribution Agreement.

“Transfer Pricing Adjustment” shall mean any proposed or actual allocation by a Tax Authority of any Tax Item between or among any member of the MINC Group and any member of the Freescale Group with respect to any Pre-Deconsolidation Period.

“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

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“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is acceptable to MINC, on which MINC may rely to the effect that a transaction will not affect the Tax-Free Status. Any such opinion must assume that the Contribution and Distribution would have qualified for Tax-Free Status if the transaction in question did not occur.

Section 2. Allocation of Tax Liabilities.

Section 2.01 General Rule.

(a) MINC Liability. MINC shall be liable for, and shall indemnify and hold harmless the Freescale Group from and against any liability for, Taxes which are allocated to MINC under this Section 2.

(b) Freescale Liability. Freescale shall be liable for, and shall indemnify and hold harmless the MINC Group from and against any liability for, Taxes which are allocated to Freescale under this Section 2.

Section 2.02 Allocation of United States Federal Income Tax and Federal Other Tax. Except as provided in Section 2.05, Federal Income Tax and Federal Other Tax shall be allocated as follows:

(a) Allocation of Tax Relating to MINC Federal Consolidated Income Tax Returns. With respect to any MINC Federal Consolidated Income Tax Return, MINC shall be responsible for any and all Federal Income Taxes due or required to be reported on any such Income Tax Return (including any increase in such Tax as a result of a Final Determination).

(b) Allocation of Tax Relating to Federal Separate Income Tax Returns. (i) MINC shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any MINC Separate Return (including any increase in such Tax as a result of a Final Determination); (ii) Freescale shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any Freescale Separate Return (including any increase in such Tax as a result of a Final Determination).

(c) Allocation of Federal Other Tax. MINC shall be responsible for any and all Federal Other Taxes attributable to the Motorola Business. Freescale shall be responsible for any and all Federal Other Taxes attributable to the Freescale Business.

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Section 2.03 Allocation of State Income and State Other Taxes. Except as provided in Section 2.05, State Income Tax and State Other Tax shall be allocated as follows:

(a) Allocation of Tax Relating to MINC State Combined Income Tax Returns. Except as provided in Sections 2.03(a)(i) and (ii) below, MINC shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any MINC State Combined Income Tax Return (including any increase in such Tax as a result of a Final Determination).

(i) Allocation of Tax Relating to Post-Deconsolidation Periods.

(A) With respect to any MINC State Combined Income Tax Returns relating to any Post-Deconsolidation Periods, Freescale shall be liable to MINC for State Income Tax liability computed as if all members of the Freescale Group included in the computation of such Tax had filed such State Income Tax Return for such Freescale Group members based solely on the income and other Tax Items of such members for the period that such Freescale Group members are included in such MINC State Combined Income Tax Return (without regard to any Taxes or Tax Attributes arising with respect to any period or portion thereof ending on or prior to the Deconsolidation Date), but based on the apportionment factors derived by including all appropriate entities of both Groups on such State Income Tax Return. Any amount so allocated to the Freescale Group shall be a liability of Freescale to MINC under this Section 2, regardless of whether such amount exceeds the total Tax liability shown on such MINC State Combined Income Tax Return.

(B) If, with respect to any MINC State Combined Income Tax Returns relating to any Post-Deconsolidation Periods, a Tax Attribute of any of the members of the Freescale Group arising in such Post-Deconsolidation Period actually reduces the combined Tax liability on the MINC State Combined Income Tax Return below the amount that would have been payable by MINC if the members of the Freescale Group had not been included in such Return (the “MINC Reduction”), then MINC shall be liable to Freescale in an amount equal to the MINC Reduction.

(ii) Allocation of Consolidated or Combined State Income Tax Adjustments. If there is any adjustment to the Tax liability with respect to any MINC State Combined Income Tax Return relating to any Post-Deconsolidation Periods as reported on such Tax Return as described in Section 2.03(a)(i) above, Freescale shall be liable to MINC, or MINC shall be liable to Freescale, for the difference between the amounts set forth in Section 2.03(a)(i) without regard to the adjustment and the amounts set forth in Section 2.03(a)(i) as adjusted.

(b) Allocation of Tax Relating to Separate Returns. (i) MINC shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any MINC Separate Return (including any increase in such Tax as a result of a Final Determination); (ii) Freescale shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any Freescale Separate Return (including any increase in such Tax as a result of a Final Determination).

(c) Allocation of State Other Tax. MINC shall be responsible for any and all State Other Taxes attributable to the Motorola Business. Freescale shall be responsible for any and all State Other Taxes attributable to the Freescale Business.

Section 2.04 Allocation of Foreign Taxes. Except as provided in Sections 2.05 and 2.06, Foreign Income Tax and Foreign Other Tax shall be allocated as follows:

(a) MINC shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any MINC Separate Return, including Foreign Income Tax of

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MINC or any member of the MINC Group imposed by way of withholding by a member of the Freescale Group (and including any increase in such Foreign Income Tax as a result of a Final Determination).

(b) Freescale shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any Freescale Separate Return, including Foreign Income Tax of Freescale or any member of the Freescale Group imposed by way of withholding by a member of the MINC Group (and including any increase in such Foreign Income Tax as a result of a Final Determination).

(c) MINC shall be responsible for any and all Foreign Other Taxes attributable to the Motorola Business. Freescale shall be responsible for any and all Foreign Other Taxes attributable to the Freescale Business.

Section 2.05 Certain Transaction and Other Taxes.

(a) Freescale Liability. Freescale shall be liable for, and shall indemnify and hold harmless the MINC Group from and against any liability for:

(i) Any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed by any Tax Authority on any member of the Freescale Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions;

(ii) any Tax resulting from a breach by Freescale of any covenant in this Agreement, the Master Separation and Distribution Agreement or any Ancillary Agreement; and

(iii) any Tax-Related Losses for which Freescale is responsible pursuant to Section 7.05 of this Agreement.

(b) MINC Liability. MINC shall be liable for, and shall indemnify and hold harmless the Freescale Group from and against any liability for:

(i) Any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed by any Tax Authority on any member of the MINC Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions;

(ii) any Tax resulting from a breach by MINC of any covenant in this Agreement, the Master Separation and Distribution Agreement or any Ancillary Agreement; and

(iii) any Tax-Related Losses for which MINC is responsible pursuant to Section 7.05 of this Agreement.

Section 2.06 Foreign Stock Distributions. Notwithstanding any other provision of this Agreement, (i) MINC shall be responsible for 50 percent of any Foreign Income Tax, if any, imposed solely with respect to the distribution of shares of stock of a member of the MINC

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Group by a member of the Freescale Group pursuant to the Transactions (such distribution, a “Foreign Stock Distribution”), (ii) neither MINC nor Freescale shall treat any Foreign Stock Distribution as giving rise to any Foreign Income Tax, unless otherwise required to do so pursuant to a Final Determination and (iii) MINC shall control in all respects, including as to settlement, any Tax Contest, ruling request or other proceeding relating to any Foreign Stock Distribution.

Section 3. Proration of Taxes for Straddle Periods.

(a) General Method of Proration. In the case of any Straddle Period, Tax Items shall be apportioned between Pre-Deconsolidation Periods and Post-Deconsolidation Periods in accordance with the principles of Treasury Regulation Section 1.1502-76(b) as reasonably interpreted and applied by the Companies. No election shall be made under Treasury Regulation Section 1.1502-76(b)(2)(ii) (relating to ratable allocation of a year’s items). If the Deconsolidation Date is not an Accounting Cutoff Date, the provisions of Treasury Regulation Section 1.1502-76(b)(2)(iii) will be applied to ratably allocate the items (other than extraordinary items) for the month which includes the Deconsolidation Date.

(b) Transaction Treated as Extraordinary Item. In determining the apportionment of Tax Items between Pre-Deconsolidation Periods and Post-Deconsolidation Periods, any Tax Items relating to the Transactions shall be treated as extraordinary items described in Treasury Regulation Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods, and any Taxes related to such items shall be treated under Treasury Regulation Section 1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods.

Section 4. Preparation and Filing of Tax Returns.

Section 4.01 General. Except as otherwise provided in this Section 4, Tax Returns shall be prepared and filed when due (including extensions) by the person obligated to file such Tax Returns under the Code or applicable Tax Law. The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperation to one another in accordance with Section 8 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 8.

Section 4.02 MINC’s Responsibility. MINC has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

(a) MINC Federal Consolidated Income Tax Returns for any Tax Periods ending on, before or after the Deconsolidation Date;

(b) MINC State Combined Income Tax Returns and any other Joint Returns which MINC reasonably determines are required to be filed (or which MINC chooses to be filed) by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Deconsolidation Date; provided, however, that MINC shall provide written notice of such determination to file such MINC State Combined Income Tax Returns or other Joint Returns to Freescale; and

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(c) MINC Separate Returns and Freescale Separate Returns which MINC reasonably determines are required to be filed by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Deconsolidation Date (limited, in the case of Freescale Separate Returns, to such Returns as are required to be filed for Tax Periods ending on or prior to the Deconsolidation Date).

Section 4.03 Freescale Responsibility. Freescale shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to members of the Freescale Group other than those Tax Returns which MINC is required to prepare and file under Section 4.02. The Tax Returns required to be prepared and filed by Freescale under this Section 4.03 shall include (a) any Freescale Federal Consolidated Income Tax Return for Tax Periods ending after the Deconsolidation Date and (b) Freescale Separate Returns required to be filed for Tax periods ending after the Deconsolidation Date.

Section 4.04 Tax Accounting Practices.

(a) General Rule. Except as provided in Section 4.04(b), with respect to any Tax Return that Freescale has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.03, for any Pre-Deconsolidation Period or any Straddle Period (or any taxable period beginning after the Deconsolidation Date to the extent items reported on such Tax Return might reasonably be expected to affect items reported on any Tax Return for any Pre-Deconsolidation Period or any Straddle Period), such Tax Return shall be prepared in accordance with past practices (in the case of any such Tax Return for a taxable period beginning after the Deconsolidation Date, limited to past practices regarding the reporting of items on Schedule M-1 of the MINC Federal Consolidated Income Tax Return or any similar schedule of any other Tax Return required to be filed by MINC under this Agreement), accounting methods, elections or conventions (“Past Practices”) used with respect to the Tax Returns in question (unless there is no reasonable basis for the use of such Past Practices), and to the extent any items are not covered by Past Practices (or in the event that there is no reasonable basis for the use of such Past Practices), in accordance with reasonable Tax accounting practices selected by Freescale. Except as provided in Section 4.04(b), MINC shall prepare any Tax Return which it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.02, in accordance with reasonable Tax accounting practices selected by MINC.

(b) Reporting of Transaction Tax Items. The Tax treatment reported on any Tax Return of the Transactions shall be consistent with the treatment thereof in the Ruling Requests and the Tax Opinions/Rulings (and any Tax Return filed by MINC or any member of the MINC Group or caused to be filed by MINC, in each case with respect to periods prior to the Distribution Date or with respect to Straddle Periods), unless there is no reasonable basis for such Tax treatment. To the extent there is a Tax treatment relating to the Transactions which is not covered by the Ruling Requests or Tax Opinions/Rulings, the Companies shall agree on the Tax treatment to be reported on any Tax Return. For this purpose, the Tax treatment shall be determined by the Responsible Company with respect to such Tax Return and shall be agreed to by the other Company unless either (i) there is no reasonable basis for such Tax treatment, or (ii) such Tax treatment is inconsistent with the Tax treatment contemplated in the Ruling Requests and/or the Tax Opinions/Rulings. Such Tax Return shall be submitted for review pursuant to Section 4.06(a), and any dispute regarding such proper Tax treatment shall be referred for

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resolution pursuant to Section 14, sufficiently in advance of the filing date of such Tax Return (including extensions) to permit timely filing of the Tax Return.

Section 4.05 Consolidated or Combined Tax Returns. Freescale will elect and join, and will cause its respective Affiliates to elect and join, in filing any MINC State Combined Income Tax Returns and any Joint Returns that MINC determines are required to be filed or that MINC chooses to file pursuant to Section 4.02(b). With respect to any Freescale Separate Returns relating to any Tax Period (or portion thereof) ending on or prior to the Distribution Date, Freescale will elect and join, and will cause its respective Affiliates to elect and join, in filing consolidated, unitary, combined, or other similar joint Tax Returns, to the extent each entity is eligible to join in such Tax Returns, if MINC reasonably determines that the filing of such Tax Returns is consistent with past reporting practices, or, in the absence of applicable past practices, will result in the minimization of the net present value of the aggregate Tax to the entities eligible to join in such Tax Returns.

Section 4.06 Right to Review Tax Returns.

(a) General. The Responsible Company with respect to any material Tax Return shall make such Tax Return and related workpapers available for review by the other Company, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to be liable, (ii) such Tax Return relates to Taxes and the requesting party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of such Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) the requesting party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement. The Responsible Company shall use its reasonable best efforts to make such Tax Return available for review as required under this paragraph sufficiently in advance of the due date for filing of such Tax Return to provide the requesting party with a meaningful opportunity to analyze and comment on such Tax Return and shall use its reasonable best efforts to have such Tax Return modified before filing, taking into account the person responsible for payment of the Tax (if any) reported on such Tax Return and whether the amount of Tax liability with respect to such Tax Return is material. The Companies shall attempt in good faith to resolve any issues arising out of the review of such Tax Return. For purposes of this section 4.06(a), a Tax Return is “material” if it could reasonably be expected to reflect (A) Tax liability equal to or in excess of $1 million, (B) a credit or credits equal to or in excess of $1 million or (C) a loss or losses equal to or in excess of $3 million.

(b) Execution of Returns Prepared by Other Party. In the case of any Tax Return which is required to be prepared and filed by one Company under this Agreement and which is required by law to be signed by the other Company (or by its authorized representative), the Company which is legally required to sign such Tax Return shall not be required to sign such Tax Return under this Agreement if there is no reasonable basis for the Tax treatment of any item reported on the Tax Return or the Tax treatment of any item reported on the Tax Return should, in the opinion of a Tax advisor from a nationally recognized legal, accounting or professional tax services firm, subject the other Company (or its authorized representatives) to material penalties.

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Section 4.07 Freescale Carrybacks and Claims for Refund. Freescale hereby agrees that, unless MINC consents in writing, (i) no Adjustment Request with respect to any Joint Return (or any Return of Other Taxes described in clause (II) of Section 5.02) shall be filed, and (ii) any available elections to waive the right to claim in any Pre-Deconsolidation Period with respect to any Joint Return (or any Return of Other Taxes described in clause (II) of Section 5.02) any Freescale Carryback arising in a Post-Deconsolidation Period shall be made, and no affirmative election shall be made to claim any such Freescale Carryback; provided, however, that the parties agree that any such Adjustment Request shall be made with respect to any Freescale Carryback related to U.S. federal or State Taxes, upon the reasonable request of Freescale, if such Freescale Carryback is necessary to prevent the loss of the federal and/or State Tax Benefit of such Freescale Carryback (including, but not limited to, an Adjustment Request with respect to a Freescale Carryback of a federal or State capital loss arising in a Post-Deconsolidation Period to a Pre-Deconsolidation Period) and such Adjustment Request, based on MINC’s sole, reasonable determination, will cause no Tax detriment to MINC, the MINC Group or any member of the MINC Group. Any Adjustment Request which MINC consents to make under this Section 4.07 shall be prepared and filed by the Responsible Company for the Tax Return to be adjusted.

Section 4.08 Apportionment of Earnings and Profits and Tax Attributes. MINC shall in good faith advise Freescale in writing of the portion, if any, of any earnings and profits, Tax Attribute, overall foreign loss or other consolidated, combined or unitary attribute which MINC determines shall be allocated or apportioned to the Freescale Group under applicable law. Freescale and all members of the Freescale Group shall prepare all Tax Returns in accordance with such written notice. In the event that any temporary or final amendments to Treasury Regulations are promulgated after the date of this Agreement that provide for any election to apply such regulations retroactively, then any such election shall be made only to the extent that Motorola and Freescale collectively agree to make such election. As soon as practicable after receipt of a written request from Freescale, MINC shall provide copies of any studies, reports, and workpapers supporting the earnings and profits and other Tax Attributes allocable to Freescale. Any dispute regarding the apportionment of such earnings and profits or any Tax Attribute shall be resolved pursuant to the provisions of Section 14 of this Agreement. All Tax Returns that are required to be filed under this Agreement after such resolution shall be filed in accordance with such resolution. In the event of a subsequent adjustment to the earnings and profits or any Tax Attributes determined by MINC, MINC shall promptly notify Freescale in writing of such adjustment. For the absence of doubt, MINC shall not be liable to Freescale or any member of the Freescale Group for any failure of any determination under this Section 4.08 to be accurate under applicable law.

Section 5. Tax Payments.

Section 5.01 Payment of Taxes with Respect to MINC Federal Consolidated Income Tax Returns. MINC shall pay to the IRS any Tax due with respect to any MINC Federal Consolidated Income Tax Return (including any Federal Income Tax due from the MINC Affiliated Group that is required to be paid as a result of an adjustment to a MINC Federal Consolidated Income Tax Return).

Section 5.02 Payment of Taxes With Respect to Joint Returns (other than a MINC Federal Consolidated Income Tax Return) and Certain Returns of Other Taxes. In the case of (I)

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any Joint Return (other than a MINC Federal Consolidated Tax Return) and (II) any Return of Other Taxes reflecting both Taxes for which MINC is responsible under Section 2 and Taxes for which Freescale is responsible under Section 2:

(a) Computation and Payment of Tax Due. At least three business days prior to any Payment Date for any Tax Return, the Responsible Company shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 4.04 relating to consistent accounting practices) with respect to such Tax Return on such Payment Date. The Responsible Company shall pay such amount to such Tax Authority on or before such Payment Date (and provide notice and proof of payment to the other Company).

(b) Computation and Payment of Liability With Respect To Tax Due. Within 30 days following the earlier of (i) the due date (including extensions) for filing any such Tax Return (excluding any Tax Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Tax Return is filed, if MINC is the Responsible Company, then Freescale shall pay to MINC (or MINC shall pay to Freescale) the amount allocable to the Freescale Group (or the amount to which the Freescale Group is entitled) under the provisions of Section 2, and if Freescale is the Responsible Company, then MINC shall pay to Freescale (or Freescale shall pay to MINC) the amount allocable to the MINC Group (or the amount to which the MINC Group is entitled) under the provisions of Section 2, in each case, plus interest computed at the Prime Rate on the amount of the payment based on the number of days from the earlier of (i) the due date of the Tax Return (including extensions) or (ii) the date on which such Tax Return is filed, to the date of payment.

(c) Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any such Tax Return, the Responsible Company shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Return required to be paid as a result of such adjustment pursuant to a Final Determination. The Responsible Company shall compute the amount attributable to the Freescale Group in accordance with Section 2 and Freescale shall pay to MINC any amount due MINC (or MINC shall pay Freescale any amount due Freescale) under Section 2 within 30 days from the later of (i) the date the additional Tax was paid by the Responsible Company or (ii) the date of receipt of a written notice and demand from the Responsible Company for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Any payments required under this Section 5.02(c) shall include interest computed at the Prime Rate based on the number of days from the date the additional Tax was paid by the Responsible Company to the date of the payment under this Section 5.02(c).

(d) Any payments made by MINC to Freescale pursuant to Section 2.03(a)(i)(B) shall be recalculated in light of any Final Determination (or any other facts that may arise or come to light after such payment is made, such as a carryback of a MINC Group Tax Attribute to a Tax Period in respect of which a payment was made by MINC to Freescale under Section 2.03(a)(i)(B)) that would affect the calculation set forth in Section 2.03(a)(i)(B) and an appropriate adjusting payment shall be made by Freescale to MINC (or by MINC to Freescale) such that the aggregate amounts paid pursuant to Section 2.03(a)(i)(B) equal such recalculated amount (with interest computed at the Prime Rate).

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Section 5.03 Payment of Separate Company Taxes. Each Company shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Taxes owed by such Company or a member of such Company’s Group with respect to a Separate Return of Income Taxes and with respect to a Separate Return of Other Taxes (provided that Separate Returns of Other Taxes described in clause (II) of Section 5.02 shall be governed by Section 5.02).

Section 5.04 Indemnification Payments.

(a) If any Company (the “Payor”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Company (the “Required Party”) is required to pay to such Tax Authority under this Agreement, the Required Party shall reimburse the Payor within 30 days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. The reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 5.04.

(b) All indemnification payments under this Agreement shall be made by MINC directly to Freescale and by Freescale directly to MINC; provided, however, that if the Companies mutually agree with respect to any such indemnification payment, any member of the MINC Group, on the one hand, may make such indemnification payment to any member of the Freescale Group, on the other hand, and vice versa.

Section 6. Tax Benefits.

Section 6.01 Tax Benefits.

(a) Except as set forth below, MINC shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Income Taxes and Other Taxes for which MINC is liable hereunder, Freescale shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Income Taxes and Other Taxes for which Freescale is liable hereunder and a Company receiving a refund to which another Company is entitled hereunder shall pay over such refund to such other Company within thirty days after such refund is received (together with interest computed at the Prime Rate based on the number of days from the date the refund was received to the date the refund was paid over).

(b) If a member of the Freescale Group realizes (or will realize) any Tax Benefit as a result of an adjustment (other than an adjustment set forth in Schedule 6.01(b), as such Schedule 6.01(b) may be amended by mutual agreement by the Companies prior to the date of the IPO) pursuant to a Final Determination to any Taxes (other than Foreign Income Taxes) for which a member of the MINC Group is liable hereunder (or Tax Attribute of a member of the MINC Group, or of any consolidated, combined or unitary group the Taxes of which MINC is liable for hereunder), or if a member of the MINC Group realizes (or will realize) any Tax Benefit as a result of an adjustment (other than an adjustment set forth in Schedule 6.01(b), as such Schedule 6.01(b) may be amended by mutual agreement by the Companies prior to the date of the IPO) pursuant to a Final Determination to any Taxes (other than Foreign Income Taxes) for which a member of the Freescale Group is liable hereunder (or Tax Attribute of a member of the Freescale Group), Freescale or MINC, as the case may be, shall make a payment to either MINC

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or Freescale, respectively, within 364 days following such Final Determination in an amount equal to such Tax Benefit (including any such Tax Benefit not yet realized). For purposes of determining the amount of any Tax Benefit, the Freescale Group or MINC Group (or the applicable member thereof) (A) shall be deemed to realize such Tax Benefit in the first taxable year (or years) that such Tax Benefit (or the Tax Attribute giving rise to such Tax Benefit) may be realized and utilized under applicable law (in the case of a Tax Benefit arising from additional basis in an asset, in no event later than the date of the Final Determination), (B) shall be deemed to pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year (or in the case of taxable years subsequent to the taxable year in which the Final Determination occurs, the highest marginal corporate Tax rates in effect in the taxable year of the Final Determination) and (C) shall be deemed to have no Tax Attributes other than those giving rise to such Tax Benefit.

(c) If a member of the Freescale Group actually realizes pursuant to a Final Determination any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Foreign Income Taxes for which a member of the MINC Group is liable hereunder (or Foreign Income Tax Attribute of a member of the MINC Group) and such Tax Benefit would not have arisen but for such adjustment, or if a member of the MINC Group actually realizes pursuant to a Final Determination any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Foreign Income Taxes for which a member of the Freescale Group is liable hereunder (or Foreign Income Tax Attribute of a member of the Freescale Group) and such Tax Benefit would not have arisen but for such adjustment, Freescale or MINC, as the case may be, shall make a payment to either MINC or Freescale, as appropriate, within 30 days following such actual realization of the Tax Benefit, in an amount equal to such Tax Benefit actually realized (including any Tax Benefit actually realized as a result of the payment), plus interest on such amount computed at the Prime Rate based on the number of days from the date of such actual realization of the Tax Benefit to the date of payment of such amount under this Section 6.01(c).

(d) No later than 30 days after the date of a Final Determination referred to in Section 6.01(b), MINC (if a member of the MINC Group receives such Final Determination) or Freescale (if a member of the Freescale Group receives such Final Determination) shall provide the other Company with a written calculation of the amount payable by such other Company to MINC or Freescale pursuant to this Section 6. No later than 30 days after a Tax Benefit described in Section 6.01(c) is actually realized by a member of the MINC Group or a member of the Freescale Group, MINC (if a member of the MINC Group actually realizes such Tax Benefit) or Freescale (if a member of the Freescale Group actually realizes such Tax Benefit) shall provide the other Company with a written calculation of the amount payable to such other Company by MINC or Freescale pursuant to this Section 6. In the event that MINC or Freescale disagrees with any such calculation described in this Section 6.01(d), MINC or Freescale shall so notify the other Company in writing within 30 days of receiving the written calculation set forth above in this Section 6.01(d). MINC and Freescale shall endeavor in good faith to resolve such disagreement, and, failing that, the amount payable under this Section 6 shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable.

(e) Freescale shall be entitled to any refund that is attributable to, and would not have arisen but for, a Freescale Carryback pursuant to the proviso set forth in Section 4.07. Any such

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payment of such refund made by MINC to Freescale pursuant to this Section 6.01(e) shall be recalculated in light of any Final Determination (or any other facts that may arise or come to light after such payment is made, such as a carryback of a MINC Group Tax Attribute to a Tax Period in respect of which such refund is received) that would affect the amount to which Freescale is entitled, and an appropriate adjusting payment shall be made by Freescale to MINC such that the aggregate amounts paid pursuant to this Section 6.01(e) equals such recalculated amount (with interest computed at the Prime Rate).

Section 7. Tax-Free Status.

Section 7.01 Tax Opinions/Rulings and Representation Letters.

(a) Each of Freescale and MINC hereby represents and agrees that (A) it will read the Representation Letters prior to the date submitted and (B) subject to any qualifications therein, all information contained in such Representation Letters that concerns or relates to such Company or any Affiliate of such Company will be true, correct and complete.

(b) Freescale and MINC acknowledge that the Tax Opinions/Rulings and the Representation Letters have not yet been obtained or submitted and may not be obtained or submitted until after the IPO. Freescale and MINC shall use their commercially reasonable efforts and shall cooperate in good faith to finalize the Representation Letters for the Distribution as soon as possible hereafter and to cause the same to be submitted to the Tax Advisors, the IRS or such other governmental authorities as MINC shall deem necessary or desirable and shall take such other commercially reasonable actions as may be necessary or desirable to obtain the Tax Opinions/Rulings in order to confirm the Tax-Free Status.

Section 7.02 Restrictions on Freescale.

(a) Freescale agrees that it will not take or fail to take, or permit any Freescale Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in any Representation Letters or Tax Opinions/Rulings. Freescale agrees that it will not take or fail to take, or permit any Freescale Affiliate to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any transaction contemplated by the Master Separation and Distribution Agreement which is intended by the parties to be tax-free (including, but not limited to, those transactions listed on Schedule 7.02(a)) from so qualifying, including issuing any Freescale Capital Stock that would prevent the Distribution from qualifying as a tax-free distribution within the meaning of Section 355 of the Code.

(b) Pre-Distribution Period. During the period from the date hereof until the completion of the Distribution, Freescale shall not take any action (including the issuance of Freescale Capital Stock) or permit any Freescale Affiliate directly or indirectly controlled by Freescale to take any action if, as a result of taking such action, Freescale could have a number of shares of Freescale Capital Stock (computed on a fully diluted basis or otherwise) issued and outstanding, including by way of the exercise of stock options (whether or not such stock options are currently exercisable) or the issuance of restricted stock, that could cause MINC to cease to have Tax Control of Freescale.

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(c) Freescale agrees that, from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will (i) maintain its status as a company directly engaged in the Active Trade or Business and (ii) not engage in any transaction that would result in it ceasing to be a company directly engaged in the Active Trade or Business.

(d) Freescale agrees that, from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will not (i) enter into any Proposed Acquisition Transaction or, to the extent Freescale has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (a) redeeming rights under a shareholder rights plan, (b) finding a tender offer to be a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, or (c) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the DGCL or any similar corporate statute, any “fair price” or other provision of Freescale’s charter or bylaws or otherwise), (ii) merge or consolidate with any other Person or liquidate or partially liquidate, (iii) in a single transaction or series of transactions sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred to Freescale pursuant to the Contribution or sell or transfer 60% or more of the gross assets of the Active Trade or Business or 60% or more of the consolidated gross assets of Freescale and its Affiliates (such percentages to be measured based on fair market value as of the Distribution Date), (iv) redeem or otherwise repurchase (directly or through a Freescale Affiliate) any Freescale stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30, (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of the separate classes of Freescale Capital Stock (including, without limitation, through the conversion of one class of Freescale Capital Stock into another class of Freescale Capital Stock) or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions/Rulings) which in the aggregate (and taking into account any other transactions described in this subparagraph (d)) would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in Freescale or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (A) Freescale shall have requested that MINC obtain a Ruling in accordance with Section 7.04(b) and (d) of this Agreement to the effect that such transaction will not affect the Tax-Free Status and MINC shall have received such a Ruling in form and substance satisfactory to MINC in its sole and absolute discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Status (and in determining whether a Ruling is satisfactory, MINC may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations made in connection with such Ruling), or (B) Freescale shall provide MINC with an Unqualified Tax Opinion in form and substance satisfactory to MINC in its sole and absolute discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Status (and in determining whether an opinion is satisfactory, MINC may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion and MINC may determine that no opinion would be acceptable to MINC) or (C) MINC shall have waived the requirement to obtain such ruling or opinion.

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(e) Certain Issuances of Freescale Capital Stock. If Freescale proposes to enter into any Section 7.02(e) Acquisition Transaction or, to the extent Freescale has the right to prohibit any Section 7.02(e) Acquisition Transaction, proposes to permit any Section 7.02(e) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first day after the two-year anniversary of the Distribution Date, Freescale shall provide Motorola, no later than ten days following the signing of any written agreement with respect to the Section 7.02(e) Acquisition Transaction, with a written description of such transaction (including the type and amount of Freescale Capital Stock to be issued in such transaction) and a certificate of the Board of Directors of Freescale to the effect that the Section 7.02(e) Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 7.02(d) apply (a “Board Certificate”).

(f) Freescale Internal Restructuring. Freescale shall not engage in any internal restructuring (including by making or revoking any election under Treasury Regulation Section 301.7701-3) involving Freescale and/or any of its subsidiaries or contribute any of the assets contributed to Freescale as part of the Contribution to any subsidiary of Freescale (any such action, an “Internal Restructuring”) during or with respect to any taxable period (or portion thereof) ending on the Distribution Date without obtaining the prior written consent of MINC (such prior written consent not to be unreasonably withheld). Freescale shall provide written notice to MINC describing any Internal Restructuring proposed to be taken during or with respect to any taxable period (or portion thereof) beginning after the Distribution Date and ending on or prior to the two-year anniversary of the Distribution Date and shall consult with MINC regarding any such proposed actions reasonably in advance of taking any such proposed actions.

(g) Distributions by Foreign Freescale Subsidiaries. Until January 1^st of the calendar year immediately following the calendar year in which the Distribution occurs, Freescale shall neither cause nor permit any foreign subsidiary of Freescale to enter into any transaction or take any action that would be considered under the Code to constitute the declaration or payment of a dividend (including pursuant to Section 304 of the Code) without obtaining the prior written consent of MINC (such prior written consent not to be unreasonably withheld).

Section 7.03 Restrictions on MINC. MINC agrees that it will not take or fail to take, or permit any member of the MINC Group to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in any Representation Letters or Tax Opinions/Rulings. MINC agrees that it will not take or fail to take, or permit any member of the MINC Group to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any other transaction contemplated by the Master Separation and Distribution Agreement which is intended by the parties to be tax-free from so qualifying; provided, however, that this Section 7.03 shall not be construed as obligating MINC to consummate the Distribution without the satisfaction or waiver of all conditions set forth in Section 4.3 of the Master Separation and Distribution Agreement nor shall it be construed as preventing MINC from terminating the Master Separation and Distribution Agreement pursuant to Section 9.14 thereof.

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Section 7.04 Procedures Regarding Opinions and Rulings.

(a) If Freescale notifies MINC that it desires to take one of the actions described in clauses (i) through (vi) of Section 7.02(d) (a “Notified Action”), MINC and Freescale shall reasonably cooperate to attempt to obtain the ruling or opinion referred to in Section 7.02(d), unless MINC shall have waived the requirement to obtain such ruling or opinion.

(b) Rulings or Unqualified Tax Opinions at Freescale’s Request. MINC agrees that at the reasonable request of Freescale pursuant to Section 7.02(d), MINC shall cooperate with Freescale and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a Ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting Freescale to take the Notified Action. Further, in no event shall MINC be required to file any Ruling Request under this Section 7.04(b) unless Freescale represents that (A) it has read the Ruling Request, and (B) all information and representations, if any, relating to any member of the Freescale Group, contained in the Ruling Request documents are (subject to any qualifications therein) true, correct and complete. Freescale shall reimburse MINC for all reasonable costs and expenses incurred by the MINC Group in obtaining a Ruling or Unqualified Tax Opinion requested by Freescale within ten business days after receiving an invoice from MINC therefor.

(c) Rulings or Unqualified Tax Opinions at MINC’s Request. MINC shall have the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If MINC determines to obtain a Ruling or an Unqualified Tax Opinion, Freescale shall (and shall cause each Affiliate of Freescale to) cooperate with MINC and take any and all actions reasonably requested by MINC in connection with obtaining the Ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS or Tax Advisor; provided that Freescale shall not be required to make (or cause any Affiliate of Freescale to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control). MINC and Freescale shall each bear its own costs and expenses in obtaining a Ruling or an Unqualified Tax Opinion requested by MINC.

(d) Freescale hereby agrees that MINC shall have sole and exclusive control over the process of obtaining any Ruling, and that only MINC shall apply for a Ruling. In connection with obtaining a Ruling pursuant to Section 7.04(b), (A) MINC shall keep Freescale informed in a timely manner of all material actions taken or proposed to be taken by MINC in connection therewith; (B) MINC shall (1) reasonably in advance of the submission of any Ruling Request documents provide Freescale with a draft copy thereof, (2) reasonably consider Freescale’s comments on such draft copy, and (3) provide Freescale with a final copy; and (C) MINC shall provide Freescale with notice reasonably in advance of, and Freescale shall have the right to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Ruling. Neither Freescale nor any Freescale Affiliate directly or indirectly controlled by Freescale shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Contribution or the Distribution (including the impact of any transaction on the Contribution or the Distribution) or any transaction listed on Schedule 7.02(a).

Section 7.05 Liability for Tax-Related Losses.

(a) Notwithstanding anything in this Agreement or the Master Separation and Distribution Agreement to the contrary, subject to Section 7.05(c), Freescale shall be responsible

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for, and shall indemnify and hold harmless MINC and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (A) the acquisition (other than pursuant to the Contribution, as defined in the Master Separation and Distribution Agreement, the Distribution or the actions set forth in Section 3.4 of the Master Separation and Distribution Agreement) of all or a portion of Freescale’s stock and/or its assets by any means whatsoever by any Person, (B) any negotiations, understandings, agreements or arrangements by Freescale with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of Freescale representing a Fifty-Percent or Greater Interest therein, (C) any action or failure to act by Freescale after the IPO (including, without limitation, any amendment to Freescale’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the relative voting rights of the separate classes of Freescale stock (including, without limitation, through the conversion of one class of Freescale Capital Stock into another class of Freescale Capital Stock), (D) any act or failure to act by Freescale or any Freescale Affiliate described in Section 7.02 (regardless whether such act or failure to act is covered by a Ruling, Unqualified Tax Opinion or waiver described in clause (A), (B) or (C) of Section 7.02(d), a Board Certificate described in Section 7.02(e) or a consent described in Section 7.02(f) or (g)) or (E) any breach by Freescale of its agreement and representation set forth in Section 7.01(a).

(b) Notwithstanding anything in this Agreement or the Master Separation and Distribution Agreement to the contrary, subject to Section 7.05(c), MINC shall be responsible for, and shall indemnify and hold harmless Freescale and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to, or result from any one or more of the following: (A) the acquisition (other than pursuant to the Contribution, as defined in the Master Separation and Distribution Agreement, the Distribution or the actions set forth in Section 3.4 of the Master Separation and Distribution Agreement) of all or a portion of MINC’s stock and/or its assets by any means whatsoever by any Person other than an Affiliate of MINC, (B) any negotiations, agreements or arrangements by MINC with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of MINC representing a Fifty-Percent or Greater Interest therein, (C) any act or failure to act by MINC or a member of the MINC Group described in Section 7.03 or (D) any breach by MINC of its agreement and representation set forth in Section 7.01(a).

(c) To the extent that any Tax-Related Loss is subject to indemnity under both Sections 7.05(a) and (b), responsibility for such Tax-Related Loss shall be shared by MINC and Freescale according to relative fault.

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Section 8. Assistance and Cooperation.

Section 8.01 Assistance and Cooperation.

(a) After the IPO, the Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Company and its Affiliates available to such other Company as provided in Section 9. Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. In the event that a member of the MINC Group, on the one hand, or a member of the Freescale Group, on the other hand, suffers a Tax detriment as a result of a Transfer Pricing Adjustment, the Companies shall cooperate pursuant to this Section 8 to seek any competent authority relief that may be available with respect to such Transfer Pricing Adjustment.

(b) Any information or documents provided under this Section 8 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement, (i) neither MINC nor any MINC Affiliate shall be required to provide Freescale, any Freescale Affiliate or any other Person access to or copies of any information or procedures (including the proceedings of any Tax Contest) other than information or procedures that relate solely to Freescale, a Freescale Affiliate or the business or assets of Freescale or any Freescale Affiliate and (ii) in no event shall MINC or any MINC Affiliate be required to provide Freescale, any Freescale Affiliate or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that MINC determines that the provision of any information to Freescale or any Freescale Affiliate could be commercially detrimental, violate any law or agreement or waive any Privilege, the parties shall use reasonable best efforts to permit compliance with its obligations under this Section 8 in a manner that avoids any such harm or consequence.

Section 8.02 Income Tax Return Information. Freescale and MINC acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by MINC or Freescale pursuant to Section 8.01 or this Section 8.02. Freescale and MINC acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by MINC or Freescale could cause irreparable harm.

(a) Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns. Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

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(b) At Freescale’s sole expense, Freescale shall provide to MINC the information set forth on Schedule 8.02(b) in accordance with the deadlines set forth on such Schedule, and shall provide such other information reasonably requested in writing by MINC in connection with the preparation of Tax Returns in accordance with the deadlines set forth in such written request.

(c) In the event that Freescale fails to provide any information requested by MINC pursuant to Section 8.01 or this Section 8.02, within the deadlines as set forth herein (or otherwise reasonably set by MINC and agreed to by Freescale, such agreement not to be unreasonably withheld), MINC shall have the right to engage a nationally recognized public accounting firm of its choice (the “Accountant”), in its sole and absolute discretion, to gather such information directly from Freescale or any other members of the Freescale Group. Freescale and all members of the Freescale Group agree, upon ten business days’ notice by MINC, in the case of a failure by Freescale to provide information pursuant to Section 8.01 or this Section 8.02, to permit any such Accountant full access to all records or other information requested by such Accountant that are in the possession of Freescale or any member of the Freescale Group during reasonable business hours. Freescale agrees to promptly pay MINC all reasonable costs and expenses incurred by MINC in connection with the engagement of such Accountant.

Section 8.03 Reliance by MINC. If any member of the Freescale Group supplies information to a member of the MINC Group in connection with a Tax liability and an officer of a member of the MINC Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the MINC Group identifying the information being so relied upon, the chief financial officer of Freescale (or any officer of Freescale as designated by the chief financial officer of Freescale) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. Freescale agrees to indemnify and hold harmless each member of the MINC Group and its directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to a member of the Freescale Group having supplied, pursuant to this Section 8, a member of the MINC Group with inaccurate or incomplete information in connection with a Tax liability.

Section 8.04 Reliance by Freescale. If any member of the MINC Group supplies information to a member of the Freescale Group in connection with a Tax liability and an officer of a member of the Freescale Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Freescale Group identifying the information being so relied upon, the chief financial officer of MINC (or any officer of MINC as designated by the chief financial officer of MINC) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. MINC agrees to indemnify and hold harmless each member of the Freescale Group and its directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to a member of the MINC Group having supplied, pursuant to this Section 8, a member of the Freescale Group with inaccurate or incomplete information in connection with a Tax liability.

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Section 9. Tax Records.

Section 9.01 Retention of Tax Records. Each Company shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Deconsolidation Periods, and MINC shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitation, or (ii) seven years after the Deconsolidation Date. After such later date, each Company may dispose of such records upon 90 days’ prior written notice to the other Company. If, prior to the expiration of the applicable statute of limitation or such seven-year period, a Company reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 9 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such records upon 90 days’ prior notice to the other Company. Any notice of an intent to dispose given pursuant to this Section 9.01 shall include a list of the records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such 90-day period, all or any part of such Tax Records.

Section 9.02 Access to Tax Records. The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records in their possession to the extent reasonably required by the other Company in connection with the preparation of Tax Returns, audits, litigation, or the resolution of items under this Agreement.

Section 10. Tax Contests.

Section 10.01 Notice. Each of the parties shall provide prompt notice to the other party of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other party hereunder. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such party fails to give the indemnifying party prompt notice of such asserted Tax liability and the indemnifying party is entitled under this agreement to contest the asserted Tax liability, then (i) if the indemnifying party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying party shall have no obligation to indemnify the indemnified party for any Taxes arising out of such asserted Tax liability, and (ii) if the indemnifying party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a material monetary detriment to the indemnifying party, then any amount which the indemnifying party is otherwise required to pay the indemnified party pursuant to this Agreement shall be reduced by the amount of such detriment.

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Section 10.02 Control of Tax Contests.

(a) Separate Company Taxes. In the case of any Tax Contest with respect to any Separate Return (other than a Separate Return of Other Taxes described in clause (II) of Section 5.02), the Company having liability for the Tax shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(e) and (f) below.

(b) MINC Federal Consolidated Income Tax Return. In the case of any Tax Contest with respect to any MINC Federal Consolidated Income Tax Return, MINC shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(e) and (f) below.

(c) MINC State Combined Income Tax Return. In the case of any Tax Contest with respect to any MINC State Combined Income Tax Return, MINC shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Sections 10.02(e) and (f) below.

(d) Joint Returns and Certain Other Returns. In the case of any Tax Contest with respect to (I) any Joint Return (other than any MINC Federal Consolidated Income Tax Return or any MINC State Combined Income Tax Return) or (II) any Return of Other Taxes described in clause (II) of Section 5.02, (i) MINC shall control the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any MINC Adjustment, including settlement of any such MINC Adjustment and (ii) Freescale shall control the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any Freescale Adjustment, including settlement of any such Freescale Adjustment, and (iii) the Tax Contest Committee shall control the defense or prosecution of Joint Adjustments and any and all administrative matters not directly and exclusively related to any MINC Adjustment or Freescale Adjustment. The “Tax Contest Committee” shall be comprised of two persons, one person selected by MINC (as designated in writing to Freescale) and one person selected by Freescale (as designated in writing to MINC). Each person serving on the Tax Contest Committee shall continue to serve unless and until he or she is replaced by the party designating such person. Any and all matters to be decided by the Tax Contest Committee shall require the unanimous approval of both persons serving on the committee. In the event the Tax Contest Committee shall be deadlocked on any matter, the provisions of Section 14 of this Agreement shall apply.

(e) Settlement Rights. The Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest without obtaining the prior consent of the Non-Controlling Party. Unless waived by the parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 6) to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Party shall provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection

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with such potential adjustment in such Tax Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (v) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in Section 10.02(a), (b) or (c), “Controlling Party” means the Company entitled to control the Tax Contest under such Section and “Non-Controlling Party” means the other Company.

(f) Tax Contest Participation. Unless waived by the parties in writing, the Controlling Party shall provide the Non-Controlling Party with written notice reasonably in advance of, and the Non-Controlling Party shall have the right to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest pursuant to which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 6) to the Controlling Party under this Agreement. The failure of the Controlling Party to provide any notice specified in this Section 10.02(f) to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

(g) Power of Attorney. Each member of the Freescale Group shall execute and deliver to MINC (or such member of the MINC Group as MINC shall designate) any power of attorney or other similar document reasonably requested by MINC (or such designee) in connection with any Tax Contest (as to which MINC is the Controlling Party) described in this Section 10. Each member of the MINC Group shall execute and deliver to Freescale (or such member of the Freescale Group as Freescale shall designate) any power of attorney or other similar document requested by Freescale (or such designee) in connection with any Tax Contest (as to which Freescale is the Controlling Party) described in this Section 10.

Section 11. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements. This Agreement shall be effective as of the date hereof. As of the date hereof, (i) all prior intercompany Tax allocation agreements or arrangements shall be terminated, and (ii) amounts due under such agreements as of the date hereof shall be settled as of the date hereof (including capitalization or distribution of amounts due or receivable under such agreements). Upon such termination and settlement, no further payments by or to MINC or by or to Freescale, with respect to such agreements shall be made, and all other rights and obligations resulting from such agreements between the Companies and their Affiliates shall cease at such time. Any payments pursuant to such agreements shall be disregarded for purposes of computing amounts due under this Agreement; provided that payments made pursuant to such agreements shall be

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credited to Freescale or MINC, respectively, in computing their respective obligations pursuant to this Agreement, in the event that such payments relate to a Tax liability that is the subject matter of this Agreement for a Tax Period that is the subject matter of this Agreement.

Section 12. Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

Section 13. Treatment of Payments; Tax Gross Up.

Section 13.01 Treatment of Tax Indemnity and Tax Benefit Payments. In the absence of any change in Tax treatment under the Code or other applicable Tax Law,

(a) any Tax indemnity payments made by a Company under Section 5 shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Deconsolidation (but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Section 1552 of the Code or the regulations thereunder or Treasury Regulation Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability, and

(b) any Tax Benefit payments made by a Company under Section 6, shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Deconsolidation (but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Section 1552 of the Code or the regulations thereunder or Treasury Regulation Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability.

Section 13.02 Tax Gross Up. If notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all Income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive pursuant to this Agreement.

Section 13.03 Interest Under This Agreement. Anything herein to the contrary notwithstanding, to the extent one Company (“Indemnitor”) makes a payment of interest to another Company (“Indemnitee”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by law) and as interest income by the Indemnitee (includible in income to the extent provided by law). The amount of the payment shall not be adjusted under Section 2.02 to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

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Section 14. Disagreements. The Companies mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (other than a High-Level Dispute) (a “Tax Advisor Dispute”) between the Companies as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the Companies shall negotiate in good faith to resolve the Tax Advisor Dispute. If such good faith negotiations do not resolve the Tax Advisor Dispute, then the matter, upon written request of either Company, will be referred for resolution to the Steering Committee, which will make a good faith effort to resolve the Tax Advisor Dispute pursuant to the procedures set forth in Section 9.3(a) of the Master Separation and Distribution Agreement. If the Steering Committee does not agree to a resolution of a Tax Advisor Dispute within thirty (30) days after the reference of the Tax Advisor Dispute to it, then the matter will be referred to a Tax Advisor acceptable to each of the Companies. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall furnish written notice to the Companies of its resolution of any such Tax Advisor Dispute as soon as practical, but in any event no later than 45 days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be conclusive and binding on the Companies. Following receipt of the Tax Advisor’s written notice to the Companies of its resolution of the Tax Advisor Dispute, the Companies shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. In accordance with Section 16, each Company shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor. All fees and expenses of the Tax Advisor in connection with such referral shall be shared equally by the Companies. Any High-Level Dispute shall be resolved pursuant to the procedures set forth in Section 9.3 of the Master Separation and Distribution Agreement. Nothing in this Section 14 will prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Advisor Dispute through the Steering Committee and the Tax Advisor (or any delay resulting from the efforts to resolve any High-Level Dispute through the procedures set forth in Section 9.3 of the Master Separation and Distribution Agreement) could result in serious and irreparable injury to either Company.

Section 15. Late Payments. Any amount owed by one party to another party under this Agreement which is not paid when due shall bear interest at the Prime Rate plus two percent, compounded semiannually, from the due date of the payment to the date paid. To the extent interest required to be paid under this Section 15 duplicates interest required to be paid under any other provision of this Agreement, interest shall be computed at the higher of the interest rate provided under this Section 15 or the interest rate provided under such other provision.

Section 16. Expenses. Except as otherwise provided in this Agreement, each party and its Affiliates shall bear their own expenses incurred in connection with preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

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Section 17. General Provisions.

Section 17.01 Addresses and Notices. Each party giving any notice required or permitted under this Agreement will give the notice in writing and use one of the following methods of delivery to the party to be notified, at the address set forth below or another address of which the sending party has been notified in accordance with this Section 17.01: (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States of America certified or registered mail, return receipt requested. Notice to a party is effective for purposes of this Agreement only if given as provided in this Section 17.01 and shall be deemed given on the date that the intended addressee actually receives the notice.

If to Motorola:	with a copy to:
Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Director, Taxes Facsimile: 847.576.0903	Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Chief Financial Officer Facsimile: 847.576.1402
If to Freescale:	with a copy to:
Freescale Semiconductor, Inc. 6501 William Cannon Drive Austin, Texas 78737 Attention: Director, Taxes Facsimile: 512.895.3671	Freescale Semiconductor, Inc. 6501 Willam Cannon Drive Austin, Texas 78737 Attention: Chief Financial Officer Facsimile: 512.895.8696

A party may change the address for receiving notices under this Agreement by providing written notice of the change of address to the other parties.

Section 17.02 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

Section 17.03 Waiver. The parties may waive a provision of this Agreement only by a writing signed by the party intended to be bound by the waiver. A party is not prevented from enforcing any right, remedy or condition in the party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and remedies in this Agreement is not intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

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Section 17.04 Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full force, if the essential terms and conditions of this Agreement for each party remain valid, binding and enforceable.

Section 17.05 Authority. Each of the parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 17.06 Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other parties in accordance with Section 10.

Section 17.07 Integration. This Agreement, together with each of the exhibits and schedules appended hereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein. All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained herein are superseded by this Agreement, as applicable. In the event of any inconsistency between this Agreement and the Master Separation and Distribution Agreement, or any other agreements relating to the transactions contemplated by the Master Separation and Distribution Agreement, with respect to matters addressed herein, the provisions of this Agreement shall control.

Section 17.08 Construction. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning and shall not be strictly construed for or against any party. The captions, titles and headings included in this Agreement are for convenience only, and do not affect this Agreement’s construction or interpretation. Unless otherwise indicated, all “Section” references in this Agreement are to sections of this Agreement.

Section 17.09 No Double Recovery. No provision of this Agreement shall be construed to provide an indemnity or other recovery for any costs, damages, or other amounts for which the damaged party has been fully compensated under any other provision of this Agreement or under any other agreement or action at law or equity. Unless expressly required in this Agreement, a party shall not be required to exhaust all remedies available under other agreements or at law or equity before recovering under the remedies provided in this Agreement.

Section 17.10 Counterparts. The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement. This Agreement is effective upon delivery of one

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executed counterpart from each party to the other party. The signatures of both parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

Section 17.11 Governing Law. The internal laws of the State of Delaware (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of or in connection with this Agreement and each of the exhibits and schedules hereto and thereto (whether arising in contract, tort, equity or otherwise).

Section 17.12 Jurisdiction. If any dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group to irrevocably) (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Delaware, (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient, and (c) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

Section 17.13 Amendment. The parties may amend this Agreement only by a written agreement signed by each party to be bound by the amendment and that identifies itself as an amendment to this Agreement.

Section 17.14 Freescale Subsidiaries. If, at any time, Freescale acquires or creates one or more subsidiaries that are includable in the Freescale Group, they shall be subject to this Agreement and all references to the Freescale Group herein shall thereafter include a reference to such subsidiaries.

Section 17.15 Successors. This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto (including but not limited to any successor of MINC or Freescale succeeding to the Tax attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

Section 17.16 Injunctions. The parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. The parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by the respective officers as of the date set forth above.

Motorola, Inc.
By:	/s/ David W. Devonshire
Its:	Executive Vice President and Chief Financial Officer

Freescale Semiconductor, Inc.
By:	/s/ Alan Campbell
Its:	Senior Vice President and Chief Financial Officer

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EX-10.(B)(II)

EXHIBIT 10(b)(ii)

AMENDMENT No. 1

TO THE

TAX SHARING AGREEMENT

BETWEEN

MOTOROLA, INC. AND FREESCALE SEMICONDUCTOR, INC.

This AMENDMENT No. 1 TO THE TAX SHARING AGREEMENT (“Amendment No. 1”) is entered into as of June 18, 2004 by and between Motorola, Inc., a Delaware corporation (“MINC”) and Freescale Semiconductor, Inc., a Delaware corporation and wholly owned subsidiary of MINC (“Freescale”) (MINC and Freescale are sometimes collectively referred to herein as the “Parties” and individually, a “Party”);

RECITALS

WHEREAS, MINC and Freescale have previously entered into that certain Tax Sharing Agreement dated as of April 4, 2004 (the “Tax Sharing Agreement”); and

WHEREAS, the Parties now consider it desirable to amend the Tax Sharing Agreement to confirm the consistent treatment between the Parties and their respective affiliates of various incentive compensation payments to employees of the Parties and their respective affiliates as described below and to address certain other matters;

NOW THEREFORE, in consideration of the mutual agreements contained herein, the Parties agree as follows:

I. Income Tax Deductions.

A. Solely MINC or any member of the MINC Group, as the case may be, shall be entitled to claim any Tax deduction associated with the following items on its respective Tax Return:

1. The vesting of Freescale restricted stock or restricted stock units received by any MINC Employee (as defined below) with respect to MINC restricted stock or restricted stock units held by such MINC Employee and payment of any dividends with respect to such Freescale restricted stock.

2. The exercise of any MINC stock options by any MINC Employee, the vesting of MINC restricted stock or restricted stock units held by any MINC Employee (and payment of any dividends on such MINC restricted stock), any disqualifying dispositions made by any MINC Employee of MINC shares acquired under the Motorola Employee Stock Purchase Plan and any payments made pursuant to the Motorola Incentive Plan or the Motorola Mid-Range Plan of 2003 to any MINC Employee.

B. Solely Freescale or any member of the Freescale Group, as the case may be, shall be entitled to claim any Tax deduction associated with the following items on its respective Tax Return:

1. The exercise of any MINC stock options by any Freescale Employee (as defined below) on or after the first date any member of the Freescale Group employed such Freescale Employee;

2. The vesting of MINC restricted stock or restricted stock units held by any Freescale Employee on or after the first date any member of the Freescale Group employed such Freescale Employee (and the payment of any dividends on such MINC restricted stock at any time on or after the first date any member of the Freescale Group employed such Freescale Employee);

3. Any disqualifying dispositions of MINC shares acquired under the Motorola Employee Stock Purchase Plan made by any Freescale Employee on or after the first date any member of the Freescale Group employed such Freescale Employee;

4. Any replacement award designed to replace benefits such individual would have been eligible to accrue under the Motorola Elected Officers Supplementary Retirement Plan paid to any Freescale Employee on or after the date any member of the Freescale Group employed such Freescale Employee; and

5. Any payments made pursuant to the Motorola Incentive Plan or the Motorola Mid-Range Incentive Plan of 2003 to any Freescale Employee on or after the first date any member of the Freescale Group employed such Freescale Employee.

C. 1.         The following terms shall have the following meanings:

“Freescale Employee” means any person employed or formerly employed by any member of the Freescale Group at the time of the exercise, vesting, disqualifying disposition or payment, as appropriate, unless, at such time, such person is employed by a member of the MINC Group or was more recently employed by a member of the MINC Group than by a member of the Freescale Group;

“MINC Employee” means any person employed or formerly employed by any member of the MINC Group at the time of the exercise, vesting, disqualifying disposition or payment, as appropriate, unless, at such time, such person is a Freescale Employee.

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2. Section 6.01(b) of the Tax Sharing Agreement shall not apply to any Tax Benefit realized (or to be realized) as a result of an adjustment pursuant to a Final Determination to any Tax deduction described in Section I.A. or Section I.B. of this Amendment No. 1.

II. Tax-Related Losses

A. Section 7.05(c) of the Tax Sharing Agreement shall be amended and restated in its entirety as follows:

“(c) (i) To the extent that any Tax-Related Loss is subject to indemnity under both Sections 7.05(a) and (b), responsibility for such Tax-Related Loss shall be shared by MINC and Freescale according to relative fault.

(ii) Notwithstanding anything in Section 7.05(b) or (c)(i) or any other provision of this Agreement or the Master Separation and Distribution Agreement to the contrary:

(A) with respect to (I) any Tax-Related Loss resulting from Section 355(e) of the Code (other than as a result of an acquisition of a Fifty- Percent or Greater Interest in MINC) and (II) any other Tax-Related Loss resulting (for the absence of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of Freescale (or any Freescale Affiliate) by any means whatsoever by any Person or any action or failure to act by Freescale after the IPO affecting the relative voting rights of the separate classes of Freescale stock, Freescale shall be responsible for, and shall indemnify and hold harmless MINC and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss;

(B) for purposes of calculating the amount and timing of any Tax- Related Loss for which Freescale is responsible under this Section 7.05, Tax-Related Losses shall be calculated by assuming that MINC, the MINC Affiliated Group and each member of the MINC Group (I) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year and (II) have no Tax Attributes in any relevant taxable year; and

(C) Freescale shall not be entitled to any refund (or any interest thereon received from the applicable Tax Authority) of Taxes for which Freescale is responsible under this Section 7.05, and Section 6.01(b) shall not apply to any Tax Benefit that MINC realizes (or will realize) as a result of an adjustment to any Taxes for which a member of the Freescale Group is responsible under this Section 7.05.”

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B. The following shall be included as Section 7.05(d) of the Tax Sharing Agreement:

“(d) Freescale shall pay MINC the amount of any Tax-Related Losses for which Freescale is responsible under this Section 7.05: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than two Business Days prior to the date MINC files, or causes to be filed, the applicable Tax Return for the year of the Contribution or Distribution, as applicable (the “Filing Date”) (provided that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (a), (b) or (c) of the definition of “Final Determination”, then Freescale shall pay MINC no later than two Business Days after the date of such Final Determination with interest calculated at the Prime Rate plus two percent, compounded semiannually, from the date that is two Business Days prior to the Filing Date through the date of such Final Determination) and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two Business Days after the date MINC pays such Tax-Related Losses. MINC shall pay Freescale the amount of any Tax-Related Losses (described in clause (ii) or (iii) of the definition of Tax-Related Loss) for which MINC is responsible under this Section 7.05 no later than two Business Days after the date Freescale pays such Tax-Related Losses.”

C. The following shall be added to Section 1 of the Tax Sharing Agreement:

“ ‘Business Day’ has the meaning set forth in the Master Separation and Distribution Agreement.”

“ ‘Filing Date’ shall have the meaning set forth in Section 7.05(d) of this Agreement.”

III. Miscellaneous

A. Section 7.02(f) shall be amended by inserting the words “or prior to” after the words “thereof) ending on” and before the words “the Distribution Date without obtaining the”.

B. The definition of “Master Separation and Distribution Agreement” shall be amended by inserting the words “April 4” prior to the word “, 2004”.

IV. General

A. This Amendment No. 1 shall constitute an amendment to the Tax Sharing Agreement. Except as provided in this Amendment No. 1, the terms of the Tax Sharing Agreement shall continue in effect. All terms not defined in this Amendment No. 1 shall have the same meanings assigned to them in the Tax Sharing Agreement.

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IN WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to the Tax Sharing Agreement to be executed as of the date first set forth above.

MOTOROLA, INC.
By:	/s/ David W. Devonshire
Its:	Executive Vice President and Chief Financial Officer
FREESCALE SEMICONDUCTOR, INC.
By:	/s/ Karen Roscher
Its:	Vice President, Director of Planning and Analysis

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EX-10.(C)

EXHIBIT 10(c)

EMPLOYEE MATTERS AGREEMENT

(As Amended and Restated as of June 18, 2004)

THIS Amended and Restated EMPLOYEE MATTERS AGREEMENT (the “Agreement”), is dated this 18^th day of June, 2004 by and between Motorola, Inc., a Delaware corporation (“Motorola”), and Freescale Semiconductor, Inc., a Delaware corporation (“Freescale” and together with Motorola, the “Parties” and individually, a “Party”).

RECITALS:

WHEREAS, the Parties have entered into a Master Separation and Distribution Agreement dated April 4, 2004 (the “Separation Agreement”) providing for, among other things, the transfer of the SPS Business (as defined in the Separation Agreement) from Motorola and certain of its Subsidiaries to Freescale and certain of its Subsidiaries;

WHEREAS, certain individuals who work in or are assigned to the SPS Business and are directly employed by Motorola or its Affiliates shall receive offers of employment from, or shall otherwise become employees of, Freescale or its Affiliates pursuant to this Agreement or by operation of applicable local laws; and

WHEREAS, the Parties hereto wish to set forth their agreement as to certain matters regarding the treatment of, and the compensation and employee benefits provided to, those former employees of Motorola or its Affiliates who become employees of Freescale or its Affiliates as described above, pursuant to the terms of this Agreement or by operation of applicable local laws; and

WHEREAS, the Parties entered into an Employee Matters Agreement dated April 4, 2004 (the “Original EMA”) and desire to amend and restate the Original EMA as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth below and in the Separation Agreement and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree with legal and binding effect as follows:

ARTICLE 1

AMENDMENT AND RESTATEMENT; DEFINITIONS

The Parties hereby agree and acknowledge that this Agreement amends and restates the Original EMA in its entirety.

Except as otherwise expressly provided herein, all capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Separation Agreement or in the preceding portions of this Agreement. In addition, the following terms, as used herein, shall have the following meanings:

1.1 “Cause” shall mean poor performance or any misconduct identified as a ground for termination in Freescale’s human resources policies, code of business conduct, or other written policies, practices or procedures.

1.2 “Controlled Group Member” shall mean, as to Motorola or Freescale, any other entity which either is part of a controlled group of corporations which includes that Party or is a trade or business under common control with that Party, as defined in Sections 414(b) and (c) of the Code.

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1.3 “Employee Benefit Plan” shall mean:

(a) any plan, fund, or program which provides health, medical, surgical, hospital or dental care or other welfare benefits, or benefits in the event of sickness, accident or disability, or death benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services,

(b) any plan, fund, or program which provides retirement income to employees or results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,

(c) any plan, fund or program which provides severance, unemployment, vacation or fringe benefits (including dependent and health care accounts),

(d) any incentive compensation plan, deferred compensation plan, stock option or stock-based incentive or compensation plan, or stock purchase plan, or

(e) any other “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any other “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and any other written or oral plan, agreement or arrangement involving direct or indirect compensation including, without limitation, insurance coverage, severance benefits, disability benefits, fringe benefits, pension or retirement plans, profit sharing, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation.

1.4 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

1.5 “Freescale Non-U.S. Plans” shall mean Freescale’s or its Affiliates’ Employee Benefit Plans under which some or all of the Non-U.S. Transferred Employees will be eligible to participate as of the Reorganization Date or a later date.

1.6 “Freescale U.S. Plans” shall mean Freescale’s or its Affiliates’ Employee Benefit Plans under which some or all of the U.S. Transferred Employees will be eligible to participate as of the Reorganization Date or a later date.

1.7 “Motorola Non-U.S. Plans” shall mean Motorola’s and its Affiliates’ Employee Benefit Plans (i) in which some or all of the Non-U.S. Transferred Employees have been eligible to participate immediately prior to the Reorganization Date or (ii) with respect to which some or all of the Non-U.S. Transferred Employees constituted an employee group covered thereunder immediately prior to the Reorganization Date even if not yet participating thereunder until completion of all applicable eligibility requirements.

1.8 “Motorola U.S. Plans” shall mean Motorola’s and its Affiliates Employee Benefit Plans (i) in which some or all of the U.S. Transferred Employees have been eligible to participate immediately prior to the Reorganization Date or (ii) with respect to which some or all of the U.S. Transferred Employees constituted an employee group covered thereunder immediately prior to the Reorganization Date even if not yet participating thereunder until completion of all applicable eligibility requirements.

1.9 “Non-U.S. Employee” shall mean each employee of Motorola or of any Affiliate of Motorola on a non-U.S. payroll immediately prior to the Reorganization Date who works in or is assigned to the SPS Business and is listed on Schedule 1.9, as such Schedule 1.9 shall be amended between the Reorganization Date and the Distribution Date to reflect changes which the Parties agree have occurred in the ordinary course of business and to comply with Section 1.10 below. Schedule 1.9 shall be completed

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by Motorola in cooperation with Freescale; an initial version shall be agreed between Motorola and Freescale within a reasonable period of time prior to the Reorganization Date, and an updated version thereof shall be agreed between Motorola and Freescale within a reasonable period of time after the Distribution Date.

1.10 “Non-U.S. Transferred Employee” shall mean each Non-U.S. Employee who accepts an offer of employment from, or otherwise by the operation of applicable local law becomes an employee of, Freescale or an Affiliate of Freescale, as contemplated by Section 3.1. Each such person shall be separately identified as such on each version of Schedule 1.9.

1.11 “Reorganization Date” shall mean, with respect to any country (including the United States) in which a U.S. Employee or Non-U.S. Employee is employed, the date as of which Freescale or a Freescale Affiliate becomes the employer of that employee in accordance with Section 2.1 or 3.1 below, as applicable.

1.12 “Transferred Employee” shall mean any U.S. Transferred Employee and any Non-U.S. Transferred Employee.

1.13 “U.S. Employee” shall mean each employee of Motorola or any Affiliate of Motorola on a U.S. payroll immediately prior to the Reorganization Date who works in or is assigned to the SPS Business and is listed on Schedule 1.13, as such Schedule 1.13 shall be amended between the Reorganization Date and the Distribution Date to reflect changes which the Parties agree have occurred in the ordinary course of business and to comply with Section 1.14 below. Schedule 1.13 shall be completed by Motorola in cooperation with Freescale; an initial version shall be agreed between Motorola and Freescale within a reasonable period of time prior to the Reorganization Date; and an updated version thereof shall be agreed between Motorola and Freescale within a reasonable period of time after the Distribution Date.

1.14 “U.S. Transferred Employee” shall mean each U.S. Employee transferred to employment with a Freescale Affiliate as provided in Section 2.1. Each such person shall be separately identified as such on each version of Schedule 1.13.

ARTICLE 2

U.S. TRANSFERRED EMPLOYEE MATTERS

2.1 U.S. Transferred Employees.

(a) Within a reasonable period of time prior to the Reorganization Date, Freescale and Motorola will provide notice of employment transfer to each U.S. Employee who is employed by Motorola as of the date such notice is provided. Such notice shall be for a position with Freescale or a Freescale Affiliate effective as of the Reorganization Date with job duties substantially similar to the job duties of the position held by such U.S. Employee immediately prior to the Reorganization Date.

(b) Notwithstanding the foregoing, and except as may be otherwise provided in the Separation Agreement or agreed in writing between the Parties or prohibited by applicable law, for the period beginning on the Reorganization Date and continuing for a period of one year following the Distribution Date, neither Party nor their Affiliates will employ (or engage as an independent contractor or consultant) any U.S. Employee who refuses the transfer of employment to Freescale pursuant to this Section 2.1.

(c) If any U.S. Transferred Employee is hired by any Affiliate of Freescale, then that Affiliate shall be bound by (and Freescale shall cause that Affiliate to honor) all of the provisions of this Agreement that would have applied to Freescale with respect to that U.S. Transferred Employee.

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2.2 Compensation and Benefits. For the one-year period beginning on the Reorganization Date, Freescale and its Affiliates will compensate each U.S. Transferred Employee while employed by Freescale and its Affiliates:

(a) at a base wage or base salary rate (including any applicable variable pay rate (e.g., shift differential pay)), which shall not be less than that provided to the U.S. Transferred Employee by Motorola immediately prior to the Reorganization Date; provided, that the foregoing provisions of this Section 2.2(a) shall not preclude Freescale from making individual wage and salary adjustments in the ordinary course of business to align pay to job responsibilities;

(b) with an incentive program or other additional compensation which shall be substantially comparable to Motorola’s Management Incentive Plan; and

(c) with Employee Benefit Plans and similar programs substantially comparable in economic value to the Motorola U.S. Plans (other than defined benefit pension and retiree medical plans).

2.3 Severance. During the one-year period beginning on the Reorganization Date, Freescale and its Affiliates will use their commercially reasonable efforts to continue to employ each U.S. Transferred Employee in a position that has substantially similar job duties to that held by the U.S. Transferred Employee immediately prior to the Reorganization Date, in accordance with the terms and conditions set forth in this Agreement. Notwithstanding the foregoing, if any U.S. Transferred Employee is terminated by Freescale (other than for Cause) on or before the Distribution Date, Freescale shall provide such employee with severance allowances and benefits under the Motorola, Inc. Involuntary Severance Plan (the “Motorola Severance Plan”) as in effect on the date of severance (but not to exceed the allowance and benefit levels in effect thereunder as of the Reorganization Date), in any case crediting such employee with his service with Motorola and its Affiliates (including Freescale) prior to the Distribution Date in accordance with Section 2.5 below.

2.4 Paid Time Off.

(a) During the period from the Reorganization Date through December 31, 2004, Freescale shall adopt and maintain the Paid Time Off policy of Motorola for the benefit of all U.S. Transferred Employees and other Freescale employees, and shall be responsible for all accrued leave thereunder with respect to such U.S. Transferred Employees and other Freescale employees. Effective January 1, 2005, U.S. Transferred Employees’ and other Freescale employees’ entitlement to Paid Time Off or vacation time will be accrued and used only in accordance with Freescale’s own Paid Time Off or vacation policy; provided, that each such U.S. Transferred Employee or other Freescale employee hired prior to the earlier of January 1, 2005 or the Distribution Date shall be entitled to no less Paid Time Off or vacation for any calendar year beginning on or after the date of their hire than that to which he would have been entitled for calendar year 2004 under the Paid Time Off policy of Motorola as in effect on that date.

(b) Prior to calendar year 2005, the “Attendance Bonus Plan” of Motorola or any similar programs applicable to U.S. Transferred Employees immediately prior to the Reorganization Date shall continue to apply to all U.S. Transferred Employees and other Freescale Employees at least through December 31, 2004, and Freescale shall be responsible for payments thereunder.

2.5 Service Credit. Freescale shall provide each U.S. Transferred Employee or other Freescale employee with full credit for all purposes under the Freescale U.S. Plans (including, without limitation, any Freescale paid time off and severance plans or policies), for pre-Distribution Date (i) service with Motorola and its Affiliates and Controlled Group Members (including Freescale), and (ii) service credited under the comparable Motorola U.S. Plans for employment other than with Motorola and its Affiliates and Controlled Group Members; provided, however, that in no event shall Freescale be

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required to provide any service credit to any U.S. Transferred Employee or other Freescale employee to the extent that the provision of such credit would result in any duplication of benefits.

2.6 401(k) Plan.

(a) On the Reorganization Date and continuing until the Distribution Date, Freescale shall adopt and maintain the Motorola, Inc. 401(k) Profit Sharing Plan (the “Motorola 401(k) Plan”) for the benefit of Freescale’s eligible employees, and Motorola shall consent to such adoption and maintenance, in accordance with the terms of the Motorola 401(k) Plan. Immediately prior to the Distribution Date, the U.S. Transferred Employees and other Freescale employees shall cease to participate in the Motorola 401(k) Plan. No later than the first day of the month following the month in which the Distribution Date occurs, the U.S. Transferred Employees and other Freescale employees shall be eligible to commence participation in the Freescale Semiconductor, Inc. 401(k) Profit Sharing Plan (the “Freescale 401(k) Plan”). Any service requirements contained in the Freescale 401(k) Plan with respect to eligibility to participate generally or eligibility to share in any employer contributions thereunder shall be waived for U.S. Transferred Employees and other Freescale employees who immediately prior to the Distribution Date were eligible to participate or share in employer contributions, respectively, under the Motorola 401(k) Plan. The Freescale 401(k) Plan will provide for an annual employer matching contribution (which may be made in installments during each year) expressed as a 100% match on each participant’s pre-tax contributions to the plan (not to exceed 5% of the participant’s eligible compensation) for that year, and a discretionary annual employer profit sharing contribution based on the profitability of Freescale with respect to that year.

(b) As soon as is reasonably practicable following the Distribution Date, Motorola and Freescale shall cause a trust-to-trust transfer of account balances related to the U.S. Transferred Employees (including any outstanding loans, and shares of Motorola and Freescale common stock for investment in Motorola and Freescale Common Stock Funds to be maintained under the Freescale 401(k) Plan (the Motorola Common Stock Fund to be maintained thereunder on a wasting basis for at least a two-year period after the Distribution Date or such other period as the plan administrator thereunder or its delegate may determine)) from the Motorola 401(k) Plan to the Freescale 401(k) Plan, in accordance with Sections 411(d)(6) and 414(1) of the Code and the terms of the 401(k) Transfer Agreement which shall be executed by the Parties and shall be attached to this Agreement as Exhibit 2.6 hereto.

2.7 Motorola Pension Plan.

(a) On the Reorganization Date and continuing through the Distribution Date, Freescale shall adopt and maintain the Motorola, Inc. Pension Plan (the “Motorola Pension Plan”) for the benefit of its eligible employees, and Motorola shall consent to such adoption and maintenance, in accordance with the terms of the Motorola Pension Plan. Immediately prior to the Distribution Date, each U.S. Transferred Employee and other Freescale employee shall cease to accrue benefits and to otherwise actively participate in the Motorola Pension Plan.

(b) As soon as practicable after the Distribution Date, Motorola shall cause the Motorola Pension Plan to (i) inform the U.S. Transferred Employees and other Freescale employees who are participants in such plan of their rights thereunder; and (ii) permit any U.S. Transferred Employees and other Freescale employees who are eligible to receive their vested accrued benefit under the Motorola Pension Plan in the form of an immediate single sum distribution, to elect to take such a distribution from such plan. Freescale shall cause the plan administrator of the Freescale 401(k) Plan to take any and all necessary action to permit the U.S. Transferred Employees and other Freescale employees described in clause (ii) above, if requested by them, to roll over directly their distributions from the Motorola Pension Plan to the Freescale 401(k) Plan, subject to reasonable conditions similar to those described in Section 2.6(b) above.

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2.8 Health and Dental Plans; Disability Plan. As of the Reorganization Date and continuing through the date described in the following sentence, Freescale shall adopt and maintain the Motorola Employee Medical Benefits Plan (the “Motorola Medical Plan”) and the Motorola Employee Dental Benefits Plan (the “Motorola Dental Plan”) for the benefit of its eligible employees, and Motorola shall consent thereto, all in accordance with the terms of those plans. As of the earlier of December 31, 2004 or the last day of the calendar month in which the Distribution Date occurs (or the last day of the month immediately prior to the Distribution Date if the Distribution Date occurs on the first day of a month in calendar year 2004), the U.S. Transferred Employees and other Freescale employees shall cease to participate in the Motorola Medical Plan and Motorola Dental Plan. If the Distribution Date occurs before December 1, 2004, then commencing on the first day of the calendar month following the calendar month in which the Distribution Date occurs (or on the first day of the month that includes the Distribution Date if the Distribution Date occurs on the first day of a month), Freescale shall provide each U.S. Transferred Employee and other Freescale employee (subject to any applicable COBRA elections) with the medical and dental coverage, under one or more medical plan(s) and dental plan(s) maintained by Freescale covering U.S. Transferred Employees (the “Freescale Medical Plan(s)” and “Freescale Dental Plan(s),” respectively), identical to the coverage that had been provided to the U.S. Transferred Employee or other Freescale employee immediately before the Distribution Date. If the Distribution Date occurs on or after December 1, 2004, Freescale shall provide each U.S. Transferred Employee and other Freescale employee with the option to elect medical and dental coverage under one or more medical plan(s) and dental plan(s) maintained by Freescale and effective as of January 1, 2005. Freescale will apply prior period(s) of health insurance coverage toward satisfaction of Freescale pre-existing condition limitations upon submission of Certificate(s) of Creditable Coverage, as permitted under the Health Insurance Portability and Accountability Act (HIPAA). Freescale shall pay the amount of the COBRA premium per month with respect to any U.S. Transferred Employee or other Freescale employee who (a) was hired within one year prior to the Distribution Date, (b) has a pre-existing condition for which coverage would consequently not be available under the Freescale Health plan, and (c) elects COBRA continuation coverage under the Motorola Health Plan, for the period of time that the U.S. Transferred Employee or other Freescale employee is subject to any pre-existing condition exclusion under the Freescale Health Plan. In addition, immediate prior coverage under Motorola’s long-term or short-term disability plan will be used to establish the Reorganization Date for Freescale’s long-term or short-term disability plan for purposes of satisfying any waiting periods. Freescale shall credit U.S. Transferred Employees and other Freescale employees who were enrolled in the Motorola Medical Plan and Motorola Dental Plan immediately prior to the Distribution Date with the deductibles and out-of-pocket expenses with which those U.S. Transferred Employees and other Freescale employees had been credited thereunder for the current plan year that includes the Distribution Date.

2.9 Retiree Medical Coverage.

(a) The Parties shall enter into the “Retiree Medical Benefits Transfer Agreement” which shall be executed by the Parties and shall be attached to this Agreement as Exhibit 2.9 hereto.

(b) Notwithstanding any other provision of this Agreement, Motorola expressly reserves the right to amend, alter, modify the terms of, or terminate the Motorola Post-Employment Health Benefits Plan at any time and to interpret the provisions of that plan with respect to all of its current or former employees, and Freescale expressly reserves the same rights with respect to its retiree health plan referenced in the Retiree Medical Benefits Transfer Agreement (subject to any restrictions upon which the favorable Private Letter Ruling referenced in the Retiree Medical Benefits Transfer Agreement is conditioned). It is understood and agreed by the Parties that Motorola shall not be responsible or otherwise liable for the provision of post-retirement medical coverage to any U.S. Transferred Employee (or to any former Motorola employees covered by the Retiree Medical Benefits Transfer Agreement) other than as may be described in this Section 2.9 or the Retiree Medical Benefits Transfer Agreement. Freescale shall have no obligation to establish successor plans to the Motorola Post-Employment Health Benefits Plan other than as provided in the Retiree Medical Benefits Transfer Agreement, and shall not be

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otherwise liable for any claims arising from, in connection with or in any manner relating to the Motorola Post-Employment Health Benefits Plan.

2.10 Health Reimbursement Plan and Dependent Care Plan. As of the Reorganization Date and continuing through the “Motorola HRA/DCA Coverage Cessation Date” (that is, the earlier of December 31, 2004 or the day immediately prior to the Distribution Date), Freescale shall adopt and maintain Motorola’s health reimbursement (or flexible spending) account plan and Motorola’s dependent care expense account plan (the “Motorola HRA Plan” and “Motorola DCA Plan,” respectively), both designed to comply with Section 125 of the Code, for the benefit of its eligible employees, and Motorola shall consent thereto, in accordance with the respective terms of such plans. Effective as of the Motorola HRA/DCA Coverage Cessation Date, the U.S. Transferred Employees and other Freescale employees shall cease to contribute to the Motorola HRA and DCA Plans, in accordance with the respective terms of such plans. Effective as of the “Freescale HRA/DCA Date” (that is, the earlier of January 1, 2005 or the Distribution Date), Freescale shall adopt and maintain for at least the period ending on the last day of the calendar year following the calendar year in which the Freescale HRA/DCA Date occurs, Employee Benefit Plans substantially identical to the Motorola HRA and DCA Plans (the “Freescale HRA Plan” and the “Freescale DCA Plan,” respectively). The Motorola HRA and DCA Plans shall transfer the U.S. Transferred Employees’ and other Freescale employees’ account balances to the Freescale HRA and DCA Plans. A U.S. Transferred Employee or other Freescale employee shall submit claims and shall be reimbursed for those claims (if any), incurred during the calendar year in which the Freescale HRA/DCA Date occurs (or the calendar year ending immediately prior to the Freescale HRA/DCA Date if the Freescale HRA/DCA Date occurs on the first day of a calendar year), up to the amounts residing in each individual U.S. Transferred Employee’s or other Freescale employee’s respective plan accounts as of the day immediately prior to the Freescale HRA/DCA Date under the Freescale HRA and DCA Plans. Contributions will be made to any U.S. Transferred Employee’s or other Freescale employee’s accounts under the Freescale HRA and/or DCA Plans for compensation earned after the Freescale HRA/DCA Date.

2.11 Other Welfare and Nonqualified Pension Plans. As of the Reorganization Date and continuing through the Distribution Date, Freescale shall adopt and maintain Motorola’s (i) welfare plans (as defined in Section 3(1) of ERISA and including but not limited to the life insurance supplemental life insurance, accidental death and dismemberment insurance, long- and short-term disability, severance and tuition reimbursement plans) not already covered in Sections 2.8 and 2.10 above, and (ii) pension plans (as defined in Section 3(2) of ERISA) which are not intended to be tax-qualified under Section 401(a) of the Code, for the benefit of its eligible employees, and Motorola shall consent thereto, all in accordance with the terms of those plans. Immediately prior to the Distribution Date, all U.S. Transferred Employees and other Freescale employees who participate in any of said other welfare plans or non-qualified pension plans shall cease to participate in those plans; and distribution of any benefits to which they are entitled under those non-qualified pension plans shall be made at the time and in the manner provided under those plans.

2.12 Certain Foreign National Employees. The Parties recognize that certain of the U.S. Transferred Employees and possibly other Freescale employees are in nonimmigrant visa status or have applications for lawful permanent residence pending with the relevant governmental authorities (the “Affected Foreign National Employees”). The Parties further recognize that new or amended petitions with respect to such Affected Foreign National Employees may be required in certain of these cases, unless Freescale (or Freescale’s Affiliates, as the case may be), are deemed the “successor-in-interest” to Motorola (as such term is used in pronouncements by the U.S. Citizenship and Immigration Service (“USCIS”)) with respect to such Affected Foreign National Employees. Accordingly, Freescale hereby expressly agrees to assume, and Motorola hereby assigns, all of the immigration related liabilities of the Affected Foreign National Employees (including, without limitation, any obligations, liabilities and undertakings arising from or under attestations made in each certified and still effective Labor Condition Application (“LCA”) filed by Motorola with respect to any such Affected Foreign National Employees). The Parties each agree to take such actions as may reasonably be requested at and following the Reorganization Date to document

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to the USCIS or such other governmental agency, as the case may be, as may be necessary, the “successor-in-interest” relationship with respect to any Affected Foreign National Employees.

ARTICLE 3

NON-U.S. TRANSFERRED EMPLOYEE MATTERS

3.1 Non-U.S. Transferred Employees.

(a) Effective as of the Reorganization Date, Freescale agrees (i) to employ, or cause its applicable Affiliates to employ, the Non-U.S. Employees who accept offers of employment from the applicable Freescale Affiliate or who otherwise become employees of the applicable Freescale Affiliate by operation of law, and (ii) to provide, or cause its Affiliates to provide, each Non-U.S. Employee with at least substantially comparable terms and conditions of employment to those provided by the applicable Motorola Affiliate immediately prior to the Reorganization Date. The Parties agree to fully and timely cooperate in the transition activities and also to comply (and cause their applicable Affiliates to comply) with all applicable provisions of the European Union Acquired Rights Directive or other country-specific legal standards or applicable laws.

(b) Notwithstanding the foregoing, and except as may be otherwise agreed in writing between the Parties or prohibited by applicable law, neither Party nor their Affiliates will employ (or engage as an independent contractor or consultant) for a period of one year following the Distribution Date any Non-U.S. Employee whose employment relationship with Motorola or Motorola’s Affiliates terminates following any refusal by such Non-U.S. Employee to accept employment with, or transfer of his employment to, Freescale or its Affiliates as of the Reorganization Date pursuant to this Section 3.1.

(c) During the one-year period beginning on the Reorganization Date, Freescale will use its commercially reasonable efforts to continue, or cause its applicable Affiliates to continue, to employ each Non-U.S. Transferred Employee in a position that has substantially similar job duties to that held by the Non-U.S. Transferred Employee immediately prior to the Reorganization Date, in accordance with the terms and conditions set forth in this Agreement. Notwithstanding the foregoing, if any Non-U.S. Transferred Employee is terminated by Freescale or its Affiliate (other than for Cause) within one year after the Reorganization Date, Freescale shall provide, or cause its Affiliate to provide, such employee (i) with severance allowances and benefits at least substantially comparable to the severance allowances and benefits under the country policies or plans of Motorola or its applicable Affiliate as in effect on the date of severance (but not to exceed the allowance and benefit levels in effect thereunder as of the Reorganization Date), or (ii) with such greater allowances and benefits as may be available under Freescale’s or its applicable Affiliate’s severance benefit plan or program extended to Non-U.S. Transferred Employees in the same pay country, in either case crediting such employee with his service with Motorola and its Affiliates (including Freescale) prior to the Distribution Date in accordance with Section 3.3 below.

3.2 Non-U.S. Employee Benefits.

(a) Freescale shall cause its Affiliates to establish or maintain the Freescale Non-U.S. Plans and such other employee benefit plans outside of the United States as may be required by applicable law, in accordance with Section 1.5 hereof.

(b) Immediately prior to the Reorganization Date (or such later date as provided in Schedule 3.2 or in subsequent written agreements between the Parties for the adoption of the Freescale Non-U.S. Plan of the same type), Motorola and/or its Affiliates shall cease all responsibility or liability with respect to coverage for any Non-U.S. Transferred Employee and any other Freescale Affiliate employee under any pension, retirement, medical, dental, disability, severance, life insurance, accident insurance or other retirement or health or welfare benefit plan,

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program or policy which is maintained by Motorola or any of its Affiliates. To the extent such coverages are permitted to cease under applicable law and are not continued by Motorola or its Affiliates in accordance with the next following sentence, the coverages shall so cease immediately prior to the applicable date described in the immediately preceding sentence. To the extent (i) such coverages are required to continue on or beyond said applicable date under applicable law or (ii) Motorola and Freescale agree in writing that any such coverages shall continue after said applicable date for other purposes not inconsistent with applicable law, Motorola and/or its Affiliates shall continue to provide coverage for any Non-U.S. Transferred Employee and any other non-U.S. Freescale Affiliate employee under any benefit plans, programs or policies maintained by Motorola or any of its Affiliates on and after the aforesaid date to the extent so required or agreed, and Freescale and its Affiliates shall indemnify Motorola and its Affiliates and reimburse them for any and all expenses incurred under said plans in respect of such continuation of coverage on and after the aforesaid date. Such reimbursement shall be made within 30 days after Freescale or its Affiliate receives from Motorola or its Affiliate an itemized statement setting forth the types and amounts of said expenses. Schedule 3.2 sets forth the Motorola Non-U.S. Plans in which Non-U.S. Transferred Employees and any other non-U.S. Freescale Affiliate employees will continue to participate on and after the Reorganization Date or such other applicable date, as well as the anticipated date on which their participation in such plans will cease.

(c) On the Reorganization Date, through the last day of the calendar year that includes the Reorganization Date, Freescale shall assume and fulfill, and shall cause its Affiliates to assume and fulfill, in a timely manner, all of the accrued obligations and liabilities relating to the vacation, annual leave, and holiday policies (collectively “Paid Leave Days”) of Motorola and its Affiliates immediately prior to the Reorganization Date with regard to Non-U.S. Transferred Employees and any other Freescale Affiliate employees, including allowing Non-U.S. Transferred Employees and any other Freescale Affiliate employee to use and be paid for their accrued but unused Paid Leave Days. For calendar years beginning after the Reorganization Date and subject to Section 3.3 below and the requirements of governing law, Non-U.S. Transferred Employees and any other Freescale Affiliate employees will be entitled to accrue and use Paid Leave Days only in accordance with the policies and procedures of Freescale or its Affiliates applicable to similarly situated employees; provided, that where legally permissible each such Non-U.S. Transferred Employee shall be entitled once employed by Freescale or its Affiliates to no less Paid Leave Days for any such year than that to which he or she would have been entitled at Motorola or the applicable Motorola Affiliate for the calendar year that included the Reorganization Date.

3.3 Service Credit. Without limiting anything in Section 3.1 above and consistent therewith, Freescale shall cause its Affiliates to provide each Non-U.S. Transferred Employee with full credit for service recognized by Motorola and its Affiliates for all purposes (other than defined benefit pension plan benefit accrual unless either a plan-to-plan transfer of assets and liabilities has occurred or applicable law requires the recognition of such service); provided, however, that in no event shall any Freescale Affiliate be required to provide any service credit to any Non-U.S. Transferred Employee to the extent the provision of such credit would result in any duplication of benefits or unusual or unintended increase in benefits. To the extent that a Non-U.S. Transferred Employee is paid severance as a result of his transfer of employment to Freescale or Freescale’s Affiliate, and to the extent permitted by applicable law, Freescale shall cause Freescale’s Affiliate not to provide that Non-U.S. Transferred Employee with full credit for service recognized by Motorola or Motorola’s Affiliate, for purposes of any future severance or severance-like payments or vacation, holiday or other service-based benefits.

3.4 Guaranty. Freescale shall or shall take all action necessary to cause the applicable Freescale Affiliates to, fulfill the terms of this Agreement that are binding on Freescale Affiliates, and Freescale hereby guarantees to Motorola and its Affiliates such performance. Motorola shall or shall take all action necessary to cause the applicable Motorola Affiliates to, fulfill the terms of this Agreement that are binding on Motorola Affiliates and Motorola hereby guarantees to Freescale and its Affiliates such performance.

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ARTICLE 4

STOCK OPTIONS AND INCENTIVE COMPENSATION

4.1 Motorola Options.

(a) Transferred Employees will continue to hold their options to purchase Motorola common stock (“Motorola Options”) and Motorola stock appreciation rights (“Motorola SARs”) after the Reorganization Date on the same terms and conditions under which they were held as of the Reorganization Date.

(b) Unless Motorola determines otherwise and provides advance written notice of such determination to Freescale, all unvested Motorola Options held by Transferred Employees or other Freescale employees on the Distribution Date will be converted into stock options to purchase Freescale Class A common stock (“Freescale Options”) and all unvested Motorola SARs held by such employees will be converted into stock appreciation rights relating to Freescale Class A common stock (“Freescale SARs”). To the extent permitted by applicable law, the Freescale Options and SARs will have the same terms and conditions, including the same vesting provisions and exercise periods, as the unvested Motorola Options and SARs had immediately prior to the Distribution Date. The conversion ratio used in determining the number of shares subject to each unvested Motorola Option and each unvested Motorola SAR, and the per-share exercise price of each Motorola Option and SAR, will be determined by dividing the closing price of Motorola common stock on the Distribution Date (or if that date is not a trading day, the previous trading day) by the opening price of the Class A Freescale common stock on the day after the Distribution Date (or if that date is not a trading day, on the next trading day). The number of shares purchasable under each converted Freescale Option and the number of shares subject to each Freescale SAR shall be determined by multiplying the number of shares subject to the corresponding unvested Motorola Option or SAR by the conversion ratio. The per-share exercise price of each converted Freescale Option and SAR shall be determined by dividing the exercise price per share of the corresponding unvested Motorola Option or SAR by the conversion ratio.

(c) Any vested Motorola Options and SARs, and any unvested Motorola Options and SARs if they are not converted into Freescale Options or SARs in accordance with Section 4.1(b) above, that are held by Transferred Employees or other Freescale employees, can continue to be exercised to acquire Motorola common stock for a period of time after the Distribution Date only in accordance with the terms of the Motorola stock incentive plan under which they were granted and the terms of their grant .

(d) In the event of the termination of a Transferred Employee’s employment prior to the Distribution Date, any Motorola Option or SAR held by the Transferred Employee can continue to be exercised for a period of time after termination only in accordance with the terms of the Motorola stock incentive plan under which they were granted and the terms of their grant.

4.2 Freescale Options – Initial Grants. Effective as of the IPO, executive officers, non-employee directors (excluding any Motorola directors serving on the Freescale Board) and certain employees worldwide will be granted stock options to purchase shares of Freescale Class A common stock, restricted stock and/or restricted stock units. The value of the shares subject to such grants, valued at the initial public offering price, shall be agreed upon by Freescale and Motorola. These grants will vest over three years, with 33% vesting on each of the first two anniversaries of the grant date, and the remaining 34% vesting on the third anniversary of the grant date. The exercise price per share of the stock options will be equal to the initial public offering price of the Freescale Class A common stock. The options will have a 10-year exercise period.

4.3 Motorola Restricted Stock and Restricted Stock Units. Transferred Employees and any other Freescale employees will continue to hold their shares of Motorola restricted stock and restricted stock units after the Reorganization Date on the same terms and conditions under which they

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were held as of the Reorganization Date. As of the Distribution Date, certain shares of Motorola restricted stock and restricted stock units held by Transferred Employees and any other Freescale employees will become free of restriction by virtue of the terms of the award document pursuant to which they were granted. A portion of the balance of the Motorola restricted stock and restricted stock units held by Transferred Employees and any other Freescale employees will be freed of restriction on the Distribution Date. The portion freed of restriction will be determined by multiplying the number of shares or units subject to restriction by a fraction, the numerator of which is the number of years of service performed by the subject employee during the restricted period and the denominator is the total number of years in the restricted period. The balance of the Motorola restricted stock and restricted stock units will be forfeited. Freescale will issue shares of restricted stock or restricted stock units to certain employees to compensate for those otherwise forfeited grants within 60 days after the Distribution Date.

4.4 Stock Purchase Plan. Transferred Employees and any other Freescale employees will continue to participate in the Motorola Employee Stock Purchase Plan of 1999 (the “MOT Share Plan”) after the Reorganization Date through the Distribution Date or such earlier date on which their participation in the MOT Share Plan terminates (the “Plan Termination Date”). Motorola shall take any and all necessary action prior to the Plan Termination Date to allow the contributions of the Freescale employees made prior to the Plan Termination Date to be used to purchase shares of Motorola common stock in accordance with the following: If the Plan Termination Date is within three months of the end of the current MOT Share Plan period, such purchase shall take place as of the end of the then applicable six month period under the MOT Share Plan and pursuant to the terms of such plan. If the Plan Termination Date is not within three months of the end of the current MOT Share Plan period, such purchase shall not take place and any amounts contributed by Freescale employees prior to the Plan Termination Date shall be refunded, without interest, as soon as practicable after the Plan Termination Date.

4.5 Incentive Compensation.

(a) Transferred Employees and any other Freescale employees will continue to participate in the Motorola Incentive Plan after the Reorganization Date through December 31, 2004, if they remain employed by Freescale or its eligible Affiliates through that date. Each such employee will be paid the award the employee would have earned under the Plan for 2004, if any, had he or she remained an employee of Motorola or its eligible Affiliates through December 31, 2004. The amount paid will be funded pro rata by Motorola for the period up to the Reorganization Date and funded pro rata by Freescale for the period commencing on or after the Reorganization Date.

(b) Transferred Employees will continue to participate in the Motorola Mid Range Incentive Plan of 2003 after the Reorganization Date through the earliest of the Distribution Date, December 31, 2004, or such other date on which their participation in the Plan terminates. If the Distribution Date occurs during calendar year 2004, any Transferred Employee who remains an employee of Freescale through the Distribution Date will be paid a portion of the award the employee would have earned under the Plan, if any, had he or she remained an employee of Motorola or its subsidiaries through December 31, 2004. The portion of the award payable to the employee will be determined by multiplying the full award by a fraction, the numerator of which is the number of full months of service performed by the employee during 2003 and 2004 through the Distribution Date and the denominator of which is twenty four. The amount paid will be funded pro rata by Motorola for the period up to the Reorganization Date and funded pro rata by Freescale for the period commencing on or after the Reorganization Date.

(c) Freescale will establish a special incentive plan for select Transferred Employees and other select employees with awards based on exceptional revenue growth and operating earnings performance. The plan will be in place for each of the 2004 and 2005 fiscal years and will have approximately 25 participants. The maximum cost of the Plan for each of the two fiscal years will be $25 million and will allow individuals to earn awards up to four times

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their base salary. Awards under the plan for each such fiscal year will be paid partly in cash and partly in restricted stock units.

ARTICLE 5

RESPONSIBILITY FOR EMPLOYEES

5.1 Responsibility for Employees. Effective as of the Reorganization Date and except as expressly provided otherwise herein, Freescale, to the exclusion of the Motorola Group, shall assume and thereafter be responsible for and pay, perform and discharge, any and all employment, compensation and employee benefit liabilities, responsibilities and obligations relating to the U.S. Employees, Non-U.S. Employees, other Freescale employees, and other current and past employees of the SPS Business, which arise before, on or after the Reorganization Date, including, without limitation:

(a) those arising from any claim that Motorola or any of its Motorola Group Affiliates is the actual employer, co-employer or joint employer of any U.S. Employees or Non-U.S. Employees or other such employees;

(b) any and all employment-related claims under any national or local law or ordinance, all as they may have been or may in the future be amended; and

(c) all termination and severance liabilities, claims for lost wages, compensation, and benefits, claims for damages, and claims for unfair or wrongful dismissal, together with all costs and expenses associated therewith,

(collectively, “Freescale Employment Liabilities”); provided, that benefits accrued by U.S. Transferred Employees under the Motorola Pension Plan shall remain the responsibility of Motorola and shall not be included in the Freescale Employment Liabilities. Freescale shall reimburse, indemnify and hold harmless Motorola for any costs, liabilities and expenses, including attorneys’ fees, incurred by the Motorola Group or their Employee Benefit Plans in connection with the Freescale Employment Liabilities.

ARTICLE 6

MISCELLANEOUS

6.1 Entire Agreement. This Agreement is an integral part of, is subject to, and is to be interpreted consistently with, the Separation Agreement, and the provisions of the Separation Agreement that do not conflict with the provisions of this Agreement are hereby incorporated by reference; in all other respects this Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior written and oral (and all contemporaneous oral) agreements and understandings with respect to the express subject matter hereof. The provisions of Article 9 of the Separation Agreement (Miscellaneous) not otherwise expressly covered in this Article 5 are hereby incorporated by reference into this Agreement. For purposes of this Section 6.1 only, references herein to this Agreement shall include the Schedules and Exhibits to this Agreement, the “Employees” section of any country’s Asset Purchase Agreement, and Annex A of the Transition Services Agreement.

6.2 Cooperation. Motorola and Freescale agree to, and to cause their Affiliates to, cooperate and use reasonable efforts to promptly (i) comply with all requirements of this Agreement, ERISA, the Code and other laws and regulations which may be applicable to the matters addressed herein, and (ii) subject to applicable law, provide each other with such information reasonably requested by the other Party to assist the other Party in administering its Employee Benefit Plans and complying with applicable law and regulations and the terms of this Agreement.

6.3 Third Party Beneficiaries. This Agreement shall not confer third-party beneficiary rights upon any Transferred Employee or any other person or entity. Nothing in this Agreement shall be construed as giving to any Transferred Employee or other person any legal or equitable right against Motorola or Freescale or their Affiliates. This Agreement shall not constitute a contract of

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employment and will not give any Transferred Employee a right to be retained in the employ of either Motorola or Freescale or any of their Affiliates, unless the Transferred Employee would otherwise have that right under applicable law. With regard to any Transferred Employee who was an employee-at-will prior to becoming a Transferred Employee, this Agreement shall not be deemed to change that at-will status in any way.

6.4 Employment Records. The Parties agree that on or within a reasonable time period after the Distribution Date, Motorola or its Affiliates, as applicable, shall provide to Freescale or its Affiliates, as applicable, all employment records for the Transferred Employees required to be kept under applicable law or necessary for the conduct of the Freescale business, provided (a) that such records shall not include any records to the extent such a transfer would violate applicable law or cause Motorola or its Affiliates, as applicable, to break any agreement with a third party, and (b) that such records are in the possession of Motorola or its Affiliates, as applicable. Motorola and/or the Motorola Affiliates may make, at its expense, and keep copies of such records. After the Distribution Date, as may be necessary for any business purpose of Motorola or its Affiliates or to permit Motorola or its Affiliates to respond to any government inquiry or audit, defend any claim or lawsuit or administer any Employee Benefit Plan, Freescale will or will cause applicable Affiliate to allow Motorola or its Affiliates, as applicable, reasonable access to and, if requested, copies of any records relating to such employees. Motorola shall be responsible for the cost associated with the production and copies of such requested documents. Employment records of employees who terminate employment with Motorola and its Affiliates in the SPS Business prior to the Reorganization Date shall not be transferred to Freescale; provided, that Motorola shall provide Freescale with reasonable access to such records of such employees, and if requested, copies of such records, as may be necessary to permit Freescale to respond to any government inquiry or audit, defend any claim or lawsuit related to any Employee Benefit Plan, or for any business purpose of Freescale. Freescale shall be responsible for the cost associated with the production and copies of such requested documents. Freescale acknowledges that Motorola is under no obligation to retain these records for a period of time which exceeds Motorola’s internal document retention policy, or applicable law, whichever is greater.

6.5 Additional Transferred Employees. Unless Motorola and Freescale otherwise mutually agree in writing, for the period beginning on the Reorganization Date and ending on the second anniversary thereof, neither Freescale nor Motorola will, nor will they permit their applicable Affiliates to, employ any employee of the other or of the other’s Affiliates. This limitation applies to any employee of Motorola or Freescale or their Affiliates (i) as of the Reorganization Date or (ii) who becomes employed by Motorola or Freescale or their Affiliates at any time during this two-year period. This limitation does not apply to any employee involuntarily separated from employment by Motorola or Freescale or their Affiliates, but it does apply to any employee who voluntarily terminates employment.

6.6 Breaches, Indemnification and Termination. Except as set forth in Article 5 and Section 6.4 above, the sole and exclusive remedy for any breach of a covenant or agreement set forth herein shall be as set forth in Article 8 of the Separation Agreement. More specifically, any breach of a covenant or agreement set forth hereon shall be subject to the limitations set forth in, and resolved in accordance with the terms of Articles 8 and 9 of the Separation Agreement. This Agreement shall terminate upon termination of the Separation Agreement as set forth in Article 9 of the Separation Agreement.

*     *     *

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SIGNATURE PAGE TO THE EMPLOYEE MATTERS AGREEMENT

IN WITNESS WHEREOF, this Employee Matters Agreement has been executed by the Parties as of the date set forth above.

MOTOROLA, INC.
By:	/s/ Donald F. McLellan
Title:	Corporate Vice President
FREESCALE SEMICONDUCTOR, INC.
By:	/s/ John Torres
Title:	Senior Vice President and General Counsel

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EX-10.(D)

EXHIBIT 10 (d)

INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

THIS INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT (this “Agreement”) is entered into as of April 4, 2004 (the “Effective Date”) between Motorola, Inc., a Delaware corporation (“Motorola”), and Freescale Semiconductor, Inc., a Delaware corporation (“Freescale”). Capitalized terms used in this Agreement and not otherwise defined herein will have the meanings ascribed to such terms in that certain Master Separation and Distribution Agreement between Motorola and Freescale dated as of April 4, 2004 (the “Master Separation and Distribution Agreement”).

RECITALS

WHEREAS, Motorola has determined that it would be appropriate and desirable to separate the SPS Business from Motorola;

WHEREAS, in connection with the separation of the SPS Business from Motorola, Motorola desires to contribute or otherwise transfer, and to cause certain of its Subsidiaries to contribute or otherwise transfer, certain Assets and Liabilities associated with the SPS Business, including the stock or other equity interests of certain of Motorola’s Subsidiaries dedicated to the SPS Business, to Freescale and certain of Freescale’s Subsidiaries (the “Contribution”);

WHEREAS, as part of such Contribution, Motorola desires to contribute or otherwise transfer and assign, and to cause certain of its Subsidiaries to contribute or otherwise transfer and assign, certain Intellectual Property of the Motorola Group associated with the SPS Business prior to the Effective Date;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

AGREEMENT

1. DEFINITIONS

1.1 “Affiliate” of any specified Person means any other Person directly or indirectly “controlling,” “controlled by,” or “under common control with” (within the meaning of the Securities Act), such specified Person; provided, however, that for purposes of this Agreement, unless this Agreement expressly provides otherwise, the determination of whether a Person is an Affiliate of another Person will be made assuming that no member of the Motorola Group is an Affiliate of any member of the Freescale Group.

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1.2 “Assigned Copyrights” means: (a) all Copyrights in and to the Assigned Technology and other copyrightable works identified in Exhibit A; (b) all renewals and extensions thereof; and (c) all rights with respect to such Copyrights.

1.3 “Assigned Intellectual Property” has the meaning set forth in Section 2.1 (Assigned Intellectual Property).

1.4 “Assigned Mask Works” means: (a) those Mask Works fixed by Motorola that are embodied exclusively in an SPS Product and any mask work protection available to Motorola in those Mask Works; and (b) all rights with respect to such Mask Works.

1.5 “Assigned Patents” means: (a) all Patents set forth on Exhibit A; (b) all inventions claimed or described in such Patents; (c) all divisions, renewals, reissues, continuations, extensions, and continuations-in-part of the foregoing Patents, (d) any Patents in the United States and anywhere else in the world and Patent applications that have been or may be granted or filed, respectively, with respect to those inventions, including without limitation all foreign Patents that may claim priority based on and correspond to the Patents listed in Exhibit A; and (e) all rights with respect to such Patents.

1.6 “Assigned Technology” means any and all portions of Corporation Technology (other than Assigned Mask Works): (a) used exclusively or held for use exclusively in the SPS Business; (b) the Technology set forth on Exhibit A; and (c) all rights with respect to such Technology.

1.7 “Assigned Trademarks” means: (a) the Trademarks identified on Exhibit A; (b) all goodwill associated with the business related to such Trademarks; and (c) all rights with respect to such Trademarks.

1.8 “Copyrights” means: (a) any rights in original works of authorship fixed in any tangible medium of expression as set forth in 17 U.S.C. § 101 et. seq.; (b) all registrations and applications to register the foregoing anywhere in the world; (c) all foreign counterparts and analogous rights anywhere in the world; and (d) all rights in and to any of the foregoing.

1.9 “Corporation Technology” means any and all Technology that exists as of the Effective Date and that, immediately prior to the Effective Date, is owned by Motorola or any of its Affiliates, including any of its business units and divisions. The term includes any and all Technology owned or controlled by any Motorola Affiliates under which Motorola or any of its Affiliates has the right to grant any of the assignments of the type and on the terms granted in this Agreement.

1.10 “Freescale Group” means Freescale, each Person that Freescale directly or indirectly controls (within the meaning of the Securities Act) immediately after the Effective Date, and each other Person that becomes an Affiliate of Freescale after the Effective Date.

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1.11 “Group” means either the Motorola Group or the Freescale Group, as the context requires.

1.12 “Intellectual Property” means all rights in Copyrights, Patents, Mask Works, Trademarks, Technology and any other proprietary rights relating to intangible property anywhere in the world, and all registrations and applications related to any of the foregoing and analogous rights thereto anywhere in the world.

1.13 “Mask Work” means: (a) any mask work, registered or unregistered, as defined in 17 U.S.C. §901; (b) all registrations and applications to register the foregoing anywhere in the world; (c) all foreign counterparts and analogous rights anywhere in the world (including, without limitation, semiconductor topography rights); and (d) all rights in and to any of the foregoing.

1.14 “Motorola Group” means Motorola and each Person that is an Affiliate of Motorola (other than any member of the Freescale Group) immediately after the Effective Date, and each other Person that becomes an Affiliate of Motorola after the Effective Date.

1.15 “Patents” means: (a) patents and patent applications, worldwide, including all divisions, continuations, continuing prosecution applications, continuations in part, reissues, renewals, reexaminations, and extensions thereof and any counterparts worldwide claiming priority therefrom; utility models, design patents, patents of importation/confirmation, and certificates of invention and like statutory rights; and (b) all right in and to any of the foregoing.

1.16 “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency, or political subdivision thereof.

1.17 “Registered Intellectual Property” means Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by any governmental or quasi-governmental agency or non-governmental registrar (whether provisional, supplemental, or otherwise), anywhere in the world.

1.18 “Software” means computer programs and systems, whether embodied in software, firmware or otherwise, including, software compilations, software implementations of algorithms, software tool sets, compilers, and software models and methodologies (regardless of the stage of development or completion) including any and all: (a) media on which any of the foregoing is recorded; (b) forms in which any of the foregoing is embodied (whether in source code, object code, executable code or human readable form); and (c) translation, ported versions and modifications of any of the foregoing.

1.19 “SPS Product” means any product that, immediately prior to the Effective Date, is identified as a product of the Motorola Semiconductor Products Sector as set forth in the pti code listing for the Semiconductor Products Sector excluding those products set forth on Exhibit I.

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1.20 “Technology” means any and all technical information, Software, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, knowledge, know-how, trade secrets invention disclosures or other data including works subject to Copyrights and Mask Works (but does not include Trademarks or Patents).

1.21 “Trademarks” means: (a) trademarks, service marks, logos, trade dress and trade names, and domain names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise); (b) all registrations and applications to register the foregoing anywhere in the world; (c) all goodwill associated therewith; and (e) all rights in and to any of the foregoing.

2. ASSIGNMENT AND TRANSFER OF INTELLECTUAL PROPERTY

2.1 Assigned Intellectual Property. In accordance with this Agreement, Motorola hereby sells, assigns, conveys, transfers and agrees to deliver to Freescale, and Freescale hereby acquires from Motorola and the members of the Motorola Group, all right, title and interest in the United States and throughout the world of Motorola and the members of the Motorola Group in and to the following (collectively, the “Assigned Intellectual Property”):

(a) all Assigned Patents, Assigned Copyrights, Assigned Trademarks, Assigned Mask Works and Assigned Technology including, without limitation, the Intellectual Property listed and described in Exhibit A, and all tangible embodiments of any of the foregoing, in any form and in any media, in the possession of any member of the Motorola Group or other Persons engaged or retained by any member of the Motorola Group, subject to all licenses and covenants not to assert with respect to any of the foregoing entered into prior to the Effective Date;

(b) the exclusive right to grant licenses and rights under and with respect to any of the Intellectual Property referenced in Section 2.1(a), and to sue for any infringement occurring before or after the Effective Date as well as all statutory, contractual and other claims, demands, and causes of action for royalties, fees, or other income from, or infringement, misappropriation or violation of, any of the foregoing, and all of the proceeds from the foregoing that are accrued and unpaid as of, and/or accruing after, the Effective Date (except with respect to certain revenue sharing arrangements set forth in Exhibit B2 to the Master Intellectual Property License Agreement between Motorola and Freescale dated on or about the Effective Date with respect to certain “BGA Patents” described in such agreement); and

(c) the exclusive right to apply for and obtain statutory rights and registrations with respect to any Intellectual Property referenced in Section 2.1(a), including without limitation any Intellectual Property: (i) conceived, developed or reduced to practice prior to the Effective Date solely by individuals who were Motorola employees and become Freescale employees after the Effective Date, even if the applicable Freescale employment agreement is not signed by such individuals (“Transferred Employees”), and (ii) unless otherwise agreed by

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the parties, conceived, developed or reduced to practice solely by Transferred Employees after the Effective Date, in the United States and anywhere else in the world.

2.2 Mandatory Laws. If and to the extent that, as a matter of law in any jurisdiction, ownership, title, or any rights or interest in or to any of the Assigned Intellectual Property cannot be assigned as provided in Section 2.1 (Assigned Intellectual Property) (i) Motorola irrevocably agrees to assign and transfer, and hereby assigns and transfers to Freescale all rights (including, without limitation, all economic and commercialization rights) that can be assigned pursuant to Section 2.1 (Assigned Intellectual Property) to the fullest extent permissible; and (ii) Motorola irrevocably agrees to grant, and hereby grants, Freescale an unlimited (except as provided otherwise in the Intellectual Property License Agreement), exclusive, irrevocable, worldwide, perpetual, royalty-free license to use, exploit and commercialize in any manner now known or in the future discovered and for whatever purpose, any rights to Assigned Intellectual Property that cannot be assigned as contemplated by Section 2.1 (Assigned Intellectual Property).

2.3 Supplemental Document Deliveries. On the Effective Date, each of Motorola and Freescale shall deliver to the other all of the documents and instruments included below to be duly executed where appropriate by the applicable party(ies) and notarized where indicated in the exhibits to this Agreement: (i) a bill of sale substantially in the form attached as Exhibit B (the “Bill of Sale”); (ii) the Patent Assignment, Copyright Assignment, Trademark Assignment, and Domain Name Assignment (substantially in the form attached as Exhibit C, Exhibit D, Exhibit E, and Exhibit F, respectively, including any foreign counterparts thereto); and (iii) such other documents as the either party or its counsel may reasonably request with respect to the Assigned Intellectual Property.

2.4 Certain Trademark Rights. With respect to the composite Trademarks specifically identified on Exhibit H (the “Designated Composite Marks”), Motorola hereby agrees that it shall expressly abandon its rights in and to its registrations and pending trademark application for such Designated Composite Marks and shall not contest or otherwise take any action to prevent or impede Freescale from filing applications to register Trademarks which include components of the Designated Composite Marks that do not include as any element or component thereof: (a) the “MOTOROLA” name or Trademark; (b) the M in a Circle Design Trademark (c) any other Trademark of Motorola that is not an Assigned Trademark; or (d) any Trademark confusingly similar to either of the foregoing. For clarity, the foregoing does not constitute an assignment or transfer of (or an agreement to assign or transfer) any elements of any of the Designated Composite Marks (which shall be assigned solely to the extent such elements constitute Assigned Trademarks).

3. TECHNOLOGY ACCESS AND KNOWLEDGE TRANSFER

3.1 Access and Transfer. During the period beginning on the Effective Date and ending on June 1, 2005 (the “Assigned IP Transfer Period”): (a) Motorola shall deliver to Freescale or its designee all tangible embodiments of the Assigned Intellectual Property and all records and documentation relating thereto, including but not limited to (i) the Software included in the Assigned Intellectual Property, and (ii) all files, records, notes and correspondence with

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respect to the prosecution, registration and maintenance of any Registered Intellectual Property; and (b) the parties shall undertake training, debriefing and other knowledge transfer activities described in the knowledge transfer plan set forth on Exhibit G (Assigned IP Transfer Plan) in accordance with the schedule set forth thereon. In addition, during the Assigned IP Transfer Period, each party shall have the right to access and to copy any and all portions of the Assigned Intellectual Property in possession of the other party; provided, however, that any member of the Freescale Group taking possession of facilities containing certain Assigned Intellectual Property shall constitute delivery of such Assigned Intellectual Property. Such access and copying shall be in accordance with a reasonable request and schedule to be mutually agreed upon between the party in possession of the Assigned Intellectual Property that is requested and the requesting party. All costs associated with the assembling, copying and delivering of such Assigned Intellectual Property shall be borne by the requesting party.

3.2 Export Control. Freescale hereby acknowledges that the Assigned Technology is subject to export controls under the laws and regulations of the United States, including the Export Administration Regulations, 15 C.F.R. Parts 730-774. In the purchase, resale and exploitation of any or all Assigned Technology, Freescale and each member of the Freescale Group shall comply strictly with all such United States export controls, and, without limiting the generality of this Section 3.2 (Export Control), Freescale and each member of the Freescale Group shall not export, reexport, transfer or divert any of the Assigned Technology, and technical data pertaining to such Assigned Technology, or any direct product thereof to any destination, end-use or end-user that is prohibited or restricted under such United States export control laws and regulations, except as specifically authorized by the United States Department of Commerce.

4. NO REPRESENTATIONS OR WARRANTIES

FREESCALE (ON BEHALF OF ITSELF AND EACH MEMBER OF THE FREESCALE GROUP) ACKNOWLEDGES AND AGREES THAT: (A) NO MEMBER OF THE MOTOROLA GROUP IS MAKING IN THIS AGREEMENT (OR ANY OTHER AGREEMENT CONTEMPLATED BY THIS AGREEMENT OR OTHERWISE) ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION, QUALITY, MERCHANTABILITY OR FITNESS OF ANY ASSIGNED INTELLECTUAL PROPERTY; (B) ALL SUCH ASSIGNED INTELLECTUAL PROPERTY SHALL BE TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS; AND (C) FREESCALE AND ITS AFFILIATES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN IT OR THEM GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, PLEDGE, LIEN, CHARGE, CLAIM OR OTHER ENCUMBRANCE OF ANY NATURE WHATSOEVER.

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5. MISCELLANEOUS

5.1 Governing Law. The internal laws of the State of Delaware (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of or in connection with this Agreement and its exhibits and schedules (whether arising in contract, tort, equity or otherwise).

5.2 Jurisdiction. If any Dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group members to irrevocably): (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Delaware; (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient; and (c) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

5.3 Dispute Resolution.

(a) Amicable Resolution –

(i) Motorola and Freescale mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto or thereto. In furtherance thereof, in the event of any dispute or disagreement (a “Dispute”) between any Motorola Group member and any Freescale Group member as to the interpretation of any provision of this Agreement (or the performance of obligations hereunder), the matter, upon written request of either party, will be referred for resolution to a steering committee established pursuant to this Section 5.3(a) (Amicable Resolution) (the “Steering Committee”). The Steering Committee will have eight (8) members, four (4) of whom will be appointed by Motorola and four (4) of whom will be appointed by Freescale. Each of Motorola and Freescale will use its good faith efforts to avoid replacing the initial members of the Steering Committee for the first year after the Effective Date. Thereafter, Motorola and Freescale will, to the extent practicable, honor the other party’s reasonable objections to any replacements of Steering Committee members. While any person is serving as a member of the Steering Committee, such person may not designate any substitute or proxy for purposes of attending or voting at a Steering Committee meeting. Notwithstanding the foregoing, unless otherwise specifically agreed upon by the parties, the members comprising the steering committee established for purposes of resolving Disputes under the Master Separation and Distribution Agreement will constitute the Steering Committee for purposes of resolving Disputes under this Agreement. The Steering Committee will make a good faith effort to promptly resolve all Disputes referred to it. Steering Committee decisions made with the consent of at least three (3) Freescale members and at least three (3) Motorola members will be binding on Motorola and Freescale. If the Steering Committee does not agree to a resolution of a Dispute within thirty (30) days after the reference of the matter to it, each of Motorola and Freescale will be free to exercise the remedies available to it under applicable law, subject to

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Section 5.3(b) (Mediation and Alternate Dispute Resolution). Notwithstanding anything to the contrary in this Section 5 (Miscellaneous), any amendment to the terms of this Agreement may only be effected in accordance with Section 5.10 (Amendment).

(ii) Between the Effective Date and the first anniversary of the Effective Date, the Steering Committee will hold meetings every six (6) weeks on dates established at the organizational meeting of the Steering Committee, which will be held as promptly as practicable after the Effective Date. Such meeting dates may be rescheduled by the Steering Committee if it becomes reasonably impracticable to hold such a meeting. After the first anniversary of the Effective Date, the Steering Committee will hold regularly scheduled meetings as determined by the Steering Committee.

(b) Mediation and Alternate Dispute Resolution – In the event any Dispute cannot be resolved in a friendly manner as set forth in Section 5.3(a) (Amicable Resolution), the parties intend that such Dispute be resolved by an alternative dispute resolution process (“ADR”). If the Steering Committee is unable to resolve the Dispute as contemplated by Section 5.3(a) (Amicable Resolution), either Motorola or Freescale may demand mediation of the Dispute by written notice to the other, in which case the two parties will select a mediator within ten (10) days after the demand. Neither party may unreasonably withhold consent to the selection of the mediator. The parties may agree to replace mediation with some other form of non-binding ADR such as neutral fact finding or mini-trial. The use of any ADR procedures will not be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either party. Each of Motorola and Freescale will bear its own costs of mediation or other form of ADR, but both parties will share the costs of the mediator or other arbiter equally.

(c) Non-Exclusive Remedy – Nothing in this Section 5.3 (Dispute Resolution) will prevent either Motorola or Freescale from commencing formal litigation proceedings or seeking injunctive or similar relief if: (i) the Dispute has not been resolved within forty-five (45) days after commencement of the applicable ADR process; or (ii) any delay resulting from efforts to mediate such Dispute could result in serious and irreparable injury to either Motorola, Freescale, or any member of either party’s Group.

(d) Commencement of Dispute Resolution Procedure – Notwithstanding anything to the contrary in this Agreement, Motorola and Freescale are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, whether pursuant to this Section 5.3 (Dispute Resolution) or otherwise, and each party will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section5.3(d).

5.4 Notices. Each party giving any notice required or permitted under this Agreement will give the notice in writing and use one of the following methods of delivery to the party to be notified, at the address set forth below or another address of which the sending party has been notified in accordance with this Section 5.1 (Notices): (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States

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of America certified or registered mail, return receipt requested. Notice to a party is effective for purposes of this Agreement only if given as provided in this Section 5.4 (Notices) and shall be deemed given on the date that the intended addressee actually receives the notice.

If to Motorola:	with a copy to:
Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Chief Financial Officer Facsimile: 847.576.1402	Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: General Counsel Facsimile: 847.576.3628
If to Freescale:	with a copy to:
Freescale Semiconductor, Inc. 6501 William Cannon Drive Austin, Texas 78737 Attention: Chief Financial Officer Facsimile: 512.895.8696	Freescale Semiconductor, Inc. 7700 West Parmer Lane Austin, Texas 78729 Attention: General Counsel Facsimile: 512.996.7697

5.5 Binding Effect and Assignment. This Agreement binds and benefits the parties and their respective successors and assigns, neither party may assign any of its rights or delegate any of its obligations under this Agreement without the written consent of the other party which consent may be withheld in its sole and absolute discretion and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, Motorola may assign this Agreement in connection with a merger transaction in which Motorola is not the surviving entity or the sale of all or substantially all of its assets.

5.6 Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement will remain in full force, if the essential terms and conditions of this Agreement for each party remain valid, binding and enforceable.

5.7 Entire Agreement. This Agreement, together with the Ancillary Agreements and each of the exhibits and schedules appended hereto and thereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein and therein. All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained in this Agreement are superseded by this Agreement. In event of any conflict between (a) any provision in the Master Separation and Distribution Agreement or any Contribution Agreement (as defined in the Separation and Distribution Agreement) on the one hand, and (b) any specific provision of this Agreement, on the other hand, pertaining to the subject matter of this Agreement, the specific provisions of this Agreement will control over the provisions in the Master Separation and Distribution Agreement or such Contribution Agreement, as applicable.

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5.8 Counterparts. The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement. The signatures of both parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

5.9 Expenses. Except as otherwise provided in this Agreement, any of the other Ancillary Agreements or any other agreement between the parties contemplated hereby, all costs, fees and expenses of either party in connection with the transactions contemplated by this Agreement will be paid by the party that incurs such costs and expenses.

5.10 Amendment. The parties may amend this Agreement only by a written agreement signed by each party to be bound by the amendment and that identifies itself as an amendment to this Agreement.

5.11 Waiver. The parties may waive a provision of this Agreement only by a writing signed by the party intended to be bound by the waiver. A party is not prevented from enforcing any right, remedy or condition in the party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and remedies in this Agreement is not intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

5.12 Authority. Each of the parties hereto represents to the other that: (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it and its Affiliates in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

5.13 Construction of Agreement.

(a) Where this Agreement states that a party “will” or “shall” perform in some manner or otherwise act or omit to act, it means that the party is legally obligated to do so in accordance with this Agreement.

(b) The captions, titles and headings, and table of contents, included in this Agreement are for convenience only, and do not affect this Agreement’s construction or

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interpretation. When a reference is made in this Agreement to an Article or a Section, exhibit or schedule, such reference will be to an Article or Section of, or an exhibit or schedule to, this Agreement unless otherwise indicated.

(c) This Agreement is for the sole benefit of the parties hereto and the respective Group members of the parties hereto and does not, and is not intended to, confer any rights or remedies in favor of any Person (including any employee or stockholder of Motorola or Freescale) other than the parties signing this Agreement and their respective Group members.

(d) The words “including,” “includes,” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance.

(e) Any reference in this Agreement to the singular includes the plural where appropriate. Any reference in this Agreement to the masculine, feminine or neuter gender includes the other genders where appropriate. For purposes of this Agreement, after the Effective Date, the SPS Business will be deemed to be the business of Freescale and the Freescale Group, and all references made in this Agreement to Freescale as a party which operates as of a time following the Effective Date, will be deemed to refer to all members of the Freescale Group as a single party, where appropriate.

(f) Unless otherwise expressly specified, all references in this Agreement or any Ancillary Agreement to “dollars” or “$” means United States Dollars. If any payment required to be made hereunder is denominated in a currency other than United States Dollars, such payment will be made in United States Dollars and the amount thereof will be computed using Motorola’s P&L rate for the current month.

(a) Any reference in this Agreement to a “member” of a Group means a party to this Agreement or another Person referred to in the definition of Freescale Group or Motorola Group, as applicable.

5.14 Performance. Motorola shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Motorola Group. Freescale shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Freescale Group. Each party further agrees that it will cause its other Group members not to take any action or fail to take any action inconsistent with such party’s obligations under this Agreement or the transactions contemplated hereby. Without limiting the foregoing or anything else in this Agreement, the parties shall cause each member of their respective Group to make such assignments or transfers (or take such other action) as may be necessary to make effective the assignments and transfers under this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by a duly authorized officer on the day and year first above written.

MOTOROLA, INC.
By:	/s/ Jonathan P. Meyer
Name:	Jonathan P. Meyer
Title:	Senior Vice President and Director, Patents, Trademarks and Licensing
FREESCALE SEMICONDUCTOR, INC.
By:	/s/ Ray Burgess
Name:	Ray Burgess
Title:	Corporate Vice President, Director of Strategy

SIGNATURE PAGE TO INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

EX-10.(E)

EXHIBIT 10(e)

INTELLECTUAL PROPERTY LICENSE AGREEMENT

THIS INTELLECTUAL PROPERTY LICENSE AGREEMENT (this “Agreement”) is entered into as of April 4, 2004 (the “Effective Date”) between Motorola, Inc., a Delaware corporation (“Motorola”), and Freescale Semiconductor, Inc., a Delaware corporation (“Freescale”). Capitalized terms used in this Agreement and not otherwise defined will have the meanings ascribed to such terms in Article 1 of this Agreement or in that certain Master Separation and Distribution Agreement between Motorola and Freescale dated as of April 4, 2004 (the “Master Separation and Distribution Agreement”).

RECITALS

WHEREAS, Motorola has determined that it would be appropriate and desirable to separate the SPS Business from Motorola;

WHEREAS, in connection with the separation of the SPS Business from Motorola, Motorola desires to contribute or otherwise transfer, and to cause certain of its Subsidiaries to contribute or otherwise transfer, certain Assets and Liabilities associated with the SPS Business, including the stock or other equity interests of certain of Motorola’s Subsidiaries dedicated to the SPS Business, to Freescale and certain of Freescale’s Subsidiaries (the “Contribution”);

WHEREAS, Freescale and its Subsidiaries desire to receive (and Motorola is willing to grant to Freescale and its Subsidiaries) certain rights under Patents and Non-Patent Intellectual Property retained and owned by Motorola or its Subsidiaries on or after the Effective Date, and Motorola and its Subsidiaries desire to receive (and Freescale is willing to grant to Motorola and its Subsidiaries) certain rights under Patents and Non-Patent Intellectual Property Rights owned by Freescale or its Subsidiaries on or after the Effective Date.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

AGREEMENT

1. DEFINITIONS

1.1 “Affiliate” of any specified Person means any other Person directly or indirectly “controlling,” “controlled by,” or “under common control with” (within the meaning of the Securities Act), such specified Person; provided, however, that for purposes of this Agreement, unless this Agreement expressly provides otherwise, the determination of whether a Person is an Affiliate of another Person will be made assuming that no member of the Motorola Group is an Affiliate of any member of the Freescale Group.

1.2 “Change of Control” means the acquisition of at least fifty percent (50%) of the outstanding voting power of a party to this Agreement by another Person by means of any transaction or series of related transactions including, without limitation, any reorganization, merger, consolidation or tender offer, except where such party’s shareholders of record as constituted immediately prior to such transaction will, immediately after such transaction

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together hold at least fifty percent (50%) of the outstanding voting power of the surviving or acquiring Person in such transaction. Notwithstanding the foregoing or anything in this Agreement to the contrary, neither the IPO nor Distribution will constitute a Change of Control for purposes of this Agreement.

1.3 “Copyrights” means: (a) any rights in original works of authorship fixed in any tangible medium of expression as set forth in the United States Copyright Act, 17 U.S.C. § 101 et. seq.; (b) all registrations and applications to register the foregoing anywhere in the world; (c) all foreign counterparts and analogous rights anywhere in the world; and (d) all rights in and to any of the foregoing.

1.4 “Confidential Information” has the meaning set forth in Section 7.1 (Confidential Information).

1.5 “Corporation Technology” means any and all Technology that exists as of the Effective Date and that, immediately prior to the Effective Date, was owned by Motorola or any of its Affiliates, including any of its business units and divisions. The term includes any and all Technology owned or controlled by any Motorola Affiliate under which Motorola has the right to grant any of the licenses and rights of the type and on the terms granted in this Agreement.

1.6 “Damages” means all losses, claims, demands, damages, Liabilities, judgments, dues, penalties, assessments, fines (civil, criminal or administrative), costs, liens, forfeitures, settlements, fees or expenses (including reasonable attorneys’ fees and expenses and any other expenses reasonably incurred in connection with investigating, prosecuting or defending a claim or Action), of any nature or kind, whether or not the same would properly be reflected on a balance sheet.

1.7 “Derivative(s)” means: (a) for copyrightable or copyrighted material, any translation (including translation into other computer languages), port, modification, correction, addition, extension, upgrade, improvement, compilation, abridgment or other form in which an existing work may be recast, transformed or adapted or which would otherwise constitute a derivative work under the United States Copyright Act; (b) for patentable or patented material, any improvement thereon; and (c) for material which is protected by trade secret law, any new material derived from such existing trade secret material, including new material which may be protected by copyright, patent and/or trade secret law.

1.8 “Development System” means an assembly of one or more Packaged Devices (as defined in Supplement C (Glossary of Technical Elements)) that is: (a) produced in limited quantities to demonstrate the capabilities of Freescale Semiconductor Products; and (b) not an end user product and is not provided for resale; provided, however, that such an assembly will not be deemed to be provided for resale solely due to Freescale’s distribution of such assembly directly or indirectly through distributors for demonstration purposes only.

1.9 “Distribution” has the meaning ascribed to such term in the Master Separation and Distribution Agreement.

1.10 “Essential Patent Claims” means the claims of the Motorola Patents set forth on Exhibit B as well as all other Motorola IC Patent Claims: (a) to the extent that infringement of

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such claims cannot be avoided in remaining compliant with the Wireless Standards, including optional implementations thereof provided for in the Wireless Standards, on technical grounds (but not commercial grounds) taking into account normal technical practice and the state of the art generally available at the time of standardization; or (b) that a member of the Motorola Group has certified, declared or otherwise identified to a standards organization or other public subscription system as being claims that cannot be avoided in remaining compliant with Wireless Standards (as further set forth in subsection (a) above) including, for example, Motorola IC Patent Claims of Patents identified on the website of a standard organization as Patents essential to compliance with a Wireless Standard.

1.11 “First Commercially Offered” means, with respect to a Freescale Wireless Semiconductor Product, the first instance in which a member of the Freescale Group has made available for sampling working Freescale Wireless Semiconductor Products that meet the applicable design specification.

1.12 “Freescale Equipment Patent Claims” means claims of any Freescale Patent other than a Freescale IC Patent Claim.

1.13 “Freescale Group” means Freescale, and each Affiliate of Freescale, including each Person that Freescale directly or indirectly controls (within the meaning of the Securities Act) immediately after the Effective Date, and each other Person that becomes an Affiliate of Freescale after the Effective Date.

1.14 “Freescale IC Patent Claims” means claims of any Freescale Patent to the extent that such claims cover any one or more: (a) Semiconductor Product; (b) method of manufacturing a Semiconductor Product; or (c) Manufacturing Apparatus (as defined in Supplement C (Glossary of Technical Elements)) or method of using or manufacturing a Manufacturing Apparatus.

1.15 “Freescale Indemnified Product” has the meaning set forth in Section 5.3(a) (Obligation to Defend).

1.16 “Freescale Patent” means all Patents other than Motorola Patents, filed for or issued anywhere in the world, that are owned or controlled by any member of the Freescale Group and issued on, or claiming priority from, an application filed anywhere in the world prior to the one (1) year anniversary of the Effective Date, including all Patents assigned to Freescale pursuant to that certain Intellectual Property Assignment Agreement between Motorola and Freescale dated on or about the Effective Date; and with respect to which and to the extent that any member of the Freescale Group has a right, as of the Effective Date or thereafter, to grant the licenses and related rights granted in this Agreement without the payment of royalties or other consideration to third Persons, except for payments to third Persons: (a) for inventions made by said third Persons while engaged by any member of the Freescale Group; and (b) as consideration for the acquisition of such Patents.

1.17 “Freescale Process Technology” means manufacturing process recipes for manufacturing Semiconductor Products and Mask Works developed by or for the Semiconductor Product Sector.

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1.18 “Freescale Technology” means any and all portions of Corporation Technology that were developed by or for, or otherwise acquired by the SPS Business and that relate to Semiconductor Products and the SPS Business, including all:

(a) Technology assigned to Freescale pursuant to that certain Intellectual Property Assignment Agreement between Motorola and Freescale dated on or about the Effective Date; and

(b) Technology licensed to or on behalf of the SPS Business that relate to Semiconductor Products and the SPS Business to the extent any member of the Freescale Group has the right to grant the licenses granted in this Agreement without the payment of royalties or other consideration to third Persons, except for payments to third Persons: (i) for Technology made by said third Persons while engaged by any member of the Freescale Group; and (ii) as consideration for the acquisition of intellectual property rights, applications and registrations with respect to such Technology; and

(c) Licensed Freescale Technology (but excluding all Motorola Technology as well as Technology that Freescale developed or acquired on behalf of the Motorola Business including, for example, custom Semiconductor Products for a specific Motorola business sector).

1.19 “Freescale Wireless Semiconductor Product” means a Wireless Semiconductor Product that is sold by Freescale in the merchant market under a Freescale brand as a standard Freescale product.

1.20 “Group” means either the Motorola Group or the Freescale Group, as the context requires.

1.21 “IPO” has the meaning ascribed to such term in the Master Separation and Distribution Agreement.

1.22 “IPO Effective Date” means the date on which the IPO is consummated.

1.23 “Licensed Field” means the practice of Motorola IC Patent Claims in the: (a) transportation and controller fields – including, for example, telematics applications, navigation systems applications, vehicle assistance applications (for example, aids for power steering and on-board electronics) and industrial and consumer applications; and (b) network and computing fields – including, for example, personal computing applications, computer networking applications, gaming applications and handheld computing applications. The Licensed Field does not include the practice of Motorola IC Patent Claims in Semiconductor Products specifically designed for applications in the Wireless Field.

1.24 “Licensed Freescale Product” has the meaning set forth in Section 4.3(f) (Combination Claims Excluded – Licensed Freescale Product).

1.25 “Licensed Freescale Technology” means that Freescale Technology which, at any time prior to the Effective Date, was embodied in or used in connection with the design, development or manufacture of: (a) any product that Motorola offered for sale other than as a reseller or sales agent of the Semiconductor Products Sector (an “Existing Motorola Product”) or

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was used in connection with the Motorola Business for the design, development or manufacture of such product; provided, however, that Freescale Technology will not be deemed to have been so used or embodied solely as a result of the incorporation of components or other products obtained from Freescale into an Existing Motorola Product; or (b) any Semiconductor Product that was under development by or for Motorola (other than by the Semiconductor Products Sector) as of the Effective Date and offered for sale by Motorola on or before January 1, 2006.

1.26 “Licensed Motorola Technology” means that Motorola Technology (other than Motorola Restricted Technology) which, at any time prior to the Effective Date: (a) was embodied in or used in connection with the design, development or manufacture of (i) any product that the Semiconductor Products Sector offered for sale other than as a reseller or sales agent of Motorola (an “Existing Freescale Product”) or was used in connection with the SPS Business for the design, development or manufacture of such product; provided, however, that Motorola Technology will not be deemed to have been so used or embodied solely as a result of the incorporation of components or other products obtained from Motorola into an Existing Freescale Product, or (ii) any Semiconductor Product that was under development by or for the Semiconductor Products Sector as of the Effective Date and offered for sale by Freescale on or before January 1, 2006; or (b) was used for the internal administration and operation of the SPS Business (e.g., training materials, operational documentation).

1.27 “Licensed Technology” means Licensed Freescale Technology and/or the Licensed Motorola Technology, as applicable.

1.28 “Mask Work” means: (a) any mask work, registered or unregistered, as defined in 17 U.S.C. §901; (b) all registrations and applications to register the foregoing anywhere in the world; (c) all foreign counterparts and analogous rights anywhere in the world (including, without limitation, semiconductor topography rights); and (d) all rights in and to any of the foregoing.

1.29 “Motorola Equipment Patent Claims” means claims of a Motorola Patent other than Motorola IC Patent Claims (including, without limitation, Essential Patent Claims and Non-Essential Patent Claims).

1.30 “Motorola Group” means Motorola and each Person that is an Affiliate of Motorola (other than any member of the Freescale Group) immediately after the Effective Date, and each other Person that becomes an Affiliate of Motorola after the Effective Date.

1.31 “Motorola IC Patent Claims” means claims of any Motorola Patent to the extent that such claims cover any one or more of the following (as defined in Supplement C (Glossary of Technical Elements)): (a) Circuit; (b) Integrated Circuit Structure; (c) Packaged Device; (d) Semiconductor Element; (e) Semiconductive Material; (f) System; (g) Circuit and System employing an Electrical Method; (h) method of manufacturing any of (a) through (g); or (i) Manufacturing Apparatus or a method of using or manufacturing a Manufacturing Apparatus.

1.32 “Motorola Patent” means all Patents (including reissues and reexaminations thereof) other than Freescale Patents, filed for or issued anywhere in the world, that are owned or controlled by any member of the Motorola Group and issued on, or claiming priority from, an

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application filed anywhere in the world prior to the one (1) year anniversary of the Effective Date with respect to which and to the extent that any member of the Motorola Group has a right, as of the Effective Date or thereafter, to grant the licenses and related rights granted in this Agreement without the payment of royalties or other consideration to third Persons, except for payments to third Persons: (a) for inventions made by said third Persons while engaged by any member of the Motorola Group or any Affiliate of Motorola; and (b) as consideration for the acquisition of such Patents.

1.33 “Motorola Restricted Technology” means Celestri Satellite Technology, Iridium Satellite Technology, Teledesic Satellite Technology, iDEN Technology, TETRA Technology, APCO25 Technology, ASTRO Technology and MIRS Technology each as further set forth in the attached Supplement A.

1.34 “Motorola Sector Patents” means the Motorola Patents, if any, listed on or otherwise licensed under the following Supplements with respect to the applicable Motorola business sector, Motorola Software or Motorola laboratory: (a) Supplement B1 – Broadband Communications Sector; (b) Supplement B2 – Commercial, Government and Industrial Solutions Sector; (c) Supplement B3 – Global Telecom Solutions Sector/iDEN; (d) Supplement B4 – Integrated Electronic Systems Sector; (e) Supplement B5 – Personal Communications Sector; and (f) Supplement B6 – Motorola Laboratories and Software.

1.35 “Motorola Sector Technology” means the Motorola Technology listed on or otherwise licensed under the following Supplements with respect to the applicable Motorola business sector, Motorola Software or Motorola laboratory: (a) Supplement B1 – Broadband Communications Sector; (b) Supplement B2 – Commercial, Government and Industrial Solutions Sector; (c) Supplement B3 – Global Telecom Solutions Sector/iDEN; (d) Supplement B4 – Integrated Electronic Systems Sector; (e) Supplement B5 – Personal Communications Sector; and (f) Supplement B6 – Motorola Laboratories and Software.

1.36 “Motorola Technology” means any and all portions of Corporation Technology that were developed by or for, or otherwise acquired by the Motorola Business, including all:

(a) Technology licensed to or on behalf of the Motorola Business to the extent any member of the Motorola Group has the right to grant the licenses granted in this Agreement without the payment of royalties or other consideration to third Persons, except for payments to third Persons: (i) for Technology made by said third Persons while engaged by any member of the Motorola Group or any Affiliate of Motorola; and (ii) as consideration for the acquisition of intellectual property rights, applications and registrations with respect to such Technology; and

(b) Licensed Motorola Technology and Motorola Restricted Technology (but excluding all Freescale Technology).

1.37 “Motorola Wireless Patent Claims” means the claims of those Patents set forth on Exhibit A.

1.38 “Non-Essential Patent Claims” means, with respect to a Wireless Semiconductor Product, Motorola IC Patent Claims (other than Essential Patent Claims) to the extent that such claims would be directly infringed by such Wireless Semiconductor Product.

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1.39 “Non-Patent Intellectual Property Rights” means all rights in Copyrights, Mask Works, Technology and other intangible property anywhere in the world, and all registrations and applications relating to any of the foregoing and analogous rights thereto anywhere in the world, other than rights in Patents and Trademarks.

1.40 “Patents” means: (a) patents and patent applications, worldwide, including all divisions, continuations, continuing prosecution applications, continuations in part, reissues, renewals, reexaminations, and extensions thereof and any counterparts worldwide claiming priority therefrom; utility models, design patents, patents of importation/confirmation, and certificates of invention and like statutory rights; and (b) all right in and to any of the foregoing.

1.41 “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency, or political subdivision thereof. As used in this Agreement, the term “third Person(s)” means a Person that is neither a party to this Agreement nor an Affiliate of a party to this Agreement.

1.42 “Semiconductor Product” means any one or more of the following items (as defined in Supplement C (Glossary of Technical Elements)), whether or not an item is incorporated in more comprehensive equipment: (a) Circuit; (b) Integrated Circuit Structure; (c) Packaged Device; (d) Semiconductor Element; (e) Semiconductive Material; or (f) Circuits employing an Electrical Method; provided, however, that a “Semiconductor Product” does not include an assembly of more than one Packaged Device.

1.43 “Semiconductor Products Sector” means the business unit of Motorola known as the Semiconductor Products Sector prior to the Effective Date.

1.44 “Semiconductor Software” means all Software owned by Freescale and designed solely for use with, or to design, a Semiconductor Product.

1.45 “Software” means computer programs and systems, whether embodied in software, firmware or otherwise, including, software compilations, software implementations of algorithms, software tool sets, compilers, and software models and methodologies (regardless of the stage of development or completion) including any and all: (a) media on which any of the foregoing is recorded; (b) forms in which any of the foregoing is embodied (whether in source code, object code, executable code or human readable form); and (c) translation, ported versions and modifications of any of the foregoing.

1.46 “SPS Business” means: (a) the businesses and operations conducted by the Semiconductor Products Sector of Motorola and its Affiliates (including, for purposes of this definition, any member of the Freescale Group) prior to the Effective Date, including as described in the IPO Registration Statement; and (b) except as otherwise expressly provided in this Agreement, any terminated, divested or discontinued businesses or operations that at the time of such termination, divestiture or discontinuation exclusively related to the SPS Business (as described in the foregoing clause (a)) as then conducted.

1.47 “Technology” means any and all technical information, Software, specifications, drawings, records, documentation, works of authorship or other creative works, ideas,

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knowledge, know-how, trade secrets, invention disclosures or other data including works subject to Copyrights and Mask Works (but does not include Trademarks or Patents).

1.48 “Trademarks” means: (a) trademarks, service marks, logos, trade dress and trade names, and domain names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise); (b) all registrations and applications to register the foregoing anywhere in the world; (c) all goodwill associated therewith; and (d) all rights in and to any of the foregoing.

1.49 “Wireless Equipment” means, collectively or individually, any of the following the function of which is standardized in any of the Wireless Standards (or between which certain interfaces are substantially standardized in any of the Wireless Standards): (a) subscriber terminals (i.e., equipment such as a mobile, transportable or handheld portable unit containing no less than all of the following components: a display, a battery, plurality of keys or other input device, antenna, RF receiver and controller therefore); (b) subscriber modules (i.e., an assembled unit containing no less than all of the following components: an RF receiver, a controller, and necessary interface connections); and (c) infrastructure equipment (i.e., base transceiver stations, base transcoders, base station controllers, mobile service switching centers, operation and maintenance centers, network management centers, location registers, equipment identity registers, authentication centers, test equipment, and equivalent equipment (e.g. radio access network and Node B)).

1.50 “Wireless Field” means the practice of the Motorola IC Patent Claims in Semiconductor Products designed for: (a) wireless telecommunications applications that are compliant with or substantially based upon a Wireless Standard; or (b) broadband wireless communications applications. The Wireless Field does not encompass the practice of Motorola IC Patent Claims in products and components (such as certain multipurpose or programmable products and components) that can be used in applications for the Wireless Field but are not specifically designed for such use.

1.51 “Wireless Semiconductor Product” means a Semiconductor Product specifically designed solely or jointly by or for Freescale for the Wireless Field.

1.52 “Wireless Standards” means: (a) all cellular communication technical specifications adopted as a standard by either a standards development organization (SDO) or a major operator of public subscription systems for in-country requirements (e.g., frequency spectrum availability, interconnection with preexisting telephony networks, etc.), as well as various adjunct protocols to the extent incorporated into such standards, including, but are not limited to, those technical specifications for digital radiotelephone service: (i) promulgated by ETSI and known as the GSM, Pan-European Digital Cellular radiotelephone service (including Personal Communications Network services, presently known as DCS1800 and in the United States PCS1900); (ii) promulgated in the United States by the Telecommunications Industry Association/Electronic Industries Associates (TIA/EIA) and presently known as AMPS (Advanced Mobile Phone System), NAMPS (Narrowband AMPS), TDMA Cellular/PCS – Radio Interface Interim Standards IS-136, IS-137 and IS-138 (including IS-54, IS-55 and IS-56 and PCS 1900 standards JSTD-009, JSTD-010 and JSTD-011); (iii) promulgated by ARIB (formerly RCR) and known as PDC (Personal Digital Cellular); (iv) promulgated by the TIA and known as

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IS-95 IS-95B, RTT MC 1X and 1X Plus and 1Xtreme Code Division Multiple Access services; (v) third generation (3G) cellular standards currently under development and known by such designations including 3GPP, UMTS, WCDMA and CDMA2000; and (vi) fourth generation (4G) cellular communication standards; and (vii) various derivations thereof that do not fundamentally alter the character thereof (e.g., wireless air-interface, framing structure, control, call set-up and connection management); and (b) all technical specifications promulgated or currently under development and known as IEEE 802 wireless network standards (including any and all international versions thereof).

2. TECHNOLOGY ACCESS AND KNOWLEDGE TRANSFER

2.1 Access and Transfer. During the period beginning on the Effective Date and ending on June 1, 2005 (the “Transfer Period”), each party has the right to access and to copy any and all portions of the Licensed Technology in the possession of the other party in accordance with a reasonable request and schedule to be mutually agreed upon by the parties. All costs associated with the assembling, copying and delivering of such Licensed Technology will be borne by the requesting party. Notwithstanding the foregoing, the parties acknowledge and agree that except to the extent otherwise expressly stated on any of Supplement B1 through Supplement B6: (a) Freescale will have no obligation to deliver, provide or make available to Motorola any Freescale Process Technology; and (b) neither party will have any obligation to deliver, provide or make available to the other party any Technology licensed under any of Supplement B1 through Supplement B6.

2.2 Export Control. Each party agrees it and each member of its Group will comply with all applicable import and export laws, rules and regulations with respect to the transfer of any Technology provided to it under this Agreement. Without limiting the generality of the foregoing, each party acknowledges and agrees that such Technology is subject to export controls under the laws and regulations of the United States, including the Export Administration Regulations, 15 C.F.R. Parts 730-774. Each party and the members of its Group will comply strictly with all such United States export controls, and shall not export, re-export, transfer, divert or disclose any Technology provided hereunder, or any direct product thereof, to any destination, end-use or end-user that is prohibited or restricted under such United States export control laws and regulations, except as specifically authorized by the Department of Commerce. If requested by either party, the other party and any other member of such party’s Group agrees to sign written assurances and other export-related documents as may be required for such party or each member of its Group to comply with U.S. export regulations. This Section 2.2 (Export Control) will survive termination of this Agreement for any reason whatsoever.

3. TECHNOLOGY LICENSE TERMS

3.1 Licensed Freescale Technology Grant. Subject to the restrictions specified in this Section 3.1 (Licensed Freescale Technology Grant), and any additional restrictions set forth in the Supplements hereto, Freescale hereby grants to each member of the Motorola Group under

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the Freescale Non-Patent Intellectual Property Rights in the Licensed Freescale Technology a personal, worldwide, perpetual, irrevocable, non-exclusive, non-transferable, royalty-free, paid-up right and license to continue to use any Licensed Freescale Technology for the businesses in which any member of the Motorola Group are now or hereafter engaged to: (a) create Derivatives of the Licensed Freescale Technology; and (b) use, reproduce, distribute, perform and display the Licensed Freescale Technology and Derivatives (made pursuant to subsection (a) above) of the Licensed Freescale Technology. Except as expressly set forth in Section 3.3 (Procurement Rights), no right is granted hereunder to any member of the Motorola Group to sublicense or disclose any of the Licensed Freescale Technology to any third Person, other than the sublicensing of Software in object code form in connection with the sale of products or services of the Motorola Group.

3.2 Licensed Motorola Technology Grant. Subject to the restrictions specified in this Section 3.2 (Licensed Motorola Technology Grant), and any additional restrictions set forth in the Supplements hereto, Motorola hereby grants to each member of the Freescale Group under the Motorola Non-Patent Intellectual Property Rights in the Licensed Motorola Technology a personal, worldwide, perpetual, irrevocable, non-exclusive, non-transferable, royalty-free, paid-up right and license to continue to use any Licensed Motorola Technology for the businesses in which any member of the Freescale Group are now or hereafter engaged to: (a) create Derivatives of the Licensed Motorola Technology; and (b) use, reproduce, distribute, perform and display the Licensed Motorola Technology and Derivatives (made pursuant to subsection (a) above) of the Licensed Motorola Technology. Except as expressly set forth in Section 3.3 (Procurement Rights), no right is granted hereunder to any member of the Freescale Group to sublicense or disclose any of the Licensed Motorola Technology to any third Person, other than the sublicensing of Software in object code form in connection with the sale of products or services of the Freescale Group.

3.3 Procurement Rights.

(a) Subject to the restrictions in this Article 3 (Technology License Terms), and without limiting its other rights hereunder, each party and each member of its Group may sublicense and disclose to any of its suppliers, prospective suppliers or third Person joint developers (under appropriate joint development agreements) the Licensed Technology of the other party solely to the extent reasonably necessary for the procurement by such party of components, subsystems, subassemblies, products and/or services of the businesses of such party. Such disclosure and/or license may only be made for a bona fide business purpose for the benefit of a party hereto.

(b) Each party agrees that it will not make any portion of Licensed Technology of the other party available to any such supplier, prospective supplier, or joint developer except under terms and conditions (including confidentiality, use and disclosure restrictions) normally used by such party to protect its own intellectual property and proprietary information of a similar nature.

(c) The rights granted hereunder to each of the parties under this Section 3.3 (Procurement Rights) or otherwise under this Agreement, may not be exercised by either party in a manner such that the exercise of such party’s procurement rights is a sham to effect the

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licensing of the Licensed Technology of the other party or any portion thereof, to a third Person and not for bona fide business purposes of such party.

(d) Each party agrees that prior to the disclosure of any portion of Licensed Technology of the other party under this Section 3.3 (Procurement Rights), it shall expunge all extraneous proprietary information of the other party.

(e) Nothing in this Section 3.3 (Procurement Rights), will be construed to obligate either party to transfer or provide technical assistance to third Persons with respect to the Technology that it has licensed to the other party under this Agreement.

3.4 Restricted and Sector Technology. Notwithstanding anything to the contrary in this Article 3 (Technology License Terms): (a) each member of the Freescale Group only has the applicable licenses set forth on Supplement B1 – Supplement B6, for the applicable Motorola Sector Technology described therein; and (b) no member of the Freescale Group has any right or license under this Agreement with respect to any of the Motorola Restricted Technology except if and to the extent such right or license is expressly set forth in Supplement B1 – Supplement B6.

3.5 Assignment of Technology Licenses. The licenses granted to the members of the Freescale Group under Section 3.2 (Licensed Motorola Technology Grant) and Section 3.4 (Restricted and Sector Technology) are assignable by Freescale only to the acquirer of all or substantially all of the assets of the SPS Business, and provided that: (a) all such licenses are assigned together (i.e., concurrently and to the same assignee); (b) the assignee expressly assumes in writing acceptable to Motorola all obligations and limitations under this Agreement with respect to such licenses; and (c) such assigned licenses may be exercised by the assignee only in connection with (i) the operation of the SPS Business, the Semiconductor Products and assets of Freescale so sold or disposed of, and (ii) with the authorization or approval of any governmental authority as then may be required. Subject to the foregoing, the Technology rights and licenses granted above shall continue in accordance their terms with respect to the assignee as further set forth in Section 9.2(c). Any assignment or attempted assignment in violation of the foregoing will be null and void.

4. PATENT LICENSE AND NON-ASSERT

4.1 Freescale General Patent Terms.

(a) License (Equipment Patent Claims) – Freescale hereby grants to each member of the Motorola Group a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Freescale Equipment Patent Claims to make, have made, use, sell, offer for sale, and import and otherwise dispose of any products designed substantially by or for any member of the Motorola Group, except Semiconductor Products.

(b) License (IC Patent Claims) – Freescale hereby grants to each member of the Motorola Group a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Freescale IC Patent Claims to: (i) use and have made Semiconductor

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Products designed substantially by or for any member of the Motorola Group; and (ii) sell, offer for sale, and import and otherwise dispose of equipment offered for sale by a member of the Motorola Group that incorporates Semiconductor Products so made.

(c) Covenant Not to Assert – Freescale hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that no member of the Freescale Group will assert any Freescale IC Patent Claims against any member of the Motorola Group or their respective customers or distributors for using, having made, selling, importing or offering for sale any Semiconductor Products embodied in a Motorola product; provided, however, that the aforementioned covenant will not apply to any stand-alone Semiconductor Product component offered for sale or sold as a product except to the extent offered to an equipment manufacturer for use in a Motorola product.

(d) Combination Claims Excluded (Licensed Motorola Product) – The licenses granted in this Section 4.1 (Freescale General Patent Terms) include licenses to convey to any customer of any member of the Motorola Group with respect to Motorola products that are sold or leased by any member of the Motorola Group to such customer, rights to use and resell such products as sold or leased by any member of the Motorola Group; provided, however, that no rights may be conveyed to customers with respect to any claim of a Freescale Patent that is: (i) directed to a combination of a Motorola product with any other product (including any other Motorola products); (ii) directed to a method or process other than a method or process the inventive steps of which are implemented primarily by a Motorola product in the operation of such product, and (iii) directed to a method or process involving the use of a Motorola product to manufacture any other product or to test any such manufactured product.

4.2 Freescale Supplier Patent Covenants.

(a) Covenant Not to Assert (Supplier Incorporated Motorola Technology) – Freescale hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that no member of the Freescale Group will assert any Freescale Patent against any supplier or vendor to any member of the Motorola Group for making, having made, selling, importing or offering for sale any product supplied to any member of the Motorola Group to the extent the alleged infringement relates solely to Motorola Technology incorporated into such product.

(b) Covenant Not to Assert (Motorola Purchased Products) – Freescale hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that no member of the Freescale Group will assert any Freescale IC Patent Claims against third Persons selling Semiconductor Products to any member of the Motorola Group for direct infringement of the Freescale IC Patent Claims by such Semiconductor Products sold for use in Motorola products; provided, however, that the foregoing covenant will not apply if:

(i) any member of the Freescale Group is asserting Freescale IC Patent Claims in conjunction with the Freescale Group’s general portfolio of Patents against such third Person;

(ii) any member of the Freescale Group is asserting such Freescale IC Patent Claims in a patent cross-licensing negotiation to obtain licenses under the third Person’s

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semiconductor patents for Freescale Semiconductor Products in response to such third Person’s claim or demand that such a license is required and, if such third Person declines to take a license to such Freescale IC Patent Claims, also where any member of the Freescale Group subsequently files a lawsuit against such third Person for infringement of such Freescale IC Patent Claims; provided, however, that (A) the applicable member(s) of the Freescale Group agree not to seek an injunction against the continued sale by the third Person of such Semiconductor Products to any member of the Motorola Group; and (B) members of the Freescale Group may seek monetary damages for such infringement; or

(iii) Such third Person has a written agreement with any member of the Freescale Group in which such third Person has licensed the Freescale IC Patent Claims or in which such third Person may elect to receive a license to such Freescale IC Patent Claims.

(c) License Offer (Resold Custom Products) - Freescale agrees that if a third Person selling Semiconductor Products designed substantially by or for any member of the Motorola Group requests a license from Freescale under the Freescale IC Patent Claims, Freescale will offer to license such claims on fair and reasonable terms and conditions (including payment of royalties or other payments in consideration for such license) to be negotiated between Freescale and such third Person in good faith. For clarity, if such third Person refuses to accept such terms and conditions for a license under the relevant Freescale IC Patent Claims during a commercially reasonable negotiation period, then members of the Freescale Group will be free to exercise legal rights otherwise available to them under the relevant Freescale IC Patent Claims.

4.3 Motorola General Patent Terms.

(a) License (IC Patent Claims) – Motorola hereby grants to each member of the Freescale Group a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Motorola IC Patent Claims to make, have made, use, sell, offer for sale, import and otherwise dispose of Semiconductor Products, Semiconductor Software and Manufacturing Apparatus in the Licensed Field.

(b) License (Motorola Wireless Patent Claims) – Motorola hereby grants to each member of the Freescale Group a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Motorola Wireless Patent Claims to make, have made, use, sell, offer for sale, import and otherwise dispose of Freescale Wireless Semiconductor Products and Manufacturing Apparatus.

(c) License (Development Systems) – Motorola hereby grants to each member of the Freescale Group a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Motorola Equipment Patent Claims to make, have made, use, sell, offer for sale, import and otherwise dispose of Development Systems.

(d) Covenant Not to Assert (Wireless Semiconductor Product) – Motorola hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that no member of the Motorola Group will assert any Motorola Patents against any member of the Freescale

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Group or their respective distributors for making, having made, using, selling, importing or offering for sale Wireless Semiconductor Products.

(e) Covenant Not to Assert (Foundry Service Rights) — Motorola hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that no member of the Motorola Group will assert any Motorola IC Patent Claims against any member of the Freescale Group or their respective distributors for: (i) making Semiconductor Products designed solely or jointly by or for a third Person, and (ii) selling, offering to sell, importing or otherwise disposing of such Semiconductor Products solely to such third Person.

(f) Combination Claims Excluded (Licensed Freescale Products) — The licenses granted in this Section 4.3 (Motorola General Patent Terms) include licenses to convey to any customer of any member of the Freescale Group, with respect to Manufacturing Apparatus, Development System, Semiconductor Products, Semiconductor Software and Freescale Wireless Semiconductor Products (collectively, the “Licensed Freescale Products”) which are sold or leased by any member of the Freescale Group to such customer, rights to use and resell such products as sold or leased by any member of the Freescale Group; provided, however, that no rights may be conveyed to customers with respect to any claim of a Motorola Patent which is: (i) directed to a combination of a Licensed Freescale Product with any other product (including any other Licensed Freescale Products); (ii) directed to a method or process other than a method or process the inventive steps of which are implemented primarily by a Licensed Freescale Product in the operation of such product; or (iii) directed to a method or process involving the use of a Licensed Freescale Product to manufacture any other product and to test any such manufactured product.

4.4 Motorola Customer Patent Covenants.

(a) Non-Essential Patent Covenants – Motorola hereby grants a personal, worldwide, non-exclusive, non-transferable covenant that:

(i) for a period of five (5) years after the Effective Date (the “Wireless Transition Period”) no member of the Motorola Group will assert Non-Essential Patent Claims against a third Person purchasing Freescale Wireless Semiconductor Products from any member of the Freescale Group or its distributors for direct infringement of such Non-Essential Patent Claims by Freescale Wireless Semiconductor Products sold by any member of the Freescale Group to such third Person and incorporated by such third Person into Wireless Equipment; and

(ii) no member of the Motorola Group will assert Non-Essential Patent Claims against a third Person purchasing Freescale Wireless Semiconductor Products from any member of the Freescale Group or its distributors for direct infringement of such Non-Essential Patent Claims by any Freescale Wireless Semiconductor Product sold after the Wireless Transition Period that was First Commercially Offered by any member of the Freescale Group prior to June 1, 2006 (the “Wireless Transition Products”) and incorporated by such third Person into Wireless Equipment;

provided, however, that the foregoing covenants shall not apply: (A) where the applicable third Person has a written agreement as of the Effective Date with any member of the Motorola Group

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in which such third Person has licensed Non-Essential Patent Claims or in which such third Person may elect to receive a license to such Non-Essential Patent Claims; or (B) to a product design or portion thereof provided by such third Person and embodied in the Freescale Wireless Semiconductor Product (by way of example and not limitation, the manufacturing process employed by Freescale and any ASIC library tool or standard cell of Freescale that is incorporated into a Freescale Wireless Semiconductor Product shall be within the scope of the non-assert, while a circuit or logic design provided by the third Person and embodied in such Freescale Wireless Semiconductor Product shall be outside the scope of the non-assert).

(b) Non-Essential Patent Covenant Termination – Without limiting anything in this Article 4 (Patent License and Non-Assert) the covenants set forth in Section 4.4(a) (Non-Essential Patent Covenants) shall automatically terminate with respect to a third Person in response to such third Person’s: (i) claim or demand that a license is required under any of its Patents; or (ii) seeking a declaratory judgment of invalidity or non-infringement with respect to any Patent of any member of the Motorola Group. For clarification, a third Person’s assertion of a claim or demand of a Patent against a member of the Motorola Group in response to a member of the Motorola Group first asserting Essential Patent Claims against such third Person will not cause the covenants in Section 4.4(a) (Non-Essential Patent Covenants) to terminate, unless and until such third Person asserts in litigation a claim of patent infringement against any member of the Motorola Group.

(c) Non-Essential Patent Covenant Damages – The parties agree that:

(i) upon termination of the covenants set forth in Section 4.4(a) (Non-Essential Patent Covenants) pursuant to Section 4.4(b) (Non-Essential Patent Covenant Termination), members of the Motorola Group may seek damages from the applicable third Person for infringement of Non-Essential Patent Claims; provided, however, that no damages will accrue with respect to accused Wireless Equipment that incorporates a Freescale Wireless Semiconductor Product and that is sold by such third Person prior to the termination of such covenants as set forth in Section 4.4(b) (Non-Essential Patent Covenant Termination); and

(ii) except to the extent otherwise limited by the covenant set forth in Section 4.4(a)(ii), upon expiration of the covenant set forth in Section 4.4(a)(i), members of the Motorola Group may seek damages from applicable third Persons for infringement of Non-Essential Patent Claims; provided, however that no damages will accrue with respect to any accused Wireless Equipment that is sold by such third Person prior to the expiration of the Wireless Transition Period set forth in Section 4.4(a)(i).

(d) Non-Essential Patent Covenant Assertions – Notwithstanding anything in this Agreement to the contrary, after the expiration of the Wireless Transition Period it shall not constitute a breach of the covenant set forth in Section 4.4(a)(ii) if a member of the Motorola Group asserts a Non-Essential Patent Claims against a third Person purchasing Freescale Wireless Semiconductor Products from any member of the Freescale Group or its distributors for direct infringement of such Non-Essential Patent Claims by any Wireless Transition Products incorporated into Wireless Equipment; provided, however, that such member of the Motorola Group ceases to assert such Non-Essential Patent Claims with respect to Wireless Equipment for

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which Freescale provides Motorola sufficient documentation that the Freescale Wireless Semiconductor Product incorporated therein is a Wireless Transition Product.

4.5 Assignment of Patent Rights.

(a) The licenses granted to the members of the Freescale Group under Section 4.3(a) (License – IC Patent Claims), Section 4.3(b) (License – Motorola Wireless Patent Claims) and Section 4.3(c) (License – Development Systems) are assignable by Freescale only to the acquirer of all or substantially all of the assets of the SPS Business, and provided that: (i) all such licenses are assigned together (i.e., concurrently and to the same assignee); (ii) the assignee expressly assumes in writing acceptable to Motorola all obligations and limitations under this Agreement with respect to such licenses; and (iii) such assigned licenses may be exercised by the assignee only in connection with (A) the operation of the SPS Business, the Semiconductor Products and assets of Freescale so sold or disposed of, and (B) with the authorization or approval of any governmental authority as then may be required. Further, the rights and licenses in favor of the assignee will be the same as those as set forth in Section 9.2(a) as applicable, depending on whether the assignor remains a separately identifiable business.

(b) Freescale may not assign any of its rights or privileges under Section 4.4 (Motorola Customer Patent Covenants) or Section 4.3(d) (Covenant Not to Assert – Wireless Semiconductor Product) without the prior written consent of Motorola which consent may be withheld in its sole and absolute discretion. The covenants not to sue as well as the rights and obligations of Section 4.4 (Motorola Customer Patent Covenants) and Section 4.3(d) (Covenant Not to Assert – Wireless Semiconductor Product) are personal and will not be assignable or transferable in the event of a Change of Control of Freescale (whether by operation of law or otherwise), without Motorola’s prior written consent, which consent may be withheld in its sole and absolute discretion.

(c) Any assignment or attempted assignment in violation of the foregoing will be null and void.

(d) If any member of the Motorola Group or Freescale Group, respectively, assigns to a third Person any Motorola Patent or Freescale Patent that is otherwise subject to any of the licenses or covenants set forth in Article 4 (Patent License and Non-Assert) then: (i) notwithstanding such assignment, such assigned Motorola Patent or Freescale Patent, as applicable, shall remain subject to the applicable licenses and covenants set forth in Article 4 (Patent License and Non-Assert); and (ii) the assigning party shall notify the third Person assignee that the assigned Motorola Patent or Freescale Patent, as applicable, shall remain subject to the applicable licenses and covenants set forth in Article 4 (Patent License and Non-Assert).

4.6 Sector Patent License. Notwithstanding anything to the contrary in this Article 4 (Patent License and Non-Assert), each member of the Freescale Group only has the applicable licenses set forth on Supplement B1 – Supplement B6, for the applicable Motorola Sector Patents, if any.

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4.7 Term of Patent Licenses and Covenants. Except as expressly set forth above, the term of the licenses and covenants granted under this Article 4 (Patent License and Non-Assert), are for the lives of the applicable Patents unless earlier terminated in accordance with this Agreement.

4.8 Motorola Restricted Technology. Notwithstanding anything to the contrary in this Article 4 (Patent License and Non-Assert), no member of the Freescale Group has any right or license under this Agreement with respect to any Patents related to the Motorola Restricted Technology except if and to the extent such right or license is expressly set forth in Supplement B1 – Supplement B6.

4.9 Non-Exhaustion of Patents.

(a) For the avoidance of doubt, Freescale agrees that the covenants not to sue of Section 4.3(d) (Covenant Not to Assert — Wireless Semiconductor Product) and Section 4.4 (Motorola Customer Patent Covenants): (i) extend only to the members of the Freescale Group and their respective distributors; (ii) do not constitute a license; and (iii) do not constitute an unconditional sale or a consent to an unconditional sale by Freescale that would exhaust Motorola’s patent rights as to third parties with respect to any Motorola Patent that is incorporated into, or would otherwise be infringed by the use of Wireless Semiconductor Products. In the event that, despite the parties’ intent, under the laws of any jurisdiction covenants not to sue of the nature provided in Section 4.3(d) (Covenant Not to Assert — Wireless Semiconductor Product) or Section 4.4 (Motorola Customer Patent Covenants) would exhaust Motorola’s patent rights in any country, then Motorola and Freescale agree to meet promptly to negotiate in good faith a mutually acceptable substitute provision for such jurisdictions.

(b) For the avoidance of doubt, Motorola agrees that the covenants not to sue of Section 4.1(c) (Covenant Not to Assert) and Section 4.2 (Freescale Supplier Patent Covenants): (ii) extend only to the members of the Motorola Group and their respective customers or distributors; (ii) do not constitute a license; and (iii) do not constitute an unconditional sale or a consent to an unconditional sale by Motorola that would exhaust Freescale’s patent rights as to third parties with respect to any Freescale Patent that is incorporated into, or would otherwise be infringed by the manufacture or sale of Semiconductor Products or any other product. In the event that, despite the parties’ intent, under the laws of any jurisdiction covenants not to sue of the nature provided in Section 4.1(c) (Covenant Not to Assert) or Section 4.2 (Freescale Supplier Patent Covenants) would exhaust Freescale’s patent rights in any country, then Freescale and Motorola agree to meet promptly to negotiate in good faith a mutually acceptable substitute provision for such jurisdictions.

5. RETENTION, MAINTENANCE AND DEFENSE OF RIGHTS

5.1 Retained Rights. Neither party grants any license (or makes any covenant not to assert) other than as expressly set forth in Article 3 (Technology License Terms), Article 4 (Patent License and Non-Assert) and Supplements B1 thought Supplement B6. Subject only to such licenses and covenants, each party retains all right, title and interest (including all Patents

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and Non-Patent Intellectual Property Rights), in and to its respective Technology, Patents and Non-Patent Intellectual Property Rights. Without limiting the foregoing, the party granting the license or non-assert with respect to certain Technology or Patents will have the sole right (but not the obligation) to file for, prosecute and maintain any applications, registrations or recordation thereof and to bring any action to enforce or otherwise seek to abate any infringement thereof.

5.2 No Representations or Warranties.

(a) FREESCALE (ON BEHALF OF ITSELF AND EACH MEMBER OF THE FREESCALE GROUP) ACKNOWLEDGES AND AGREES THAT: (i) NO MEMBER OF THE MOTOROLA GROUP IS MAKING IN THIS AGREEMENT (OR ANY OTHER AGREEMENT CONTEMPLATED BY THIS AGREEMENT OR OTHERWISE) ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION, QUALITY, MERCHANTABILITY OR FITNESS OF ANY LICENSED INTELLECTUAL PROPERTY OR LICENSED MOTOROLA TECHNOLOGY; (ii) ALL SUCH LICENSED INTELLECTUAL PROPERTY OR LICENSED MOTOROLA TECHNOLOGY SHALL BE LICENSED ON AN “AS IS,” “WHERE IS” BASIS; AND (iii) FREESCALE AND ITS AFFILIATES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY LICENSE OR NON-ASSERT SHALL PROVE TO BE INSUFFICIENT TO VEST IN IT THE RIGHTS AND LICENSES PURPORTED TO BE GRANTED HEREUNDER.

(b) MOTOROLA (ON BEHALF OF ITSELF AND EACH MEMBER OF THE MOTOROLA GROUP) ACKNOWLEDGES AND AGREES THAT: (i) NO MEMBER OF THE FREESCALE GROUP IS MAKING IN THIS AGREEMENT (OR ANY OTHER AGREEMENT CONTEMPLATED BY THIS AGREEMENT OR OTHERWISE) ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION, QUALITY, MERCHANTABILITY OR FITNESS OF ANY LICENSED INTELLECTUAL PROPERTY OR LICENSED FREESCALE TECHNOLOGY; (ii) ALL SUCH LICENSED INTELLECTUAL PROPERTY OR LICENSED FREESCALE TECHNOLOGY SHALL BE LICENSED ON AN “AS IS,” “WHERE IS” BASIS; AND (iii) MOTOROLA AND ITS AFFILIATES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY LICENSE OR NON-ASSERT SHALL PROVE TO BE INSUFFICIENT TO VEST IN IT THE RIGHTS AND LICENSES PURPORTED TO BE GRANTED HEREUNDER.

5.3 Freescale Indemnified Products.

(a) Obligation to Defend - Subject to the limitations and exclusions stated below, Freescale and each member of the Freescale Group will defend, at Freescale’s expense, any Claim against Motorola (which, for purposes of this Section 5.3 (Freescale Indemnified Products) also includes “Motorola Indemnified Parties” as defined in the Master Separation and Distribution Agreement), and will indemnify and hold Motorola harmless from all Damages awarded in the Suit or resulting from settlement of the Suit or any Claim. “Suit” means a lawsuit based on a Claim. For purposes of this Section, “Claim” means a claim that a product:

(i) furnished by the Semiconductor Products Sector to Motorola prior to the Effective Date (“Intra-Company Product”); or

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(ii) furnished by the Semiconductor Products Sector to a third Person prior to the Effective Date or by Freescale to a third Person (including, without limitation, pursuant to Article 6 (Trademark Transition) on or after the Effective Date ((i) and (ii), collectively, “Freescale Indemnified Products”);

infringes a Patent or Non-Patent Intellectual Property Right anywhere in the world.

(b) Indemnification Procedure – In connection with any Claim or Suit, Motorola shall:

(i) promptly notify Freescale in writing as soon as reasonably practicable after Motorola first becomes aware of the Claim, and

(ii) gives Freescale sole control of the Claim and all requested assistance for resolving the Claim or defending the Suit.

Freescale will not be liable for the settlement of a Claim made without Freescale’s prior written consent unless Freescale breaches its duty to defend hereunder. If any suit against Motorola involves a Claim as well as other claims against Motorola, Freescale shall nonetheless be fully responsible for defending, indemnifying and holding Motorola harmless from the Claim(s), and shall provide reasonable cooperation to Motorola’s counsel with respect to the other claims asserted in such suit.

(c) Exclusions - Freescale will have no obligation to defend, indemnify or hold Motorola harmless to the extent:

(i) Motorola or any third Person has altered the Intra-Company Product, and the alleged infringement would not have occurred but for this alteration;

(ii) Motorola or any third Person has combined the Intra-Company Product with any other products or elements not furnished by Freescale, and the alleged infringement would not have occurred but for this combination;

(iii) the Intra-Company Products were designed or manufactured in accordance with Motorola’s designs, specifications, or instructions (other than those of the Semiconductor Products Sector), and the alleged infringement would not have occurred but for these designs, specifications or instructions; or

(iv) the Intra-Company Product infringes Essential Patent Claims for which Freescale does not have pass-through license rights that if extended to Motorola would avoid such infringement.

(d) Remedies - If the use or permitted resale of any Freescale Indemnified Product is enjoined as a result of a Suit or in Freescale’s reasonable belief is likely to be enjoined, Freescale, at Freescale’s option, and at no expense to Motorola, will: (i) obtain for Motorola the right to use or sell the Freescale Indemnified Product; (ii) modify the Freescale Indemnified Product to make it non-infringing without degrading it, (iii) substitute an equivalent non-infringing product(s) reasonably acceptable to Motorola and extend this indemnity to that

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product(s); or (iv) accept the return of the Freescale Indemnified Product and refund Motorola the purchase price paid for the Intra-Company Product, less a reasonable charge for prior use, if any.

(e) Limitations on Payable Damages -

(i) Except as expressly set forth in (ii) below, Freescale’s total liability for damages under this Section 5.3 (Freescale Indemnified Products), with respect to any Suit or Claim with respect to an Intra-Company Product will not exceed fifty percent (50%) of the net sales to Motorola of the applicable Intra-Company Product (as recorded in Motorola’s audited financial statements), plus attorneys’ fees and costs related to such Claim.

(ii) Freescale’s total liability under this Section 5.3 (Freescale Indemnified Products) will be unlimited with respect to: (A) all products other than Intra-Company Products, and (B) any Suit or Claim with respect to Intra-Company Products where such Suit or Claim is brought as part of a retaliatory action.

(iii) For purposes of the foregoing, a “retaliatory action” means a third Person claim against any member of the Motorola Group: (A) alleging that a Freescale Intra-Company Product infringes such third Person’s Patent or Non-Patent Intellectual Property Rights anywhere in the world; and (B) that is asserted against Motorola within six (6) months after any member of the Freescale Group has first asserted a claim or action against such third Person.

(f) ENTIRE LIABILITY - THIS SECTION CONTAINS (I) FREESCALE’S ENTIRE LIABILITY AND ALL OBLIGATIONS RELATED TO INTELLECTUAL PROPERTY INFRINGEMENT OR MISAPPROPRIATION FOR FREESCALE INDEMNIFIED PRODUCTS, AND (II) MOTOROLA’S EXCLUSIVE REMEDIES AGAINST FREESCALE FOR INTELLECTUAL PROPERTY INFRINGEMENT OR MISAPPROPRIATION OF FREESCALE INDEMNIFIED PRODUCTS. THESE REMEDIES ARE PROVIDED IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTY AGAINST INFRINGEMENT SPECIFIED IN THE UNIFORM COMMERCIAL CODE.

(g) WITHOUT LIMITATION OF FREESCALE’S OBLIGATIONS UNDER THIS SECTION 5.3 (FREESCALE INDEMNIFIED PRODUCTS) WITH REGARD TO THIRD PARTY CLAIMS AGAINST MOTOROLA INDEMNIFIED PARTIES, IN NO EVENT WILL FREESCALE OR ANY OF ITS AFFILIATES BE LIABLE FOR ANY OTHER SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OF MOTOROLA OR ITS AFFILIATES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY CLAIMS, LOSSES, DAMAGES OR INJURIES UNDER THIS SECTION 5.3 (FREESCALE INDEMNIFIED PRODUCTS).

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6. TRADEMARK TRANSITION

6.1 Transitional Trademark License.

(a) Trademark License Grant – Motorola grants Freescale a worldwide royalty-free, personal, non-transferable, non-exclusive license to continue to use the Motorola Trademarks in connection with the manufacture, repair, maintenance, support, marketing, promotion, distribution and sale of Semiconductor Products that have been manufactured or masked out prior to or are being manufactured or masked out as of the IPO Effective Date (a “Trademark Transition Product”) for a period of eighteen (18) months after the IPO Effective Date, except as otherwise specified below (the “Trademark License Period”). For purposes of this Article 6 (Trademark Transition), a “Motorola Trademark” means a Trademark of Motorola that, as of the Effective Date, is used on or connection with a Trademark Transition Product.

(b) Quality Standards – Without limiting anything set forth in this Article 6 (Trademark Transition), Freescale may only: (i) use the Motorola Trademarks on or in connection with Transition Trademark Products that meet the same product specifications and the general standards of quality (including performance parameters) applicable to the fabrication, performance, design, use, provision, and support of such products (or products substantially similar thereto) by Motorola prior to the IPO Effective Date; and (ii) use the Trademark Transition Products in compliance with the Motorola’s general trademark usage guidelines and standards applicable to the manner in which Motorola Trademarks may be used on marketing, advertising, and promotion materials.

(c) Quality Control – As necessary to enable Motorola to maintain its rights in and to the Motorola Trademarks and the goodwill represented thereby, Freescale shall at regular periodic intervals and as otherwise reasonably requested by Motorola, submit to Motorola samples of its Transition Trademark Products and usage of the Motorola Trademarks to enable Motorola to verify compliance with the foregoing. All new usage of the Motorola Trademarks (e.g., on new packaging, advertisements and other material) is subject to Motorola’s prior written consent.

6.2 Trademark Transition Efforts. As soon as practicable following the Effective Date, Freescale shall cease use of all Motorola Trademarks by: (a) removing, changing or covering external signage, building flags and vehicle markings bearing or incorporating Motorola Trademarks not later than six (6) months after the IPO Effective Date, except that Freescale shall remove and make no further use of the sixty (60) foot neon cube bearing the ‘M’ logo on its building in Kuala Lumpur, Malaysia no later than eighteen (18) months after the IPO Effective Date; (b) removing, changing or covering internal signage incorporating Motorola Trademarks not later than eighteen (18) months after the IPO Effective Date; (c) ceasing production of promotional or advertising material bearing or incorporating Motorola Trademarks in whatever medium not later than eighteen (18) months after the IPO Effective Date; (d) changing stationery and business cards bearing or incorporating Motorola Trademarks not later than six (6) months after the IPO Effective Date; and (e) ceasing use of Motorola Trademarks in Freescale’s corporate, partnership, doing business as, and fictitious name no later than the Distribution Date, except that Freescale may continue to use the Motorola name, or similar reference approved by Motorola in writing, in connection with a statement indicating that

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Freescale is a former Motorola company for up to three (3) years after the IPO Effective Date. The parties acknowledge that the laws of certain foreign jurisdictions may be such that Freescale may not be able to meet its obligations under this Section 6.2 (Trademark Transition Efforts) as of the dates specified therein. In these circumstances, such dates will be adjusted accordingly so that Freescale ceases its use as soon as commercially possible in accordance with the relevant laws.

6.3 Inventory and Stock Exhaustion. Subject to Freescale’s compliance with the foregoing, Freescale may use its inventory, stock or supply (“Freescale Inventory”) of:

(a) Finished Goods – goods fully assembled, manufactured, marked and bearing Motorola Trademarks (the “Finished Goods”) until the earlier of: (i) sixty (60) months after the IPO Effective Date; or (ii) the date on which Freescale’s supply of such Finished Goods in inventory as of the IPO Effective Date is depleted; unless required otherwise by applicable State or Federal laws or the laws of the relevant foreign jurisdiction.

(b) Reticles and Internal Material –masks and reticles, tools, dies, equipment, engineering/manufacturing drawings, archived collateral and literature, manuals, work sheets, operating procedures, other written materials which include or contain any Motorola Trademarks for the life of such materials; provided, however, that: (i) such matter may only be used for Freescale’s internal purposes (except that with respect to archived collateral and literature, Freescale may provide access to and grant the right to Freescale customers to copy in electronic or other form); and (ii) all stock of the foregoing is replaced in the ordinary course and such replacements do not include or contain any Motorola Trademarks.

For purposes of this Section 6.3 (Inventory and Stock Exhaustion), “Freescale Inventory” includes inventory owned by Freescale but maintained at its customer facilities. Notwithstanding anything in this Article 6 (Trademark Transition), Freescale will not be obligated to retract or remark any packaging or inserts bearing Motorola Trademarks that are otherwise already included in inventories of Freescale or Freescale’s customers upon the expiration of the Trademark License Period.

6.4 Restrictions and Limitations.

(a) Retained Ownership –Motorola will retain all right, title and interest in and to Motorola Trademarks including, without limitation, the right to use and license others to use such Motorola Trademarks in connection with the marketing, offer or provision of any product or service, including any product or service which competes with Freescale products and services. All use of Motorola Trademarks, including all goodwill accrued thereby, will inure to the benefit of Motorola.

(b) Rights Not Granted – Freescale may not use Motorola Trademarks in connection with any product or service except as expressly set forth in this Article 6 (Trademark Transition). Without limiting the generality of the foregoing, Freescale may not use the Motorola Trademarks on any new stationery, new business cards, new building signage, new building flags, new employee badges or new vehicle markings after the Effective Date or to affix

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or use Motorola Trademarks on or in connection with products other than Trademark Transition Products.

(c) Change to Motorola Trademarks – Freescale may not alter the placement or appearance of the Motorola Trademarks on the Freescale Inventory, except to obliterate or to cover the mark with a Freescale label. Notwithstanding the foregoing, if as a result of governmental regulation or court order Motorola must modify or discontinue the use of any of the Motorola Trademarks, Freescale shall, within sixty (60) days of notice: (i) modify the Motorola Trademarks on the Freescale Inventory as necessary to comply with such regulation or order; or (ii) cease all use of the applicable Freescale Inventory.

(d) Third Party Trademarks – Without limiting the foregoing, Freescale is solely responsible for obtaining any required consent from third Persons to use any third Person Trademarks that may appear on the Freescale Inventory. In addition, Freescale may not add any third Person Trademarks to the Freescale Inventory without Motorola’s prior written consent.

7. CONFIDENTIALITY

7.1 Confidential Information. Each party and the members of such party’s Group (collectively, the “Receiving Party”) expressly acknowledges that in connection with this Agreement (including, without limitation, the sector license terms set forth in Supplement B1 through Supplement B6) members of the party’s Group (collectively, the “Disclosing Party”) has disclosed or may disclose or make available information and material relating to the Disclosing Party’s business or Technology which is confidential or proprietary in nature (including, without limitation, information that embodies or relates to Technology, any other technical, business, financial, customer information, product development plans, supplier information, forecasts, strategies and other confidential information) which to the extent disclosed to the Receiving Party is hereinafter referred to as “Confidential Information” of the Disclosing Party provided such information: (a) is disclosed in writing and conspicuously marked “CONFIDENTIAL” or with words of similar effect; (b) is disclosed orally after the Effective Date and is identified as confidential information at the time of disclosure and, within thirty (30) days of such disclosure, is summarized in a writing by the Disclosing Party that is submitted to the Receiving Party and that confirms the confidential nature of such information; or (c) was disclosed orally prior to the Effective Date and specifically identified in any of Supplement B1 through Supplement B6 as confidential information.

7.2 Treatment of Confidential Information. The Receiving Party will: (a) take commercially reasonable precautions to protect such Confidential Information consistent with all precautions the Receiving Party usually employs with respect to its own comparable confidential materials; (b) except as expressly provided in this Agreement, not disclose any such Confidential Information to any third Person, except under terms and conditions (including confidentiality, use, and disclosure restrictions) normally used by the Receiving Party to protect its own confidential or proprietary information of a similar nature; and (c) not use or disclose such Confidential Information except as necessary to exercise its rights and perform its obligations under this Agreement (including, without limitation, the sector license terms set forth in

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Supplement B1 through Supplement B6) in accordance with any applicable restrictions or obligations with respect thereto. Subject to the limitations and requirements set forth in this Article 7 (Confidentiality) and elsewhere in this Agreement (including, without limitation Section 3.3 (Procurement Rights)) the Receiving Party may disclose Technology of the Disclosing Party to a customer, supplier, prospective supplier or third Person joint developer of the Receiving Party except as set forth in any of Supplement B1 through Supplement B6.

7.3 Exclusions. Without granting any right or license, the Disclosing Party agrees that Section 7.2 (Treatment of Confidential Information) will not apply with respect to any information that the Receiving Party can document: (a) is or becomes generally available to the public through no improper action or inaction by the Receiving Party or any of its Affiliates, agents, consultants or employees; or (b) was properly in the Receiving Party’s possession or known by it prior to receipt from the Disclosing Party; or (c) was rightfully disclosed to the Receiving Party by a third Person provided the Receiving Party complies with restrictions imposed by the third Person. The Receiving Party, with prior written notice to the Disclosing Party, may disclose such Confidential Information to the minimum extent possible that is required to be disclosed to a governmental entity or agency, or pursuant to the lawful requirement or request of a governmental entity or agency, provided that reasonable measures are taken to guard against further disclosure (including without limitation, seeking appropriate confidential treatment or a protective order, or assisting the Disclosing Party to do so) and has allowed the Disclosing Party to participate in any proceeding that requires the disclosure.

8. CONSIDERATION

Except as expressly set forth in any of Supplement B1 through Supplement B6, the parties to this Agreement acknowledge and agree that the licenses, rights and obligations exchanged hereunder by the parties are of substantially equal value, and accordingly, unless otherwise expressly set forth in this Agreement (including any Supplements to this Agreement), no payments or royalties will be due from or to any party under this Agreement.

9. TERMINATION

9.1 Group Member Termination. If a Person ceases to be an Affiliate of a party (i.e., ceases to be a member of such party’s Group), then notwithstanding anything in this Agreement to the contrary (including the Supplements hereto): (a) all rights and license granted with respect to such Person under this Agreement will automatically terminate on the date such Person ceases to be an Affiliate (except, however, as to product units already sold by such Person as of such date); (b) all of the licenses and rights granted by such Person with respect to the other parties hereunder with respect to Patents of such Person for which applications were filed prior to the date such Person ceases to be an Affiliate will not be affected by such cessation; and (c) such Person’s obligations under Section 2.2 (Export Control) and Article 7 (Confidentiality) will survive, together with all other obligations under this Agreement that arose prior to the date such Person ceases to be an Affiliate.

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9.2 Corporate Change.

(a) If a party remains a separate identifiable business after a Change of Control, the Patent licenses and Patent-related rights granted to that party or the members of its Group hereunder will continue in accordance with the terms thereof with respect to such party. If a party does not remain as a separate identifiable business after a Change of Control, the Patent licenses and Patent-related rights granted to that party hereunder will extend only to those products that such party has offered for sale prior to such Change of Control and, except as otherwise set forth in this Agreement, all other rights and licenses will automatically terminate. Except as expressly set forth above, in no event will the Patent licenses and Patent-related rights granted to a party hereunder be extended to any other Person involved in such Change of Control, without the prior written consent of the party whose Patents are being licensed, which consent may be withheld in its sole and absolute discretion.

(b) In the event that either party (the “Acquiring Party”) hereto acquires any Person, then all Patent licenses and Patent-related rights granted to the Acquiring Party hereunder: (i) may be sublicensed to the acquired Person subject to the terms of this Agreement, if such Person is not merged into the Acquiring Party; or (ii) may be extended to all products and services manufactured by the portion of the business previously operated by the acquired Person, if such Person is merged into the Acquiring Party, provided that:

(i) if the non-Acquiring Party is Motorola, that Motorola is licensed under all Patents owned or controlled by the acquired Person at the time of the acquisition for which applications were filed prior to the one (1) year anniversary of the Effective Date under the same terms and conditions as apply to Freescale Patents, and

(ii) if the non-Acquiring Party is Freescale, that Freescale is licensed under all Patents owned or controlled by the acquired Person at the time of the acquisition for which applications were filed prior to the one (1) year anniversary of the Effective Date under the same terms and conditions as apply to Motorola Patents.

(c) Notwithstanding the foregoing, in the event of a Change of Control of a party, the Technology licenses granted hereunder will continue in accordance with the terms thereof whether or not such party remains a separate identifiable business after a Change of Control.

9.3 Material Breach. No party may unilaterally terminate this Agreement, or any licenses granted hereunder, for a material breach of this Agreement by another party, provided, however, that each party will retain any remedies for such breach that it may be entitled to in a court of law or equity.

10. MISCELLANEOUS

10.1 Governing Law. The internal laws of the State of Delaware (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising

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out of or in connection with this Agreement and its exhibits and schedules (whether arising in contract, tort, equity or otherwise).

10.2 Jurisdiction. If any Dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the parties irrevocably (and the parties will cause each other member of their respective Group to irrevocably): (a) consent and submit to the exclusive jurisdiction of federal and state courts located in Delaware; (b) waive any objection to that choice of forum based on venue or to the effect that the forum is not convenient; and (c) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

10.3 Dispute Resolution.

(a) Amicable Resolution –

(i) Motorola and Freescale mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto or thereto. In furtherance thereof, in the event of any dispute or disagreement (a “Dispute”) between any Motorola Group member and any Freescale Group member as to the interpretation of any provision of this Agreement (or the performance of obligations hereunder), the matter, upon written request of either party, will be referred for resolution to a steering committee established pursuant to this Section 10.3(a) (Amicable Resolution) (the “Steering Committee”). The Steering Committee will have eight (8) members, four (4) of whom will be appointed by Motorola and four (4) of whom will be appointed by Freescale. Each of Motorola and Freescale will use its good faith efforts to avoid replacing the initial members of the Steering Committee for the first year after the Effective Date. Thereafter, Motorola and Freescale will, to the extent practicable, honor the other party’s reasonable objections to any replacements of Steering Committee members. While any person is serving as a member of the Steering Committee, such person may not designate any substitute or proxy for purposes of attending or voting at a Steering Committee meeting. Notwithstanding the foregoing, unless otherwise specifically agreed upon by the parties, the members comprising the steering committee established for purposes of resolving Disputes under the Master Separation and Distribution Agreement will constitute the Steering Committee for purposes of resolving Disputes under this Agreement. The Steering Committee will make a good faith effort to promptly resolve all Disputes referred to it. Steering Committee decisions made with the consent of at least three (3) Freescale members and at least three (3) Motorola members will be binding on Motorola and Freescale. If the Steering Committee does not agree to a resolution of a Dispute within thirty (30) days after the reference of the matter to it, each of Motorola and Freescale will be free to exercise the remedies available to it under applicable law, subject to Section 10.3(b) (Mediation and Alternate Dispute Resolution). Notwithstanding anything to the contrary in this Section 10 (Miscellaneous), any amendment to the terms of this Agreement may only be effected in accordance with Section 10.10 (Amendment).

(ii) Between the Effective Date and the first anniversary of the Effective Date, the Steering Committee will hold meetings every six (6) weeks on dates

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established at the organizational meeting of the Steering Committee, which will be held as promptly as practicable after the Effective Date. Such meeting dates may be rescheduled by the Steering Committee if it becomes reasonably impracticable to hold such a meeting. After the first anniversary of the Effective Date, the Steering Committee will hold regularly scheduled meetings as determined by the Steering Committee.

(b) Mediation and Alternate Dispute Resolution – In the event any Dispute cannot be resolved in a friendly manner as set forth in Section 10.3(a) (Amicable Resolution), the parties intend that such Dispute be resolved by an alternative dispute resolution process (“ADR”). If the Steering Committee is unable to resolve the Dispute as contemplated by Section 10.3(a) (Amicable Resolution), either Motorola or Freescale may demand mediation of the Dispute by written notice to the other in which case the two parties will select a mediator within ten (10) days after the demand. Neither party may unreasonably withhold consent to the selection of the mediator. The parties may agree to replace mediation with some other form of non-binding ADR such as neutral fact finding or mini-trial. The use of any ADR procedures will not be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either party. Each of Motorola and Freescale will bear its own costs of mediation or other form of ADR, but both parties will share the costs of the mediator or other arbiter equally.

(c) Non-Exclusive Remedy – Nothing in this Section 10.3 (Dispute Resolution) will prevent either Motorola or Freescale from commencing formal litigation proceedings or seeking injunctive or similar relief if: (i) the Dispute has not been resolved within forty-five (45) days after commencement of the applicable ADR process; or (ii) any delay resulting from efforts to mediate such Dispute could result in serious and irreparable injury to either Motorola, Freescale, or any member of either party’s Group.

(d) Commencement of Dispute Resolution Procedure – Notwithstanding anything to the contrary in this Agreement, Motorola and Freescale are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, whether pursuant to this Section 10.3 (Dispute Resolution) or otherwise, and each party will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section 10.3(d).

10.4 Notices. Each party giving any notice required or permitted under this Agreement will give the notice in writing and use one of the following methods of delivery to the party to be notified, at the address set forth below or another address of which the sending party has been notified in accordance with this Section 10.4 (Notices): (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States of America certified or registered mail, return receipt requested. Notice to a party is effective for purposes of this Agreement only if given as provided in this Section 10.4 (Notices) and will be deemed given on the date that the intended addressee actually receives the notice.

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If to Motorola:	with a copy to:
Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Chief Financial Officer Facsimile: 847.576.1402	Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: General Counsel Facsimile: 847.576.3628
If to Freescale:	with a copy to:
Freescale Semiconductor, Inc. 6501 William Cannon Drive Austin, Texas 78737 Attention: Chief Financial Officer Facsimile: 512.895.8696	Freescale Semiconductor, Inc. 7700 West Parmer Lane Austin, Texas 78729 Attention: General Counsel Facsimile: 512.996.7697

10.5 Binding Effect and Assignment. This Agreement binds and benefits the parties and their respective successors and assigns, except that (other than as expressly provided in this Agreement, including Section 3.5 (Assignment of Technology Licenses) and Section 4.5 (Assignment of Patent Rights), or otherwise in connection with a Change of Control of a party, subject to Section 9.2 (Change of Control)), neither party may assign any of its rights or delegate any of its obligations under this Agreement without the written consent of the other party which consent may be withheld in its sole and absolute discretion and any assignment or attempted assignment in violation of the foregoing will be null and void. Notwithstanding the preceding sentence, Motorola may assign this Agreement in connection with a merger transaction in which Motorola is not the surviving entity or the sale of all or substantially all of its assets.

10.6 Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement will remain in full force, if the essential terms and conditions of this Agreement for each party remain valid, binding and enforceable.

10.7 Entire Agreement. This Agreement, together with the Ancillary Agreements and each of the exhibits and schedules appended hereto and thereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein and therein. All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained in this Agreement are superseded by this Agreement. In event of any conflict between (a) any provision in the Master Separation and Distribution Agreement or any Contribution Agreement (as defined in the Separation and Distribution Agreement) on the one hand, and (b) any specific provision of this Agreement, on the other hand, pertaining to the subject matter of this Agreement, the specific provisions of this Agreement will control over the provisions in the Master Separation and Distribution Agreement or such Contribution Agreement, as applicable.

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10.8 Counterparts. The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement. The signatures of both parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

10.9 Expenses. Except as otherwise provided in this Agreement, any of the other Ancillary Agreements or any other agreement between the parties contemplated hereby, all costs, fees and expenses of either party in connection with the transactions contemplated by this Agreement will be paid by the party that incurs such costs and expenses.

10.10 Amendment. The parties may amend this Agreement only by a written agreement signed by each party to be bound by the amendment and that identifies itself as an amendment to this Agreement.

10.11 Waiver. The parties may waive a provision of this Agreement only by a writing signed by the party intended to be bound by the waiver. A party is not prevented from enforcing any right, remedy or condition in the party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and remedies in this Agreement is not intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

10.12 Authority. Each of the parties hereto represents to the other that: (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it and its Affiliates in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

10.13 Construction of Agreement.

(a) Where this Agreement states that a party “will” or “shall” perform in some manner or otherwise act or omit to act, it means that the party is legally obligated to do so in accordance with this Agreement.

(b) The captions, titles and headings, and table of contents, included in this Agreement are for convenience only, and do not affect this Agreement’s construction or interpretation. When a reference is made in this Agreement to an Article or a Section, exhibit or schedule, such reference will be to an Article or Section of, or an exhibit or schedule to, this Agreement unless otherwise indicated.

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(c) This Agreement is for the sole benefit of the parties and the respective Group members of the parties hereto (and their respective customers as specifically provided in this Agreement) and, except for the indemnification rights of the Motorola Indemnified Parties under Section 5.3 (Freescale Indemnified Products) of this Agreement, does not, and is not intended to, confer any rights or remedies in favor of any Person (including any employee or stockholder of Motorola or Freescale) other than the parties signing this Agreement and their respective Group members.

(d) The words “including,” “includes,” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance.

(e) Any reference in this Agreement to the singular includes the plural where appropriate. Any reference in this Agreement to the masculine, feminine or neuter gender includes the other genders where appropriate. For purposes of this Agreement, after the Effective Date, the SPS Business will be deemed to be the business of Freescale and the Freescale Group, and all references made in this Agreement to Freescale as a party which operates as of a time following the Effective Date, will be deemed to refer to all members of the Freescale Group as a single party, where appropriate.

(f) Unless otherwise expressly specified, all references in this Agreement or any Ancillary Agreement to “dollars” or “$” means United States Dollars. If any payment required to be made hereunder is denominated in a currency other than United States Dollars, such payment will be made in United States Dollars and the amount thereof will be computed using Motorola’s P&L rate for the current month.

(g) Any reference in this Agreement to a “member” of a Group means a party to this Agreement or another Person referred to in the definition of Freescale Group or Motorola Group, as applicable.

(h) Any reference in this Agreement to the products of a party (e.g., a “Motorola product” or “Freescale Wireless Semiconductor Product”) includes products of any member of such party’s Group and any reference in this Agreement to the Patent or Non-Patent Intellectual Property Rights of a party means the Patent or Non-Patent Intellectual Property Rights of any member of such party’s Group.

10.14 Performance. Motorola shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Motorola Group. Freescale shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Freescale Group. Each party further agrees that it will cause its other Group members not to take any action or fail to take any action inconsistent with such party’s obligations under this Agreement or the transactions contemplated hereby. Without limiting the foregoing or anything else in this Agreement, the parties shall cause each member of their respective Group to: (a) comply with all applicable limitations and restrictions with respect to the licenses, rights and covenants granted by, to or on behalf of such member under this Agreement; and (b) make such license grants or covenants (or take such other

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action) as may be necessary to make effective the licenses, covenants and other rights granted by the parties under this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by a duly authorized officer on the day and year first above written.

MOTOROLA, INC.
By:	/s/ Jonathan P. Meyer
Name:	Jonathan P. Meyer
Title:	Senior Vice President and Director, Patents, Trademarks and Licensing

FREESCALE SEMICONDUCTOR, INC.
By:	/s/ Ray Burgess
Name:	Ray Burgess
Title:	Corporate Vice President, Director of Strategy

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INTELLECTUAL PROPERTY LICENSE AGREEMENT

TABLE OF SUPPLEMENTS

Supplement A	Motorola Restricted Technology
Supplement B1	Sector License Terms - Broadband Communications Sector
Supplement B2	Sector License Terms - Commercial, Government & Industrial Solutions Sector
Supplement B3	Sector License Terms - Global Telecom Solutions Sector/iDEN
Supplement B4	Sector License Terms - Integrated Electronic Systems Sector
Supplement B5	Sector License Terms - Personal Communications Sector
Supplement B6	Sector License Terms - Motorola Laboratories and Software
Supplement C	Glossary of Technical Elements

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT A MOTOROLA RESTRICTED TECHNOLOGY

“Celestri Satellite Technology” means all confidential and proprietary Technology owned or licensable by any member of the Motorola Group that relates to: (a) system concepts or designs developed by Motorola for any combined GEO/LEO satellite broadband data transmission system, concepts, together with any systems, concepts, studies, or research from any predecessor programs to such combined GEO/LEO satellite broadband data transmission system; and (b) the number and arrangement of satellites, capacity enhancement strategies, network transport protocols, network topologies, network routing and operation concepts, network control, system control, and methods of hand-off.

“Iridium Satellite Technology” means all confidential and proprietary Technology owned or licensable by any member of the Motorola Group that relates to: (a) system concepts or designs developed by Motorola for any primarily voice, narrowband satellite-based telecommunications system, concepts, or studies; and (b) the number and arrangement of satellites, capacity enhancement strategies, network transport protocols, network topologies, network routing and operation concepts, network control, system control and methods of hand-off.

“Teledesic Satellite Technology” means all confidential and proprietary Technology owned or licensable by any member of the Motorola Group that relates to: (a) system concepts or designs developed by Motorola for a satellite-based broadband system for the transmission of communications and data, such system including satellites; ground-based sites, equipment, and facilities to operate and manage the satellites and the communications links of the system; one or more network control systems; and ground-based equipment and Software which is used by subscribers for sending and receiving communications through the system; and (b) the number and arrangement of satellites, capacity enhancement strategies, network transport protocols, network topologies, network routing and operation concepts, network control, system control, and methods of hand-off.

“iDEN Technology” means all confidential and proprietary Technology (other than Freescale Technology embedded in or used for the design of Semiconductor Products), patented or otherwise, owned or licensable by any member of the Motorola Group that relates to products, systems, concepts or designs developed by/for Motorola with respect to a wireless communications technology commonly referred to as Integrated Digital Enhanced Network (iDEN) Technology that: (a) supports voice, circuit data, packet date, short messaging and dispatch radio (two way radio) functionality in a single mobile phone device; (b) is based on digital TDMA (Time Division Multiple Access); and (c) uses QAM (Quadrature Amplitude Modulation) techniques. iDEN Technology includes all enhancements and improvements to such Technology including, but not limited to, WiDEN.

A-1 Motorola Restricted Technology

“CGISS Communication Technology” means all confidential and proprietary Technology (other than Freescale Technology embedded in or used for the design of Semiconductor Products), patented or otherwise, owned or licensable by any member of the Motorola Group that relates to products, systems, concepts or designs developed by/for Motorola with respect to:

(a) the following standards formulated by the European Telecommunications Standard Institute (ETSI): (i) Terrestrial Trunked Radio (TETRA) Standard for mobile radio devices with two-way radio, cellular, paging and data functionality; (ii) Low Tier Digital (LTD) Standard; and (iii) Digital Mobile Radio (DMR) Standard; and

(b) the standards formulated in connection with following projects of the Telecommunications Industry Association (TIA) in the TR-8 Committee: (i) Project 25; (ii) Project 34; (iii) the Scalable Adaptive Modulation (SAM) Project, also referred to as the TIA 902 series; and (iv) the Broadband Standard for Public Safety Interoperability in the 4.9 GHz spectrum band. For clarity, the standard formulated in connection with Project 25 (i.e., the “APCO Project 25 Standard”) is the system described in the family of TIA/EIA documents in the 102 series starting with document TSB102-A, entitled “APCO Project 25 System and Standards Definition”. Products developed with respect to the APCO Project 25 Standard include, without limitation, products sold by Motorola through its Commercial, Governmental & Industrial Solutions Sector (CGISS) and identified as of the Effective date as “ASTRO” products and its predecessors.

A-2 Motorola Restricted Technology

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B1 SECTOR LICENSE TERMS

BROADBAND COMMUNICATIONS SECTOR

These BCS Sector License Terms (these “BCS Sector Terms”) set forth the terms and conditions pursuant to which certain Technology, Patents and Non-Patent Intellectual Property Rights relating to certain products of General Instrument Corporation dba the Broadband Communications Sector of Motorola, Inc. (BCS) are licensed to Freescale. In particular, these BCS Sector Terms are intended to reflect certain arrangements between Motorola’s Semiconductor Products Sector (SPS) and BCS immediately prior to the Effective Date.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to Technology, Patents and Non-Patent Intellectual Property Rights developed or otherwise acquired solely or jointly by or for Freescale and BCS. In addition, all terms not defined in these BCS Sector Terms shall have the meaning set forth in the Agreement.

1. DEFINITIONS

1.1 “AMS CableCARD” means Motorola’s next generation cable card integrated circuit that, as of the Effective Date, is under development and identified as the “AMS CableCARD”.

1.2 “Custom Products” means the MCSC, MC2.7, MC2.0, MC2.1, MC1.7, MCSC2.0 and AMS CableCARD.

1.3 “Freescale Technology” means Freescale’s MCU (micro-controller unit) core Technology known as “ColdFire”, Freescale proprietary embedded poly fuse Technology (comprising an analog block design with current source programming and differential sense circuit), Freescale proprietary Secana engine analog blocks and Freescale Embedded Technology.

1.4 “Freescale Embedded Technology” means, with respect to a Custom Product, Freescale’s standard cell libraries, input/output structures, packaging technology and other Freescale Technology embedded in such product.

1.5 “Licensed Technology” means the Custom Products.

1.6 “MCSC” means Motorola’s MediaCipher Smart Card integrated circuit die identified as of the Effective Date as the “MCSC” or “SCWF65000” integrated circuit die and having Motorola Part nos. 482516-00x.

1.7 “MC1.7” means Motorola’s set top box conditional access integrated circuit identified as of the Effective Date as the “MC1.7” integrated circuit and having Motorola part nos. 420061-00x-xx.

B-1-1	Sector License Terms –
	Broadband Communications Sector

1.8 “MC2.0” means Motorola’s infrastructure conditional access integrated circuit identified as of the Effective Date as the “MC2.0” integrated circuit having Motorola part nos. 469126-00x-xx.

1.9 “MC2.1” means Motorola’s multi-stream conditional access integrated circuits identified as of the Effective Date as the “MC2.1” integrated circuit and having Motorola Part nos. 502977-00x-xx.

1.10 “MC2.7” means Motorola’s next generation set-top box conditional access integrated circuit identified as of the Effective Date as the “MC2.7” integrated circuit and having Motorola part nos. 506473-001-xx.

1.11 “MCSC2.0” means Motorola’s second generation SmartCard device that, as of the Effective Date, is under development and identified as the “MCSC2.0”.

1.12 “Motorola Sector Technology” means, solely for purposes of these BCS Sector Terms, all Motorola Technology relating to Custom Products (excluding any Freescale Embedded Technology incorporated in any of the foregoing).

2. LICENSES GRANTED

2.1 Embedded Technology License. Freescale grants to Motorola and each member of the Motorola Group the license set forth in Section 3.1 of the Agreement with respect to the Freescale Embedded Technology.

2.2 Custom Products License. Subject to the terms and conditions of these BCS Sector Terms, Motorola hereby grants to each member of the Freescale Group under the Motorola Non-Patent Intellectual Property Rights and Motorola IC Patent Claims in the Custom Products a personal, worldwide, non-exclusive, non-transferable, royalty free, paid up right and license to: (a) use, import and make the Custom Products and to sell and offer to sell the Custom Products so made solely to members of the Motorola Group; and (b) reproduce, display, perform and distribute the Motorola Sector Technology embodied in the Custom Products solely as necessary and for the purpose of the foregoing. No right or license is granted under this Section 2.2 (Custom Products License) to: (i) sublicense any of the foregoing rights to third Persons; or (ii) create or otherwise dispose of any Derivative of the Custom Products.

2.3 Retained Rights. Each member of the Motorola Group and the Freescale Group hereby reserve all of their respective Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing: (a) each member of the Motorola Group shall retain ownership of all Motorola Patent and Motorola Non-Patent Intellectual Property Rights in and to the Motorola Sector Technology; and (b) each member of the Freescale Group shall retain ownership of all Freescale Patent and Freescale Non-Patent Intellectual Property Rights in and to the Freescale Embedded Technology. Notwithstanding the foregoing, nothing in these BCS Sector Terms shall be construed as a transfer or assignment by

B1-2	Sector License Terms –
	Broadband Communications Sector

any member of the Freescale Group of any Freescale Technology embodied in or used to develop the Custom Products, if any.

2.4 No Transfer. Except as expressly provided herein, nothing in these BCS Sector Terms obligates either party to deliver to the other party any Technology that is already in the other party’s possession as of the Effective Date.

2.5 Third Party Technology Rights. No right or license is granted hereunder with respect to any third Person Technology, if any, that may be incorporated or embodied in or necessary to use or make the Licensed Technology or that may be necessary to practice any of the Patents licensed under these BCS Sector Terms.

3. OTHER RIGHTS AND OBLIGATIONS

3.1 Supply of Custom Products. The unit pricing and other terms and conditions with respect to the purchase by BCS of Custom Products from Freescale shall be as set forth in the Master Semiconductor Purchase Agreement to be entered into by Motorola and Freescale following the Effective Date (in connection with the transactions contemplated by the Master Separation and Distribution Agreement) to the extent such products are expressly referenced in such agreement.

3.2 Restrictions.

(a) Legal Notices and Source Code Disclosure – Except as expressly set forth herein, or as Motorola otherwise expressly approves in writing: (i) each member of a party’s Group shall reproduce and include on all copies and media for the License Technology of the other party (and any Derivatives thereof) the product identification, copyright notice and any legal legend that appears on such Licensed Technology as originally provided by the other party; (ii) no member of the either party’s Group shall (and no member of the either party’s Group shall authorize, encourage or facilitate any third Person to): (A) remove alter or obscure any product identification, copyright notice and any legal legend required to be included on the Licensed Technology of the other party as set forth above; or (B) distribute, disclose or otherwise make available to any third Person the Source Code for any Licensed Technology.

(b) Reverse Engineering – Except as expressly set forth herein, or as otherwise expressly agreed upon in writing, no member of the either party’s Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the Licensed Technology of the other party or any Derivatives thereof by any means whatsoever except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

B1-3	Sector License Terms –
	Broadband Communications Sector

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B2 SECTOR LICENSE TERMS

COMMERCIAL, GOVERNMENT & INDUSTRIAL SOLUTIONS SECTOR

These CGISS Sector License Terms (these “CGISS Sector Terms”) set forth the terms and conditions pursuant to which certain Technology, Patents and Non-Patent Intellectual Property Rights of Motorola’s Commercial Government & Industrial Solutions Sector (“CGISS”) are licensed to Freescale and certain related Technology, Patents and Non-Patent Intellectual Property Rights of Freescale are licensed to Motorola as well as certain commercial arrangements between CGISS and Freescale with respect thereto. In particular, these CGISS Sector Terms are intended to reflect certain arrangements between Motorola’s Semiconductor Products Sector (“SPS”) and CGISS immediately prior to the Effective Date with respect to such Technology, Patents and Non-Patent Intellectual Property.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to such Technology, Patents and Non-Patent Intellectual Property developed or otherwise acquired solely or jointly by or for Freescale and CGISS. In addition, all terms not defined in these CGISS Sector Terms shall have the meaning set forth in the Agreement.

1. DEFINITIONS

1.1 “AFP99” means Motorola’s audio integrated circuit identified as of the Effective Date as the “AFP99” integrated circuit and including, but not limited to, the “AFP99” integrated circuit having part nos. including, but not limited to, 5185164C01.

1.2 “Alternate Source Products” means the ASFIC CMP, LV FRACN, VCO BUFFER IC and HALF LIFE.

1.3 “ASFIC CMP” means Motorola’s audio processing integrated circuit identified as of the Effective Date as the “ASFIC CMP” and “ASFIC IC” integrated circuit and including, but not limited to, the “ASFIC CMP” and “ASFIC IC” integrated circuit having part nos. including, but not limited to, 5185130C53 and 510585U45.

1.4 “BGA Package” means a housing for an Integrated Circuit Structure(s) in which such Integrated Circuit Structure(s) are mounted on one side of a substrate of printed circuit board material or the like and are wire bonded to the substrate, plastic overlies the Integrated Circuit Structure(s) and pads for receiving solder balls or the like and providing electrical contacts to the integrated circuit device are mounted on the substrate on the side opposite to that on which the Integrated Circuit Structure(s) are mounted. Some BGA Packages may have some pads that are not electrically connected to the Integrated Circuit Structure(s).

B2-1	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

1.5 “BGA Patent” means those Patents identified in Schedule A to this Supplement B2.

1.6 “BRAVO” means Motorola’s digital signal processor and microcontroller integrated circuit identified as of the Effective Date as the “BRAVO” integrated circuit and including, but not limited to, the “BRAVO” integrated circuit having part nos. including, but not limited to, 5185956E51.

1.7 “CGISS Product(s)” means the TOMAHAWK, HALF LIFE, SONATA, LVZIF, LV FRACN, VCO BUFFER IC, ASFIC CMP, ESCORT, POWER IC, RFP99, AFP99, DFP BUFFER 99, WIPC and BRAVO.

1.8 “CGISS Product Design Information” means the layout database, schematic design database and design RTL (register transfer level) Software code, if any, for the CGISS Products.

1.9 “DFP BUFFER 99” means Motorola’s microcontroller and digital integrated circuit identified as of the Effective Date as the “DFP BUFFER 99” integrated circuit and including, but not limited to, the “DFP BUFFER 99” integrated circuit having part nos. including, but not limited to, 5185353D60.

1.10 “Derivative Technology” means any Derivative of the Licensed Technology.

1.11 “EOL Date” means, with respect to a CGISS Product the date on which Freescale has notified CGISS that such that such product has been placed on “End of Life” status which notice shall be as provided as set forth in the Master Semiconductor Purchase Agreement with respect to CGISS Products expressly referenced in such agreement.

1.12 “ESCORT” means Motorola’s direct launch transmitter integrated circuit identified as of the Effective Date as the “ESCORT” integrated circuit and including, but not limited to, the “ESCORT” integrated circuit having part nos. including, but not limited to, 515185368C18.

1.13 “Frac-N Patent” means, as applicable: (a) a Motorola Patent set forth in Schedule B to this Supplement B2; or (b) a Freescale Patent forth in Schedule C to this Supplement B2.

1.14 “Freescale Embedded Technology” means, with respect to a Semiconductor Product, Freescale’s standard cell libraries, input/output structures, packaging technology and other Freescale Technology embedded in such product.

1.15 “Freescale Sector Technology” means, solely with respect to these CGISS Sector Terms, all: (a) CGISS Product Design Information; and (b) Freescale Embedded Technology incorporated in the CGISS Products.

B2-2	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

1.16 “HALF LIFE” means Motorola’s RF front end integrated circuit identified as of the Effective Date as the “HALF LIFE” integrated circuit and including, but not limited to, the “HALF LIFE” integrated circuit having part nos. including, but not limited to, 5187512V01.

1.17 “Licensed Technology” means the CGISS Products and the CGISS Product Design Information.

1.18 “LV ZIF” means Motorola’s Zero IF integrated circuit identified as of the Effective Date as the “LV ZIF” integrated circuit and including, but not limited to, the “LV ZIF” integrated circuit having part nos. including, but not limited to, 5102464J01 and 510963D83.

1.19 “LV FRACN” means Motorola’s fractional synthesizer integrated circuit identified as of the Effective Date as the “LV FRACN” integrated circuit and including, but not limited to, the “LV FRACN” integrated circuit having part nos. including, but not limited to, 5185963A27 and 5105835U92.

1.20 “Motorola Sector Technology” means, solely with respect to these CGISS Sector Terms, all Motorola Technology relating to the CGISS Products (including the Technology embodied in the detailed technical specifications for such products) excluding any Freescale Embedded Technology incorporated in the CGISS Products.

1.21 “Master Semiconductor Purchase Agreement” means the Master Semiconductor Purchase Agreement to be entered into by Motorola and Freescale following the Effective Date (in connection with the transactions contemplated by the Master Separation and Distribution Agreement).

1.22 “POWER IC” means Motorola’s power control integrated circuit identified as of the Effective Date as the “POWER IC” integrated circuit and including, but not limited to, the “POWER IC” integrated circuit having part nos. including, but not limited to, 5185765B26.

1.23 “RFP99” means Motorola’s direct conversion RF integrated circuit identified as of the Effective Date as the “RFP99” integrated circuit and including, but not limited to, the “RFP99” integrated circuit having part nos. including, but not limited to, 5185163C06.

1.24 “Sole Source Products” means all CGISS Products other than the Alternate Source Products.

1.25 “SONATA” means Motorola’s receiver and dual conversion integrated circuit identified as of the Effective Date as the “SONATA” integrated circuit and including, but not limited to, the “SONATA” integrated circuit having part nos. including, but not limited to, 5185353D15.

1.26 “TOMAHAWK” means Motorola’s synthesizer receiver and transmitter integrated circuit identified as of the Effective Date as the “TOMAHAWK” integrated circuit and including, but not limited to, the “TOMAHAWK” integrated circuit having part nos. including, but not limited to, 5185143E02, 5185956E44, and 5185956E33.

B2-3	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

1.27 “VCO BUFFER IC” means Motorola’s voltage control oscillator buffer integrated circuit identified as of the Effective Date as the “VCO” integrated circuit and including, but not limited to, the “VCO” integrated circuit having part nos. including, but not limited to, 5105750U54.

1.28 “WIPC” means Motorola’s direct conversion and synthesizer integrated circuit identified as of the Effective Date as the “WIPC” integrated circuit and including, but not limited to, the “WIPC” integrated circuit having part nos. including, but not limited to, 5185368C21.

2. LICENSES GRANTED

2.1 Frac-N Patent Cross-License. Subject to the terms and conditions set forth in these CGISS Sector Terms:

(a) Motorola hereby grants to each member of the Freescale Group, under the Motorola Frac-N Patents, an irrevocable, personal, worldwide, non-exclusive, royalty-free, paid-up right and license to, make and have made, sell, offer to sell, import and dispose of Semiconductor Products or Software; no right or license is granted under this Section 2.1(a) to sublicense any of the foregoing rights to third Persons; and

(b) Freescale hereby grants to each member of the Motorola Group, under the Freescale Frac-N Patents, an irrevocable, personal, worldwide, non-exclusive, royalty-free, paid-up right and license to: (i) use and have made Semiconductor Products; (ii) use, make and have made Software; and (iii) sell, offer to sell, import and dispose of any equipment offered for sale by a member of the Motorola Group that incorporates a Semiconductor Product and/or Software so made; no right or license is granted under this Section 2.1(b) to sublicense any of the foregoing rights to third Persons.

2.2 BGA Patent License. Subject to the terms and conditions set forth in these CGISS Sector Terms, Freescale hereby grants to each member of the Motorola Group, under the BGA Patents, an irrevocable, personal, worldwide, non-exclusive, royalty-free, paid-up right and license to: (a) use and have made Semiconductor Products that employ BGA Packaging; and (b) sell, offer to sell, import and dispose of any equipment offered for sale by any member of the Motorola Group that incorporates a Semiconductor Product so made that employs BGA Packaging. No right or license is granted under this Section 2.2 (BGA Patent License) to sublicense any of the foregoing rights to third Persons.

2.3 Alternate Source Product License. Subject to the terms and conditions of these CGISS Sector Terms, Freescale hereby grants each member of the Motorola Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license, under Freescale’s IC Patent Claims and Non-Patent Intellectual Property Rights in the CGISS Product Design Information for each Alternate Source Product, to: (a) use and modify the CGISS Product Design Information to create Derivatives of the Alternate Source Product (the “Alternate Source Product Derivatives”); (b) use, have made, sell, offer to sell, import and otherwise dispose of such Alternate Source Product and Alternate Source Product Derivatives;

B2-4	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

(c) reproduce, display, perform and distribute the CGISS Product Design Information in such Alternate Source Products solely as necessary and for the purpose of the foregoing; and (d) sublicense any of the foregoing rights to third Persons other than the right to create Alternate Source Derivatives. Notwithstanding the foregoing, nothing in this Section 2.3 (Alternate Source Product License) obligates Freescale to deliver to Motorola any CGISS Product Design Information already in Motorola’s possession as of the Effective Date with respect to any Alternate Source Product.

2.4 End of Life License. Subject to the terms and conditions of these CGISS Sector Terms, Freescale hereby grants each member of the Motorola Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license, under Freescale’s IC Patent Claims and Non-Patent Intellectual Property Rights in the CGISS Product Design Information for each Sole Source Product, to: (a) use and modify the CGISS Product Design Information to create Derivatives of the Sole Source Product after the EOL Date for such product (the “Sole Source Product Derivatives”); (b) use, have made, sell, offer to sell, import and otherwise dispose of such Sole Source Product and Sole Source Product Derivatives after the EOL Date for such product; (c) reproduce, display, perform and distribute the CGISS Product Design Information in such Sole Source Products after the EOL Date for such product solely as necessary and for the purpose of the foregoing; and (d) sublicense any of the foregoing rights to third Persons other than the right to create Sole Source Product Derivatives.

2.5 Resale License. Subject to the terms and conditions of these CGISS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under the Motorola Non-Patent Intellectual Property Rights and Motorola IC Patent Claims in the CGISS Products, to: (a) reproduce, display and perform such CGISS Products and distribute such CGISS Products directly or indirectly to its customers; and (b) use, make, have made, sell, offer to sell, import and otherwise dispose of such CGISS Products directly or indirectly to its customers. No right or license is granted under this Section 2.5 (Resale License) to: (i) sublicense any of the foregoing rights to third Persons; or (ii) create or otherwise dispose of any Derivative of the CGISS Products.

2.6 No Transfer. Except as expressly provided herein, nothing in these CGISS Sector Terms obligates either party to deliver to the other party any Technology that is already in the other party’s possession as of the Effective Date.

3. RESTRICTIONS AND RETAINED RIGHTS

3.1 Retained Rights. Each member of the Motorola Group and the Freescale Group reserve all of their respective Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing: (i) each member of the Motorola Group shall retain ownership of all Motorola Patent and Motorola Non-Patent Intellectual Property Rights in and to the Motorola Frac-N Patents and Motorola Sector Technology; and (ii) each member of the Freescale Group shall retain ownership of all Freescale Patent and Freescale Non-Patent Intellectual Property Rights in and to the BGA Patents, Freescale Frac-N Patents and Freescale Sector Technology. Notwithstanding the foregoing,

B2-5	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

nothing in these CGISS Sector Terms shall be construed as a transfer or assignment by: (A) any member of the Freescale Group of any Freescale Technology embodied in or used to develop the CGISS Products, if any; (B) any member of the Freescale Group of any Freescale Technology necessary to practice the Freescale Frac-N Patents or BGA Patents, if any; or (C) any member of the Motorola Group of any Motorola Technology necessary to practice the Motorola Frac-N Patents, if any.

3.2 Derivative Technology Rights. The right to create Derivative Technology granted above shall not be construed to confer any Patent rights with respect to such Derivative Technology except, and solely to the extent, such Patent rights are granted with respect to the underlying Licensed Technology.

3.3 Third Party Technology Rights. No right or license is granted hereunder with respect to any third Person Technology incorporated or embodied in or necessary to use or make the Licensed Technology or to practice any of the BGA Patents or Frac-N Patents.

3.4 Confidentiality. The parties acknowledge and agree that all information and material comprising the marketing requirements documents and detailed technical specifications for TOMAHAWK IC constitutes the Confidential Information of Motorola. Notwithstanding anything to the contrary in the Agreement or this Supplement B2, no member of the Freescale Group may disclose such Confidential Information to any third Person without Motorola’s prior written consent except that Freescale may disclose such Confidential Information without Motorola’s prior written consent, subject to Article 7 of the Agreement (Confidentiality), to contractors of Freescale for use in their performance of design, manufacturing and testing services for Freescale.

3.5 Restrictions.

(a) Legal Notices and Source Code Disclosure – Except as expressly set forth herein, or as the applicable party otherwise expressly approves in writing: (i) each member of a party’s Group shall reproduce and include on all copies and media for the Licensed Technology of the other party (and any Derivatives thereof) the product identification, copyright notice and any legal legend that appears on such Licensed Technology as originally provided by the other party; (ii) no member of the either party’s Group shall (and no member of the either party’s Group shall authorize, encourage or facilitate any third Person to): (A) remove alter or obscure any product identification, copyright notice and any legal legend required to be included on the Licensed Technology of the other party as set forth above; or (B) distribute, disclose or otherwise make available to any third Person the Source Code for any Licensed Technology of the other party.

(b) Reverse Engineering – Except as expressly set forth herein, or as otherwise expressly agreed upon in writing, no member of the either party’s Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the Licensed Technology of the other

B2-6	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

party or any Derivatives thereof by any means whatsoever except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

4. OTHER RIGHTS AND OBLIGATIONS

4.1 Supply of CGISS Products. The unit pricing and other terms and conditions with respect to the purchase by Motorola of CGISS Products from Freescale shall be as set forth in the Master Semiconductor Purchase Agreement to the extent such products are expressly referenced in such agreement.

4.2 End Of Life Transfers and Notices. With respect to each Sole Source Product, Freescale shall: (a) provide Motorola notice of the “End of Life” status of such Sole Source Product (i) in accordance with the terms of the Master Semiconductor Purchase Agreement with respect to Sole Source Products expressly referenced in such agreement, and (ii) with respect to all other Sole Source Products, within thirty (30) days after Freescale has internally designated such product as being on “End of Life” status; and (b) within thirty (30) days after the EOL Date for such Sole Source Product, a copy of the applicable CGISS Product Design Information then in Freescale’s possession or otherwise permit designated Motorola personnel to access and copy such CGISS Product Design Information (at a mutually agreed upon place, time and schedule). If Motorola exercises its right under Section 2.4 (End of Life License) to have any Sole Source Product or Sole Source Product Derivative manufactured for Motorola, Motorola shall provide Freescale with written notice of identity and location of the applicable foundry.

4.3 BGA Revenue Share.

(a) During the period commencing on the Effective Date and continuing through December 31, 2004 (the “Revenue Share Period”), Freescale shall pay to Motorola sixty percent (60%) of the gross revenues accrued to any member of the Freescale Group in connection with the licensing of any BGA Patent during the Revenue Share Period (the “CGISS Revenue Share”).

(b) At the end of each calendar quarter during the Revenue Share Period, Freescale shall submit to Motorola: (i) a reasonably detailed written report with respect to the revenues accrued to any member of the Freescale Group during such quarter in connection with the licensing of any BGA Patents by any member of the Freescale Group; and (ii) in accordance with the revenues indicated on such report, the applicable CGISS Revenue Share for such quarter.

(c) Freescale shall keep complete and accurate books and records with respect to revenues accrued to any member of the Freescale Group in connection with the licensing of any BGA Patents during the Revenue Share Period. Motorola may engage a certified public accountant (a “CPA”) reasonably acceptable to Freescale to inspect and audit such books and records to determine Freescale’s compliance with the requirements of this Section 4.3. Motorola acknowledges and agrees that such audit: (i) may be conducted no more than once in any twelve (12) month period; (ii) is subject to execution by CPA of a non-disclosure agreement with respect to the books and records reviewed; and (iii) shall be conducted only on at least ten (10) days prior written notice and only in a manner that does not unduly interfere with the normal business operations of Freescale. Motorola shall bear the cost of such audit unless such audit reveals an under payment of seven percent (7%) or more in which case such costs shall be borne by Freescale.

B2-7	Sector License Terms –
	Commercial, Gov’t & Industrial Solutions Sector

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B3 SECTOR LICENSE TERMS

GLOBAL TELECOM SOLUTIONS SECTOR/iDEN

These GTSS-iDEN Sector License Terms (these “iDEN Sector Terms”) set forth the terms and conditions pursuant to which certain Technology, Patents and Non-Patent Intellectual Property Rights relating to certain products of Motorola’s Global Telecom Solutions Sector – iDEN (“iDEN”) are licensed to Freescale as well as certain commercial arrangements between iDEN and Freescale with respect to such products. In particular, these iDEN Sector Terms are intended to reflect certain arrangements between Motorola’s Semiconductor Products Sector (“SPS”) and iDEN immediately prior to the Effective Date with respect to such Technology, Patents and Non-Patent Intellectual Property Rights.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to such Technology, Patents and Non-Patent Intellectual Property Rights developed or otherwise acquired solely or jointly by or for Freescale and iDEN. In addition, all terms not defined in these iDEN Sector Terms shall have the meaning set forth in the Agreement.

1. DEFINITIONS

1.1. “Air Interface Compliant Product” means any Semiconductor Product or System that is substantially compliant with the iDEN Air Interface Protocol.

1.2. “Custom Modules” means (a) digital signal processor and microprocessor program code, instructions and fixed tables, which are supplied from Motorola through iDEN or developed by Freescale for use in Custom Products, (b) other code and instructions supplied from iDEN to Freescale to be written into the ROM sections of integrated circuits, and (c) Motorola’s Cartesian Feedback Linearization System.

1.3. “Custom Products” means the Classic IC, ODCT IC, Patriot Bravo IC, Patriot CDR3 IC, Patriot HIP6W IC, Patriot Indy IC, Redcap2 IC, Redcap IC, Roadrunner IC, Sledgehammer IC, Tomahawk IC, WPIC IC and Zeus IC.

1.4. “Freescale Embedded Technology” means, with respect to a Semiconductor Product, standard cell libraries, input/output structures, packaging technology and other Freescale Technology embedded in the Custom Products.

1.5. “Freescale Sector Technology” means the Freescale Embedded Technology and the Level 2 and Level 3 Specifications for the Zeus IC.

1.6. “Freescale Wireless Semiconductor Product” means a Wireless Semiconductor Product manufactured and sold by Freescale.

B3-1	Sector License Terms –
	Global Telecom Solutions Sector/iDEN

1.7. “iDEN Air Interface Protocol” means the wireless air interface protocol that is based on the iDEN Technology and is used by a communication device to communicate with an iDEN network.

1.8. “iDEN Sector Patents” means those claims of a Motorola Patent that would be infringed by the iDEN Air Interface Protocol.

1.9. “IPC Software” means Motorola’s proprietary Inter-Processor Communications (IPC) Software that directs communication between logic cores within an integrated circuit or between two or more integrated circuits, in a form to be mutually agreed by the parties.

1.10. “IPC Derivatives” means a Derivative of the IPC Software or any portion thereof.

1.11. “Level 2 Specification” means, with respect to a Motorola integrated circuit, the device architectural block diagram and sub-system specifications which (i) describe in technical terms at a high level, the various modules within the device that constitute the IC, (ii) define how the modules in the device will operate together, and the architectural requirements necessary for each module to meet the goals of the device, and (iii) discuss the various sub-systems of the device and how they will operate. These concepts are defined via text, block diagrams, and the basic theory of operation.

1.12. “Level 3 Specification” means, with respect to a Motorola integrated circuit, the device detailed technical specifications which (i) provide a detailed description of every module/circuit block in the device and (ii) include specifications for each module, suggested implementations, detailed description of modes of operation, programming model, and current/power drain analysis.

1.13. “Licensed Technology” means the technology comprising or embodied in the Custom Products, Leveraged Technology Products, Motorola Design Specifications and IPC Software.

1.14. “Motorola’s Cartesian Feedback Linearization System” means a Motorola patented system that reduces the non-linearity of a radio frequency power amplifier and thereby reduces the spectral regrowth and emissions of a transmitter.

1.15. “Motorola Design Specifications” means the Level 2 and Level 3 Specifications for the Custom Products (other than the Zeus IC).

1.16. “Motorola Reserved Technology” means the Custom Modules.

1.17. “Motorola Sector Technology” means all Motorola Technology relating to the Custom Modules, the Motorola Design Specifications, as well as the system level technical embodiments of such specifications (excluding any Freescale Embedded Technology incorporated in any of the foregoing) and the IPC Software.

1.18. “ODCT IC” means Motorola’s radio frequency integrated circuit having part no. 5185963A90 and 5105457W87.

B3-2	Sector License Terms –
	Global Telecom Solutions Sector/iDEN

1.19. “Patriot Bravo IC” means Motorola’s baseband integrated circuit having part no. 5185594F01 and 5185594F03.

1.20. “Patriot CDR3 IC” means Motorola’s baseband integrated circuit having part no. 5195015D303.

1.21. “Patriot HIP6W/IC” means Motorola’s baseband integrated circuit having part no. 5195016D02.

1.22. “Patriot Indy IC” means Motorola’s baseband integrated circuit having part no. 51950117D05 and 5195017D06.

1.23. “Phoenix Platform Program” means the joint development program between Motorola and Freescale to create the Sledgehammer IC, Roadrunner IC and Zeus IC.

1.24. “Redcap2 IC” means Motorola’s integrated circuit having part no. 518130C40/SP29703VFR2.

1.25. “Roadrunner IC” means Motorola’s audio power management integrated circuit currently under development for Motorola by Freescale as part of the Phoenix Platform Program.

1.26. “Sledgehammer IC” means Motorola’s transceiver radio frequency integrated circuit currently under development as part of the Phoenix Platform Program.

1.27. “Tomahawk IC” means Motorola’s radio frequency integrated circuit having part nos. 5185956E44, 5185143E02 and 5185956E33-die/wafer.

1.28. “WPIC IC” means Motorola’s radio frequency integrated circuit having part no. 5185143E37, 5185368C21 and 5185127C02.

1.29. “Zeus IC” means a baseband integrated circuit currently under development as part of the Phoenix Platform Program.

2. LICENSES GRANTED

2.1. Embedded Technology License. Freescale grants to Motorola and each member of the Motorola Group the license set forth in Section 3.1 of the Agreement with respect to the Freescale Embedded Technology.

2.2. Custom Products License. Subject to the terms and conditions of these iDEN Sector Terms, Motorola hereby grants to each member of the Freescale Group under the Motorola Non-Patent Intellectual Property Rights and Motorola IC Patent Claims in the Custom Products a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license to: (i) use, import, make, and have made the Custom Products and to sell and offer to sell the Custom Products made solely to Motorola and its Affiliates; and (ii) reproduce, display, perform and distribute the Motorola Technology embodied in the Custom Products solely as necessary and for the purpose of the foregoing.

B3-3	Sector License Terms –
	Global Telecom Solutions Sector/iDEN

2.3. IPC License. Subject to the terms and conditions of these iDEN Sector Terms, Motorola hereby grants to each member of the Freescale Group a personal, perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free paid-up right and license under the Motorola Non-Patent Intellectual Property Rights in the IPC Software to: (a) prepare and have prepared IPC Software Derivatives; (b) reproduce the IPC Software and IPC Derivatives solely for use in connection with a Freescale Wireless Semiconductor Product; (c) use IPC Software and IPC Derivatives solely for use in connection with a Freescale Wireless Semiconductor Products; and (d) distribute the IPC Software and IPC Derivatives in object code form only for use in connection with a Freescale Wireless Semiconductor Product. Motorola will deliver the IPC Software to Freescale in source code and object code form on a date to be mutually agreed by the parties.

2.4. Leveraged Technology License.

(a) Subject to the terms and conditions of these iDEN Sector Terms, Motorola hereby grants to each member of the Freescale Group a personal, perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under Motorola’s Non-Patent Intellectual Property Rights in the Zeus IC to: (1) prepare and have prepared Derivatives of such integrated circuit that do not contain any Motorola Reserved Technology (the “Leveraged Zeus Products”); and (2) reproduce, display, perform and distribute such Leveraged Zeus Products.

(b) Subject to the terms and conditions of these iDEN Sector Terms, Motorola hereby grants to each member of the Freescale Group a personal, perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under the Motorola’s Non-Patent Intellectual Property Rights in the Motorola Design Specifications (excluding any specifications for Custom Modules) to: (1) prepare and have prepared Derivatives of such Specifications to develop integrated circuits that do not contain any Motorola Reserved Technology (the “Leveraged Derivative Products”); and (2) reproduce, display, perform and distribute such Leveraged Derivative Products.

2.5. Sublicense. No right is granted to sublicense any of the rights granted in this Article 2 (Licenses Granted) to any third Person, except as expressly provided herein.

2.6. No Transfer. Except as expressly provided herein, nothing in these iDEN Sector Terms obligates either party to deliver to the other party any Technology that is already in the other party’s possession as of the Effective Date.

3. RESTRICTIONS AND RETAINED RIGHTS

3.1. Motorola Retained Rights. Each member of the Motorola Group hereby expressly reserves all rights in and to all Motorola Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing, each member of the Motorola Group shall retain ownership of all Motorola Patent and Motorola Non-Patent Intellectual Property Rights in and to the Motorola Sector Technology. Notwithstanding the foregoing: (a) nothing in these iDEN Sector Terms shall be construed as a transfer or assignment

B3-4	Sector License Terms –
	Global Telecom Solutions Sector/iDEN

by any member of the Freescale Group of any Freescale Technology embodied in or used to develop or manufacture the Motorola Sector Technology; and (b) except for the license set forth in Section 2.2 (Custom Products License) no rights are granted under the Agreement (including this Supplement B3) in and to any Motorola Reserved Technology.

3.2. Air Interface Network. Notwithstanding anything herein or in the Agreement to the contrary, no right or license is granted to any member of the Freescale Group under any iDEN Sector Patents.

3.3. Freescale Retained Rights. Each member of the Freescale Group hereby expressly reserves all rights in and to all Freescale Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing, each member of the Freescale Group shall retain ownership of all Freescale Patent and Freescale Non-Patent Intellectual Property Rights in and to the Freescale Sector Technology. Notwithstanding the foregoing, nothing herein shall be construed as a transfer or assignment by any member of the Motorola Group of any Motorola Technology that is embodied in or used to develop or manufacture the Freescale Sector Technology.

3.4. Derivative Technology Rights. The right to create Derivative Technology otherwise granted above shall not be construed to confer any Patent rights with respect to such Derivative Technology except, and solely to the extent, such Patent rights are granted with respect to the underlying Licensed Technology.

3.5. Third Party Technology Rights. No right or license is granted hereunder with respect to any third Person Technology, if any, that may be incorporated or embodied in or necessary to use or make the Licensed Technology or that may be necessary to practice any of the Patents licensed under these iDEN Sector Terms.

3.6. Restrictions.

(a) Legal Notices and Source Code Disclosure – Except as expressly set forth herein, or as the applicable party otherwise expressly approves in writing: (i) each member of a party’s Group shall reproduce and include on all copies and media for the License Technology of the other party (and any Derivatives thereof) the product identification, copyright notice and any legal legend that appears on such Licensed Technology as originally provided by the other party; (ii) no member of the either party’s Group shall (and no member of the either party’s Group shall authorize, encourage or facilitate any third Person to): (A) remove alter or obscure any product identification, copyright notice and any legal legend required to be included on the Licensed Technology of the other party as set forth above; or (B) distribute, disclose or otherwise make available to any third Person the Source Code for any Licensed Technology.

(b) Reverse Engineering – Except as expressly set forth herein, or as otherwise expressly agreed upon in writing, no member of the either party’s Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the Licensed Technology of the other party or any Derivatives thereof by any means whatsoever except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

B3-5	Sector License Terms –
	Global Telecom Solutions Sector/iDEN

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B4 SECTOR LICENSE TERMS

INTEGRATED ELECTRONIC SYSTEMS SECTOR

These IESS Sector License Terms (these “IESS Sector Terms”) set forth the terms and conditions pursuant to which certain Technology, Patents and Non-Patent Intellectual Property Rights relating to certain products of Motorola’s Integrated Electronic Systems Sector (IESS) are licensed to Freescale as well as certain commercial arrangements between Motorola and Freescale with respect to such products.

These IESS Sector Terms are intended to reflect certain arrangements between Motorola’s Semiconductor Products Sector (SPS) and IESS immediately prior to the Effective Date including certain of the arrangements described under: (a) the Memorandum of Understanding between ACES, GPS Products Group and SPS DART regarding the Sale and Support of Motorola GPS Products; (b) Commercial Agreement between AIEG and SPS Regarding the Sale of ProSAK IC; and (c) Memorandum of Understanding between Motorola SPS Driver Information Systems (DIS) Operation and IESS Telematics Communications Group (TCG) regarding the distribution sale of Motorola GPS chipset products, Oncore chipset pricing and PowerStrike GPS royalty.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to Technology, Patents and Non-Patent Intellectual Property Rights developed or otherwise acquired solely or jointly by or for Freescale and IESS. In addition, all terms not defined in these IESS Sector Terms shall have the meaning set forth in the Agreement.

1. DEFINITIONS

1.1 “AICE IC” means Motorola’s first generation family of engine control module input conditioning integrated circuits identified as of the Effective Date as the “AICE” integrated circuit and including, but not limited to, the “AICE” integrated circuits having Motorola part nos. 5142492Uxx (U01 & U02) and 5142500Uxx (U01 & U02).

1.2 “ATLANTIC IC” means Motorola’s engine control input conditioning integrated circuit identified as of the Effective Date as the “ATLANTIC” integrated circuit and including, but not limited to, the “ATLANTIC” integrated circuit having part nos. including, but not limited to SC370752FNR2 & SC370719FNR2.

1.3 “ATLAS IC” means Motorola’s engine control input signal processing integrated circuit identified as of the Effective Date as the “ATLAS” integrated circuits having Motorola part nos. 5144732 U01 / U02.

B4-1	Sector License Terms –
	Integrated Electronic Systems Sector

1.4 “BOB IC” means Motorola’s power supply integrated circuit for passenger vehicles identified as of the Effective Date as the “BOB” integrated circuit and including, but not limited to, the “BOB” integrated circuit having Motorola part no. 5144733U01.

1.5 “Custom Products” means individually the ORION IC, ISKRA IC, AICE IC, TREX1.x IC, MIST IC, PAN IC, ATLAS IC, MOTION IC, TORC IC and GIN IC.

1.6 “Derivative Technology” means any Derivative of the Licensed Technology.

1.7 “Filter Conversion Tool” means a Matlab-based software tool for the conversion of the Intersil integrated circuit knock parameters (“Harris IC parameters”) to ProSAK format owned by Motorola and developed by IESS.

1.8 “Freescale Embedded Technology” means, with respect to a Semiconductor Product, Freescale’s standard cell libraries, input/output structures, packaging technology and other Freescale Technology embedded in such product.

1.9 “Freescale Sector Technology” means, solely for purposes of these IESS Sector Terms, (a) the Freescale TSI Transition Technology, (b) the Freescale Embedded Technology with respect to the Custom Products, Resale Integrated Circuits, Resale GPS Products, BOB IC, HEAPS IC and TORC IC (c) the PowerStrike IC, but not including the 12-channel GPS correlator design block and the embedded ROM software instantiated in the PowerStrike IC and (d) the Roadrunner IC, but not including the 8-channel GPS correlator design block and the embedded ROM software, if any, instantiated in the Roadrunner IC.

1.10 “Freescale TSI Transition Technology” means, solely for purposes of these IESS Sector Terms, the RTL files for the PSC Controller, BDLC J1850 Controller, MSCAN Controller and FlexCAN Controller modules and all Freescale Technology related thereto.

1.11 “GAM Patent” means any of the Motorola Patents set forth on Schedule A to this Supplement B4.

1.12 “GIN IC” means Motorola’s engine control input signal processing integrated circuit identified as of the Effective Date as the “GIN” integrated circuit and including, but not limited to, the “GIN” integrated circuit having Motorola part no. XC370720.

1.13 “HEAPS IC” means Motorola’s power supply integrated circuit for heavy vehicles identified as of the Effective Date as the “HEAPS” integrated circuit and including, but not limited to, the “HEAPS” integrated circuit having Motorola part no. 5140060Y01.

1.14 “IESS Tools” means, collectively and individually, the Filter Conversion Tool, Knock Calibration Tool and Sensor Placement Tool and any upgrades, upgrades and new releases thereof that Motorola provides to Freescale pursuant to Section 6.1 (Tool Upgrades and Delivery).

B4-2	Sector License Terms –
	Integrated Electronic Systems Sector

1.15 “ISKRA IC” means Motorola’s 2^nd generation ignition control integrated circuit identified as of the Effective Date as the “ISKRA” integrated circuit and including, but not limited to, the “ISKRA” integrated circuit having Motorola part no. 5140593Y01.

1.16 “Knock Calibration Tool” means MKICS (Motorola Knock IC Calibration System) calibration units manufactured by the Automotive Communications and Electronic Systems (“ACES”) group of IESS for use with the ProSAK IC.

1.17 “Licensed Technology” means the Technology comprising or embodied in the Custom Products, Resale Integrated Circuits, Resale GPS Products, BOB IC, HEAPS IC, VSP4 Software, Freescale TSI Transition Technology, Freescale Embedded Technology and IESS Tools.

1.18 “MIST IC” means Motorola’s 2^nd generation engine control input signal processing integrated circuit identified as of the Effective Date as the “MIST” integrated circuit and including, but not limited to, the “MIST” integrated circuits having Motorola part nos. 5140151Yxx (Y01 thru Y06).

1.19 “MOTION IC” means Motorola’s ignition control integrated circuit identified as of the Effective Date as the “MOTION” integrated circuit and including, but not limited to, the “MOTION” integrated circuit having Motorola part no. XC370722.

1.20 “Motorola Reserved Technology” means the: (a) variable reluctance, Hall-effect circuit block instantiated in the TREX1.x IC; (b) eight (8) channel GPS correlator design block and the embedded ROM software, if any, instantiated in the ROADRUNNER IC; (c) twelve (12) channel GPS correlator design block and the embedded ROM software instantiated in the POWERSTRIKE IC; and (d) ionization detection circuit block instantiated in the ISKRA IC.

1.21 “Motorola Sector Technology” means, solely for purposes of these IESS Sector Terms, all Motorola Technology relating to Custom Products, Resale Integrated Circuits, BOB IC, HEAPS IC, Resale GPS Products, VSP4 Software and IESS Tools (excluding any Freescale Embedded Technology incorporated in any of the foregoing).

1.22 “Net Sales” means the actual gross selling price specified on the invoice for the sale of a product less all taxes, duties, shipping costs, insurance, returns and customary trade discounts.

1.23 “ORION IC” means Motorola’s 2^nd generation ignition control integrated circuit identified as of the Effective Date as the “ORION” integrated circuit and including, but not limited to, the “ORION” integrated circuit having Motorola part no. 5140150Y01.

1.24 “PAN IC” means Motorola’s engine control input signal processing integrated circuit identified as of the Effective Date as the “PAN” integrated circuit and including, but not limited to, the “PAN” integrated circuit having Motorola part no. XC370712DW.

B4-3	Sector License Terms –
	Integrated Electronic Systems Sector

1.25 “POWERSTRIKE IC” means the GPS integrated circuits identified as of the Effective Date as the “POWERSTRIKE” integrated circuits having Motorola part nos. 5143943U01/XC550007HCPV16A and 5187300J01/SC550007VPV16A.

1.26 “ProSAK IC” (Programmable Stand Alone Knock) means Motorola’s anti-knock integrated circuit identified as of the Effective Date as the “ProSAK” integrated circuit and including, but not limited to, the “ProSAK” integrated circuit having Motorola part no. 5144951U01.

1.27 “Resale Integrated Circuits” means the products identified as of the Effective Date as the ProSAK IC, PowerStrike IC (PowerStrike and PowerStrike Plus), Atlantic IC and Roadrunner IC.

1.28 “Resale GPS Products” means the Global Positioning System (GPS) integrated circuits and GPS integrated circuit modules that Freescale purchases from any member of the Motorola Group and which, as of the Effective Date, are sold under the product family names: (a) Instant GPS IC (and having part nos. PG 4100 (sample) and MG 4100 (Production)); and (b) FS Oncore Module (and having part designations PFS Oncore (sample) and FS Oncore (production)).

1.29 “ROADRUNNER IC” means the GPS integrated circuits identified as of the Effective Date as the “ROADRUNNER” integrated circuits having Motorola part nos. 5143909U01/SS38140EF05C.

1.30 “Sensor Placement Tool” means the sensor placement tool manufactured by AIEG for use with the ProSAK IC.

1.31 “Sensor Product” means a Semiconductor Product the function of which is to sense a physical property and generate an electrical signal in response to the sensed physical property.

1.32 “TORC IC” means Motorola’s Twin Output Regulated Current integrated circuit for transmission solenoid constant current control identified as of the Effective Date as the “TORC” integrated circuit and including, but not limited to, the “TORC” integrated circuits having Motorola part no. 5144700U01.

1.33 “Standard Supply Terms” means Motorola’s then standard terms and conditions with respect to the purchase and supply of hardware and software tools relating to the ProSAK IC.

1.34 “TREX1.x IC” means Motorola’s first generation transmission regulator integrated circuits identified as of the Effective Date as the “TREX1.x” integrated circuits and including, but not limited to, the “TREX1.x” integrated circuits having Motorola part nos. 5140349Yxx (Y01 & Y02).

B4-4	Sector License Terms –
	Integrated Electronic Systems Sector

1.35 “TSI Transition Technology Product” means a Semiconductor Product that: (a) is a single Packaged Device; (b) contains a parallel host interface (address, data, chip select); (c) contains at least one of a PSC Controller, BDLC J1850 Controller, MSCAN Controller or FlexCAN controller; (d) contains at least one of a DSP acceleration block, a serial data conversion block, a MOST vehicle bus data buffering block, a DMA controller, a serial communications block, a timers/counters/PWMs, digital I/O, analog I/O, Real Time Clock, Analog to Digital converter or a RAM; and (e) does not contain a general purpose programmable processing element. An individual TSI Transition Technology Product also includes any succeeding version of such product provided such succeeding version differs from the original TSI Transition Technology Product only in the correction of defects or design errors.

1.36 “VSP4 Patent Claims” means the claims of those Motorola Patents set forth on Schedule B to this Supplement B4.

1.37 “VSP4 Software” means Motorola’s proprietary hands-free vehicular speakerphone Software for the automotive market in the form such Software exists as of the Effective Date.

2. LICENSES GRANTED

2.1 Embedded Technology License. Freescale grants to Motorola and each member of the Motorola Group the license set forth in Section 3.1 of the Agreement with respect to the Freescale Embedded Technology.

2.2 TSI License. Subject to the terms and conditions of these IESS Sector Terms, Freescale hereby grants to each member of the Motorola Group under Freescale’s Patent and Non-Patent Intellectual Property Rights in the Freescale TSI Transition Technology a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, fee bearing right and license to: (a) make Derivatives of the Freescale TSI Transition Technology (the “Freescale TSI Derivatives”); (b) reproduce, display, perform and distribute such Freescale TSI Transition Technology and Freescale TSI Derivatives; and (c) use, make, have made, and import up to two (2) TSI Transition Technology Products incorporating all or part of the Freescale TSI Transition Technology or Freescale TSI Derivatives; and (d) to sell and offer to sell up to two (2) TSI Transition Technology Products directly or indirectly to its customers when embedded in Motorola telematics systems. Motorola’s TSI Transition Technology Products shipped to customers in production volumes aggregating less than one thousand (1,000) units will not count against the limitation of two (2) TSI Transition Technology Products.

2.3 Custom Products License. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group under the Motorola Non-Patent Intellectual Property Rights and Motorola IC Patent Claims in the Custom Products a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license to: (a) use, import, make, and have made the Custom Products and to sell and offer to sell the Custom Products made solely to members of the Motorola Group; and (b) reproduce, display, perform and distribute the Motorola Technology embodied in the Custom Products

B4-5	Sector License Terms –
	Integrated Electronic Systems Sector

solely as necessary and for the purpose of the foregoing. No right or license is granted under this Section 2.3 (Custom Products License) to create or otherwise dispose of any Derivative of the Custom Products.

2.4 VSP4 License. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-bearing right and license under the Motorola Non-Patent Intellectual Property Rights, VSP4 Patent Claims and Motorola IC Patent Claims in the VSP4 Software to: (a) make Derivatives of the VSP4 Software (the “VSP4 Derivatives”); (b) reproduce, display, perform and distribute such VSP4 Software and VSP4 Derivatives; and (c) use, make, have made, sell, offer to sell and import the VSP4 Software and VSP4 Derivatives directly or indirectly to its customers.

2.5 Resale Integrated Circuits License. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-bearing (except as set forth below) right and license under the Motorola Non-Patent Intellectual Property Rights and Motorola IC Patent Claims in the Resale Integrated Circuits to: (a) reproduce, display and perform such Resale Integrated Circuits and distribute such Resale Integrated Circuits direct or indirectly to its customers; and (b) use, make, have made, sell, offer to sell and import the Resale Integrated Circuits directly or indirectly to its customers. No right or license is granted under this Section 2.5 (Resale Integrated Circuits License) to create or otherwise dispose of any Derivative of the Resale Integrated Circuits.

2.6 Leveraged Technology License. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under the Motorola Non-Patent Intellectual Property Rights embedded in the TORC IC, ISKRA IC and TREX1.x IC to: (a) prepare and have prepared Derivatives of such integrated circuits that do not contain any Motorola Reserved Technology or otherwise include the same feature set as the TORC IC (the “Leveraged Derivative Products”); (b) reproduce, display, perform and distribute such Leveraged Derivative Products; and (c) use, make, have made, sell, offer to sell and import the Leveraged Derivative Products directly or indirectly to its customers.

2.7 IESS Tools. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under the Motorola Non-Patent Intellectual Property Rights in the IESS Tools to: (a) use, sell and offer to sell IESS Tools acquired by Freescale as set forth in these IESS Sector Terms; and (b) sublicense Freescale’s customers to use the software comprising the IESS Tools (in object code only) solely pursuant to an end user license agreement.

2.8 Licensed Motorola Technology. Subject to the terms and conditions of these IESS Sector Terms, Motorola hereby grants to each member of the Freescale Group the license set forth in Section 3.2 of the Agreement with respect to the Licensed Motorola Technology incorporated in the BOB IC and the HEAPS IC.

B4-6	Sector License Terms –
	Integrated Electronic Systems Sector

2.9 Freescale Sensor Product License. Subject to the terms and conditions of these IESS Sector Terms, Freescale hereby grants to each member of the Motorola Group a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license under the Freescale Patents to use, make, have made, sell, offer to sell, import and otherwise dispose of Motorola Sensor Products.

2.10 Sublicense. Except as expressly provided herein, no right is granted under these IESS Sector Terms to sublicense any of the rights granted in this Article 2 (Licenses Granted) to any third Person.

2.11 No Transfer. Except as expressly provided herein, nothing in these IESS Sector Terms obligates either party to deliver to the other party any Technology that is already in the other party’s possession as of the Effective Date.

3. RESTRICTIONS AND RETAINED RIGHTS

3.1 Motorola Retained Rights. Each member of the Motorola Group hereby expressly reserves all rights in and to all Motorola Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing, each member of the Motorola Group shall retain ownership of all Motorola Patent and Motorola Non-Patent Intellectual Property Rights in and to the Motorola Sector Technology. Notwithstanding the foregoing: (a) nothing in these IESS Sector Terms shall be construed as a transfer or assignment by any member of the Freescale Group of any Freescale Technology embodied in or used to develop or manufacture the Motorola Sector Technology; (b) except for the license set forth in Section 2.3 (Custom Products License) no rights are granted under the Agreement (including this Supplement B4) in and to any Motorola Reserved Technology; and (c) no rights are granted under the Agreement (including this Supplement B4) under any GAM Patent.

3.2 Freescale Retained Rights. Each member of the Freescale Group hereby expressly reserves all rights in and to all Freescale Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing, each member of the Freescale Group shall retain ownership of all Freescale Patent and Freescale Non-Patent Intellectual Property Rights in and to the Freescale Sector Technology. Notwithstanding the foregoing, nothing herein shall be construed as a transfer or assignment by any member of the Motorola Group of any Motorola Technology that is embodied in or used to develop or manufacture the Freescale Sector Technology.

3.3 Derivative Technology Rights. The right to create Derivative Technology granted above shall not be construed to confer any Patent rights with respect to such Derivative Technology except, and solely to the extent, such Patent rights are granted with respect to the underlying Licensed Technology.

3.4 Third Party Technology Rights. No right or license is granted hereunder with respect to any third Person Technology, if any, that may be incorporated or embodied in or

B4-7	Sector License Terms –
	Integrated Electronic Systems Sector

necessary to use or make the Licensed Technology or that may be necessary to practice any of the Patents licensed under these IESS Sector Terms.

3.5 Restrictions.

(a) Legal Notices and Source Code Disclosure – Except as expressly set forth herein, or as the applicable party otherwise expressly approves in writing: (i) each member of a party’s Group shall reproduce and include on all copies and media for the Licensed Technology of the other party (and any Derivatives thereof) the product identification, copyright notice and any legal legend that appears on such Licensed Technology as originally provided by the other party; (ii) no member of the either party’s Group shall (and no member of the either party’s Group shall authorize, encourage or facilitate any third Person to): (A) remove alter or obscure any product identification, copyright notice and any legal legend required to be included on the Licensed Technology of the other party as set forth above; or (B) distribute, disclose or otherwise make available to any third Person the Source Code for any Licensed Technology.

(b) Reverse Engineering – Except as expressly set forth herein, or as otherwise expressly agreed upon in writing, no member of the either party’s Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the Licensed Technology of the other party or any Derivatives thereof by any means whatsoever except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

4. ROYALTIES, SERVICE FEES AND PAYMENTS

4.1 TSI License Fee. If Motorola or any other member of the Motorola Group elects to incorporate any Freescale TSI Transition Technology or Freescale TSI Derivative into any product to be made available to its customers then, in consideration of such rights as granted herein, Motorola shall promptly notify Freescale thereof in writing (such notice, a “Election Notice”) and, together with such notice, shall pay Freescale:

(a) a one-time payment of fifteen thousand dollars ($15,000.00) for the PSC Controller upon submission of Motorola’s Election Notice for the same;

(b) a one-time payment of fifteen thousand dollars ($15,000.00) for the BDLC J1850 Controller upon submission of Motorola’s Election Notice for the same;

(c) a one-time payment of fifteen thousand dollars ($15,000.00) for the MSCAN Controller upon submission of Motorola’s Election Notice for the same; and

(d) a one-time payment of fifteen thousand dollars ($15,000.00) for the FlexCAN Controller upon submission of Motorola’s Election Notice for the same.

B4-8	Sector License Terms –
	Integrated Electronic Systems Sector

4.2 Supply of Custom Products. The unit pricing and other terms and condition with respect to the purchase by members of the Motorola Group of Custom Products from Freescale shall be as set forth in the Master Semiconductor Purchase Agreement to be entered into by Motorola and Freescale following the Effective Date (in connection with the transactions contemplated by the Master Separation and Distribution Agreement).

4.3 VSP4 Royalty. In consideration of the license granted under these IESS Sector Terms with respect to the VSP4 Software, Freescale shall pay Motorola a royalty for each copy of the VSP4 Software or VSP4 Derivatives distributed to customers of any member of the Freescale Group (other than members of the Motorola Group) as follows:

Volume Step	Cumulative Volume	Royalty (per copy)
First 250,000 copies	250,000 copies	$1.00
Next 750,000 units	1,000,000 copies	$0.60
Over 1,000,000 copies	1,000,001 + copies	$0.40

4.4 Resale IC Royalty. In consideration of the license granted under these IESS Sector Terms with respect to the Resale Integrated Circuits, Freescale shall pay Motorola:

(a) ProSAK ICs — (i) no royalty for ProSAK ICs sold to members of the Motorola Group; and (ii) a royalty equal to ten percent (10%) of the Net Sales of all ProSAK ICs sold to all other Freescale customers regardless of the volume or pricing to such customers;

(b) Atlantic ICs – a royalty equal to (i) seven percent (7%) of the Net Sales of all Atlantic ICs sold directly to Ford Motor Company, Inc. or Visteon Corporation regardless of volume or customer pricing; and (ii) ten percent (10%) of the Net Sales of all Atlantic ICs sold to all other customers of Freescale regardless of volume or customer pricing.

Notwithstanding the foregoing, the parties acknowledge and agree that the licenses granted herein with respect to the PowersStrike IC, RoadRunner IC and Bob IC are royalty-free and paid-up for all sales after the Effective Date.

4.5 ProSAK Tool Pricing.

(a) Filter Calibration Tool – For each Filter Conversion Tool licensed by a member of the Freescale Group to its customers, Freescale shall pay Motorola the greater of: (i) ninety percent (90%) of the final license price obtained by such member of the Freescale Group; or (ii) Twenty Thousand Dollars ($20,000.00).

(b) Knock Calibration Tool — Motorola shall sell the Knock Calibration Tool to members of the Freescale Group pursuant to Section 6.3 for Eighteen Thousand Dollars ($18,000.00) per unit.

(c) Sensor Placement Tool — Motorola shall sell the Sensor Placement Tool to members of the Freescale Group pursuant to Section 6.3 for Ten Thousand Dollars ($10,000.00) per unit.

B4-9	Sector License Terms –
	Integrated Electronic Systems Sector

4.6 Records and Inspection. Each party and members of their respective Group shall keep complete and accurate books and records with respect to their payment obligations arising in connection with these IESS Sector Terms. Either party (the “Auditor”) may engage a certified public accountant (a “CPA”) reasonably acceptable to the other party (the “Audited Party”) to inspect and audit such books and records to determine the Audited Party’s compliance with the payment requirements of this Section 4 and the accuracy of the reports submitted under these IESS Sector Terms. The Auditor acknowledges and agrees that such audit: (a) may be conducted no more than once in any twelve (12) month period; (b) is subject to execution by CPA of a non-disclosure agreement with respect to the books and records reviewed; and (b) shall be conducted only on at least ten (10) days prior written notice and only in a manner that does not unduly interfere with the normal business operations of the Audited Party. The Auditor shall bear the cost of such audit unless such audit reveals an overpayment by the Auditor of seven percent (7%) or more as a result of a reporting misstatement in which case such costs shall be borne by the Audited Party.

5. INSTANT GPS RESELLER AGREEMENT

Promptly following the Effective Date, Motorola and Freescale agree to enter into a mutually agreed reseller agreement pursuant to which Freescale will act as a Motorola reseller with respect to the Resale GPS Products and undertake certain related activities on behalf of Motorola with respect to the Resale GPS Products (the “GPS Reseller Agreement”).

6. PROSAK OBLIGATIONS AND SERVICES

6.1 Tool Upgrades and Delivery. Motorola shall make available to members of the Freescale Group upgrades, updates and new versions of the Filter Conversion Tool that Motorola, in its discretion, deems suitable for commercial distribution under these IESS Sector Terms. Subject to the provisions in these IESS Sector Terms, order, shipping and delivery of the IESS Tools shall be subject to the then current Standard Supply Terms.

6.2 Filter Conversion Tool. Motorola shall provide general technical information support with respect to the Filter Conversion tool directly to members of the Freescale Group. Motorola shall name a technical contact for such support, which contact Motorola may change from time upon written notice to Freescale. As of the Effective Date such contact is Steve Rober. Freescale shall be responsible for direct customer support of the Filter Conversion Tool.

6.3 Calibration and Placement Tools.

(a) Members of the Freescale Group shall be responsible for quoting and delivering the Knock Calibration Tools and Sensor Placement Tools to customers of members of the Freescale Group; members of the Freescale Group may, in their sole discretion, establish the price of such tools to its customers.

B4-10	Sector License Terms –
	Integrated Electronic Systems Sector

(b) Motorola shall manufacture, test and deliver to Freescale Knock Calibration Tools and Sensor Placement Tools.

(c) Motorola shall designate in writing contacts for support of Knock Calibration Tools and Sensor Placement Tools, including the repair of damaged or defective units, which contact Motorola may change from time upon written notice to Freescale.

(d) At Freescale’s request, Motorola shall deliver to Freescale a MKICS tool specification and a Sensor Placement Tools specification.

6.4 IESS Tool Training. If Motorola offers direct customer training and support for the IESS Tools, Motorola will quote its prices for such training and support to Freescale customers upon request. Training will typically be quoted for one a (1) week training program and specified as on-site or at an IESS facility. All training will be quoted on a customer-by-customer basis. Due to limited capacity for this function, Motorola customers shall receive first priority for such training services.

6.5 ProSAK Post Sales Support. Freescale customer service will be the point of contact for all Freescale customer problems with respect to the ProSAK IC and IESS Tools. In addition: (a) Freescale will provide applications engineering support for such products; and (b) Motorola will support its customers, and Freescale, for circuit tools and system level tools for such product.

6.6 Warranties and Recalls. Motorola warrants to Freescale that the IESS Tools will perform in accordance with their specifications for one (1) year after delivery. Except for this express warranty, provision of the IESS Tools to Freescale is otherwise subject to Section 5.2 of the Agreement. Freescale’s then current standard terms and conditions regarding the warranty of ProSAK IC and IESS Tools will be followed with respect to warranties offered by Freescale for ProSAK ICs and IESS Tools to Freescale customers. Freescale will manage all customer interactions involving the ProSAK IC and IESS Tools. Motorola will be responsible for supporting resolution of any design related issues with the ProSAK IC and IESS Tools.

6.7 Technical Support. Upon written request by Freescale during the five (5) year period following the Effective Date, and provided IESS maintains associated technical competence (and subject to the availability of such resources), IESS agrees to provide a quote in response to Freescale’s request, specifying the cost for and availability and scope of reasonable technical support related to the ProSAK IC and to the IESS Tools at a rate not to exceed two thousand dollars ($2000) per engineer day. Motorola will invoice Freescale for any such support on a monthly basis with payment net forty-five (45) days from receipt of invoice.

B4-11	Sector License Terms –
	Integrated Electronic Systems Sector

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B5 SECTOR LICENSE TERMS

PERSONAL COMMUNICATIONS SECTOR

These PCS Sector License Terms (these “PCS Sector Terms”) set forth the terms and conditions pursuant to which certain Technology and Intellectual Property Rights relating to certain products of Motorola’s Personal Communications Sector (“PCS”) are licensed to Freescale as well as certain commercial arrangements between PCS and Freescale with respect to such products. In particular, these PCS Sector Terms are intended to reflect certain arrangements between Motorola’s Semiconductor Products Sector (“SPS”) and PCS immediately prior to the Effective Date.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to Technology, Patents and Non-Patent Intellectual Property Rights developed or otherwise acquired solely or jointly by or for Freescale and PCS. In addition, all terms not defined in these PCS Sector Terms shall have the meaning set forth in the Agreement (including Supplement C (Glossary of Technical Elements)).

1. DEFINITIONS

1.1 “Application Framework” means a software structure that enables Applications and Application Middleware/Supporting Services to run. The Application Framework runs on top of layers 1, 2 and 3 of the protocol stack.

1.2 “Application Middleware/Supporting Services” means software or hardware needed for certain Applications to run. For example, Application Middleware/Supporting Services include the “MMI-NS” on which a user interface Application runs, the imaging codec on which a camera Application runs and a VR codec on which a voice recognition Application runs.

1.3 “Applications” means, in the case of mobile phones, basic applications such as the phone book and SMS as well as more differentiated applications such as camera, video, MP3, UI, browser, etc.

1.4 “Authorized Sublicensee” means a third Person that has acquired a license from a member of the Freescale Group with respect to any PCS Phone Deliverable pursuant to and in accordance with Section 2.7 (PCS Sublicense) that is: (a) an original equipment manufacturer (OEM) or original design manufacturer (ODM) customer of a member of the Freescale Group purchasing the Freescale Wireless Component with which it will use the PCS Phone Deliverable; (b) an independent design house that will use the PCS Phone Deliverable to design products that use the Freescale Wireless Component; (c) a third Person engaged by a member of the Freescale Group as an agent to develop and deliver to Freescale Derivatives of PCS Phone Deliverables on behalf of a member of the Freescale Group; or (d) a third Person partner engaged by a member of

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the Freescale Group to develop Derivatives of PCS Phone Deliverables for use with the Freescale Wireless Component.

1.5 “Collaboration” means the undertakings of the parties under Schedule J of this Supplement B5.

1.6 “Complete Build” means those PCS Phone Deliverables that constitute all documentation, Hardware Specifications and Source Code associated with a particular Motorola mobile phone product used by PCS in that product’s development and commercialization. Complete Build includes, without limitation, PCS Protocol Stack, PCS System Tools, PCS Documentation, Application Frameworks, Application Middleware/Supporting Services and Applications.

1.7 “Hardware Specifications” means the specifications for the antenna connection, RF front end, baseband processor and PC board layout.

1.8 “Conformance Stability” means, with respect to Software, the condition in which Motorola has designated such Software as having achieved “Conformance Stability” in accordance with Motorola’s then current quality assurance protocol. Conformance Stability includes successful completion of conformance test suites CRTC/CRTU and Anite campaign, system simulator test cases and STEP (host based simulator for the stack) in accordance with Motorola’s GSM Stack Regression Test Policy.

1.9 “Final Type Approval” means, with respect to Software, the condition in which Motorola has designated such Software as having achieved “Final Type Approval” in accordance with Motorola’s then current quality assurance protocol. Final Type Approval includes official certification that the Software conforms to the GSM/GPRS standards as issued by a recognized certification authority.

1.10 “Freescale Java Deliverables” means the Java deliverables described in Schedule F to this Supplement B5. For clarity, Freescale Java Deliverables excludes the Metrowerks Java Software development kit and tools that Motorola currently licenses from Metrowerks.

1.11 “Freescale Wireless Component” means any Freescale proprietary baseband processor that: (a) is designed by or for a member of the Freescale Group; and (b) is designed to execute the instructions of the PCS Protocol Software to perform operations that support air interface functions substantially standardized in the Wireless Standards.

1.12 “Functional Stability” means, with respect to Software, the condition in which Motorola has designated such Software as having achieved “Functional Stability” in accordance with Motorola’s then current quality assurance protocol. Functional Stability includes successful completion of a live/lab stability test plan (GSM call establishment/stability and GPRS stability) and conformance stability subset (51.010) on all bands in accordance with Motorola’s GSM Stack Component Regression Test Plan.

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1.13 “Legacy GSM/GPRS Software” has the meaning set forth on Schedule B of this Supplement B5.

1.14 “Next-Gen EDGE Software” means the Software described as the “Next-Gen EDGE Software” on Schedule J of this Supplement B5.

1.15 “Next-Gen GSM/GPRS Software” means the Software described as the “Next-Gen GSM/GPRS Software” on Schedule J of this Supplement B5.

1.16 “Object Code” means computer programs in machine-readable form that is substantially or entirely in binary form or otherwise directly executable by a computer after processing or linking.

1.17 “Other PCS Deliverables” means the Multimedia and Codec deliverables described in Schedule G to this Supplement B5.

1.18 “PCS Documentation” means those PCS Phone Deliverables constituting all or part of user’s guides, compilation instructions, requirements documents, manuals and files regarding the installation, use, operation, functionality, troubleshooting, specifications, 3^rd party lists (e.g., non-Freescale IC manufacturers list), bills of materials, schematics, test procedures and plans, test results and other technical information for each PCS Protocol Stack and the PCS System Tools existing as of the date of delivery of each PCS Protocol Stack (as set forth on Schedule A, Schedule B and Schedule C to this Supplement B5). For clarity, such documentation includes the Hardware Specifications.

1.19 “PCS Phone Deliverables” means, collectively, the: (a) PCS UMTS Deliverables defined in Schedule A to this Supplement B5; (b) PCS GSM/GPRS Deliverables defined in Schedule B to this Supplement B5; and (c) PCS EDGE Deliverables defined in Schedule C to this Supplement B5.

1.20 “PCS Protocol Software” means the PCS Protocol Stack, the PCS Protocol Stack Derivatives, the PCS Software Interface and/or all other software of the PCS Phone Deliverables that is not PCS System Tools.

1.21 “PCS Protocol Stack” means those PCS Phone Deliverables that constitute all or part of a layered set of protocol instructions in Software form which, when executed by a processor, work together to support air interface functions substantially standardized in the Wireless Standards. For clarity, the PCS Protocol Stack includes layers 1, 2, and 3 of the mobile phone modem software and the software controlling the digital signal processor, which are the services that control the modem hardware that the Application Framework can draw upon to make a phone call; and the PCS Protocol Stack does not include any other Software products including any Application Middleware/Supporting Services, Application Framework or Applications.

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1.22 “PCS Protocol Stack Derivatives” means a Derivative of the PCS Protocol Stack, the PCS Software Interface, other software of the PCS Phone Deliverables that is not PCS System Tools, or any portion thereof.

1.23 “PCS Software Interface” means the PCS Phone Deliverables that constitute a refined API to the PCS Protocol Stack as described in Schedule J of this Supplement B5.

1.24 “PCS System Tools” means all or part of any or all PCS Phone Deliverables that constitute software tools associated with the PCS Protocol Stack.

1.25 “Project Deliverables” means, collectively and individually, the PCS Phone Deliverables, the Other PCS Deliverables and Freescale Java Deliverables.

1.26 “Project Derivative” means any Derivative developed in connection with these PCS Sector Terms of any Project Deliverable (including any portion or components thereof).

1.27 “Source Code” means computer programs in a form that is human readable and does not constitute Object Code.

1.28 “SUAPI” means a programming interface through which an Application Framework can access layers 1, 2 and 3 of a protocol stack.

1.29 “TAPI” means a programming interface used by an adjunct or applications processor to access the modem hardware.

1.30 “Third Person Restricted Software” means, collectively: (a) third Person Software, components and content incorporated in, or provided with, the PCS Phone Deliverables (including the Software, components and content set forth in Schedule E to this Supplement B5); and (b) Motorola Software subject to third Person restrictions (e.g., operator restrictions) incorporated in, or provided with, the PCS Phone Deliverables.

1.31 “Tier 1 OEM” means a third Person mobile phone OEM that has at any time attained at least a ten percent (10%) market share for mobile phones in any of GSM, CDMA 2000 (Narrowband CDMA) or UMTS markets for such phones.

1.32 “Time-To-Market Advantage” means, with respect to a PCS Protocol Stack to be delivered to Freescale, a period of one hundred thirty-five (135) days after the date that such PCS Protocol Stack has attained Functional Stability. For the avoidance of doubt, Time-to-Market Advantage will not be applicable to: (a) any Complete Build already in the possession of Freescale as of the Effective Date; or (b) the Strategic Customer Design Wins under Schedule I.

1.33 “Wireless Platform” means a Freescale Wireless Component in combination with the PCS Protocol Software, and may also include other Semiconductor Products.

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1.34 “VOB Database” means Motorola’s electronic exchange medium that Motorola uses in the internal development of its own mobile phone products and that is known as of the Effective Date as the “VOB”.

1.35 “Wireless Reference Designs” means those wireless reference design materials downloadable as of the Effective Date from the “Semiconductors” web page of the Motorola web site (http://e-www.motorola.com/webapp/sps/site/overview.jsp?nodeId=0MFB28t0GR).

2. PCS PROTOCOL SOFTWARE DELIVERY AND LICENSE

2.1 PCS Technology Deliveries.

(a) PCS Phone Deliverables– Motorola will deliver to Freescale the PCS Phone Deliverables, including the PCS Protocol Stacks, in accordance with the delivery schedules and other applicable provisions of Schedule A, Schedule B, and Schedule C of this Supplement B5. For clarity, Software of PCS Phone Deliverables will be provided in Source Code form unless otherwise expressly identified in the foregoing schedules as to be delivered to Freescale in Object Code only.

(b) Third Party Content –

(i) Freescale will be solely responsible for timely obtaining (and shall use commercially reasonable efforts to timely obtain) licenses and consents to Third Person Restricted Software and, aside from providing Freescale with reasonable assistance in obtaining such licenses, Motorola shall have no obligation or liability to the Freescale Group if for any reason Freescale is unable to do so. Motorola shall make a good-faith effort to ensure that Schedule E to this Supplement B5 is complete and, to the extent necessary, periodically update such Schedule E from time to time.

(ii) Freescale and each member of the Freescale Group will, at its expense: (A) defend Motorola (which, for purposes of this Section 2.1(b) (Third Party Content), includes the “Motorola Indemnified Parties” as defined in the Master Separation and Distribution Agreement) against any claim arising out of or in connection with the use or distribution of the Third Person Restricted Software by Freescale or its customers (each, a “Claim”); and (B) indemnify and hold harmless Motorola from and against all Damages incurred by Motorola with respect to such Claim or otherwise in connection with the use or distribution of such Third Person Restricted Software by Freescale or its customers.

(iii) Motorola shall promptly provide Freescale notice of any Claim for which indemnification is sought under this Section 2.1(b) (Third Party Content) (a “Claim Notice”). Following receipt of any Claim Notice by Freescale, Freescale shall take all steps reasonably necessary to mitigate any Damages with respect to such Claim and, without limiting the foregoing, shall at Motorola’s request: (A) promptly discontinue the sublicensing and distribution of the applicable Third Person Restricted Software; and (B) meet with Motorola to discuss other appropriate remedial measures. Notwithstanding anything to the contrary in this

B5-5

Agreement, in the event of any Damage or Claim subject to indemnification under this Section 2.1(b) (Third Party Content), Motorola shall have the right (in its discretion) to control and conduct the defense and settlement of such Damage or Claim including, without limitation, by negotiating appropriates licenses or consents for Freescale’s continued use of the applicable Third Person Restricted Software as contemplated under this Supplement B5.

(c) Disclaimer – Motorola provides all PCS Phone Deliverables and Other PCS Deliverables “AS IS”. Motorola will have no obligation to modify or attempt to modify the PCS Phone Deliverables to meet the needs of Freescale. Freescale acknowledges that the PCS Phone Deliverables are not commercial grade products and may have errors and omissions.

2.2 PCS Protocol Stack License. Subject to the terms and conditions of these PCS Sector Terms, and except as otherwise qualified in any of Schedules A, Schedule B or Schedule C to this Supplement B5, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under the Motorola Group’s Non-Patent Intellectual Property Rights in the PCS Protocol Software to:

(a) prepare and have prepared PCS Protocol Stack Derivatives;

(b) reproduce the PCS Protocol Software solely for use in connection with the Freescale Wireless Component;

(c) use PCS Protocol Software solely in connection with the Freescale Wireless Component; and

(d) after expiration of any applicable Time-to-Market Advantage, distribute the PCS Protocol Software to third Persons solely for use in connection with the Freescale Wireless Component.

2.3 PCS System Tools License. Subject to the terms and conditions of these PCS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under the Motorola Group’s Non-Patent Intellectual Property Rights in the PCS System Tools to: (a) prepare and have prepared Derivatives of the PCS System Tools; (b) reproduce and use the PCS System Tools and Derivatives of the PCS System Tools solely for use in connection with the Freescale Wireless Platform and Freescale Wireless Component; and (c) distribute and sublicense the PCS System Tools solely as set forth in Section 2.7 (PCS Sublicense) and solely for use in connection with the Freescale Wireless Platform and Freescale Wireless Component.

2.4 PCS Documentation License. Subject to the terms and conditions of these PCS Sector Terms, Motorola grants to each member of the Freescale Group, a perpetual, irrevocable, worldwide, non-exclusive, royalty-free, non-transferable license under the Motorola Group’s Non-Patent Intellectual Property Rights in the PCS Documentation to: (a) use, display, distribute, reproduce, and create Derivatives of the PCS Documentation; (b) incorporate any such material into written materials produced by any member of the Freescale Group; and (c) use such

B5-6

material to further Freescale’s support maintenance, development and distribution efforts in connection with the PCS Protocol Software.

2.5 Other PCS Deliverables. From time to time, Freescale may request delivery of and a license for any or all of the deliverables set forth on Schedule G to this Supplement B5 which request shall not be unreasonably denied. Such delivery and license shall be subject to terms and conditions to be agreed upon by the parties in writing (including any applicable royalties).

2.6 Wireless Reference Designs Licenses. Subject to the terms and conditions of these PCS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under Motorola Non-Patent Intellectual Property Rights in the Wireless Reference Designs to: (a) prepare and have prepared Derivatives of the Wireless Reference Designs (the “Reference Design Derivatives”); and (b) use, reproduce, display and distribute such Wireless Reference Designs solely for use in connection with a Freescale Semiconductor Product; and (c) sublicense the foregoing rights solely pursuant to an agreement that reasonably protects Motorola and its interest in the Wireless Reference Designs and solely to the extent necessary for Freescale customers to (i) incorporate the Wireless Reference Designs and Reference Design Derivatives into Freescale customer equipment, or (ii) use Wireless Reference Designs and Reference Design Derivatives in connection with Freescale customer equipment. With respect to the Motorola Source Code provided by Freescale to Freescale’s customers for use in connection with the Wireless Reference Designs; the foregoing license includes the right to distribute such Source Code to third Persons and to sublicense such Source Code to third Persons for use in connection with a Freescale Semiconductor Product.

2.7 PCS Sublicense.

(a) Subject to the terms and conditions of these PCS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under the Motorola Group’s Non-Patent Intellectual Property Rights in the PCS Phone Deliverables to sublicense the rights set forth in Section 2.2 (PCS Protocol Stack License), Section 2.3 (PCS System Tools License) and Section 2.4 (PCS Documentation License) solely to Authorized Sublicensees without the right to grant further sublicense of such rights; provided, however that all such sublicensees have executed a written, enforceable sublicense agreement that (to the extent permitted by applicable mandatory law): (i) contains at least the license limitations and contractual restrictions set forth herein with respect to the PCS Protocol Software and PCS System Tools; (ii) where the agreement covers the Wireless Platform and/or PCS Protocol Software for UMTS, contains the patent covenant not to sue set forth in Schedule H (Section 2) to this Supplement B5; and (iii) is otherwise at least as protective of Motorola (and Motorola’s interests in the PCS Protocol Software) as these PCS Sector Terms.

(b) Subject to any restrictions set forth in Schedule A, Schedule B and Schedule C of this Supplement B5, the sublicense right of Section 2.7 above further includes the right to sublicense Source Code of the PCS Protocol Software and the PCS System Tools to

B5-7

Authorized Sublicensees who are Tier 1 OEMs; provided, however, that: (i) such Authorized Sublicensees may not further distribute the PCS Protocol Software except in Object Code form and solely for use in connection with a Freescale Wireless Component; (ii) the applicable Freescale Group member uses good faith efforts to disclose such Source Code to such Authorized Sublicensees only in a manner, and on such terms, as are reasonably calculated to maintain the confidentiality and secrecy of such Source Code; and (iii) the sublicense agreement described in Section 2.7(a) above further includes a patent covenant not to sue substantially in the form set forth in Schedule H (Section 1) to this Supplement B5.

2.8 Motorola Delivered Software Covenant.

(a) Motorola hereby grants a worldwide, non-exclusive, non-transferable, royalty-free covenant that, during the five (5) year period following the Effective Date, no member of the Motorola Group will assert Non-Essential Patent Claims against a third Person purchasing the Freescale Wireless Component from any member of the Freescale Group or its distributors for direct infringement of such Non-Essential Patent Claims by the PCS Protocol Stack (as delivered by Motorola under these PCS Sector Terms) that are licensed for use as part of a Freescale Wireless Platform (“Motorola Delivered Software”) and incorporated by such third Person into its Wireless Equipment.

(b) The covenant set forth in Section 2.8(a) does not preclude any member of the Motorola Group from asserting Non-Essential Patent Claims against third Person Wireless Equipment that uses alternative Software provided by suppliers that are not members of the Freescale Group, or that do not incorporate any Motorola Delivered Software. In addition, the covenant set forth in Section 2.8(a) does not apply where:

(i) the third Person has a written agreement with any member of the Motorola Group in which such third Person has licensed the Non-Essential Patent Claims or in which such third Person may elect to receive a license to Non-Essential Patent Claims; or

(ii) the asserted infringement is based on the combination of the Motorola Delivered Software with any hardware, Software, or other matter that is either not provided by Motorola to Freescale under these PCS Sector Terms, or that is not in the form provided by Motorola to Freescale under these PCS Sector Terms (including, without limitation, components of the Freescale Wireless Component and Freescale Wireless Platform that constitute PCS Derivatives or that are otherwise not provided by Motorola under these PCS Sector Terms).

(c) Without limiting anything in this Section 2.8 (Motorola Delivered Software Covenant) the covenants set forth in Section 2.8(a) shall automatically terminate with respect to a third Person in response to such third Person’s: (i) claim or demand that a license is required under any of its Patents; or (ii) seeking a declaratory judgment of invalidity or non-infringement with respect to any Patent of any member of the Motorola Group. For clarification, a third Person’s assertion of a claim or demand of a Patent against a member of the Motorola Group in response to a member of the Motorola Group first asserting Essential Patent Claims against such third Person will not cause the covenants in Section 2.8(a) to terminate, unless and

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until such third Person asserts in litigation a claim of patent infringement against any member of the Motorola Group.

(d) If any member of the Motorola Group or Freescale Group, respectively, assigns to a third Person any Motorola Patent that is otherwise subject to any of the covenants set forth in Section 2.8(a) then: (i) notwithstanding such assignment, such assigned Motorola Patent shall remain subject to the applicable covenants set forth in Section 2.8(a); and (ii) the assigning party shall notify the third Person assignee that the assigned Motorola Patent shall remain subject to the applicable covenants set forth in Section 2.8(a).

3. JAVA SOFTWARE DELIVERY AND LICENSE

3.1 Java Technology Deliveries. To the extent that Motorola does not have possession of the Freescale Java Deliverables, Freescale shall promptly following the Effective Date deliver and otherwise make available to Motorola the Freescale Java Deliverables. To the extent that Freescale is not already in possession of the Freescale Java Deliverables as of the Effective Date, Motorola shall, promptly following the Effective Date, deliver and otherwise make available to Freescale the Freescale Java Deliverables. Notwithstanding the foregoing, Freescale acknowledges and agrees that Motorola’s delivery obligation under this Section 3.1 (Java Technology Deliveries) as well as the rights and licenses granted below with respect to the Freescale Java Deliverables are: (a) subject to the terms and conditions of the then current Java license agreement between Motorola and Sun Microsystems, Inc.; and (b) subject to and contingent upon Freescale timely obtaining its own appropriate Java license from Sun Microsystems, Inc.

3.2 Java Deliverables License. Subject to the terms and conditions of these PCS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under Motorola Non-Patent Intellectual Property Rights in the Freescale Java Deliverables to: (a) prepare and have prepared Derivatives of the Freescale Java Deliverables (the “Freescale Java Derivatives”); and (b) use, reproduce, display and distribute such Freescale Java Deliverables and Freescale Java Derivatives solely for use in connection with a Freescale Semiconductor Product (except as expressly identified in Schedule F).

3.3 Java Deliverables Sublicense. Subject to the terms and conditions of these PCS Sector Terms, Motorola hereby grants to each member of the Freescale Group a perpetual, irrevocable, worldwide, non-exclusive, non-transferable, royalty-free license under Motorola Non-Patent Intellectual Property Rights in the Freescale Java Deliverables to sublicense the rights set forth in Section 3.2(b) (Java Deliverables License), including but not limited to sublicensing the Source Code of Freescale Java Deliverables and Freescale Java Deliverables, to third Persons solely to the extent necessary for Freescale customers to: (a) either (i) incorporate Freescale Java Deliverables and Freescale Java Derivatives into Freescale customer equipment or (ii) use Freescale Java Deliverables and Freescale Java Derivatives in connection with Freescale customer equipment; and (b) distribute in object code form only such Freescale Java

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Deliverables and Freescale Java Derivatives as incorporated in, or used in connection with, such Freescale customer equipment.

3.4 MotoJUIX. In the event any member of the Motorola Group makes commercially available licenses to all or part of the MotoJUIX platform, such member of the Motorola Group will offer such licenses to members of the Freescale Group under commercially reasonable terms and conditions that are no less favorable than those offered to any other similarly situated licensee.

4. GENERAL RESTRICTIONS AND RETAINED RIGHTS

4.1 Restrictions.

(a) Legal Notices and Source Code Disclosure – Except as expressly set forth herein, or as Motorola otherwise expressly approves in writing: (i) each member of the Freescale Group shall reproduce and include on all copies and media for the Project Deliverables and Project Derivatives the product identification, copyright notice and any legal legend that appears on the Project Deliverables as originally provided by Motorola hereunder; (ii) no member of the Freescale Group shall (and no member of the Freescale Group shall authorize, encourage or facilitate any third Person to): (A) remove alter or obscure any product identification, copyright notice or any legal legend required to be included on the Project Deliverables and Project Derivatives as set forth above; or (B) distribute, disclose or otherwise make available to any third Person the Source Code for any Project Deliverable.

(b) Confidentiality – Without limiting the foregoing, the parties acknowledge and agree that all information and material exchanged in connection with these PCS Sector Terms are subject to the confidentiality provisions set forth in Section 7 (Confidentiality) of the Agreement.

(c) Reverse Engineering – Except as expressly set forth herein, or as Motorola otherwise expressly approves in writing, no member of the Freescale Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the PCS Protocol Software or PCS System Tools or any Derivatives thereof by any means whatsoever, except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

(d) Freescale Wireless Platforms – No license or right is granted hereunder to use, distribute or sublicense the PCS Protocol Software or PCS System Tools (or any Derivatives of the foregoing) for use in connection with any processor other than the Freescale Wireless Component. Accordingly, Freescale acknowledges and agrees that: (i) no member of the Freescale Group shall (and no member of the Freescale Group shall authorize, encourage or enable any third Person to) use, distribute or sublicense the PCS Protocol Software or PCS System Tools (or any Derivatives of the foregoing) for use in connection with any processor other than the Freescale Wireless Component; and (ii) without limiting any other right or remedy

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available to Motorola hereunder, any violation of the terms and conditions of Section 2 (PCS Protocol Software Delivery and License) of this Supplement B5 constitutes both a breach of these PCS Sector Terms as well as an infringement of Motorola’s Non-Patent Intellectual Property Rights.

4.2 Retained Rights.

(a) General Ownership – Motorola hereby expressly reserves all rights in and to all copies and portions of the Project Deliverables (including, without limitation, PCS Protocol Stack Object Code and Source Code) including all Patent and Non-Patent Intellectual Property Rights therein and thereto that are not expressly granted in Section 2.2 (PCS Protocol Stack License), Section 2.3 (PCS Systems Tools License), Section 2.4 (PCS Documentation License), Section 2.6 (Wireless Reference Designs Licenses), Section 2.7 (PCS Sublicense), Section 2.8 (Motorola Delivered Software Covenant) or Section 3.2 (Java Deliverables License). Without limiting the foregoing, except as expressly set forth in Section 2.8 (Motorola Delivered Software Covenant) no right or interest with respect to any Motorola Patents are granted under Section 2 (PCS Protocol Software Delivery and License) or Section 3 (Java Software Delivery and License) and the parties acknowledge and agree that such rights are granted with respect to the Project Deliverables and Project Derivatives, if at all, pursuant to Section 4 of the Agreement (Patent License and Non-Assert). Notwithstanding the foregoing, nothing in these PCS Sector Terms shall be construed as a transfer or assignment by Freescale of any Freescale Technology embodied in or used to develop or manufacture the PCS Phone Deliverables.

(b) Ownership of Derivatives – The parties acknowledge and agree that: (i) Motorola shall retain all rights in and to the underlying PCS Protocol Stack (which shall remain unaffected by the creation of such PCS Protocol Stack Derivatives); and (ii) Freescale shall retain all right in and to the specific modifications, adaptations, etc., comprising Derivative portions of the PCS Protocol Stack Derivative (which shall remain subject to Motorola’s underlying rights in and to the PCS Protocol Stack Derivative); and (iii) in addition to the Derivative portions of the PCS Protocol Stack Derivative, Freescale shall retain all rights in and to all other Project Derivatives made by the Freescale Group (which Derivatives shall remain subject to Motorola’s underlying rights in and to the Project Deliverables).

(c) Patent Rights to Derivative Technology – The right to create Derivatives granted above shall not be construed to confer any Patent rights with respect to such Derivatives except, and solely to the extent, such Patent rights are granted hereunder with respect to the underlying Technology in the Project Deliverables as delivered hereunder.

5. MANAGEMENT, SUPPORT, SOURCING AND COLLABORATION

5.1 Project Managers. Each party shall appoint an individual with overall responsibility for its respective activities under these PCS Sector Terms (a “Project Manager”). The initial Project Manager for Freescale is Franz Fink; the initial Project Manager for Motorola is Rob Shaddock. Either party may change or substitute their Project Manager from time to time by providing written notice to the other party.

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5.2 Technical Support and Training. Motorola shall have no obligation to provide technical assistance or other support (including any upgrades, updates or new releases) with respect to any of the Technology licensed under these PCS Sector Terms. Such excluded services may be provided under a separate written agreement on such terms and conditions as the parties agree upon in writing.

5.3 Collaboration.

(a) Strategic Customer Design Wins – Each party agrees to use commercially reasonable efforts to fulfill the objectives under Schedule I.

(b) Motorola and Freescale Software Collaboration – Each party agrees to use commercially reasonable efforts to perform its obligations under Schedule J.

6. PCS RIGHTS ENFORCEMENT

6.1 Notification. Freescale will use reasonable, good-faith efforts to give Motorola prompt written notice of any suspected infringement or misappropriation of any of Motorola’s Non-Patent Intellectual Property Rights in the Project Deliverables or Project Derivatives of which Freescale becomes aware.

6.2 Assistance Conditions. Freescale shall be entitled to Motorola’s assistance pursuant to Section 6.3 (Enforcement Assistance) with regard to legal actions that Freescale brings against third Persons for infringement or misappropriation of Freescale’s Non-Patent Intellectual Property Rights in Project Derivatives if: (a) at least thirty (30) days before bringing an action, Freescale provides Motorola with a written analysis of the factual and legal grounds for the infringement claims that is sufficient to demonstrate a reasonable likelihood of success of the legal action without undue risks to Motorola’s rights or interests (“Analysis”); (b) Motorola fails to give reasonable assurances to Freescale that Motorola itself will pursue the infringement claim within thirty (30) days of Motorola’s receipt of the Analysis and any additional information reasonably requested by Motorola; (c) Freescale reimburses Motorola on a monthly basis (within thirty (30) days of Freescale’s receipt of Motorola’s invoices) for any out-of-pocket costs and time expenditure of one outside legal counsel reasonably acceptable to Motorola that Motorola incurs in the process of providing assistance in accordance with Freescale’s requests; (d) Freescale refrains from pursuing, settling or otherwise resolving or attempting the action in any manner that creates an unreasonable risk of preventing Motorola from continuing its business as then conducted or otherwise adversely affecting Motorola’s rights or interests (including, without limitation, an unreasonable risk of successful counterclaims for patent or claim invalidity or to narrow claim construction); and (e) Freescale keeps Motorola reasonably informed of the progress of such actions (including, as requested, providing notice and copies of significant dates, appearances and filings) and provides Motorola or its designee with a reasonable opportunity to consult and advise with respect to such actions.

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6.3 Enforcement Assistance. If and so long as the conditions set forth in Section 6.2 (Assistance Conditions) are met, Motorola shall:

(a) Legal Assistance – take one or more of the following actions that are necessary to confer standing to sue and entitlement to all available remedies on Freescale in the jurisdiction(s) where Freescale reasonably requests to bring a lawsuit provided that Motorola may decide, at its sole discretion, which actions to take if more than one approach is available: (i) consent to Freescale’s lawsuit, (ii) authorize Freescale to bring suit, apply for injunctions, settle the claim, and collect on a settlement or judgment in Motorola’s name, (iii) join Freescale’s lawsuit as a party, (iv) assign to Freescale damages claims for past infringements or misappropriation, or (v) grant Freescale other necessary rights that do not adversely affect Motorola’s interests, subject to an agreement negotiated between the parties in good faith; and

(b) Procedural Support – make reasonable efforts to provide access to information and witnesses that are available to Motorola, that Motorola can make available without adversely affecting its own rights and interests, and that Freescale needs to justify and prove the infringement or misappropriation claims, subject to the condition that Freescale and its counsel work cooperatively with Motorola and its counsel and take all steps that are reasonably requested by Motorola or necessary to maximize Motorola’s retention of all privileges, including without limitation, trade secret protection and the attorney-client and work-product privileges.

If Freescale brings an action for infringement or misappropriation of its Non-Patent Intellectual Property Rights in the Project Derivatives and the conditions in Section 6.2 (Assistance Conditions) are not met, Motorola shall nonetheless provide Freescale reasonable cooperation in connection with such lawsuit as Motorola may determine, which may include some or all of the assistance called for in Subsection (a) above. If Motorola elects to bring an action under Section 6.2(b) in lieu of providing Enforcement Assistance, Freescale shall provide reasonable cooperation to Motorola in connection with the enforcement of such action.

6.4 Expiration of Assistance Obligations. Three (3) years after the Effective Date, Freescale’s entitlement to Motorola’s assistance provided in Section 6.3 (Enforcement Assistance) shall expire provided that Section 6.2 (Assistance Conditions) shall continue to apply for one (1) year with regard to any lawsuits that Freescale has filed against third Person infringers in a court of competent jurisdiction prior to the end of said three (3) year-period in accordance with this Section 6 (PCS Rights Enforcement).

7. TERMINATION

7.1 Term and Renewal. The term of these PCS Sector Terms shall be for an initial period of five (5) years from the Effective Date (the “Initial Term”) and shall automatically renew for successive twelve (12) month periods (each a “Renewal Term”) unless either party notifies the other party at least sixty (60) days prior to the expiration of the then current Initial Term or Renewal Term (as applicable) of its desire not to renew these PCS Sector Terms.

7.2 Change of Control. If there is a Change of Control of Freescale, or if a third Person otherwise acquires all or substantially all of Freescale’s assets, then (subject to

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Section 3.5 (Assignment of Technology Licenses) and Section 9.2 (Change of Control) of the Agreement):

(a) If such Change of Control or acquisition occurs before the three (3) year anniversary of the Effective Date: (i) where the acquiring or controlling entity is a wireless communication device provider, Motorola shall have no further obligations under Section 2.8 (Motorola Delivered Software Covenant), Section 6 (PCS Rights Enforcement) or Section 5 (Management, Support, Sourcing and Collaboration); and (ii) where the acquiring or controlling entity is not a wireless communication device provider, Motorola shall have no further obligations or liability under Section 5 (Management, Support, Sourcing and Collaboration);

(b) If such Change of Control or acquisition occurs after the three (3) year anniversary of the Effective Date, Motorola shall have the right to terminate these PCS Sector Terms upon written notice to Freescale; and

(c) If Freescale does not remain a separate identifiable business after such Change of Control or acquisition (e.g., Freescale is merged with the acquiror of its stock or assets), Motorola shall have no further obligations under Section 2.8 (Motorola Delivered Software Covenant), Section 6 (PCS Rights Enforcement) or Section 5 (Management, Support, Sourcing and Collaboration).

7.3 Effect of Termination or Non-Renewal. Upon termination or non-renewal of these PCS Sector Terms, all rights and obligations under these PCS Sector Terms shall terminate, provided, however, that (subject to Section 9.2 (Change of Control) of the Agreement) the licenses and covenants not to assert in Section 2 (PCS Protocol Software Delivery and License) and Section 3 (Java Software Delivery and License) and the rights and restrictions set forth in Section 4 (General Restrictions and Retained Rights) shall survive in accordance with their terms. The parties agree that upon expiration of the covenant set forth in Section 2.8(a) no damages will accrue and members of the Motorola Group will not seek damages with respect to accused Wireless Equipment that incorporates Motorola Delivered Software and that is sold by such third Person prior to the expiration of such covenant.

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INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT B6 SECTOR LICENSE TERMS

MOTOROLA LABORATORIES AND SOFTWARE

These Motorola Laboratories and Software Sector License Terms (these “Mot-Lab Terms”) set forth the terms and conditions pursuant to which: (a) each party will license certain of its Technology, Patents and Non-Patent Intellectual Property Rights relating to the Motorola corporate laboratory projects listed in Schedule A below (each a “Mot-Lab Project”) to members of the other party’s Group; and (b) Motorola will license certain of its internal business management Software to members of the Freescale Group for use in connection with the administration and operation of the Freescale Business.

Except as expressly set forth below, the terms and conditions otherwise set forth in the Agreement shall apply with respect to Technology, Patents and Non-Patent Intellectual Property Rights developed or otherwise acquired solely or jointly by or for Freescale and/or the Motorola corporate laboratories (“Mot-Labs”). In addition, all terms not defined in these Mot-Lab Terms shall have the meaning set forth in the Agreement.

1. DEFINITIONS

1.1 “Body of Knowledge Documents” means, with respect to a Mot-Lab Project, the project reports prepared by project engineers for such Mot-Lab Project, in the form such reports exist on the Effective Date.

1.2 “Continuation Project” has the meaning set forth in Article 4 (Continuation Project Rights).

1.3 “Continuation Technology” means Technology conceived, developed and reduced to practice solely or jointly by the parties as part of a Continuation Project during the period commencing on the Effective Date and ending December 31, 2004.

1.4 “Derivative Technology” means any Derivative of the Licensed Technology.

1.5 “DragonBall-MX Drivers” means the Software device driver for Motorola’s DragonBall-MX1 or DragonBall MXL solutions referenced in Addendum A dated January 1, 2003 to that certain Memorandum of Understanding for PPSM-GT and Baseline OS for DragonBall and DragonBall-MX1 between Motorola’s Global Software Group (GSG) China and Semiconductor Products Sector (SPS) Wireless Mobile Systems Group (WMSG).

1.6 “Freescale Laboratory Patent” means a Freescale Patent: (a) assigned to Freescale under the Intellectual Property Assignment Agreement and set forth on a schedule to this Supplement B6 that is identified in the Projects Table as a schedule of “Freescale Laboratory

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Patents”; and (b) based on an invention disclosure that is set forth on such schedule and that is filed before the one (1) year anniversary of the Effective Date.

1.7 “Freescale Laboratory Technology” means all Freescale Technology assigned to Freescale under the Intellectual Property Assignment Agreement that was developed in connection with a Mot-Lab Project for which “Freescale Laboratory Technology” is identified as the “Technology Licensed” in the Projects Table.

1.8 “Freescale Sector Patents” means, solely with respect to these Mot-Lab Terms, the Freescale Laboratory Patents as well as the Patents to be owned by Freescale pursuant to Section 4.2 (Continuation Patent Ownership and License).

1.9 “Freescale Sector Technology” means, solely with respect to these Mot-Lab Terms, the Freescale Laboratory Technology as well as the Continuation Technology to be owned by Freescale pursuant to Section 4.1 (Continuation Technology Ownership and License).

1.10 “General Laboratory Contact” has the meaning set forth in Section 6.3 (Technology Transfer Planning).

1.11 “GSG Software” means the DragonBall-MX Drivers, HDD Software, PPSM-GT Driver, RMA Software Tool, SIP Software, ISH Software, MMS Software, MicroBrowser Software and TRIO Software

1.12 “HDD Software” means the HDD reference system Software referenced in Addendum A of that certain Memorandum of Understanding dated November 15, 2003 between Motorola’s Global Software Group (GSG) India and Semiconductor Products Sector (SPS) Transportation and standard Products Group– Digital Audio, Radio and Telematics (TPSG-DART).

1.13 “ISH Software” means a flash memory management system referenced in Annex A to that certain Memorandum of Understanding between Semiconductor Products Sector (SPS) Wireless and Broadband Systems Group (WBSG) Hong Kong and Motorola’s Global Software Group (GSG) that: (a) was developed by Motorola’s Commercial, Governmental & Industrial Solutions Sector (CGISS); (b) emulates and is compatible with Intel FDI (Flash Data Integrator) 4.0 Software in terms of functionality and API interface; and (c) incorporates the changes to Intel FDI Software by Motorola’s Personal Communications Sector (PCS).

1.14 “Licensed Technology” means, as applicable, the Motorola Sector Technology and Freescale Sector Technology licensed under this Supplement B6.

1.15 “Intellectual Property Assignment Agreement” means that certain Intellectual Property Assignment Agreement entered into by Motorola and Freescale on or about the Effective Date.

1.16 “MicroBrowser Software” means the Motorola MicroBrowser, releases 1.2.x and 2.x, referenced in that certain Memorandum of Understanding dated August 20, 2002 between

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Motorola’s Global Software Group (GSG) and Semiconductor Process System (SPS) Wireless and Broadband Systems Group (WBSG).

1.17 “MMS Software” means the GSG Multimedia Messaging Service (MMS) client Software referenced in Appendix C to that certain Memorandum of Understanding dated August 20, 2002 between Motorola’s Global Software Group (GSG) and Semiconductor Process System (SPS) Wireless and Broadband Systems Group (WBSG).

1.18 “Motorola External Access Tool” means a Motorola Proprietary Tool that Freescale has been authorized by Motorola in writing (pursuant to Section 2.4(a)) to permit a customer, supplier or partner to access and use.

1.19 “Motorola Laboratory Patent” means a Motorola Patent: (a) set forth on a schedule to this Supplement B6 that is identified in the Projects Table as a schedule of “Motorola Laboratory Patents”; and (b) based on an invention disclosure that is set forth on such schedule and that is filed before the one (1) year anniversary of the Effective Date.

1.20 “Motorola Laboratory Technology” means all Motorola Technology that was developed in connection with a Mot-Lab Project for which “Motorola Laboratory Technology” is identified as the “Technology Licensed” in the Projects Table.

1.21 “Motorola Proprietary Tools” means Software that, as of the Effective Date, is: (a) owned by any member of the Motorola Group; and (b) used by or for the Semiconductor Product Sector for the administration and operation of the Freescale Business. For clarity, the Motorola Proprietary Tools do not include any Third Person Tools.

1.22 “Motorola Sector Patents” means, solely with respect to these Mot-Lab Terms, the Motorola Laboratory Patents as well as the Patents to be owned by Motorola pursuant to Section 4.2 (Continuation Patent Ownership and License).

1.23 “Motorola Sector Technology” means, solely with respect to these Mot-Lab Terms, the Motorola Laboratory Technology, Motorola Proprietary Tools, GSG Software, Zhanet Software as well as the Continuation Technology to be owned by Motorola pursuant to Section 4.1 (Continuation Technology Ownership and License).

1.24 “PPSM-GT Driver” means the Software device driver for Motorola’s Personal Portable System Manager (PPSM) Graphics Tools referenced in Addendum A dated January 1, 2003 to that certain Memorandum of Understanding for PPSM-GT and Baseline OS for DragonBall and DragonBall-MX1 between Motorola’s Global Software Group (GSG) China and Semiconductor Products Sector (SPS) Wireless Mobile Systems Group (WMSG).

1.25 “Project Specific Contact” means, with respect to a Mot-Lab Project, the applicable Motorola or Freescale contact identified by the General Laboratory Contacts pursuant to Section 6.3 (Technology Transfer Planning) as the parties respective contacts for facilitating the transfer of Motorola Laboratory Technology and/or Freescale Laboratory Technology pursuant to Article 5 (Laboratory Technology Transfer); provided, however, that each party may

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change or substitute their Project Specific Contact from time to time upon written notice to the other party.

1.26 “Projects Table” means the table of Mot-Lab Projects set forth in Schedule A (Mot-Lab Projects Table) to this Supplement B6.

1.27 “Project Technology Transfer Schedule” has the meaning set forth in Section 6.3 (Technology Transfer Planning).

1.28 “RMA Software Tool” means the Rate Monotonic Analysis Software Tool for the OSEK^™ Real Time Operating System (OSEK RTOS) developed under that certain Memorandum of Understanding dated November 22, 2002 and amended by Addendum A thereto dated January 30, 2003 between Motorola’s Global Software Group (GSG) Russia and Metrowerks Transportation Industry Group (TIG).

1.29 “SIP Software” means the Session Initiation Protocol Software for VoIP Internet Adapter Device developed as part of the Multi-Service Adapter Project under that certain Memorandum of Understanding dated October 6, 2003 between Motorola’s Global Software Group (GSG) India and Semiconductor Products Sector (SPS) NCSG NCSD.

1.30 “Technology Transfer Projects” means a Mot-Lab Project for which a Technology Transfer is indicated in the Projects Table.

1.31 “Third Person Tools” means any Software or related documentation owned by or licensed from any third Person that has been used by the Semiconductor Product Sector for the administration and operation of the Freescale Business.

1.32 “TRIO Software” means the compressed audio compact-disc (CD) playback reference system software in that certain Memorandum of Understanding dated November 15, 2003 between Motorola’s Global Software Group (GSG) India and Semiconductor Products Sector (SPS) Transportation and standard Products Group – Digital Audio, Radio and Telematics (TPSG-DART).

1.33 “WLAN Projects” means the Motorola laboratory projects designated as of the Effective Date as the: (a) Wireless LAN QoS and VoIP project; (b) Wireless LAN Link Adaptation and Power Savings project; (c) Wireless LAN NIMO Technology and MAC Enhancements for 802.11n.

1.34 “Zhanet Technology” means: (a) Software that enables residential gateways to establish NAT-less connections between the privately-address domains they hide from the open internet; and (b) Technology comprising a bootable CD-ROM image that can be installed on a PC with multiple wireline and WLAN network interfaces and subsequently configured with minimal user intervention.

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2. LABORATORY LICENSE GRANTS

2.1 Motorola Laboratory Patent License. Subject to the terms and conditions set forth in these Mot-Lab Terms, and in addition to any license granted in Section 4.3 of the Agreement under such Patents, Motorola hereby grants to each member of the Freescale Group, under the Motorola Laboratory Patents, a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license to make and have made, sell, offer to sell, import and dispose of any Semiconductor Product. No right or license is granted under this Section 2.1 (Motorola Laboratory Patent License) to sublicense any of the foregoing rights to third Persons.

2.2 Freescale Laboratory Patent License. Subject to the terms and conditions set forth in these Mot-Lab Terms, and in addition to any license granted in Section 4.1 of the Agreement under such Patents, Freescale hereby grants to each member of the Motorola Group, under the Freescale Laboratory Patents, a personal, worldwide, non-exclusive, non-transferable, royalty-free, paid-up right and license to: (a) use and have made Semiconductor Products; and (b) sell, offer to sell, import and dispose of any equipment offered for sale by a member of the Motorola Group that incorporates a Semiconductor Product so made. No right or license is granted under this Section 2.2 (Freescale Laboratory Patent License) to sublicense any of the foregoing rights to third Persons.

2.3 Laboratory Technology Cross-License. Subject to the terms and conditions set forth in these Mot-Lab Terms and, as applicable, Article 3 of the Agreement (Technology License Terms):

(a) Freescale hereby grants to each member of the Motorola Group, under the Freescale Group’s Non-Patent Intellectual Property Rights in the Freescale Laboratory Technology, the license set forth in Section 3.1 of the Agreement (Licensed Freescale Technology Grant) with respect to such Freescale Laboratory Technology; and

(b) Motorola hereby grants to each member of the Freescale Group, under the Motorola’s Group’s Non-Patent Intellectual Property Rights in the Motorola Laboratory Technology and the Zhanet Technology, the license set forth in Section 3.2 of the Agreement (Licensed Motorola Technology Grant) with respect to such Motorola Laboratory Technology.

Notwithstanding the foregoing, the license in this Section 2.3 (Laboratory Technology Cross-License) shall only apply to: (i) Technology associated with Technology Transfer Projects; and (ii) Mot-Lab Projects for which “no Technology transfer” is indicated in the Project Tables if, and to the extent, that the applicable Technology is already in the possession of the licensed party as of the Effective Date.

2.4 Proprietary Tool Transfer and License.

(a) Freescale acknowledges and agrees that Motorola Proprietary Tools installed on Freescale servers and/or computers as of the Effective Date (or are otherwise reasonably accessible to Freescale) do not require further delivery by any member of the Motorola Group. Notwithstanding the foregoing, Motorola will also consider any reasonable

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request by Freescale prior to June 1, 2005 for the delivery of source code for specific Motorola Proprietary Tools. From time to time prior to June 1, 2005, Freescale may submit for Motorola’s approval a written request to permit a particular customer, supplier or partner access and use specific Motorola Proprietary Tool. If Motorola approves such request, Motorola may in its discretion either: (i) authorize Freescale to permit the applicable customer, supplier or partner to access and use the Motorola Proprietary Tool solely as set forth in Section 2.4(b); or (ii) directly license the Motorola Proprietary Tool to such customer, supplier or partner. Freescale may not permit any third Person to access or use the Motorola Proprietary Tools except with Motorola’s prior written approval as set forth in this Section 2.4(a).

(b) Subject to the terms and conditions of these Mot-Lab Terms, Motorola hereby grants to each member of the Freescale Group, under Motorola Non-Patent Intellectual Property Rights in the Motorola Proprietary Tools, a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-free right and license to: (i) prepare and have prepared Derivatives of the Motorola Proprietary Tools (the “Motorola Tool Derivatives”); (ii) reproduce and import such Motorola Proprietary Tools and such Motorola Tool Derivatives; and (iii) use, display, perform, and distribute such Motorola Proprietary Tools and such Motorola Tool Derivatives solely internally within the Freescale Group and solely for the internal administration and operation of the Freescale Business; provided, however, that members of the Freescale Group may permit their customers, suppliers and partners to access and use the Motorola External Access Tools (and Derivatives of such Tools created pursuant to this Section 2.4 (Proprietary Tool Transfer and License)) solely in connection with the internal administration and operation of the Freescale Business.

(c) No right or license is granted under these Mot-Lab Terms with respect to any Third Person Tools, regardless of whether such tools have been historically used by the Semiconductor Products Sector in connection with the Motorola Proprietary Tools or are otherwise necessary for the use of such Motorola Proprietary Tools. Freescale will be solely responsible for timely obtaining licenses to Third Person Tools and Motorola shall have no obligation or liability to the Freescale Group if for any reason Freescale is unable to do so.

3. GSG SOFTWARE

3.1 GSG Software License. Subject to the terms and conditions of these Mot-Lab Terms, Motorola hereby grants to each member of the Freescale Group, under Motorola Non-Patent Intellectual Property Rights in the GSG Software, a perpetual, irrevocable, personal, worldwide, non-exclusive, non-transferable, royalty-bearing right and license to: (a) prepare and have prepared Derivatives of the GSG Software (the “GSG Software Derivatives”); (b) use, reproduce and import such GSG Software and such GSG Software Derivatives; and (c) display, perform and distribute such GSG Software and such GSG Software Derivatives: (i) in object code or source code form with respect to the GSG Software set forth on Schedule W and GSG Software Derivatives thereof; and (ii) only in object code form with respect to all other GSG Software and GSG Software Derivatives.

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3.2 GSG Software Fees. Freescale shall pay Motorola the applicable fees set forth in Schedule V to this Supplement B6 (the “GSG Software Fees”) for each applicable item of GSG Software. Within forty-five (45) days after the end of each calendar quarter, Freescale shall submit to Motorola a detailed written report (a “GSG Software Report”) setting forth for such quarter (and, on an aggregate basis, as of the end of such quarter): (a) unit sales of GSG Software for which any GSG Fees are due and payable by Freescale as set forth on Schedule V to this Supplement B6; (b) unit sales of Semiconductor Products or other Software with which the GSG Software is embodied or bundled and for which any GSG Fees are due and payable by Freescale as set forth on Schedule V to this Supplement B6; and (c) for each of the GSG Software, the total GSG Fees to be paid by Freescale for such calendar quarter. Within forty-five (45) days after the end of each quarter, Freescale shall submit to Motorola payment of all applicable GSG Software Fees due for such quarter in U.S. Dollars by wire transfer to an account designated from time to time by Motorola in writing.

3.3 Fee Discount. Notwithstanding the foregoing or anything else set forth in this Supplement B6, after Motorola has received GSG Fees with respect to HDD Software and the TRIO Software in the amount of Seven Hundred Seventy Eight Thousand Dollars ($778,000.00) then, if no ongoing development work continues, the GSG Fees payable with respect to the HDD Software and TRIO Software (as set forth on Schedule V to this Supplement B6), will be discounted by twenty percent (20%).

4. CONTINUATION PROJECT RIGHTS

4.1 Continuation Technology Ownership and License. The parties acknowledge and agree that, after the Effective Date, the parties may continue their work under certain projects of the Motorola Laboratories (the “Continuation Projects”) and with respect to:

(a) the Continuation Projects identified on Schedule U of this Supplement B6, Freescale shall retain all Non-Patent Intellectual Property rights in and to the Continuation Technology developed in connection with such Continuation Projects and, subject to the terms and conditions set forth in these Mot-Lab Terms and, as applicable, Article 3 of the Agreement (Technology License Terms), Freescale hereby grants and agrees to grant each Member of the Motorola Group, under the Freescale Group’s Non-Patent Intellectual Property Rights in such Continuation Technology, the license set forth in Section 3.1 of the Agreement (Licensed Freescale Technology Grant) with respect to such Continuation Technology; and

(b) the WLAN Projects and all other Continuation Projects, Motorola shall retain all Non-Patent Intellectual Property rights in and to the Continuation Technology developed in connection with the WLAN Projects and such Continuation Projects and, subject to the terms and conditions set forth in these Mot-Lab Terms and, as applicable, Article 3 of the Agreement (Technology License Terms), Motorola hereby grants and agrees to grant each Member of the Freescale Group, under the Motorola Group’s Non-Patent Intellectual Property Rights in such Continuation Technology, the license set forth in Section 3.2 of the Agreement (Licensed Motorola Technology Grant) with respect to such Continuation Technology.

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4.2 Continuation Patent Ownership & License. With respect to any Continuation Project, the parties agree that with respect to inventions subject to Patent protection and conceived, developed and reduced to practice under such Continuation Projects prior to December 31, 2004:

(a) Motorola shall own all right title and interest in all Patents for such inventions that were conceived, developed and reduced to practice solely by employees and agents of any member of the Motorola Group and, subject to the terms and conditions set forth in these Mot-Lab Terms, and in addition to any license granted in Section 4.3 of the Agreement under such Patents, Motorola hereby grants and agrees to grant to each member of the Freescale Group, under such Patents, an irrevocable, worldwide, non-exclusive, royalty-free paid-up right and license to make and have made, sell, offer to sell, import and dispose of any Semiconductor Product. No right or license is granted under this Section 4.2(a) to sublicense any of the foregoing rights to third Persons;

(b) Freescale shall own all right title and interest in all Patents for such inventions that were conceived, developed and reduced to practice solely by employees and agents of any member of the Freescale Group and, subject to the terms and conditions set forth in these Mot-Lab Terms, and in addition to any license granted in Section 4.1 of the Agreement under such Patents, Freescale hereby grants and agrees to grant to each member of the Motorola Group, under such Patents, an irrevocable, worldwide, non-exclusive, royalty-free paid-up right and license to: (i) use and have made Semiconductor Products; and (i) sell, offer to sell, import and dispose of any equipment offered for sale by a member of the Motorola Group that incorporates a Semiconductor Product so made. No right or license is granted under this Section 4.2(b) to sublicense any of the foregoing rights to third Persons; and

(c) Motorola and Freescale shall jointly own all right title and interest in all Patents for inventions for which employees of both the Motorola Group and the Freescale Group are “joint inventors” under 35 U.S.C. §116 with each party having a transferable equal and undivided interest therein without an consent or any obligation to share or account to the other party for any royalties or other revenues received by any party therefore.

4.3 Intellectual Property Assignment. Where certain Intellectual Property Rights specified in Article 4 (Continuation Project Rights) do not automatically vest in the applicable party (the “Entitled Party”), the other party (the “Assignor”) hereby assigns, transfers and conveys (and agrees to assign, transfer and convey) to the Entitled Party all of Assignor’s right, title and interest in such Intellectual Property Rights. To the extent that such Intellectual Property Rights may not be assigned under applicable law, the Assignor hereby grants and agrees to grant to the Entitled Party an exclusive, worldwide, perpetual, irrevocable, royalty-free, paid up and unconditional license, or if such grant would be invalid or not fully enforceable under applicable law, such other right and license as the Entitled Party reasonably requests in order to acquire a legal position as close as possible to that contemplated by the parties under Article 4 (Continuation Project Rights).

4.4 Assignment Assistance. The Assignor shall provide, at the Entitled Party’s expense, all assistance reasonably required by the Entitled Party to consummate, record and

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perfect the foregoing assignment and to protect, enforce and defend its Intellectual Property Rights, including, but not limited to, signing all papers and documents necessary to register and/or record such assignment with the United States Patent & Trademark Office, United States Copyright Office, other state and federal agencies and all corresponding government agencies and departments in all other countries. Assignor hereby appoints the Entitled Party as its attorney-in-fact to act as Assignor to execute and file the papers and documents specified in this Section 4.4 (Assignment Assistance) if Assignor is unwilling or unable to comply with the foregoing sentence of this Section 4.4 (Assignment Assistance).

5. RESERVED RIGHTS AND RESTRICTIONS

5.1 Term of Patent Licenses. Except as expressly set forth above, any license granted with respect to a party’s Patents under this Supplement B6 shall be for the lives of the applicable Patents unless earlier terminated in accordance with the Agreement.

5.2 Retained Rights. Notwithstanding anything in these Mot-Lab Terms, each member of the Motorola Group and the Freescale Group reserve all of their respective Patent and Non-Patent Intellectual Property Rights not expressly granted herein. Without limiting the generality of the foregoing: (a) each member of the Motorola Group shall retain ownership of all Motorola Patent and Motorola Patent and Motorola Non-Patent Intellectual Property Rights in and to the Motorola Sector Patents and Motorola Sector Technology; and (b) each member of the Freescale Group shall retain ownership of all Freescale Patent and Freescale Non-Patent Intellectual Property Rights in and to the Freescale Sector Patents and Freescale Sector Technology. Notwithstanding the foregoing, nothing in these Mot-Lab Terms shall be construed as a transfer or assignment by: (i) any member of the Freescale Group of any Freescale Technology embodied in or used to develop the Motorola Sector Technology or necessary to practice the Motorola Sector Patents, or (ii) any member of the Motorola Group of any Motorola Technology embodied in or used to develop the Freescale Sector Technology or necessary to practice the Freescale Sector Patents.

5.3 Derivative Technology. Notwithstanding anything in these Mot-Lab Terms, the right to create Derivative Technology granted above shall not be construed to confer any Patent rights with respect to such Derivative Technology except, and solely to the extent, such Patent rights are granted with respect to the underlying Licensed Technology.

5.4 Third Party Technology. No right or license is granted hereunder with respect to any third Person Technology incorporated or embodied in or necessary to use or make the Licensed Technology or to practice any of the Motorola Sector Patents or Freescale Sector Patents.

5.5 Legal Notices and Source Code Disclosure. Except as expressly set forth herein, or as otherwise expressly approved in writing: (a) each member of a party’s Group shall reproduce and include on all copies and media for the Licensed Technology of the other party (and any Derivatives thereof) the product identification, copyright notice and any legal legend that appears on such Licensed Technology as originally provided by a member of the Motorola

B6-9	Sector License Terms –
	Motorola Laboratories and Software

Group hereunder; (b) no member of the either party’s Group shall (and no member of the either party’s Group shall authorize, encourage or facilitate any third Person to): (i) remove alter or obscure any product identification, copyright notice and any legal legend required to be included on the Licensed Technology of the other party as set forth above; or (ii) distribute, disclose or otherwise make available to any third Person the Source Code for any Licensed Technology.

5.6 Reverse Engineering. Except as expressly set forth herein, or as otherwise expressly agreed upon in writing, no member of the either party’s Group shall authorize, encourage or facilitate any sublicensee or other third Person to decompile, disassemble, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying ideas or algorithms of all or any portion of the Licensed Technology of the other party or any Derivatives thereof by any means whatsoever except solely to the extent (and for such purposes as) permitted under applicable law notwithstanding the foregoing prohibition.

6. LABORATORY TECHNOLOGY TRANSFER

6.1 Laboratory Transfer Process. Notwithstanding anything to the contrary in Supplement C to the Agreement (Technology Transfer Plan), the parties shall coordinate and execute the transfer of Motorola Laboratory Technology and Freescale Laboratory Technology, as applicable, in accordance with this Article 6 (Laboratory Technology Transfer).

6.2 Body of Knowledge Documents. Within thirty (30) days after the Effective Date, the party licensing Technology under these Mot-Lab Terms with respect to a Mot-Lab Project shall provide the other Party with the applicable Body-of-Knowledge Documents for such Mot-Lab Project to the extent such documents are not already in the other party’s possession.

6.3 Technology Transfer Planning. Within sixty (60) days after the Effective Date the parties respective general laboratory contacts (each a “General Laboratory Contact”) shall meet to define a priority list and schedule for the appropriate disclosure and transfer of Technology with respect to the Technology Transfer Projects (the “Project Technology Transfer Schedule”) and, as part of such meeting, shall designate the parties respective Project Specific Contacts. As of the Effective Date, the General Laboratory Contact for Motorola shall be Morris Moore and the General Laboratory Contact for Freescale shall be Michael McClaughry. Each party may change or substitute their General Laboratory Contact from time to time upon written notice to the other party.

6.4 Technology Transfer Execution. For each Transferred Project, the parties shall execute the disclosure and transfer of applicable Motorola Laboratory Technology and/or Freescale Laboratory Technology, as applicable, in accordance with the Project Technology Transfer Schedule. The Project Specific Contacts for each Mot-Lab Project shall be responsible for coordinating and ensuring the timely transfer of Technology for such project. Without limiting the foregoing, after the development of the Project Technology Transfer Schedule, the parties respective Project Specific Contacts for a Mot-Lab Project shall meet at least quarterly (and otherwise as required by the Project Technology Transfer Schedule) to monitor, discuss and coordinate such transfer of Technology.

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	Motorola Laboratories and Software

7. MOT-LAB PROJECTS TABLE

The Project Table sets forth for each specified Mot-Lab Project: (a) the project number and project title by which Motorola identified such Mot-Lab Projects as of the Effective Date; (b) the Schedule to this Supplement B6 under which certain Patents related to such Mot Lab Project are listed; and (c) whether such Patents are “Motorola Laboratory Patents” or “Freescale Laboratory Patents” for purposes of these Mot-Lab Terms; (d) whether the Technology licensed with respect to the project is “Motorola Laboratory Technology” or “Freescale Laboratory Technology”; (e) whether there will be transfer of Technology related to such Mot-Lab Project under Article 6 (Laboratory Technology Transfer); and (f) the applicable contacts Motorola and Freescale contacts for purposes of Article 6 (Laboratory Technology Transfer). The Parties acknowledge and agree that Motorola Patents and Freescale Patents that are related to a Mot-Lab Project but which are not listed on a schedule to this Supplement B6 are subject to Article 4 of the Agreement (Patent License and Non-Assert) including, as applicable, Section 4.8 (Motorola Restricted Technology) of the Agreement.

B6-11	Sector License Terms –
	Motorola Laboratories and Software

INTELLECTUAL PROPERTY LICENSE AGREEMENT

SUPPLEMENT C GLOSSARY OF TECHNICAL ELEMENTS

As used in this Agreement, the following terms have the meanings set forth below:

“Circuit” means a plurality of active and/or passive elements for generating, receiving, transmitting, storing, transforming or acting in response to an electrical signal.

“Electrical Method” means a method or steps for using Circuits or Systems, whether or not combined with one or more active and/or passive elements, for performing electrical or electronic functions.

“Integrated Circuit Structure” means an integral unit consisting primarily of a plurality of active and/or passive circuit elements associated on, or in, a unitary body of Semiconductive Material for performing electrical or electronic functions.

“Packaged Device” means an integral unit consisting of one or more Semiconductor Elements and/or one or more Integrated Circuit Structures having a plurality of conductive leads, conductive traces, wire bonds, conductive bumps, or solder balls associated therewith.

“Manufacturing Apparatus” means an instrumentality or aggregate of instrumentalities primarily designed for use in the design, fabrication or testing of Semiconductor Products.

“Semiconductive Material” means any material whose conductivity is intermediate to that of metals and insulators at room temperature and whose conductivity, over some temperature range, increases with increases in temperature. Such material includes, but is not limited to refined products, reaction products, reduced products, mixtures and compounds.

“Semiconductor Element” means a device other than an Integrated Circuit Structure consisting primarily of a body of Semiconductive Material having a plurality of electrodes associated therewith, whether or not said body consists of a single Semiconductive Material or of a multiplicity of such materials, and whether or not said body includes one or more layers or other regions (constituting substantially less than the whole of said body) of a material or materials which are of a type other than Semiconductive Material.

“System” means one or more Circuits whether or not combined with one or more active and/or passive elements for performing electrical or electronic functions, whether or not a housing and/or supporting means for said circuitry is included.

C-1

EX-10.(F)

EXHIBIT 10(f)

TRANSITION SERVICES AGREEMENT – MOTOROLA PROVIDED SERVICES

This TRANSITION SERVICES AGREEMENT – MOTOROLA PROVIDED SERVICES (this “Agreement”) is entered into this 4^th day of April, 2004 by and between Motorola, Inc., a Delaware corporation (“Motorola”) and Freescale Semiconductor, Inc., a Delaware corporation (“Freescale”).

RECITALS

A. Pursuant to that certain Master Separation and Distribution Agreement dated April 4, 2004, by and between Motorola and Freescale (the “Separation Agreement”), the Parties have agreed to separate the businesses and operations conducted by the Semiconductor Products Sector (“SPS”) of Motorola and its Affiliates from the remainder of Motorola. Motorola and Freescale are sometimes referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined herein have the meanings given to such terms in the Separation Agreement.

B. In connection therewith, Freescale desires that Motorola and/or its Affiliates provide Freescale and/or its Affiliates (collectively, the “Company”), as applicable, with certain transition services with respect to the operation of the Company following the Effective Date, as more fully set forth herein.

NOW, THEREFORE, in consideration of the promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Motorola and Freescale each hereby agree as follows:

AGREEMENT

1. Transition Services. During the term of this Agreement as set forth in Section 4, Motorola shall provide, or shall cause one or more of its Affiliates or third parties to provide, to Freescale and/or its Affiliates, as applicable, upon the terms and subject to the conditions hereof, the services more particularly described on Annex A (each service, a “Transition Service” and collectively, the “Transition Services”). Motorola and Freescale may, by mutual written consent, amend the Transition Services to include other services in exchange for additional fees (“Additional Services”). Freescale shall and shall cause its Affiliates to, if applicable, adhere to any conditions or policies applicable to its use of the Transition Services as set forth in this Agreement or in Annex A.

2. Level of Transition Services.

(a) Unless otherwise specifically set forth in Annex A, Motorola will perform the Transition Services in the manner and at a level of service substantially similar to that provided by Motorola to SPS during the period immediately prior to the date hereof;

provided, however, that nothing in this Agreement will require Motorola to favor the Company over its other business operations.

(b) Unless otherwise specifically set forth in Annex A, it is the intention of Freescale and Motorola that the Company’s use of any Transition Service shall not be substantially greater than the level of use required by SPS immediately prior to date hereof. In no event will the Company be entitled to any new service or to substantially increase its use of any of the Transition Services above that level of use without the prior written consent of Motorola; provided, however that if Motorola consents to such an increase, Motorola shall be entitled to a pro rata increase in fees.

3. No Obligation to Continue to Use Services; Partial Termination. The Company will have no obligation to continue to use any of the Transition Services and Freescale may terminate any Transition Service by giving Motorola not less than thirty (30) days’ prior written notice of its desire to terminate any Transition Service. To the extent possible, Freescale will give such notice at the beginning of a fiscal month to terminate the service as of the beginning of the next fiscal month to avoid the need to prorate any monthly payment charges. As soon as reasonably practicable following receipt of any such notice, Motorola shall advise Freescale as to whether termination of such Transition Service will (a) require the termination or partial termination of, or otherwise affect the provision of, certain other Transition Services, or (b) result in any early termination costs, including those related to third party providers. If either will be the case, Freescale may withdraw its termination notice within five (5) business days. If Freescale does not withdraw the termination within such period, such termination shall be final. Upon such termination, Freescale’s obligation to pay for such Transition Service(s), if any, shall terminate, and Motorola shall cease, or cause its Affiliates or third party providers to cease, providing the terminated Transition Service(s), both subject to the terms of Section 4(c); provided, however, that Freescale shall reimburse Motorola for the reasonable termination costs actually incurred by Motorola resulting from Freescale’s early termination of such Transition Services, including those owed to third party providers. Motorola will use commercially reasonable efforts to mitigate such termination costs.

4. Term and Termination.

(a) Subject to Section 3, the term of this Agreement shall commence on the date hereof and continue with respect to each of the Transition Services for the term thereof as set forth in Annex A; the last date in each such term being referred to herein as a “Service Termination Date” for each such Transition Service.

(b) Notwithstanding the foregoing, this Agreement may be terminated upon the earliest to occur of the following (each, a “Termination Date”): (i) by Motorola, immediately by giving written notice to Freescale if Freescale breaches or is in default of any payment obligation, which default is capable of being cured, and such breach or default has not been cured within thirty (30) days after Freescale’s receipt of notice of such a breach or default from Motorola; (ii) by Freescale as to any particular Transition Service pursuant to Section 3; and (iii) by Motorola or Freescale, automatically upon the occurrence of the last of the Service Termination Dates.

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(c) Immediately following the Termination Date, Motorola shall cease, or cause its Affiliates or third party providers to cease, providing the Transition Services, and Freescale shall promptly pay or cause its Affiliates to promptly pay all fees accrued pursuant to Section 6 but unpaid to Motorola. The terms and conditions of this Agreement that, by their terms, require performance following the termination or expiration of this Agreement shall survive such termination or expiration.

5. General Intent. The Company shall use commercially reasonable efforts to end its use of the Transition Services as soon as reasonably possible and (unless the Parties otherwise agree) in all events to end such use with respect to each Transition Service not later than the applicable Service Termination Date.

6. Fees.

(a) Consideration. As consideration for the Transition Services, Freescale will pay to Motorola (or will cause its Affiliates to pay to Motorola or Motorola’s Affiliates, as applicable) the amount specified for each Transition Service as set forth in Annex A on a monthly basis except (i) as otherwise specified in Annex A with respect to a particular Transition Service, (ii) for Tigers purchases, Web Money reimbursements, other “normal” department charges which will result in a cash disbursement made by Motorola or its Affiliates on behalf of Freescale or its Affiliates, reimbursement shall be made as described in clause (b) below, and (iii) Motorola and its Affiliates, as applicable, shall be entitled to charge Freescale or its Affiliates, as applicable, for any VAT or similar charges that they are legally required to charge on such amounts. Unless the parties otherwise agree, any amounts charged to Freescale’s Affiliates outside of the United States will be billed and paid in the local currency of the entity providing the Transition Services; provided that such payments are made within such country. Unless the parties otherwise agree, if payments are to be made between legal entities not within the same country, such amounts will be billed and paid in U.S. dollars. To the extent necessary, local currency conversion will be based on the P&L rate for the current month. The Transition Services to be provided by third parties will be charged to the Company at no higher cost than the actual payments made by Motorola to third party providers for providing such Transition Services. All charges based on a monthly or other time basis will be pro rated based on actual days elapsed during the period of service. Upon the termination of any Transition Service in accordance with and subject to, Sections 3 or Section 4 above, the consideration to be paid under this Section 6 will be the accrued pro rated daily fees payable under this Section 6 except in cases where Motorola or its Affiliate has already procured and pre-paid for the services of a third party provider.

(b) Invoices. On the last Friday of each fiscal month, each of Motorola and each of its Affiliates providing Transition Services will submit one invoice to each of Freescale and each of its Affiliates receiving Transition Services for all Transition Services provided to the Company during such fiscal month pursuant to this Agreement. Notwithstanding the foregoing, for items described in clause (a)(ii) above, each of Motorola and each of its Affiliates shall submit a weekly invoice to each of Freescale and each of its Affiliates for the amount subject to reimbursement and the related VAT. The invoices shall break out the amount for each type of Transition Service or amounts subject to reimbursement. Motorola will

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provide documentation supporting any amounts invoiced pursuant to this Section 6 as Freescale may from time to time reasonably request, including, without limitation, detail with respect to any third party billing information relating to the Transition Services provided under this Agreement.

(c) Time of Payment. Except as provided in clause (a) above, Freescale will pay and will cause each of its Affiliates to pay all amounts due pursuant to this Agreement (ii) within thirty (30) days after receipt of each such invoice hereunder for the Transition Services and (ii) within forty-five (45) days after receipt of each such invoice hereunder for the amounts subject to reimbursement; provided that in the event that Freescale, in good faith and upon reasonable grounds, questions any invoiced item, payment of that item may be made only after resolution of such question.

7. Personnel.

(a) Right to Designate and Change Personnel. Motorola will make available such personnel as will be required to provide the Transition Services described in Annex A. Motorola will have the right to designate which personnel it will assign to perform the Transition Services. Motorola also will have the right to remove and replace any such personnel at any time or designate any of its Affiliates or a third-party provider at any time to perform the Transition Services; provided, however, that Motorola will use its commercially reasonable efforts to limit the disruption to the Company in the transition of the Transition Services to different personnel or a third party. In the event that personnel with the designated level of experience are not then employed by Motorola, Motorola will substitute such personnel or third party personnel having an adequate level of experience; provided, however, that Motorola will have no obligation to retain any individual employee for the sole purpose of providing the applicable Transition Services.

(b) Financial Responsibility for Motorola Personnel. Motorola will pay for all personnel expenses, including wages, of its employees performing the Transition Services. Any request by the Company for travel by any Motorola employee will be considered and treated as a request for Additional Services pursuant to Section 1 and the costs of such travel shall be charged to the Company as additional fees.

(c) Motorola Manager. During the term of this Agreement, Motorola will appoint one of its employees (the “Motorola Manager”) who will have overall responsibility for managing and coordinating the delivery of the Transition Services and one of its employees for each category of service. The Motorola Manager and each of the sub-managers will coordinate and consult with the Freescale Manager (as defined in Section 7(d)) and each of the Freescale sub-managers. Motorola may, at its discretion, select other individuals to serve in these capacities during the term of this Agreement.

(d) Freescale Manager. During the term of this Agreement, Freescale will appoint one of its employees (the “Freescale Manager”) who will have overall responsibility for managing and coordinating the delivery of the Transition Services and one of its employees for each category of service. The Freescale Manager and each of the Freescale sub-managers will

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coordinate and consult with the Motorola Manager and each of the Motorola sub-managers. Freescale may, at its discretion, select other individuals to serve in these capacities during the term of this Agreement.

8. Proprietary Rights; Software.

(a) Third-Party Software. In addition to the consideration set forth elsewhere herein, Freescale shall also pay any amounts that are required to be paid to any licensors of software that is used by Motorola in connection with the provision of any Transition Services hereunder, and any amounts that are required to be paid to any such licensors to obtain the consent of such licensors to allow Motorola to provide any of the Transition Services hereunder. Subject to the immediately preceding sentence and the terms of the Separation Agreement, Motorola will use commercially reasonable efforts to obtain any consent that may be required from such licensors in order to provide any of the Transition Services hereunder.

(b) Motorola Software. Any software, development tools, know-how, methodologies, processes, technologies or algorithms owned by Motorola or its Affiliates and which may during the term of this Agreement be operated or used by Motorola or its Affiliates in connection with the performance of the Transition Services hereunder will remain the property of Motorola or its Affiliates, as the case may be, and the Company will have no rights or interests therein, except as may otherwise be set forth in the Intellectual Property License Agreement and/or the Separation Agreement.

(c) Use of Trademarks. Neither Motorola nor the Company will use or have any rights to the trademarks or service marks of the other without prior written consent to such use other than as provided for in the Intellectual Property License Agreement. To the extent that such consent is granted, use of such trademarks or service marks shall be in accordance with the guidelines set forth by the Party owning such trademarks or service marks with all proper indicia of ownership, including those set forth in the Intellectual Property License Agreement.

9. IT Services.

(a) While using any data processing or communications services of Motorola (whether or not identified in this Annex A), Freescale shall and shall cause each of its Affiliates to, adhere in all respects to Motorola’s corporate information policies (including policies with respect to protection of proprietary information, data privacy and other policies regarding the use of computing resources) as in effect from time to time.

(b) The Company’s employees may continue to have access to the Motorola Intranet and associated computer applications if they meet the following criteria: (1) such employee is listed in the Freescale LDAP/”core directory” or any updates thereto and a current list of these employees is available online in a database accessible by Motorola staff and Freescale staff, and a documented process is in place for notification to Motorola of all voluntary and involuntary separations; (2) the Company has a legitimate business need to access resources on the Motorola Intranet during the term of this Agreement; and (3) the Company employee is bound by a non-disclosure agreement or other binding confidentiality obligations for the benefit

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of Motorola. The Company’s employee computer and system accounts on the Motorola Intranet that are not required for the transition must be locked. The Company’s employees that are connected to the Motorola Intranet must continue to adhere in all respects to the security requirements documented in the ISO17799+, SOP E-60, the protection of proprietary information and SOP-E-62, Appropriate Use of Computer Resources and SOP E-69, Global Data Protection/Privacy Policy or any successor or additional requirements that are provided to Freescale. Freescale shall, and shall cause each of its Affiliates to adhere in particular to security standards for requiring current antivirus protection active at all times, strong access control for all computer access, no sharing of passwords, no dual connections to the Motorola network and the Internet or other entity networks, and compliance to the requirements for protection of Motorola confidential proprietary information and intellectual assets/property. ISO17799+ must be followed when connecting the Motorola Intranet to the Company’s network or other non-Motorola networks and all external connections to the Motorola network require the review and the written approval of Motorola information protection services. Computing assets connected to the Motorola network are subject to monitoring by intrusion detection instrumentation and are subject to routine vulnerability assessment scans which may occur during connect time.

(c) Freescale and Motorola will jointly develop mutually acceptable systems conversion plans as soon as reasonably practicable. If necessary to facilitate such conversion, Motorola agrees to use commercially reasonable efforts to assist Freescale to meet the mutually agreed upon milestones, timelines and resource requirements identified in the final detailed systems conversion plan. Following this process, the plan will be considered firm and will be used by both Motorola and Freescale to synchronize their own related project efforts. Costs incurred by Motorola in connection with facilitating such conversion will be considered and treated as a request for Additional Services pursuant to Section 1. Any schedule modifications occurring after the plan is firm will require joint approval by Freescale and Motorola, such approval not to be unreasonably withheld.

(d) If the Company increases its use of Motorola’s CPU and network systems and such increased use contributes to the need for Motorola to purchase additional computing capacity that Motorola will not utilize after final separation, Freescale will be financially responsible for that computing capacity. Motorola will use commercially reasonable efforts to notify Freescale in advance of capacity issues to allow Freescale to respond and possibly discontinue use of certain Motorola systems in advance of any additional purchases. Historic usage for the second half of 2003 will serve as the basis from which to measure increases in usage. The need for purchasing additional computing capacity will be subject to the mutual agreement of Motorola and Freescale.

10. No Warranty; Limitation of Liability; Relationship of Parties.

(a) No Warranty. Motorola and Freescale both acknowledge and agree that, except as provided in Section 2.2(a), Motorola has agreed to provide the Transition Services hereunder as an accommodation to the Company and that Motorola makes no representations or warranties whatsoever, whether express or implied by statute or otherwise, with respect to the Transition Services or any other matters relating to or arising out of this Agreement.

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(b) Limitation of Liability and Indemnification.

(i) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS AFFILIATES BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY CLAIMS, LOSSES, DAMAGES OR INJURIES ARISING HEREUNDER, INCLUDING ANNEXES, SCHEDULES OR EXHIBITS HERETO.

(ii) Except insofar as the claim, demand, suit or recovery relate to Motorola’s breach of this Agreement or Motorola’s gross negligence, bad faith or intentional misconduct, and notwithstanding anything to the contrary and without limiting the Parties’ indemnification rights set forth in the Separation Agreement, Freescale shall and shall cause its Affiliates to indemnify and hold harmless Motorola and its Affiliates, and their respective Representatives (collectively, the “Indemnified Party”) from and against any Damages which the Indemnified Party may sustain or incur by reason of any claim, demand, suit or recovery by any person or entity resulting from acts or omissions committed by Motorola in providing the Transition Services pursuant to instructions from Freescale with respect to such Transition Services.

(c) Relationship of the Parties. Each Party is and will remain at all times an independent contractor of the other Party in the performance of all Transition Services hereunder. In all matters relating to this Agreement, each Party will be solely responsible for the acts of its employees and agents, and employees or agents of one Party shall not be considered employees or agents of the other Party. Except as otherwise provided herein, no Party will have any right, power or authority to create any obligation, express or implied, on behalf of any other Party nor shall either Party act or represent or hold itself out as having authority to act as an agent or partner of the other Party, or in any way bind or commit the other Party to any obligations. Nothing in this Agreement is intended to create or constitute a joint venture, partnership, agency, trust or other association of any kind between the Parties or persons referred to herein and each Party shall be responsible only for its respective obligations as set forth in this Agreement.

(d) Compliance with Laws. Each Party will comply with all applicable laws, rules, ordinances and regulations of any governmental entity or regulatory agency governing the Transition Services to be provided hereunder. No Party will take any action in violation of any applicable law, rule, ordinance or regulation that could result in liability being imposed on the other Party.

11. General.

(a) Binding Effect and Assignment. This Agreement binds and benefits the Parties and their respective successors and assigns. Neither Party may assign any of its rights or delegate any of its obligations under this Agreement without the written consent of the other Party, which consent may be withheld in such Party’s sole and absolute discretion and any

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assignment or attempted assignment in violation of the foregoing shall be null and void; provided, however, that, subject to Section 7(a), Motorola may delegate its duties hereunder to such Affiliates or third parties as may be qualified to provide the Transition Services; and provided further, that Motorola may assign this Agreement in connection with a merger transaction in which Motorola is not the surviving entity or the same of all or substantially all of its assets.

(b) Entire Agreement; Amendments. This Agreement and Annex A constitutes the final agreement between the Parties, and is the complete and exclusive statement of the Parties’ agreement on the matters contained herein. All prior and contemporaneous negotiations and agreements between the Parties with respect to the matters contained herein are superseded by this Agreement and Annex A. The Parties may amend this Agreement and Annex A only by a written agreement signed by each Party to be bound by the amendment and that identifies itself as an amendment to this Agreement or Annex A. Annex A may be amended to add Additional Services and to change the terms of any existing Transition by written consent of the Motorola and Freescale working group leads with respect to the particular service area for which they are responsible, subject to legal and accounting review.

(c) Force Majeure. In the event that Motorola is delayed in or prevented from performing its obligations under this Agreement, in whole or in part, due to an act of God, fire, flood, storm, explosion, civil disorder, strike, lockout or other labor trouble, material shortages of utilities, facilities, labor, materials or equipment, delay in transportation, breakdown or accident, any law, order, proclamation, regulation, ordinance, demand or requirement of any governmental authority, riot, war, acts of terror, rebellion, or other cause beyond the control of Motorola (each a “Force Majeure Event”), then upon written notice to Freescale, (i) the affected provisions and/or other requirements of this Agreement shall be suspended to the extent necessary during the period of such disability, (ii) Motorola shall have the right to apportion its services in an equitable manner to all users and (iii) Motorola shall have no liability to the Company or any other party in connection therewith. Motorola shall resume full performance of this Agreement as soon as reasonably practicable following the conclusion of the Force Majeure Event.

(d) Construction of Agreement.

(i) Where this Agreement or Annex A states that a Party “will” or “shall” perform in some manner or otherwise act or omit to act, it means that the Party is legally obligated to do so in accordance with this Agreement or Annex A.

(ii) The captions, titles and headings included in this Agreement and Annex A are for convenience only, and do not affect this Agreement’s or Annex A’s construction or interpretation. When a reference is made in this Agreement to an Article or a Section, annex, exhibit or schedule, such reference will be to an Article or Section of, or a annex, exhibit or schedule to, this Agreement unless otherwise indicated.

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(iii) This Agreement is for the sole benefit of the Parties hereto and do not, and are not intended to, confer any rights or remedies in favor of any Person (including any employee or stockholder of Motorola or Freescale) other than the Parties signing this Agreement.

(iv) The words “including,” “includes,” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance.

(v) Any reference in this Agreement or Annex A to the singular includes the plural where appropriate. Any reference in this Agreement or Annex A to the masculine, feminine or neuter gender includes the other genders where appropriate.

(vi) Unless otherwise specified, all references in this Agreement or Annex A to “dollars” or “$” means United States Dollars.

(e) Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full force, if the essential terms and conditions of this Agreement for each Party remain valid, binding and enforceable.

(f) Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the Party that signed it, and all of which together constitute one agreement. The signatures of both Parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending Party’s signature is as effective as signing and delivering the counterpart in person.

(g) Notices. Each Party giving any notice required or permitted under this Agreement will give the notice in writing and use one of the following methods of delivery to the Party to be notified, at the address set forth below or another address of which the sending Party has been notified in accordance with this Section 11(g): (a) personal delivery; (b) facsimile or telecopy transmission with a reasonable method of confirming transmission; (c) commercial overnight courier with a reasonable method of confirming delivery; or (d) pre-paid, United States of America certified or registered mail, return receipt requested. Notice to a Party is effective for purposes of this Agreement only if given as provided in this Section 11(g) and shall be deemed given on the date that the intended addressee actually receives the notice.

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If to Motorola:	with a copy to:
Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: Chief Financial Officer Facsimile: 847.576.1402	Motorola, Inc. 1303 East Algonquin Road Schaumburg, Illinois 60196 Attention: General Counsel Facsimile: 847.576.3628
	And
	Motorola, Inc. 1500 W. Dundee Arlington Heights, Illinois 60004 Attention: Chuck Kmoch Facsimile: 847.761.1499
If to Freescale:	with a copy to:
Freescale Semiconductor, Inc. 6501 William Cannon Drive Austin, Texas 78737 Attention: Chief Financial Officer Facsimile: 512.895.8696	Freescale Semiconductor, Inc. 7700 West Parmer Lane Austin, Texas 78729 Attention: General Counsel Facsimile: 512.996.7697
	And
	Freescale Semiconductor, Inc. 1300 North Alma School Road Chandler, Arizona 85224 Attention: Rick O’Daniels Facsimile: 480.814.3175

(h) Nonwaiver. The Parties may waive a provision of this Agreement or Annex A only by a writing signed by the Party intended to be bound by the waiver. A Party is not prevented from enforcing any right, remedy or condition in the Party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the Party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a Party’s rights and remedies in this Agreement is not intended to be exclusive, and a Party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

(i) Confidentiality. Subject to the terms of the Separation Agreement, each Party shall cause each of its Affiliates and each of their officers, directors, employees, agents, representatives, successors and assigns to hold all information relating to the business of the other Party disclosed to it by reason of this Agreement confidential and will not disclose any of such information to any party unless legally compelled to disclose such information; provided, however, that to the extent that either Party may become so legally compelled such Party may only disclose such information if it shall first have used reasonable efforts to, and, if practicable, shall have afforded the other Party the opportunity to obtain, an appropriate protective order or

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other satisfactory assurance of confidential treatment for the information required to be so disclosed.

(j) Governing Law. The internal laws of the State of Delaware (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of or in connection with this Agreement, and each of the annexes, schedules or exhibits hereto (whether arising in contract, tort, equity or otherwise).

[This space intentionally left blank]

*     *     *     *     *

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IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date and year first set forth above.

MOTOROLA, INC.
By:	/s/ David W. Devonshire
Name:	David W. Devonshire
Title:	Executive Vice President and Chief Financial Officer
FREESCALE SEMICONDUCTOR, INC.
By:	/s/ Alan Campbell
Name:	Alan Campbell
Title:	Senior Vice President and Chief Financial Officer

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EX-10.(G)

EXHIBIT 10(g)

SEMICONDUCTOR PURCHASE AGREEMENT

This Semiconductor Purchase Agreement, its Supplement and Attachments (collectively “Agreement”), effective as of April 4, 2004 (the “Effective Date”), is by and between Motorola, Inc., a Delaware corporation, acting through its Personal Communications Sector and the iDEN Subscriber Group of its Global Telecom Solutions Sector, or their successor organizations within Motorola (“Motorola”) and Freescale Semiconductor, Inc., a Delaware corporation, acting through its wireless and mobile systems group or its successor group within Freescale (“Freescale”).

RECITALS

A. Freescale is in the business of designing and manufacturing semiconductor and related software products.

B. Motorola desires to purchase products from Freescale, and Freescale desires to sell products to Motorola in accordance with the terms and conditions of this Agreement.

AGREEMENT

1. PRODUCTS.

1.1 Sale of Products. This Agreement governs all product purchases made by Motorola from Freescale. Subject to the terms of this Agreement, Freescale will sell to Motorola, and Motorola will buy from Freescale hardware, software, or a combination of hardware and software (collectively “Products”). Subject to Section 6 of Attachment A, Freescale will not be required to sell any Products that have been discontinued for manufacture or sale, or which have otherwise become unavailable, or for which the sale would cause Freescale to be in violation of pre-existing contracts or any applicable laws.

1.2 Standard and Special Products. For the purposes of this Agreement, “Standard Product(s)” means any Product that Freescale is selling to Motorola and to other customers, where Freescale’s sales to other customers exceed 30% of its total sales of that Product in any 90 day period during the term of this Agreement. Once a Product becomes a Standard Product, it remains a Standard Product. “Special Product” means a non-standard, custom, semi-custom, special product, or product unique to a customer, as such categories are defined by Freescale.

1.3 Purchase Commitment Terms. Purchase Commitments, adjustment mechanisms, conditions, and other terms governing Purchase Commitments are set forth in the attached Purchase Commitment Supplement.

1.4 Development Agreements. The Parties acknowledge their intent to negotiate and execute, from time to time, Development Agreements setting forth terms for the development of certain Products. Development Agreements will address matters such as Product specifications, development schedules and milestones, the parties’ intended Product classification (Standard or Special), deliverables, NRE, pricing, license terms, IP ownership and penalties.

2. PRICES. Motorola will receive Product pricing in accordance with the process set forth in Attachment A.

3. PURCHASE ORDERS.

3.1 General. Motorola and Freescale will exchange forecasting, ordering, and order acknowledgment data through either (i) the Schedule Sharing Program utilized by the Parties as of the Effective Date, as further described in Attachment B, or as mutually agreed by the parties from time to time, or (ii) through the use of a mutually agreed written purchase order and acknowledgment system.

3.2 Authorized Purchasers. Motorola authorizes its Affiliates to submit and enter into purchase orders with Freescale under the terms of this Agreement without any further authorization from Motorola. Purchases by these parties will be credited against Purchase Commitments in this Agreement. “Affiliates” means corporations or other entities controlled by, or under the common control of a party. A corporation or other entity is controlled by a party if more than 50% of the voting stock or other ownership interest of the corporation or entity is owned by such party. For the purposes of this Agreement, Freescale will not be considered an Affiliate of Motorola.

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3.3 Government Orders. If Motorola incorporates Products into products that Motorola sells to the U.S. government, Freescale makes no representations, certifications, or warranties whatsoever about compliance with acquisition statutes or regulations, except Freescale will comply with the clauses applicable to subcontracts for commercial items as set forth in Attachment B-1. If Motorola sells such products to any other public entity (whether state, local or international), or to a prime contractor or subcontractor of these entities, Motorola remains solely and exclusively liable for compliance with all acquisition statutes and regulations. Except as expressly provided in this section and Attachment A-1, Freescale makes no representations, certifications, or warranties whatsoever about compliance with acquisition statutes and regulations, including, without limitation, those that may relate to pricing, quality, origin or content.

3.4 Delivery. Freescale will use commercially reasonable efforts to deliver Products pursuant to a mutually agreeable schedule. Notwithstanding anything to the contrary in this Agreement, if Freescale is required to allocate Product under 2-615 of the Uniform Commercial Code, Freescale may adopt an equitable plan of allocation, taking into consideration the percentage of volume purchased by Motorola for specific Products affected by the plan, and adjust delivery schedules accordingly. Except as otherwise expressly provided, Motorola will not be entitled to any price reduction or other remedy under this Agreement or otherwise as a result of any plan of allocation or adjusted delivery schedule adopted by Freescale as a result of such Product allocation.

4. TERM & TERMINATION.

4.1 Term. Unless earlier terminated in accordance with this Section, this Agreement will terminate on December 31, 2006. Following the initial term, this Agreement will automatically extend for additional one year terms unless either party notifies the other in writing at least 60 days before the next anniversary of the Effective Date of its election not to extend the term. This Agreement may be terminated exclusively in accordance with the terms of this Section.

4.2 Immediate Termination for Cause. Either party may immediately terminate this Agreement by notifying the other party of the termination in writing if the other party becomes insolvent or bankrupt or admits its inability to pay its debts as they mature, or makes an assignment for the benefit of its creditors, or ceases to function as a going concern or to conduct its operations in the normal course of business.

4.3 Termination for Cause. If either party breaches this Agreement in any manner (other than as set forth in Section 4.2), the other party may terminate this Agreement by providing written notice to the other party of the occurrence and nature of the breach. The breaching party will have 10 days from the date it receives notice to cure payment breaches, and 30 days from the date it receives notice to cure all other breaches, after which time, this Agreement automatically terminates upon written notice from the non-breaching party. The non-breaching party must provide such termination notice within 30 days after the expiration of the relevant cure period.

4.4 Effect of Termination.

(A) Freescale Termination. Upon the termination of this Agreement by Freescale pursuant to Sections 4.2 or 4.3, Freescale may cancel, at its option, any or all acknowledged orders, and Motorola will be liable for order cancellation charges as provided in Section 5. Further, within 30 days after termination, Motorola will furnish to Freescale a certificate certifying that the original and all copies of the Licensed Programs and derivative versions thereof, in whole or in part and in any form, have been destroyed. End user licenses granted under Section 21.2(B) prior to termination survive.

(B) Motorola Termination. Upon the termination of this Agreement by Motorola pursuant to Sections 4.2 or 4.3, Freescale (i) will pay Motorola an amount equal to the amount, if any, paid by Motorola to Freescale for work not performed by Freescale, and (ii) grant manufacturing rights in accordance with Section 4.5. The remedies set forth in this 4.4(B) are Freescale’s sole liability for termination by Motorola.

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4.5 Manufacturing Rights. Upon termination of this Agreement by Motorola pursuant to Sections 4.2 or 4.3, in addition to its rights under Section 4.4, provided Freescale has not been able to cure or establish plans to cure the breach within 30 days from the date it receives notice of the breach, then Freescale will use commercially reasonable efforts to assist Motorola to establish an alternate source for Products that are sole sourced, including the following:

(A) Freescale will provide design RTL for the Products to Motorola, with a limited right to sublicense the design RTL for the Products to mutually acceptable third party semiconductor manufacturers, solely for the purpose of manufacturing Products for Motorola;

(B) Freescale and Motorola will work in good faith to establish royalty-free licensing terms for Freescale circuit related patents necessary for the acceptable third party semiconductor manufacturer to manufacture the sole source Products for Motorola in accordance with the design RTL. Freescale and the acceptable third party semiconductor manufacturer will also work in good faith to establish royalty-free licensing terms, for Freescale process related patents and Freescale process know how necessary for the acceptable third party semiconductor manufacturer to manufacture sole source Products for Motorola; and

(C) Freescale will provide Motorola with contact names to assist Motorola in their pursuit of licensing technologies that are not Freescale intellectual property but integrated into Motorola sole source Products being supplied by Freescale.

If Freescale is able to cure the breach within 90 days from the date Freescale receives notice of the breach, then the rights granted to Motorola under this paragraph during the breach period will terminate, and Freescale will compensate Motorola for direct costs incurred by Motorola during the breach period related to Motorola’s attempts to manufacture the affected Products with a third party semiconductor manufacturer.

4.6 Surviving Terms. Sections 4.4, 4.5, and 10 through 23 will survive termination of this Agreement.

5. ORDER CANCELLATION AND RESCHEDULING. Motorola may cancel or reschedule orders for Products in accordance with Attachment B.

6. MINIMUM ORDER. The Parties may mutually establish commercially reasonable minimums for orders and deliveries under this Agreement. The minimum order size for Products sold in reels is one reel. The minimum order/minimum delivery will be in multiples of MPQ (Multiple Package Quantity) or one POQ (Preferred Order Quantity).

7. FORCE MAJEURE. Neither party will be liable for any delay or non-performance of its obligations (except for payment obligations) under this Agreement resulting from a “Force Majeure Event”. “Force Majeure Event” means an event that is: (1) beyond the reasonable control of the party claiming a Force Majeure Event, (2) not reasonably foreseeable, (3) not due to the fault or negligence of the party claiming a Force Majeure Event, and (4) not capable of being overcome without unreasonable expense. The party claiming a Force Majeure Event will notify the other party immediately upon learning of the likelihood or existence of the Force Majeure Event. The party claiming a Force Majeure Event must exercise commercially reasonable efforts to mitigate the effect of the Force Majeure Event. A party impacted by a Force Majeure Event will be entitled to an equitable adjustment in the performance of its obligations that were excused by the Force Majeure Event.

8. DELIVERY TERMS. All deliveries will be made F.C.A. nearest airport or seaport to Freescale’s applicable manufacturing or storage facility (Incoterms 2000), with title and risk of loss passing to Motorola at that point. Each delivery will be separately invoiced.

9. PAYMENT TERMS. During the first two years of the term of this Agreement, Motorola will pay each invoice within 30 days from the date Freescale issues the invoice to Motorola. Prior to the end of the second year of the term, the parties will mutually determine payment terms that will be applicable for the third year of the term and thereafter.

10. UNAUTHORIZED APPLICATIONS.

10.1 Anti-Personnel Landmines. Products are not intended or authorized for use in anti-personnel landmines, and Motorola will not use Products for this purpose. Upon request from Freescale, Motorola will furnish a written certification that (i) Motorola does not use Products in anti-personnel landmines, and (ii) to Motorola’s actual knowledge, without a duty to investigate, Motorola’s customers do not use Products in anti-personnel landmines.

10.2 Critical Applications. Products are not intended or authorized for use in products surgically implanted into the body, for life support or for other products for which a Product failure could cause personal injury or death, however the

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parties agree that wireless telephony products are not considered products for which a Product failure could cause personal injury or death. If Motorola or Motorola’s customers use or permit the use of Products for these unintended or unauthorized uses, Motorola will fully indemnify Freescale, its officers, employees, and distributors, from all liability related to such use, including attorneys’ fees and costs.

11. RESALE RESTRICTIONS. Motorola will not resell Products, except (i) as integrated into a product sold by Motorola that contains substantial value added circuitry or software (including but not limited to assembled radio boards), (ii) to third party service centers for repair of such products, or (iii) to subcontractors manufacturing products on behalf of Motorola, exclusively for inclusion in products sold back to Motorola. Freescale may buy back Standard Product at a price equal to the Product price paid by Motorola, minus a 20% restocking charge. If Freescale elects not to buy back that Standard Product, Motorola may resell that Product.

12. EXPORT/REEXPORT. Neither party will export, re-export, resell, ship or divert or cause to be exported, re-exported, resold, shipped or diverted, directly or indirectly, any Product or technical information or licensed programs furnished hereunder or the direct product of this technical information or licensed programs to any country for which the United States Government or any agency thereof at the time of export or re-export requires an export license or other governmental approval, without first obtaining this license or approval.

13. LIMITATION OF LIABILITY. EXCEPT FOR PERSONAL INJURY, AND EXCEPT FOR THE LIMITED LIABILITIES OTHERWISE PROVIDED IN SECTIONS 4.4, 14, 15, 16, 20, AND THE PURCHASE COMMITMENT SUPPLEMENT, THE PARTIES’ TOTAL LIABILITY, WHETHER FOR BREACH OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE, IS LIMITED TO THE PRICE OF THE PARTICULAR PRODUCTS SOLD HEREUNDER WITH RESPECT TO WHICH LOSSES OR DAMAGES ARE CLAIMED. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

14. WARRANTY.

14.1 General. Except as provided in Section 14.5 and 14.6, Freescale warrants that its Products sold hereunder will, at the time of shipment, be (i) free from defects in material and workmanship, (ii) will conform to Freescale’s published or approved specifications (“Specifications”), including all mutually agreed production test specifications that are included within the Specifications, and (iii) will be new and unused. If Products are not as warranted, Freescale will, at its option and as Motorola’s exclusive remedy, either refund the purchase price, repair the Products, or replace the Products with the same or equivalent Products that meet this warranty. Motorola must obtain a Return Material Authorization (“RMA”) number and return nonconforming Products to Freescale’s designated facility, freight and insurance paid, within thirty 30 days of Motorola’s receipt of the RMA number. If Products are nonconforming, Freescale will reimburse Motorola’s reasonable transportation and insurance charges for return of Products. This limited warranty will not apply to any defects caused because the Products were subjected to improper testing, assembly, mishandling or misuse by Motorola or other third parties. This warranty will not be expanded, and no obligation or liability will arise, due to technical advice or assistance, qualification or testing data, computerized data, facilities or service Freescale may provide in connection with Motorola’s purchase. Upon request from Motorola, Freescale will discuss and attempt to resolve technical warranty issues directly with subcontractors manufacturing products on behalf of Motorola and those subcontractors may obtain an RMA number directly from Freescale, however the warranty rights extend only to Motorola, and any warranty remedies will be negotiated directly between Motorola and Freescale.

14.2 Limitations. THIS WARRANTY EXTENDS TO MOTOROLA ONLY AND CANNOT BE ASSIGNED BY MOTOROLA. FREESCALE WILL NOT ACCEPT WARRANTY RETURNS DIRECTLY FROM MOTOROLA’S CUSTOMERS. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE WARRANTY AGAINST INFRINGEMENT SPECIFIED IN THE UNIFORM COMMERCIAL CODE. ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED.

14.3 Time Period. Except as provided in Sections 14.4, 14.5 and 14.6, Products are warranted for the longer of (i) a period of three (3) years from date of shipment, or (ii) for the same time period as specified in Motorola’s standard warranty, provided that Motorola warrants its product in writing and extends such warranty to its customers at no additional charge.

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14.4 Time Period for Stand-Alone Software. Stand-alone software is warranted for a period of 90 days from the date Freescale first ships the single copy or Master Copy of the software to Motorola.

14.5 Time Period for Die and Wafers. Freescale warrants that die or wafers have, at shipment, been subjected to electrical test/probe and visual inspection to assure lot acceptability under Freescale’s specifications or specifications accepted by Freescale and are warranted for a period of 6 months from date of shipment. This limited warranty will not apply to any defects caused because the die or wafers were improperly removed from their original shipping container or subjected to testing or operational procedures not specifically approved by Freescale in writing to Motorola.

14.6 Products Provided “AS IS”. Development Products, including without limitation prototypes and pre-production samples (whether or not paid for by Motorola) are provided “AS IS”.

15. INTELLECTUAL PROPERTY INDEMNIFICATION.

15.1 Indemnity. Subject to the limitations and exclusions stated below, Freescale will defend, at Freescale’s expense, any Claim against Motorola, and will indemnify Motorola for costs and damages (including reasonable attorneys’ fees) finally awarded in the Suit. “Suit” means a lawsuit based on a Claim. For purposes of this Section, “Claim” means a claim that a Product furnished by Freescale under this Agreement directly infringes a valid patent or copyright, or misappropriates a trade secret.

15.2 Required Procedures. Freescale will have no obligation to defend or indemnify Motorola unless Motorola:

(A) promptly notifies Freescale in writing as soon as reasonably practicable after Motorola first becomes aware of the Claim, but in no event later than 30 days after Motorola first receives notice of the Claim; and

(B) gives Freescale sole control of the Claim and all requested assistance for resolving the Claim or defending the Suit.

Freescale will not be liable for the settlement of a Claim made without Freescale’s prior written consent unless Freescale breaches its duty to defend hereunder. If any suit against Motorola involves a Claim as well as other claims against Motorola, Freescale will nonetheless be fully responsible for defending, indemnifying and holding Motorola harmless from the Claim(s), and will provide reasonable cooperation to Motorola’s counsel with respect to the other claims asserted in such suit. If a Claim is asserted prior to completion of delivery of the Product, Freescale may decline to make further shipments.

15.3 Exclusions. Freescale will have no obligation to defend or indemnify Motorola if:

(A) Motorola or any third party has altered the Products, and the alleged infringement would not have occurred but for this alteration;

(B) Motorola or any third party has combined the Products with any other products or elements not furnished by Freescale, and the alleged infringement would not have occurred but for this combination;

(C) the Products were designed or manufactured in accordance with Motorola’s designs, specifications, or instructions, and the alleged infringement would not have occurred but for these designs, specifications, or instructions; or

(D) the Products infringe Essential Patent Claims for which Freescale does not have pass-through license rights that if extended to Motorola would avoid such infringement and for which Motorola agrees to incur Freescale’s obligation of payment or consideration owed to a third party for extending such pass-through license rights to Motorola. “Essential Patent Claims” means those claims of a third party patent to the extent that infringement of such claims can not be avoided in remaining compliant with Wireless Standards, including optional implementations thereof provided for in the Wireless Standards, on technical but not commercial grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization. “Wireless Standards” means: (a) all cellular communication technical specifications adopted as a standard by either a standards development organization (SDO) or a major operator of public subscription systems for

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in-country requirements (e.g., frequency spectrum availability, interconnection with preexisting telephony networks, etc.), as well as various adjunct protocols to the extent incorporated into such standards, including, but are not limited to, those technical specifications for digital radiotelephone service: (i) promulgated by ETSI and known as the GSM, Pan-European Digital Cellular radiotelephone service (including Personal Communications Network services, presently known as DCS1800 and in the United States PCS1900); (ii) promulgated in the United States by the Telecommunications Industry Association/Electronic Industries Associates (TIA/EIA) and presently known as AMPS (Advanced Mobile Phone System), NAMPS (Narrowband AMPS), TDMA Cellular/PCS - Radio Interface Interim Standards IS-136, IS-137 and IS-138 (including IS-54, IS-55 and IS-56 and PCS 1900 standards JSTD-009, JSTD-010 and JSTD-011); (iii) promulgated by ARIB (formerly RCR) and known as PDC (Personal Digital Cellular); (iv) promulgated by the TIA and known as IS-95 IS-95B, RTT MC 1X and 1X Plus and 1Xtreme Code Division Multiple Access services; (v) third generation (3G) cellular standards currently under development and known by such designations including 3GPP, UMTS, WCDMA and CDMA2000; and (vi) fourth generation (4G) cellular communication standards; and (vii) various derivations thereof that do not fundamentally alter the character thereof (e.g., wireless air-interface, framing structure, control, call set-up and connection management); and (b) all technical specifications promulgated or currently under development and known as IEEE 802 wireless standards (including any and all international versions thereof). “Wireless Standards” expressly excludes technical specifications for semiconductor processes or semiconductor devices issued by any public or private standards body whereby patent rights are customarily asserted against, and licenses are customarily granted (and royalties paid) for, the manufacture, use, sale or import of such semiconductor processes or semiconductor devices.

15.4 Injunctions. If the use or permitted resale of any Product is enjoined as a result of a Suit, Freescale, at Freescale’s option, and at no expense to Motorola, will: (i) obtain for Motorola the right to use or sell the Product; (ii) substitute an equivalent product(s) reasonably acceptable to Motorola and extend this indemnity to that product(s); or (iii) accept the return of the Product and refund Motorola the purchase price paid for the Product, less a reasonable charge for prior use, if any.

15.5 Limitations on Payable Damages. For each Claim, Freescale’s total liability for damages under this Section 15 will not exceed 50% of the revenue derived by Freescale from sales or license to Motorola of the Affected Product plus attorney fees and costs related to such Claim. The term Affected Product means all Products that are subject to the Claim or any related settlement.

15.6 Entire Liability. THIS SECTION CONTAINS (I) FREESCALE’S ENTIRE LIABILITY AND ALL OBLIGATIONS RELATED TO INTELLECTUAL PROPERTY INFRINGEMENT OR MISAPPROPRIATION, AND (II) MOTOROLA’S EXCLUSIVE REMEDIES AGAINST FREESCALE FOR INTELLECTUAL PROPERTY INFRINGEMENT OR MISAPPROPRIATION. THESE REMEDIES ARE PROVIDED IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTY AGAINST INFRINGEMENT SPECIFIED IN THE UNIFORM COMMERCIAL CODE.

16. PRODUCT LIABILITY INDEMNIFICATION.

16.1 Freescale will defend, at its expense, any suits against Motorola based upon a claim by a third party that a material defect in any Product furnished by Freescale under this Agreement caused death or bodily injury to any person and to pay costs and damages finally awarded based upon such claim in any such suit; provided that Freescale is: (1) promptly notified by Motorola in writing as soon as reasonably practicable after Motorola first became aware of the claim, but in no event later than 15 days after the date on which Motorola first received notice of such claim; and (2) at Freescale’s request and expense, given sole control of the suit and all requested assistance for defense of same. Freescale will not be liable for any settlement made without its written consent.

16.2 This indemnity does not extend to any suit based upon death or bodily injury arising from Product(s) furnished by Freescale that are: (1) altered in any way by Motorola or any third party if the alleged death or bodily injury would not have occurred but for such alteration; (2) combined with any other products or elements not furnished by Freescale if the alleged death or bodily injury would not have occurred but for such combination; or (3) designed and/or manufactured in accordance with Motorola’s designs, specifications, or instructions if the alleged death or bodily injury would not have occurred but for such designs, specifications or instructions.

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16.3 THE INDEMNITY PROVIDED IN THIS SECTION IS THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF FREESCALE AND THE REMEDIES PROVIDED IN THIS SECTION WILL BE MOTOROLA’S EXCLUSIVE REMEDIES AGAINST FREESCALE FOR CLAIMS BY THIRD PARTIES FOR DEATH OR BODILY INJURY AND IS PROVIDED IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY IN REGARD THERETO.

17. CONFIDENTIALITY. All materials and Products furnished by Freescale or Motorola and identified as containing confidential information must be held in confidence by the recipient using at least the degree of care the recipient uses for its own confidential information, but no less than reasonable care. Recipient may not disclose such materials or confidential information except to employees or agents who require use of the materials in the performance of their duties. This Agreement and its contents are hereby identified as confidential information. Confidential information does not include information in the public domain, information known to the recipient prior to any disclosure hereunder, information developed independently of any disclosure hereunder, information later communicated to the recipient by another without obligation of confidence, or information communicated by the owner to a third party free of any obligation of confidence. The recipient will hold all confidential information and materials containing confidential information in confidence for five (5) years after receipt. If the terms of this section conflict with any confidentiality or nondisclosure terms agreed to by the parties in a separate written agreement governing this transaction, the terms of such separate agreement will control.

18. USE OF NAME OR TRADEMARK. Nothing contained in this Agreement may be construed as conferring any rights to use in advertising, publicity, or other activities any name, trademark, or other designation of either party hereto, including any contraction, abbreviation, or simulation of any of the foregoing without the express written approval of the other party.

19. DISTRIBUTOR PARTICIPATION. When Motorola wishes to place order(s) for Products covered under this Agreement with any Freescale-authorized distributor (“Distributor”), subject to that Distributor’s approval and applicable minimum order requirements, if any, Freescale will review the requirements together with the Distributor’s current cost for the required devices and determine whether the price stated in this Agreement may be made available to this Distributor. Motorola and Distributor may then separately negotiate price and other terms and conditions of sale for these Products. Motorola acknowledges that Distributor is an independent business and is free to set its own prices, terms and conditions of sale, which may include a markup to cover the cost of its value-added services. Freescale makes no representation about the prices, terms and conditions of sale agreed upon by Distributor and Motorola. The terms of this section apply to Motorola’s U.S. domestic divisions and subsidiaries only. Freescale will evaluate distributors outside the domestic United States on a case-by-case basis.

20. MOTOROLA INDEMNITY.

20.1 Indemnity. Subject to the limitations and exclusions stated below, Motorola will defend, at Motorola’s expense, any Claim against Freescale, and will indemnify Freescale based on Motorola’s purchases of Products for costs and damages (including reasonable attorneys’ fees) finally awarded in the Suit. “Suit” means a lawsuit based on a Claim. For purposes of this Section, “Claim” means claims or liabilities (including but not limited to those related to property damage, personal injury or death), costs, damages and expenses (including but not limited to reasonable attorney’s fees) directly or indirectly arising out of, resulting from, or associated with, regardless of any alleged negligence or misconduct by Freescale relative to the design or manufacture of these Products, either of the following events:

(A) if Motorola purchases or uses Products in violation of this Agreement, or for any unintended or unauthorized application, or any application that violates any applicable law, rule or regulation, and such Suit would not have occurred but for such violation, unintended or unauthorized application or any application that violates any applicable law, rule or regulation, or

(B) if any Product made to Motorola’s designs, specifications or instructions directly infringes a valid patent or copyright, or misappropriates a trade secret, and such infringement would not have occurred but for such designs, specifications or instructions.

20.2 Required Procedures. Motorola will have no obligation to defend or indemnify Freescale unless Freescale:

(A) promptly notifies Motorola in writing as soon as reasonably practicable after Freescale first becomes aware of the Claim, but in no event later than 30 days after Freescale first receives notice of the Claim; and

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(B) gives Motorola sole control of the Claim and all requested assistance for resolving the Claim or defending the Suit.

Motorola will not be liable for the settlement of a Claim made without Motorola’s prior written consent, unless Motorola breaches its duty to defend hereunder. If any suit against Freescale involves a Claim as well as other claims against Freescale, Motorola will nonetheless be fully responsible for defending, indemnifying and holding Freescale harmless from the Claim(s), and will provide reasonable cooperation to Freescale’s counsel with respect to the other claims asserted in such suit.

20.3 Limitation on Payable Damages. For each Claim, Motorola’s total liability for damages under this Section 20 will not exceed 50% of the revenue derived by Freescale from sales or license to Motorola of the Affected Product plus attorney fees and costs related to such Claim. The term Affected Product means all Products that are subject to the Claim or any related settlement.

20.4 Entire Liability. THIS SECTION CONTAINS (I) MOTOROLA’S ENTIRE LIABILITY AND ALL OBLIGATIONS RELATED TO THE INDEMNIFIED CLAIMS, AND (II) FREESCALE’S EXCLUSIVE REMEDIES AGAINST MOTOROLA FOR THE INDEMNIFIED CLAIMS. THESE REMEDIES ARE PROVIDED IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTY AGAINST INFRINGEMENT SPECIFIED IN THE UNIFORM COMMERCIAL CODE.

21. LICENSED PROGRAMS. In the absence of a separate software agreement between Motorola and Freescale, the following terms and conditions apply to any software or firmware (software embedded in Products) in all forms, including any documentation (“Licensed Programs”) provided by Freescale:

21.1 Title to Licensed Programs delivered under this Agreement remains vested in Freescale or Freescale’s licensor and cannot be assigned or transferred. Motorola will not reverse engineer, disassemble, decompile, or modify any Licensed Program or any portion thereof, provided that if Motorola violates this restriction, Motorola hereby irrevocably assigns to Freescale all right, title and interest to any modifications to a Licensed Program. Notwithstanding the foregoing, Motorola may modify Licensed Programs solely to interface the Licensed Programs with Motorola’s software, and in such instances those modifications are not subject to the assignment obligations set forth in the previous sentence. Motorola will reproduce all of Freescale’s copyright notices and other proprietary legends on copies of Licensed Programs.

21.2 At Freescale’s discretion, Freescale may provide a single copy of the Licensed Program to Motorola (a “Master Copy”) or may provide individual copies of the Licensed Program to Motorola in a number equal to the number of copies purchased by Motorola.

(A) Use and Reproduction Rights. If Freescale provides a Master Copy to Motorola, then Freescale grants to Motorola a non-exclusive license to reproduce the number of copies purchased by Motorola and to use these copies of the Licensed Program. If Freescale provides individual copies of the Licensed Program to Motorola, then Freescale grants to Motorola a non-exclusive license to use these individual copies of the Licensed Program and to make one archival copy of this Licensed Program.

(B) Distribution Rights. Freescale grants to Motorola a non-exclusive license to distribute the number of copies of the Licensed Programs authorized above in Section 21.2(A) solely in conjunction with Motorola’s subsequent sale of Motorola’s products, and for execution on Freescale processors. Unless specifically authorized by Freescale in writing, the number of copies distributed must correspond on a one to one basis with the number of Freescale processors in Motorola’s products. Motorola may grant end user licenses to end customers of Motorola’s products as necessary for end customers to use such products.

21.3 Use of Licensed Programs is provided with RESTRICTED RIGHTS. Use, duplication or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at DFARS 252.227-7013 or subparagraphs (c)(l) and (2) of the Commercial Computer Software—Restricted Rights at 48 CFR 52.227-19, as applicable. Manufacturer is Freescale, Inc., 6501 William Cannon Drive West, Austin, TX, 78735.

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21.4 In the absence of a written agreement between the parties with regard to royalties or other fees associated with a Licensed Program, whether expressed in a purchase order, order acknowledgment, or separate license agreement, Licensed Programs are provided royalty free.

22. RESPONSIBILITY FOR EMPLOYEES. The personnel of a party (“visiting party”) will, while on the premises of the other party (“host party”), comply with the host party’s rules and regulations with regard to safety and security. The host party will provide a written copy of such rules and regulations to the personnel of the visiting party. The visiting party will have full control over its personnel and will be entirely responsible for their complying with the host party’s rules and regulations. The visiting party will indemnify and hold the host party harmless from any claims or demands including the costs, expenses and reasonable attorney’s fees on account thereof, that may be made by (i) anyone for injuries to persons or damage to property resulting from the negligent or willful acts or omissions of the visiting party’s personnel; or (ii) the visiting party’s personnel under Worker’s Compensation or similar laws. The visiting party will defend the host party against any such claim or demand.

23. GENERAL TERMS AND CONDITIONS.

23.1 Entire Agreement. This Agreement, including its Purchase Commitment Supplement and Attachments constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior communications, negotiations, understandings, agreements or representations, either written or oral, between the parties regarding its subject matter. In the event of any conflict between terms of any of the following documents, the order of precedence will be:

(A) Purchase Commitment Supplement and Attachments to this Agreement;

(B) The body of the Agreement; and

(C) Any other document related to Product purchases by Motorola from Freescale, whether asserted electronically or otherwise.

23.2 Succession and Assignment. This Agreement binds and inures to the benefit of the parties and their permitted successors and assigns. Neither party may assign this Agreement in whole or in part, or any of its rights, interests, duties or obligations under this Agreement, without the prior written approval of the other party.

23.3 Counterparts. This Agreement may be executed in one or more original counterparts, all of which together will constitute one agreement, and facsimile signatures will have the same effect as original signatures.

23.4 Headings. The section headings contained in this Agreement are for convenience only and will not affect the meaning or interpretation of this Agreement.

23.5 Notices. All notices and other communications under this Agreement will be made in writing, and will be effective when received at the following addresses:

Freescale:	Office of the President
	6501 William Cannon Drive West
	Austin, Texas 78735
With copy to:	Freescale General Counsel
	7700 West Parmer Lane
	Austin, Texas 78729
Motorola:	PCS Director of Contracts
	600 North U.S. Highway 45
	Libertyville, Illinois 60048

Either party may change its notice information upon notice to the other party.

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23.6 Governing Law. This Agreement will be governed by, construed, and enforced in accordance with the laws of the State of Delaware as if entered into in that state by citizens of that state to be performed wholly within that state, and without regard to its conflict of laws provision. The 1980 United Nations Convention on Contracts for the international sale of goods will not apply to this Agreement or any purchase order issued under this Agreement.

23.7 Amendments and Waivers. No amendment of this Agreement will be valid unless stated in writing and signed by authorized representatives of the parties. No waiver of any default, misrepresentation or covenant will affect any prior or subsequent default, misrepresentation, or covenant.

23.8 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions of this Agreement will be unimpaired and the invalid or unenforceable provision will be replaced with a provision that is valid and enforceable and that comes closest to the parties’ intention underlying the invalid or unenforceable provision. However, if the proposed modification or replacement of the invalid or unenforceable provision is held to deprive a party of a material benefit, the Agreement will terminate immediately.

23.9 Construction. Both parties have had adequate opportunity to obtain legal representation and this Agreement reflects arms’ length negotiations. Neither party will be deemed the drafter and no ambiguity in the Agreement will be construed against either party.

23.10 Authority. Each party represents and warrants to the other that:

(A) it has the authority to enter into this Agreement without any additional approvals or consents,

(B) the person executing this Agreement on its behalf is duly authorized, and

(C) to the best of such its knowledge, this Agreement is fully enforceable in accordance with its terms.

23.11 No Third Party Beneficiaries. This Agreement is for the exclusive benefit of the parties and does not create any rights enforceable by any third party.

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23.12 Dispute Resolution. Except for issues arising under Section 3 of Attachment A, or Section 3(B) or 5 of the Purchase Commitment Supplement, Motorola and Freescale will attempt to settle any claim or controversy arising out of this Agreement through consultation and negotiation in good faith and spirit of mutual cooperation. Disputes will be resolved by the following process. The dispute will be submitted in writing to a panel of consisting of one senior executive from Motorola and one senior executive from Freescale for resolution. If the executives are unable to resolve the dispute within thirty (30) days, either party may refer the dispute to mediation, the cost of which will be shared equally by the Parties, except that each party will pay its own attorney’s fees. Within forty-five (45) days after written notice demanding mediation, the Parties will choose a mutually acceptable mediator. Neither party will unreasonably withhold consent to the selection of the mediator. Mediation will be conducted in New York, New York. If the dispute cannot be resolved through mediation within three (3) months from the first day of the mediation, either party may submit the dispute to a court of competent jurisdiction. Use of any dispute resolution procedure will not be construed under the doctrines of laches, waiver, or estoppel to adversely affect the rights of either party. Nothing herein prevents either party from resorting directly to judicial proceedings if the dispute is with respect to intellectual property rights, or interim relief from a court is necessary to prevent serious and irreparable injury to a party or others. The Parties’ performance under this Agreement will not be suspended during the pendency of any dispute.

23.13 Injunctive Relief. Freescale acknowledges that any breach of its obligations to (i) meet its divestiture obligations under Section 8 of Attachment A, or (ii) honor the EOL provisions of Section 6 of Attachment A (the “Supply Obligations”) might cause irreparable harm to Motorola for which Motorola cannot be adequately compensated through money damages of any type. Accordingly, Freescale agrees that Motorola is entitled to seek injunctive relief to prevent any actual or anticipatory breach of any of the Supply Obligations, and to seek specific performance of the Supply Obligations. Motorola also will be entitled to make claims for all direct damages incurred as a result of any breach of the Supply Obligations not otherwise permitted under any provisions of this Agreement, and the provisions of Section 13 of this Agreement that cap damages at the price of the particular products sold with respect to which damages are claimed will not apply to such claims. Motorola must however use commercially reasonable efforts to mitigate damages it incurs as a result of any breach of the Supply Obligations.

23.14 Attachments. The following attachments are hereby made a part of this Agreement:

• Attachment A – Special Customer Terms

• Attachment B – Schedule Sharing and Order Terms

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives effective as of the Effective Date.

FREESCALE SEMICONDUCTOR, INC.		MOTOROLA, INC.
By:	/s/ Alan Campbell	By:	/s/ Thomas J. Lynch
	(Signature of Authorized Representative)		(Signature of Authorized Representative)
Name:	Alan Campbell	Name:	Thomas J. Lynch
	(Typed/Printed)		(Typed/Printed)
Title:	Senior Vice President and Chief Financial Officer	Title:	Executive Vice President and CEO of Personal Communications Sector
Date:		Date:

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Purchase Commitment Supplement

(Semiconductor Purchase Agreement between Motorola and Freescale)

1. Definitions.

A. “Motorola PCS 2/2.5G/GSM/GPRS/EDGE Product Families” means any Subscriber Product, the function of which is, or between which certain interfaces are, substantially standardized in the GSM Standards.

B. “Motorola PCS 3G/UMTS Product Families” means any Subscriber Product, the function of which is, or between which certain interfaces are, substantially standardized in the UMTS Standards or both the UMTS Standards and the GSM Standards.

C. “Baseband Semiconductor Family” means ICs that perform the core signal processing for GSM/GPRS/EDGE/UMTS protocol stack layers 1, 2 and 3.

D. “GSM Standards” means any of those technical specifications for digital radiotelephone services: (i) promulgated by ETSI and known as the GSM, Pan-European Digital Cellular radiotelephone service (including Personal Communications Network Services, presently known in Europe as DCS1800 and in the United States as PCS1900), (ii) promulgated by ETSI and known as the GPRS (General Packet Radio Service), (iii) promulgated by ETSI and known as EDGE (Enhanced Data rates for GSM Evolution), and (iv) that are various derivations of C(i), C(ii) or C(iii), excluding UMTS Standards, that do not fundamentally alter the character of any of the foregoing (e.g. wireless air-interface, faming structure, control, call set-up and connection management).

E. “Motorola IDEN Product Families” means any wireless communication product, including but not limited to portable cellular telephones, of the IDEN Subscriber Group within Motorola’s Global Telecommunications Solutions Sector, or any successor organization of the IDEN Subscriber Group that sells wireless communication products, including but not limited to portable cellular telephones.

F. “Motorola PCS” means Motorola’s Personal Communications Sector, or any successor organization of the Personal Communications Sector that sells wireless communication products, including but not limited to portable cellular telephones.

G. “Power Amp (PA) Semiconductor Family” means ICs that operate in conjunction with RF/IF ICs to amplify transmitted signals along the GSM/GPRS/EDGE/UMTS communication paths.

H. “Power Management Semiconductor Family” means central ICs that operate in conjunction with other components to perform power management functions within a handset.

I. “RF/IF Semiconductor Family” means ICs that perform the core processing of the RF/IF signals used in the GSM/GPRS/EDGE/UMTS communication paths.

J. “Subscriber Product” means (i) equipment such as a mobile, transportable or handheld portable unit containing no less than all of the following components: a display, a battery, plurality of keys or the input device, antenna, RF receiver and controller therefor, or (ii) an assembled unit containing no less than all of the following components: an RF receiver, a controller, and necessary interface connections.

K. “UMTS Standards” means any of those technical specifications for digital radiotelephone services (i) promulgated by ETSI and known as UMTS (Universal Mobile Telecommunications System) or W-CDMA (Wideband Code Division Multiple Access)/UMTS or IMT-2000 and (ii) that are various derivations of any of G (i) that do not fundamentally alter the character of any of the foregoing (e.g. wireless air-interface, faming structure, control, call set-up and connection management).

2. Baseband Products Purchase Commitment.

A. If Freescale is competitive with respect to pricing, timing and features, then through December 31, 2006, Motorola will purchase from Freescale 100% of Motorola’s total purchases of Baseband Semiconductor Family products

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required to manufacture handsets within the Motorola PCS 2/2.5G/GSM/GPRS/EDGE Product Families, the Motorola PCS 3G/UMTS Product Families, and the Motorola IDEN Product Families (the “Baseband Products”). For the purposes of this Agreement, Motorola’s obligation to purchase Baseband Products through December 31, 2006 is referred to as the “Purchase Commitment.”

B. The parties acknowledge that Motorola utilizes third party original design manufacturers (“ODMs”) to design and manufacture certain handsets within the Motorola Product Families for resale to Motorola (“ODM Products”). The Purchase Commitment excludes (i) purchases made by ODMs to manufacture ODM Products, (ii) purchases made by Motorola and resold to either ODMs or contract manufacturers to manufacture ODM Products, or (iii) purchases made by Motorola to enable the manufacture of handsets that are replacements for ODM Products, provided such replacements are based on ODM Products formerly manufactured by an ODM, do not utilize the Synergy or Moto-Juix software application frameworks, and would be prohibitive to manufacture with respect to cost or time to market using a Freescale Baseband Product, as compared to either the baseband chipset originally in such ODM Products or the then-currently available replacement for that original chipset. For clarity, if a third party contract manufacturer manufactures handsets designed by Motorola, in whole or in part, then the Purchase Commitment applies to purchases of Baseband Products for such handsets. During the term of this Agreement, Motorola will continue to use commercially reasonable efforts to develop products with its ODMs that incorporate Products from Freescale.

C. The parties acknowledge that Motorola may from time to time acquire third party original equipment manufacturers (“Acquired OEMs”) that manufacture handsets (“Acquired OEM Products”). The Purchase Commitment excludes purchases made by Motorola to enable the manufacture of Acquired OEM Products either formerly manufactured by or for an Acquired OEM or scheduled to be manufactured, if it would be prohibitive to either manufacture or change the schedule for manufacturing such Acquired OEM Products with respect to cost or time to market using a Freescale Baseband Product, as compared to either the baseband chipset originally in such Acquired OEM Products or the then-currently available replacement for that original chipset.

3. Development Agreements for Baseband Products.

A. The parties will in good faith negotiate a Development Agreement for each Baseband Product required by Motorola during the term of this Agreement. Motorola will design into its Product Families the Freescale Baseband Products listed in the attached Baseband Schedule to this Supplement, and enter into appropriate Development Agreements within 90 days of the Effective Date of this Agreement. If Motorola identifies any requirement for Baseband Products that is not included in the Baseband Schedule, then Motorola will promptly notify Freescale and within 30 days the parties will enter into negotiations toward the necessary Development Agreement. If the parties are unable to agree on pricing, timing and features for Baseband Products, then prior to negotiating more detailed terms and conditions of a required Development Agreement, the parties will escalate those issues for resolution in accordance with Section 4(B) below.

B. Freescale’s proposal to supply the required Baseband Product must be competitive with respect to pricing, timing and features. If the parties are unable to reach agreement within 30 days after the commencement of negotiations, the matter will be referred to their respective Chief Executive Officers for resolution. If the Chief Executive Officers are unable to resolve the matter within 10 days after the referral, either party may submit the matter to mediation by providing written notice to the other party. The parties will cooperate on selection of a mediator and use best efforts to resolve the matter through the mediation process within 30 days after issuance of the notice requesting mediation. If despite best efforts the parties are unable to resolve the matter through mediation, then either party may request submission of the matter to a qualified, independent neutral expert experienced in the industry, such as a partner in a certified public accounting firm or other mutually acceptable appraiser (the “Neutral Expert”), by providing written notice to the other party. Within 10 days after written notice requesting submission to a Neutral Expert, the parties will choose a mutually acceptable Neutral Expert. Neither party will unreasonably withhold consent to the selection of the Neutral Expert. Within 10 days after the Neutral Expert is selected, Motorola will present evidence to the Neutral Expert in support of its position that Freescale is not competitive with respect to pricing, timing or features. The Neutral Expert will evaluate but not disclose Motorola’s evidence, and within 7 days of receipt of evidence from both parties, will advise Freescale whether its proposal is not competitive, and the category (i.e. price, timing or features) with respect to which Freescale is not competitive. Freescale will have 7 days after receipt of the Neutral Expert’s guidance to provide the Neutral Expert with a revised proposal, and the Neutral Expert will determine whether the revised proposal is competitive with respect to pricing, timing and features. If the Neutral Expert determines that the revised proposal is competitive with respect to pricing, timing and features, it shall serve as the basis for the parties’ contract. If the Neutral Expert determines that the revised proposal is

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still not competitive with respect to pricing, timing and features, Motorola will be free to pursue an alternative supplier for the required product.

4. Conditions to Preserve Purchase Commitment.

Motorola’s Purchase Commitment obligation is subject to the following conditions:

A. Capacity. Freescale will use commercially reasonable efforts to maintain appropriate capacity to meet Motorola’s forecasted demand for Products. Motorola will use commercially reasonable efforts to provide accurate forecasts. Should Freescale fail to maintain such capacity or should Motorola’s actual requirements exceed its forecasts, Motorola will be entitled to purchase comparable products from an alternate supplier in such quantities as are required to meet Motorola’s actual requirements, and such purchases will be excluded from the Purchase Commitment. Should Freescale manage to add additional capacity, Motorola will transition from the alternate supplier’s product to the Freescale Product as soon as commercially reasonable (not to exceed 16 weeks). If Motorola was required to make contractual commitments to the alternate supplier regarding volume commitments in order to procure an interim supply of Non-Baseband Products, then such contractual requirements will take precedence over the Purchase Commitment. Motorola will use commercially reasonable efforts to avoid making such contractual commitments.

B. Delivery. Freescale will meet its delivery obligations under Section 3.4 of the Agreement. Should Freescale fail to deliver any Product pursuant to mutually agreed delivery schedules on a pervasive basis, Motorola will be entitled to purchase comparable products from an alternate supplier in such quantities as are required to meet the affected delivery schedules, and such purchases will be excluded from the Purchase Commitment. When Freescale is able to resume timely deliveries, Motorola will transition from the alternate supplier’s product to the Freescale Product as soon as commercially reasonable (not to exceed 16 weeks). If Motorola was required to make contractual commitments to the alternate supplier regarding volume commitments in order to procure an interim supply of Non-Baseband Products, then such contractual requirements will take precedence over the Purchase Commitment. Motorola will use commercially reasonable efforts to avoid making such contractual commitments.

C. Quality. If any Freescale Product becomes subject to an Epidemic Failure, Motorola will be entitled to purchase comparable products from an alternate supplier in lieu of the Product affected by the Epidemic Failure during the time that Freescale is attempting to cure the Epidemic Failure, and such purchases will be excluded from the Purchase Commitment. Once Freescale can reasonably demonstrate that it has cured the failure, Motorola will transition from the alternate supplier’s product to the Freescale Product as soon as commercially reasonable (not to exceed 16 weeks). If Motorola was required to make contractual commitments to the alternate supplier regarding volume commitments in order to procure an interim supply of Non-Baseband Products, then such contractual requirements will take precedence over the Purchase Commitment. Motorola will use commercially reasonable efforts to avoid making such contractual commitments.

D. Development Milestones. Freescale will use commercially reasonable efforts to meet its milestones under Development Agreements. As its sole remedy under this Agreement, Motorola will be entitled to terminate a Development Agreement and enter into a development agreement with another supplier if Freescale fails to meet any milestone under such Development Agreements, and such failure (i) has a material impact on Motorola’s product introduction schedule and (ii) is not caused by a Motorola delay such as a change in the specification for the Product or a failure by Motorola to meet one of its milestones. The parties may agree to additional remedies in the Development Agreements for failure to meet milestones in such Agreements. If Motorola enters into such a development agreement with another supplier following the termination of a Development Agreement, purchases made pursuant to such development agreement will be excluded from the Purchase Commitment. Should Freescale continue the development of a Product after termination of the applicable Development Agreement on an independent basis and develop a Product that meets the specifications, then Motorola will use commercially reasonable efforts, time permitting, to qualify the Freescale Product and transition from the alternate supplier’s product to the Freescale Product as soon as commercially reasonable (not to exceed 16 weeks). If Motorola was required to make contractual commitments to the alternate supplier regarding volume commitments in order to get the supplier to enter into the development agreement, then such contractual requirements will take precedence over the Purchase Commitment. Motorola will use commercially reasonable efforts to avoid making such contractual commitments.

5. Preferred Supplier for Non-Baseband Products. Freescale will be Motorola’s “Preferred Supplier” for products from the Power Amp (PA) Semiconductor Family, the Power Management Semiconductor Family, and the RF/IF Semiconductor Family (“Non-Baseband Products”). Preferred Supplier means that Freescale will be given an equal

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opportunity to bid on all Non-Baseband Products required by Motorola, and if Freescale’s bid is equal to or better than other bids received by Motorola with respect to pricing, timing and features, then Freescale will be awarded a percentage share that is consistent with a commercially reasonable dual source strategy. The parties acknowledge that while Motorola’s preferred suppliers typically receive between 25% to 75% share of Motorola’s requirements, no particular percentage commitment for Non-Baseband Products is intended under this Section. If Freescale submits a bid for a Non-Baseband Product opportunity, and is not selected, Freescale may submit the matter to the dispute resolution mechanism detailed in Section 3B of this Supplement. The parties will enter into Development Agreements for Non-Baseband Products awarded to Freescale that will establish terms for the sale of such Non-Baseband Products. If not already in place, the parties will promptly begin negotiations toward Development Agreements for the Non-Baseband Products listed in the Non-Baseband Schedule to this Supplement. All of the conditions set out in Section 4(A), (B), (C) and (D) above apply to Motorola’s obligation to purchase the minimum share awarded to Freescale pursuant to Motorola’s commercially reasonable dual source strategy. In addition, provided Motorola makes commercially reasonable efforts throughout the term of this Agreement to design Non-Baseband Products into such quantities and types of handsets that are in the aggregate, out of the entire portfolio of handsets designed by Motorola, reasonably likely and in good faith intended to achieve purchases of whatever minimum share Motorola awards Freescale for such Products, Motorola will not be deemed to be in breach of its commitment to purchase such share if Motorola’s failure to is caused by Motorola designing Freescale Products into particular models of handsets that (i) do not sell as many units as equivalent handsets containing products from alternate suppliers or (ii) do not launch on the dates planned resulting in a delay on the end-of-life of handsets that contain products from alternate suppliers. Motorola will use good faith efforts to cure any such failures but Freescale shall have no claim against Motorola regarding such failures including claims that Motorola failed to use good faith efforts to cure.

6. Quarterly Linkage Meetings. The parties will participate in quarterly linkage meetings to share roadmaps, scheduling and ensure progress of the Development Agreements.

7. Quarterly Review and Correction Procedure.

A. No more than 30 days following the end of each calendar quarter during the Term, the parties will jointly review Motorola’s performance to its Purchase Commitments, in light of applicable adjustments and conditions in the prior quarter.

B. If the parties determine that in the preceding quarter Motorola did not meet its Purchase Commitment, Motorola will make a correction payment to Freescale within 30 days equivalent to the gross margin Freescale would have realized had Motorola met such obligation.

C. If the parties are unable to reach agreement on the respective performance of the parties and appropriate corresponding corrections, if necessary, to achieve the Purchase Commitment, then within 15 days from the date either party notifies the other of its election to audit following failure to reach agreement, the parties will select a mutually acceptable, independent, nationally recognized auditor to review the relevant books and records of the parties to verify compliance with the requirements of this Attachment. If the audit reveals that Motorola has not met the Purchase Commitment, then the parties will go through the correction procedures set forth in subparagraph B above as if they had mutually determined that Motorola did not meet its Purchase Commitment in the preceding quarter at their quarterly review meeting.

8. Valuation upon Termination. Upon the termination of this Agreement by Freescale pursuant to Sections 4.2 or 4.3 of the Agreement, Freescale will submit to Motorola within 30 days from the termination date a good faith claim based on the gross margin for Products that Motorola would have purchased had it met the Purchase Commitment, if any, taking into consideration Freescale’s ability to mitigate the claim through the sale of Products to other parties. Motorola must notify Freescale in writing of its acceptance or rejection of the Freescale valuation within 10 business days of receipt of the valuation. Failure to provide this notice will constitute rejection of the Freescale valuation. If Motorola rejects the Freescale valuation, then the matter will be subject to the dispute resolution process set forth in Section 23.12 of the Agreement. Upon acceptance or resolution of the Purchase Commitment valuation, Motorola will pay the valuation amount to Freescale as provided in Section 9 (“Payment Terms”) of the Agreement. Upon payment of the valuation amount, Freescale will provide mutually agreed Products in amounts corresponding to the payment (if payment is full purchase price).

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EX-10.(H)

EXHIBIT 10(h)

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made and entered into as of July 18, 2004, between Motorola, Inc., a Delaware corporation (“Motorola”), and Freescale Semiconductor, Inc., a Delaware corporation (the “Company”).

WHEREAS, Motorola and the Company have entered into a Master Separation and Distribution Agreement (the “Separation and Distribution Agreement”) and certain ancillary agreements;

WHEREAS, Motorola currently owns all of the issued and outstanding shares of the Class B common stock, par value $.01, of the Company (the “Class B Common Stock”);

WHEREAS, the Company is offering and selling to the public (the “IPO”) by means of a Registration Statement (File No. 333-111250) initially filed with the Securities and Exchange Commission (the “SEC”) on Form S-1 on December 17, 2003 (the “Registration Statement”) shares of Class A common stock, par value $.01, of the Company (the “Class A Common Stock,” and together with the Class B Common Stock, the “Common Stock”);

WHEREAS, Motorola currently intends to evaluate its strategic options with respect to its entire ownership interest in the Company remaining after the IPO;

WHEREAS, Motorola and the Company desire to make certain arrangements to provide Motorola with registration rights with respect to shares of Common Stock it holds;

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and intending to be legally bound hereby, the parties hereby agree as follows:

Section 1. Effectiveness of Agreement; Term.

1.1 Effective Date. This Agreement shall become effective upon the consummation of the IPO (the “Effective Date”).

1.2 Shares Covered. This Agreement covers all shares of Common Stock that are beneficially owned by Motorola or any Permitted Transferee (as defined in Section 2.5) from time to time, whether or not held immediately following the IPO (subject to the provisions of Section 7, the “Shares”). The Shares shall include any securities issued or issuable with respect to the Shares by way of a stock dividend or a stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.

Motorola and any Permitted Transferees are each referred to herein as a “Holder” and collectively as the “Holders” and the Holders of Shares proposed to be included in any registration under this Agreement are each referred to herein as a “Selling Holder” and collectively as the “Selling Holders.”

Section 2. Demand Registration.

2.1 Notice. Upon the terms and subject to the conditions set forth herein, upon written notice of any Holder requesting that the Company effect the registration under the Securities Act of 1933, as amended (the “Securities Act”), of any or all of the Shares held by it, which notice shall specify the intended method or methods of disposition of such Shares (which methods may include, without limitation, a Shelf Registration, a Convertible Registration or an Exchange Registration (as such terms are defined in Section 2.6)), the Company will, within five days of receipt of such notice from any Holder, give written notice of the proposed registration to all other Holders, if any, and will use its best efforts to effect (at the earliest reasonable date) the registration under the Securities Act of such Shares (and the Shares of any other Holders joining in such request as are specified in a written notice received by the Company within 15 days after receipt of the Company’s written notice of the proposed registration) for disposition in accordance with the intended method or methods of disposition stated in such request (each registration request pursuant to this Section 2.1 is sometimes referred to herein as a “Demand Registration”); provided, however, that:

(a) The Company shall not be obligated to effect registration with respect to Shares pursuant to this Section 2 within 90 days after the effective date of a previous registration, other than a Shelf Registration, effected with respect to Shares pursuant to this Section 2;

(b) if at the time a Demand Registration is requested pursuant to this Section 2, the Company determines in the good faith judgment of the general counsel of the Company, to be confirmed within 15 days by the Company’s board of directors (the “Board”), that such registration would reasonably be expected to require the disclosure of material information that the Company has a bona fide business purpose to keep confidential and the disclosure of which would have a material adverse effect on any active proposal by the Company or any of its subsidiaries to engage in any material acquisition, merger, consolidation, tender offer, other business combination, reorganization, securities offering or other material transaction, the Company may postpone the filing or effectiveness of such registration until the earlier of (i) 15 business days after the date of disclosure of such material information, or (ii) 75 days after the Company makes such determination; provided, however, that the Company may delay a Demand Registration hereunder only once in any 12 month period;

(c) except in the case of a Convertible Registration or an Exchange Registration, the number of the Shares originally requested to be registered pursuant to any registration requested pursuant to this Section 2 shall cover Shares representing more than 10% of the total shares of Common Stock then outstanding held by the Holders;

(d) if a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Shares requested to be included in such offering exceeds the number of Shares which can be sold in an orderly manner in such offering within a price range acceptable to the Holders of a majority of the Shares initially requesting such registration or without materially adversely affecting the market for the Common Stock, the Company shall include in such registration the number of Shares requested by Holders of a majority of the Shares to be included therein which, in the opinion of such Holders based upon advice of the managing underwriters, can be sold in an orderly manner

-2-

within the price range of such offering and without materially adversely affecting the market for the Common Stock, pro rata among the respective Holders thereof on the basis of the amount of Shares owned by each Holder requesting inclusion of Shares in such registration; and

(e) The Company shall not be required to effect more than 10 Demand Registrations pursuant to this Section 2.1; provided, however, that the foregoing limitation shall not be effective if, at the time of the 10^th Demand Registration, the Company is prohibited under then-existing SEC rules from registering all remaining Shares pursuant to a Shelf Registration, regardless of whether the Holder or Holders has requested that such 10^th Demand Registration be a Shelf Registration or otherwise.

2.2 Registration Expenses. All Registration Expenses (as defined in Section 8) for any registration requested pursuant to this Section 2 (including any registration that is delayed or withdrawn) shall be paid by the Company; provided, however, that the expenses of a Demand Registration made in connection with a Distribution (as defined in the Separation and Distribution Agreement) shall be borne by the Holder or Holders.

2.3 Selection of Professionals. The Holders of a majority of the Shares included in any Demand Registration shall have the right to select the investment banker(s) and manager(s) to underwrite or otherwise administer the offering. The Holders of a majority of the Shares included in any Demand Registration shall have the right to select the financial printer, the solicitation and/or exchange agent (if any) and one counsel for the Selling Holders. The Company shall select its own outside counsel and independent auditors.

2.4 Third Person Shares. The Company shall have the right to cause the registration of securities for sale for the account of any Person (as defined in Section 6(e)) (including the Company) other than the Selling Holders (the “Third Person Shares”) in any registration of the Shares requested pursuant to this Section 2 so long as the Third Person Shares are disposed of in accordance with the intended method or methods of disposition requested pursuant to this Section 2; provided, however, that the Company shall not have the right to cause the registration of such securities of such other Persons if the registration requested pursuant to this Section 2 is a Convertible Registration or an Exchange Registration.

If a Demand Registration in which the Company proposes to include Third Person Shares is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Shares and Third Person Shares requested to be included in such offering exceeds the number of Shares and Third Person Shares which can be sold in an orderly manner in such offering within a price range acceptable to the Holders of a majority of the Shares initially requesting such registration or without materially adversely affecting the market for the Common Stock (the “Maximum Number”), the Company shall not include in such registration any Third Person Shares unless all of the Shares initially requested to be included therein are so included, and then only to the extent of the Maximum Number.

2.5 Permitted Transferees. As used in this Agreement, “Permitted Transferees” shall mean any transferee, whether direct or indirect, of Shares designated by Motorola (or a subsequent Holder) in a written notice to the Company as provided for in Section 9.3. Any Permitted Transferees of the Shares shall be subject to and bound by all of the terms and conditions

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herein applicable to Holders. The notice required by this Section 2.5 shall be signed by both the transferring Holder and the Permitted Transferees so designated and shall include an undertaking by the Permitted Transferees to comply with the terms and conditions of this Agreement applicable to Holders.

2.6 Shelf Registration; Convertible Registration; Exchange Registration; Distribution. With respect to any Demand Registration, the requesting Holders may request the Company to effect a registration of the Shares (a) under a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule) (a “Shelf Registration”); (b) in connection with such Holders’ registration under the Securities Act of securities (the “Convertible Securities”) convertible into, exercisable for or otherwise related to the Shares (a “Convertible Registration”); or (c) in connection with such Holders’ distribution of, or exchange of or offer to exchange the Shares for any debt or equity securities of such Holders, a subsidiary or affiliate thereof or any other Person (an “Exchange Registration”) or (d) in the form of a Distribution as defined in the Separation and Distribution Agreement.

2.7 SEC Form. The Company shall use its best efforts to cause Demand Registrations to be registered on Form S-3 (or any successor form), and if the Company is not then eligible under the Securities Act to use Form S-3, Demand Registrations shall be registered on Form S-1 (or any successor form). If a Demand Registration is a Convertible Registration or an Exchange Registration, the Company shall effect such registration on the appropriate Form under the Securities Act for such registrations. The Company shall use its best efforts to become eligible to use Form S-3 and, after becoming eligible to use Form S-3, shall use its best efforts to remain so eligible. All such Demand Registrations shall comply with applicable requirements of the Securities Act and the SEC’s rules and regulations thereunder, and, together with each prospectus included, filed or otherwise furnished by the Company in connection therewith, shall not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Company shall timely file all reports on Forms 10-K, 10-Q and 8-K (or any successor forms), and all material required to be filed, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the extent that such filing shall be a condition to initial filing or continued use or effectiveness of any Demand Registration.

2.8 Other Registration Rights. The Company shall not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, whether pursuant to “demand,” “piggyback,” or other rights, unless such rights are subject and subordinate to the rights of the Holders under this Agreement.

2.9 Withdrawal. The Holders may withdraw a Demand Registration at any time and under any circumstances.

Section 3. Piggyback Registrations.

3.1 Notice and Registration. If the Company proposes to register any of its securities for public sale under the Securities Act (whether proposed to be offered for sale by the Company

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or any other Person), on a form and in a manner which would permit registration of the Shares for sale to the public under the Securities Act (a “Piggyback Registration”), it will give prompt written notice to the Holders of its intention to do so, and upon the written request of any or all of the Holders delivered to the Company within 20 days after the giving of any such notice (which request shall specify the Shares intended to be disposed of by such Holders), the Company will use its best efforts to effect, in connection with the registration of such other securities, the registration under the Securities Act of all of the Shares which the Company has been so requested to register by such Holders (which shall then become Selling Holders), to the extent required to permit the disposition (in accordance with the same method of disposition as the Company proposes to use to dispose of the other securities) of the Shares to be so registered; provided, however, that:

(a) if, at any time after giving such written notice of its intention to register any of its other securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such other securities, the Company may, at its election, give written notice of such determination to the Selling Holders (or, if prior to delivery of the Holders’ written request described above in this Section 3.1, the Holders) and thereupon the Company shall be relieved of its obligation to register such Shares in connection with the registration of such other securities (but not from its obligation to pay Registration Expenses to the extent incurred in connection therewith as provided in Section 3.3), without prejudice, however, to the rights (if any) of any Selling Holders immediately to request (subject to the terms and conditions of Section 2) that such registration be effected as a registration under Section 2 or to include such Shares in any subsequent Piggyback Registration pursuant to this Section 3;

(b) The Company shall not be required to effect any registration of the Shares under this Section 3 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans or stock option or other employee benefit plans of the Company; and

(c) if a Piggyback Registration is an underwritten registration on behalf of the Company (whether or not selling security holders are included therein) and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially adversely affecting the marketability of the offering or the market for the Common Stock (the “Maximum Number”), the Company shall include the following securities in such registration up to the Maximum Number and in accordance with the following priorities: (i) first, the securities the Company proposes to sell, (ii) second, up to the number of Shares requested to be included in such registration, pro rata among the Selling Holders of such Shares on the basis of the number of Shares owned by each such Selling Holder, and (iii) third, up to the number of any other securities requested to be included in such registration.

(d) No registration of the Shares effected under this Section 3 shall relieve the Company of its obligation to effect a registration of Shares pursuant to Section 2.

(e) Any Selling Holder may withdraw any or all of its Shares from a Piggyback Registration at any time under any circumstances.

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3.2 Selection of Professionals. If any Piggyback Registration is an underwritten offering and any of the investment banker(s) or manager(s) selected to administer the offering was not one of the joint book-running managers of the IPO, such investment banker or manager shall not administer such offering if the Holders of a majority of the Shares included in such Piggyback Registration reasonably object thereto. The Holders of a majority of the Shares included in any Piggyback Registration shall have the right to select one counsel for the Selling Holders. The Company shall select its own outside counsel and independent auditors.

3.3 Registration Expenses. The Company will pay all of the Registration Expenses in connection with any registration pursuant to this Section 3.

Section 4. Registration Procedures.

4.1 Registration and Qualification. If and whenever the Company is required to use its best efforts to effect the registration of any of the Shares under the Securities Act as provided in Sections 2 and 3, including an underwritten offering pursuant to a Shelf Registration, the Company will as promptly as is practicable (but in no event, in the case of the initial filing of the registration statement, later than 30 days after the date of a demand under Section 2 if the applicable registration form is Form S-3 or a successor form, and for any other form, 90 days from the date of such demand):

(a) prepare and file with the SEC a registration statement with respect to such Shares and use its best efforts to cause such registration statement to become effective as soon as practicable after the initial filing thereof (provided that before filing a registration statement or prospectus or any amendments or supplement thereto, the Company shall furnish to the counsel selected by the Holders of a majority of the Shares covered by such registration statement copies of all such documents proposed to be filed (which documents shall be subject to the review and comment of such counsel));

(b) except in the case of a Shelf Registration, Convertible Registration or Exchange Registration, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all of the Shares until the earlier of (i) such time as all of such Shares have been disposed of in accordance with the intended methods of disposition set forth in such registration statement or (ii) the expiration of nine months after such registration statement becomes effective, plus the number of days that any filing or effectiveness has been delayed under Section 2.1(b);

(c) in the case of a Shelf Registration (but not including any Convertible Registration), prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Shares subject thereto for a period ending on the earlier of (i) 24 months after the effective date of such registration statement plus the number of days that any

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filing or effectiveness has been delayed under Section 2.1(b) and/or suspended under Section 4.3(a), and (ii) the date on which all the Shares subject thereto have been sold pursuant to such registration statement (the “Shelf Effective Period”);

(d) in the case of a Convertible Registration or an Exchange Registration, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all of the Shares subject thereto until such time as the rules, regulations and requirements of the Securities Act and the terms of the Convertible Securities no longer require such Shares to be registered under the Securities Act (the “Convertible Effective Period”);

(e) furnish to the Selling Holders and to any underwriter of such Shares such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents as the Selling Holders or such underwriter may reasonably request;

(f) use its best efforts to register or qualify all of the Shares covered by such registration statement under such other securities or blue sky laws of such jurisdictions as the Selling Holders or any underwriter of such Shares shall reasonably request, and do any and all other acts and things which may be necessary or advisable to enable the Selling Holders or any underwriter to consummate the disposition in such jurisdictions of the Shares covered by such registration statement, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

(g) (i) furnish to the Selling Holders, addressed to them, an opinion of counsel for the Company and (ii) use its best efforts to furnish to the Selling Holders, addressed to them, a “cold comfort” letter signed by the independent public accountants who have certified the Company’s financial statements included in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Holders may reasonably request, in each case, in form and substance and as of the dates reasonably satisfactory to the Selling Holders;

(h) immediately notify the Selling Holders, at any time when a prospectus relating to a registration pursuant to Section 2 or 3 is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and at the request of the

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Selling Holders prepare and furnish to the Selling Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.

(i) permit any Selling Holder(s) comprising holders of a majority of the Shares to be included in such registration, in their sole and exclusive judgment, to participate in the preparation of such registration or comparable statement (including but not limited to having prompt access to any SEC comment letters or other communications in connection with such registration and the Company’s responses thereto) and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such Selling Holder(s) and their counsel should be included;

(j) to make available members of management of the Company, as selected by the Holders of a majority of the Shares included in such registration, for assistance in the selling effort relating to the Shares covered by such registration, including, but not limited to, the participation of such members of the Company’s management in road show presentations.

(k) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, the Company shall use it best efforts promptly to obtain the withdrawal of such order; and

(l) use its best efforts to cause Shares covered by such registration statement to be registered with or approved by such other government agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Shares.

The Company may require the Selling Holders to furnish the Company with such information regarding the Selling Holders and the distribution of such Shares as the Company may from time to time reasonably request in writing and as shall be required by law, the SEC or any securities exchange on which any shares of Common Stock are then listed for trading in connection with any registration.

4.2 Underwriting. If requested by the underwriters for any underwritten offering in connection with a registration requested hereunder (including any registration under Section 3 which involves, in whole or in part, an underwritten offering), the Company will enter into an underwriting agreement with such underwriters for such offering, such agreement to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to that offering, including, without limitation, indemnities and contribution to the effect and to the extent provided in Section 6 and the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 4.1(g). The Company may require that the Shares requested to be registered pursuant to Section 3 be included in such underwriting on the same terms and conditions as shall be applicable to the other securities being sold

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through underwriters under such registration; provided, however, that no Selling Holder shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such Holder and such Holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6 hereof. The Selling Holders shall be parties to any such underwriting agreement, and the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Selling Holders.

4.3 Blackout Periods for Shelf Registrations.

(a) At any time when a Shelf Registration effected pursuant to Section 2 relating to the Shares is effective, upon written notice from the Company to the Selling Holders that the Company determines in the good faith judgment of the general counsel of the Company, to be confirmed within 15 days by the Board, that (i) the Selling Holders’ sale of the Shares pursuant to the Shelf Registration would require disclosure of material information which the Company has a bona fide business purpose for preserving as confidential and the disclosure of which would have a material adverse effect on the Company or (ii) the Company is unable to comply with SEC requirements for continued use or effectiveness of the Shelf Registration (in the case of either clause (i) or (ii), for convenience, referred to as an “Information Blackout”), the Selling Holders shall suspend sales of the Shares pursuant to such Shelf Registration until the earlier of (A) the date upon which such material information is disclosed to the public or ceases to be material, (or the Company otherwise complies with applicable SEC requirements) (B) 90 days after the general counsel of the Company made such good faith determination (as subsequently confirmed by the Board) unless resuming use of the Shelf Registration is then prohibited by applicable SEC rules or published interpretations, or (C) such time as the Company notifies the Selling Holders that sales pursuant to such Shelf Registration may be resumed (the number of days from such suspension of sales of the Selling Holders until the day when such sales may be resumed hereunder is hereinafter called a “Sales Blackout Period”).

(b) If there is an Information Blackout and the Selling Holders do not notify the Company in writing of their desire to cancel such Shelf Registration, the period set forth in Section 4.1(c)(i) shall be extended for a number of days equal to the number of days in the Sales Blackout Period. The fact that a Sales Blackout Period is required under this Section 4.3 or SEC rules shall not relieve the contractual duty of the Company as set forth in Section 2.7 to file timely reports and otherwise file material required to be filed under the Exchange Act.

4.4 Listing and Other Requirements. In connection with the registration of any offering of the Shares pursuant to this Agreement, the Company agrees to use its best efforts to effect the listing of such Shares on any securities exchange on which any shares of the Common Stock are then listed and otherwise facilitate the public trading of such Shares. The Company will take all other lawful actions reasonably necessary and customary under the circumstances to expedite and facilitate the disposition by the Selling Holders of Shares registered pursuant to this Agreement as described in the prospectus relating thereto, including without limitation timely preparation and delivery of stock certificates in appropriate denominations and furnishing any required instructions or legal opinions to the Company’s

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transfer agent in connection with Shares sold or otherwise distributed pursuant to an effective registration statement.

4.5 Holdback Agreements.

(a) The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 90-day period beginning on the effective date of any registration statement in connection with a Demand Registration (other than a Shelf Registration) or a Piggyback Registration, except pursuant to registrations on Form S-8 or any successor form or unless the underwriters managing any such public offering otherwise agree.

(b) If the Holders of Shares notify the Company in writing that they intend to effect an underwritten sale of Shares registered pursuant to a Shelf Registration pursuant to Section 2 hereof, the Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for its equity securities, during the seven days prior to and during the 90-day period beginning on the date such notice is received, except pursuant to registrations on Form S-8 or any successor form or unless the underwriters managing any such public offering otherwise agree.

(c) If the Company completes an underwritten registration with respect to any of its securities (whether offered for sale by the Company or any other Person) on a form and in a manner that would have permitted registration of the Shares, if no Holder requested the inclusion of any Shares in such registration, and if the Company gives each Holder at least 20 days prior written notice of the approximate date on which such offering is expected to be commenced, the Holders shall not effect any public sales or distributions of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, until the termination of the holdback period required from the Company by any underwriters in connection with such previous registration, provided that the holdback period applicable to the Holders shall (i) in no event be longer than a period of 7 days before and 90 days after the effective date of such registration or apply to the Holders more than once in any 12 month period, (ii) not apply to any Distribution under the Separation and Distribution Agreement, (iii) not apply to any securities of the Company acquired on the open market, (iv) not apply to any Holder owning less than 10% of the Company’s outstanding voting securities, and (v) not apply unless all directors and officers of the Company and holders of 10% or more of the Company’s outstanding voting securities are bound by the same holdback restrictions as are intended to apply to the Holders.

Section 5. Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement registering the Shares under the Securities Act and each sale of the Shares thereunder, the Company will give the Selling Holders and the underwriters, if any, and their respective counsel and accountants, access to its financial and other records, pertinent corporate documents and properties of the Company and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Selling Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

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Section 6. Indemnification and Contribution.

(a) In the event of any registration of any of the Shares hereunder, the Company will enter into customary indemnification arrangements to indemnify and hold harmless each of the Selling Holders, each of their respective directors and officers, each Person who participates as an underwriter in the offering or sale of such securities, each officer and director of each underwriter, and each Person, if any, who controls each such Selling Holder or any such underwriter within the meaning of the Securities Act (collectively, the “Covered Persons”) against any losses, claims, damages, liabilities and expenses, joint or several, to which such Person may be subject under the Securities Act or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any related registration statement filed under the Securities Act, any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse each such Covered Person, as incurred, for any legal or any other expenses reasonably incurred by such Covered Person in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus or final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Selling Holder or such underwriter specifically for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Covered Person and shall survive the transfer of such securities by the Selling Holders. In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (a) any Holder exercising rights under this Agreement, or any controlling person of any such Holder, makes a claim for indemnification pursuant to this Section 6, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6 provides for indemnification in such case, or (b) contribution under the Securities Act may be required on the part of any such Selling Holder or any such controlling person in circumstances for which indemnification is provided under this Section 6; then, and in each such case, the Company and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Shares offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other Selling Holders are responsible for the remaining portion; provided, however, that, in any such case: (i) no such Holder will be required to contribute any amount in excess of the net amount of proceeds of all such Shares offered and sold by such Holder pursuant to such registration statement; and (ii) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be

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entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

(b) Each of the Selling Holders, by virtue of exercising its respective registration rights hereunder, agrees and undertakes to enter into customary indemnification arrangements to indemnify and hold harmless (in the same manner and to the same extent as set forth in clause (a) of this Section 6) the Company, its directors and officers, each Person who participates as an underwriter in the offering or sale of such securities, each officer and director of each underwriter, and each Person, if any, who controls the Company or any such underwriter within the meaning of the Securities Act, with respect to any statement in or omission from such registration statement, any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto, if such statement or omission is contained in written information furnished by such Selling Holder to the Company specifically for inclusion in such registration statement or prospectus; provided, however, that the obligation to indemnify shall be individual, not joint and several, for each Selling Holder and shall be limited to the net amount of proceeds received by such Selling Holder from the sale of Shares pursuant to such registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or Person and shall survive the transfer of the registered securities by the Selling Holders.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided, however, that the failure to give prompt notice shall not impair any Person’s rights to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without the indemnifying party’s consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to (as a result of a conflict of interest, as determined in the indemnified party’s reasonable judgment), or who elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

(d) Indemnification and contribution similar to that specified in the preceding subdivisions of this Section 6 (with appropriate modifications) shall be given by the Company and the Selling Holders with respect to any required registration or other qualification of such Shares under any federal or state law or regulation of governmental authority other than the Securities Act.

(e) “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity, or any department, agency or political subdivision thereof.

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Section 7. Benefits and Termination of Registration Rights. The Holders may exercise the registration rights granted hereunder in such manner and proportions as they shall agree among themselves. The registration rights hereunder shall cease to apply to any particular Shares and such securities shall cease to be Shares when: (a) a registration statement with respect to the sale of such Shares shall have become effective under the Securities Act and such Shares shall have been disposed of in accordance with such registration statement; (b) such Shares shall have been sold to the public pursuant to Rule 144 under the Securities Act (or any successor provision); (c) such Shares shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force; (d) such Shares shall have ceased to be outstanding or (e) in the case of Shares held by a Permitted Transferee, when such Shares become eligible for sale pursuant to Rule 144(k) under the Securities Act (or any successor provision).

Section 8. Registration Expenses. As used in this Agreement, the term “Registration Expenses” means all expenses incident to the Company’s performance of or compliance with the registration requirements set forth in this Agreement including, without limitation, the following: (a) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares to be disposed of under the Securities Act; (b) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to the underwriters and dealers and directly to securityholders in the case of an Exchange Registration; (c) the cost of printing and producing any agreements among underwriters, underwriting agreements, and blue sky or legal investment memoranda, any selling agreements and any amendments thereto or other documents in connection with the offering, sale or delivery of the Shares to be disposed of; (d) all expenses in connection with the qualification of the Shares to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters in connection with such qualification and in connection with any blue sky and legal investment surveys; (e) the filing fees incident to securing any required review by the New York Stock Exchange and any other securities exchange on which the Common Stock is then traded or listed of the terms of the sale of the Shares to be disposed of and the trading or listing of all such Shares on each such exchange; (f) the costs of preparing stock certificates; (g) the costs and charges of the Company’s transfer agent and registrar; and (h) the fees and disbursements of any custodians, solicitation agents, information agents and/or exchange agents. Registration Expenses shall not include underwriting discounts and underwriters’ commissions attributable to the Shares being registered for sale on behalf of the Selling Holders, which shall be paid by the Selling Holders.

Section 9. Miscellaneous.

9.1 Entire Agreement. This Agreement, the Separation and Distribution Agreement, all the other Ancillary Agreements (as defined in the Separation and Distribution Agreement) and all other Exhibits and Schedules attached hereto and thereto constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all

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prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof.

9.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware regardless of the laws that might otherwise govern under principles of conflicts of laws applicable thereto.

9.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by telecopy with answer back, by express or overnight mail delivered by a nationally recognized air courier (delivery charges prepaid), or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties as follows:

if to Motorola:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Attention:	General Counsel
Telecopy:	(847) 576-3628
with a copy to:
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Attention:	Chief Financial Officer and Chief Accounting Officer
Telecopy:	(847) 576-4768
if to the Company:
Freescale Semiconductor, Inc.
7700 West Parmer Lane
Austin, TX 78729
Attention:	General Counsel
Telecopy:	(512) 996-7697
with a copy to:
Freescale Semiconductor, Inc.
6501 William Cannon Drive
Austin, Texas 78737
Attention:	Chief Financial Officer
Telecopy:	(512) 895-8696

or to such other address as the party to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Any notice or communication delivered in person shall be deemed effective on delivery. Any notice or communication sent by telecopy

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shall be deemed effective on the day at the place such notice or communication is received if confirmed by return facsimile. Any notice or communication sent by air courier shall be deemed effective on the day at the place at which such notice or communication is received if delivery is confirmed by the air courier. Any notice or communication sent by registered or certified mail shall be deemed effective on the fifth Business Day (as defined below) at the place from which such notice or communication was mailed following the day on which such notice or communication was mailed. “Business Day” means any day other than a Saturday, a Sunday, or a day on which banking institutions located in Chicago, Illinois are authorized or obligated by law or executive order to close.

9.4 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their legal representatives and successors, and each affiliate of the parties hereto, and nothing in this Agreement, express or implied, is intended to confer upon any other Person, other than any Permitted Transferee, any rights or remedies of any nature whatsoever under or by reason of this Agreement.

9.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.

9.6 Assignment. This Agreement may not be assigned by any party hereto other than by Motorola to a Permitted Transferee as provided for in Section 2.5; provided, further, that Motorola may assign this Agreement in connection with the sale of all or substantially all of its assets.

9.7 Amicable Resolution. Motorola and the Company mutually desire that friendly collaboration will continue between them. Accordingly, they will try to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (“Dispute”) between Motorola and the Company as to the interpretation of any provision of this Agreement (or the performance of obligations hereunder), the matter, upon written request of either party, will be referred for resolution to a steering committee established pursuant to the Separation and Distribution Agreement (the “Steering Committee”) and treated as a “Dispute” under the applicable provisions of the Separation and Distribution Agreement concerning the Steering Committee. For purposes of this Section 9.7, the Steering Committee shall be governed by and its decisions will have the effect, if any, set forth in the applicable provisions of the Separation and Distribution Agreement. Notwithstanding anything to the contrary in this Section 9.7, no amendment to the terms of this Agreement will be effected except in writing signed by an authorized officer of both parties.

9.8 Mediation and Alternate Dispute Resolution.

(a) In the event any Dispute cannot be resolved in a friendly manner as set forth in Section 9.7, the parties intend that such Dispute be resolved by ADR as defined and set forth in the Separation and Distribution Agreement . Nothing in this paragraph shall prevent either Motorola or the Company from commencing formal litigation proceedings if (i) good faith efforts to resolve the Dispute under these procedures have been unsuccessful, or (ii) any delay

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resulting from efforts to mediate such dispute could result in serious and irreparable injury to either Motorola or the Company. The use of any ADR procedures will not be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either party.

(b) Each of Motorola and the Company will bear its costs of mediation or ADR, but both parties shall share the costs of the mediation or ADR equally.

9.9 Jurisdiction. In the event a Dispute under this Agreement is to be submitted to judicial proceedings, each of Motorola and the Company consents to the exclusive jurisdiction of the federal or state courts of Delaware for any such legal action, suit or proceeding and agrees that any such action, suit, or proceeding may be brought only in such courts. Each of Motorola and the Company further waives any objection to the laying of venue for any suit, action or proceeding in such courts. Each party also waives its rights to a trial by jury. Each party agrees to accept and acknowledge service of any and all process that may be served in any suit, action or proceeding. Each party agrees that any service of process upon it mailed by registered or certified mail, return receipt requested to such party at the address provided in Section 9.3 above will be deemed in every respect effective service of process upon such party in any such suit, action or proceeding. Each party agrees to waive any right it might have to a trial by jury in any such suit, action or proceeding.

9.10 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible.

9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. Subject to Section 9.7, all rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

9.12 Amendment. No change, amendment or waiver will be made to this Agreement, except by an instrument in writing signed on behalf of each of the parties hereto.

9.13 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency,

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reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

9.14. Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. All references made herein to the Company as a party which operate as of a time following the Effective Date shall be deemed to refer to the Company and its subsidiaries as a single party.

*     *     *

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date and year first written above.

MOTOROLA, INC.
By:	/s/ David W. Devonshire
Its:	Executive Vice President and Chief Financial Officer
FREESCALE SEMICONDUCTOR, INC.
By:	/s/ Karen Roscher
Its:	Vice President, Director of Planning and Analysis

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EX-10.10

EXHIBIT 10.10

Standard NQ

Rev 7-04

MOTOROLA, INC.

AWARD DOCUMENT

Terms and Conditions Related to Employee Nonqualified Stock Options

Recipient:	Date of Expiration:
Commerce ID#:	Number of Options:
Date of Grant:	Exercise Price:

Motorola, Inc. (“Motorola”) is pleased to grant you options to purchase shares of Motorola’s common stock under the [define plan](the “Plan”). The number of options (“Options”) awarded to you and the Exercise Price per Option, which is the Fair Market Value on the Date of Grant, are stated above. Each Option entitles you to purchase one share of Motorola’s common stock on the terms described below and in the Plan.

Vesting and Exercisability

You cannot exercise the Options until they have vested.

Regular Vesting – The Options will vest in accordance with the following schedule (subject to the other terms hereof):

Percent	Date
25%	, 200
25%	, 200
25%	, 200
25%	, 200

Special Vesting – You may be subject to the Special Vesting Dates described below if your employment or service with Motorola or a Subsidiary (as defined below) terminates.

Exercisability – You may exercise Options at any time after they vest and before they expire as described below.

Expiration

All Options expire on the earlier of (1) the Date of Expiration as stated above or (2) any of the Special Expiration Dates described below. Once an Option expires, you no longer have the right to exercise it.

Special Vesting Dates and Special Expiration Dates

There are events that cause your Options to vest sooner than the schedule discussed above or to expire sooner than the Date of Expiration as stated above. Those events are as follows:

Retirement – If your employment or service with Motorola or a Subsidiary is ended because of your Retirement, Options that were granted at least one year prior to your Retirement that are not vested will automatically become fully vested upon your Retirement. Any remaining unvested Options will be forfeited. All your vested Options will then expire on the earlier of the third anniversary of ending your employment or service because of your Retirement or the Date of Expiration stated above. Retirement means (only for purposes of this Option) your retirement from Motorola or a Subsidiary as follows:

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

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

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

Disability – If your employment or service with Motorola or a Subsidiary is terminated because of your Total and Permanent Disability (as defined below), Options that are not vested will automatically become fully vested upon your termination of employment or service. All your Options will then expire on the earlier of the third anniversary of your termination of employment or service because of your Total and Permanent Disability or the Date of

Expiration stated above. Until that time, the Options will be exercisable by you or your guardian or legal representative.

Death – If your employment or service with Motorola or a Subsidiary is terminated because of your death, Options that are not vested will automatically become fully vested upon your death. All your Options will then expire on the earlier of the third anniversary of your death or the Date of Expiration stated above. Until that time, with written proof of death and inheritance, the Options will be exercisable by your legal representative, legatees or distributees.

Change In Control – If there is a Change In Control of Motorola (as defined in the Plan), all the unvested Options will automatically become fully vested as described in the Plan. If Motorola or a Subsidiary terminates your employment or service other than for Serious Misconduct within two years of consummation of a Change In Control, all of your vested Options will be exercisable until the Date of Expiration stated above.

Termination of Employment or Service Because of Serious Misconduct – If Motorola or a Subsidiary terminates your employment or service because of Serious Misconduct (as defined below) all of your Options (vested and unvested) expire upon your termination.

Change in Employment in Connection with a Divestiture – If you accept employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola or a Subsidiary (a “Divestiture”), all of your unvested Options will automatically expire upon termination in direct connection with a Divestiture and your vested Options will expire 12 months after such Divestiture or such shorter period remaining until expiration as set forth above.

Termination of Employment or Service by Motorola or a Subsidiary Other than for Serious Misconduct or a Divestiture– If Motorola or a Subsidiary on its initiative, terminates your employment or service other than for Serious Misconduct or a Divestiture, all of your unvested Options will automatically expire upon termination and your vested Options will expire twelve months after your termination of employment or such shorter period remaining until expiration as set forth above.

Termination of Employment or Service for any Other Reason than Described Above – If your employment or service with Motorola or a Subsidiary terminates for any reason other than that described above, including voluntary resignation of your employment or service, all of your Options (vested and unvested) will automatically expire on the date of termination.

Leave of Absence/Temporary Layoff

If you take a Leave of Absence from Motorola or a Subsidiary that your employer has approved in writing in accordance with your employer’s Leave of Absence Policy and which does not constitute a termination of employment as determined by Motorola, or you are placed on Temporary Layoff (as defined below) by Motorola or a Subsidiary the following will apply:

Vesting of Options – Options will continue to vest in accordance with the vesting schedule set forth above.

Exercising Options – You may exercise Options that are vested or that vest during the leave of absence or layoff.

Effect of Termination of Employment or Service – If your employment or service is terminated during the Leave of Absence or Temporary Layoff, the treatment of your Options will be determined as described under “Special Vesting Dates and Special Expiration Dates” above.

Other Terms

Method of Exercising – You must follow the procedures for exercising options established by Motorola from time to time. At the time of exercise, you must pay the Exercise Price for all of the Options being exercised and any taxes that are required to be withheld by Motorola or a Subsidiary in connection with the exercise. Options may not be exercised for less than 50 shares unless the number of shares represented by the Option is less than 50 shares, in which case the Option must be exercised for the remaining amount.

Transferability – Unless the Committee provides, Options are not transferable other than by will or the laws of descent and distribution.

Tax Withholding – Motorola or a Subsidiary is entitled to withhold an amount equal to the required minimum statutory withholding taxes for the

respective tax jurisdictions attributable to any share of common stock deliverable in connection with the exercise of the Options. You may satisfy any withholding obligation in whole or in part by electing to have Motorola retain Option shares having a Fair Market Value on the date of exercise equal to the minimum amount required to be withheld.

Definition of Terms

If a term is used but not defined, it has the meaning given such term in the Plan.

“Fair Market Value” is the closing price for a share of Motorola common stock on the last trading day before the date of grant or date of exercise, whichever is applicable. The official source for the closing price is the New York Stock Exchange Composite Transaction as reported in the Wall Street Journal, Midwest edition.

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

“Subsidiary” means an entity of which Motorola owns directly or indirectly at least 50% and that Motorola consolidates for financial reporting purposes.

“Total and Permanent Disability” means for (x) U.S. employees, entitlement to long-term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of permanent total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations.

“Temporary Layoff” means a layoff or redundancy that is communicated as being for a period of up to twelve months and as including a right to recall under defined circumstances.

Consent to Transfer Personal Data

By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary, salary grade, hire data, nationality, job title, any shares of stock held in Motorola, or details of all options or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

Acknowledgement of Discretionary Nature of the Plan; No Vested Rights

You acknowledge and agree that the Plan is discretionary in nature and limited in duration, and may be amended, cancelled, or terminated by Motorola or a Subsidiary, in its sole discretion, at any time. The grant of awards under the Plan is a one-time benefit and does not create any contractual or other right to receive an award in the future. Future grants, if any, will be at the sole discretion of Motorola, including, but not limited to, the timing of any grant, the amount of the award, vesting provisions, and the exercise price.

Agreement Following Termination of Employment

As a further condition of accepting the Options, you acknowledge and agree that for a period of two years following your termination of employment or service, you will not recruit, solicit or induce, or cause, allow, permit or aid others to recruit, solicit or induce, or to communicate in support of those activities, any employee of Motorola or a Subsidiary to terminate his/her employment with Motorola or a Subsidiary

and/or to seek employment with your new or prospective employer, or any other company.

You agree that upon termination of employment with Motorola or a Subsidiary, you will immediately inform Motorola of (i) the identity of your new employer (or the nature of any start-up business or self-employment), (ii) your new title, and (iii) your job duties and responsibilities. You hereby authorize Motorola or a Subsidiary to provide a copy of this Award Document to your new employer. You further agree to provide information to Motorola or a Subsidiary as may from time to time be requested in order to determine your compliance with the terms hereof.

Substitute Stock Appreciation Right

Motorola reserves the right to substitute a Stock Appreciation Right for your Option in the event certain changes are made in the accounting treatment of stock options. Any substitute Stock Appreciation Right shall be applicable to the same number of shares as your Option and shall have the same Date of Expiration, Exercise Price, and other terms and conditions. Any substitute Stock Appreciation Right may be settled only in Common Stock.

Acceptance of Terms and Conditions

By accepting the Options, you agree to be bound by these terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued under the Plan.

Other Information about Your Options and the Plan

You can find other information about options and the Plan on the Motorola website http://myhr.mot.com/finances/stock_options/index.jsp If you do not have access to the website, please contact Motorola Global Rewards, 1303 E. Algonquin Road, Schaumburg, IL 60196 USA;

GBLRW01@Motorola.com; 847-576-7885; for an order form to request Plan documents.

EX-10.11

EXHIBIT 10.11

RS Agreement

Standard Cliff

7-04

RESTRICTED

STOCK AWARD AGREEMENT

This Restricted Stock Award (“Award”) is made this              day of              2004 (“Date of Grant”), by Motorola, Inc. (the “Company” or “Motorola”) to                                  (the “Grantee”).

WHEREAS, Grantee is receiving the Award under the [NAME OF PLAN] (the “Plan”); and

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

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

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

1. Award of Restricted Stock. The Company hereby grants to Grantee a total of ______________________ (______) shares of Motorola Restricted Stock (the “Restricted Stock”) subject to the terms and conditions set forth below.

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

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

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

c. If Grantee engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary, or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola or any Subsidiary, all Restricted Stock shall be forfeited. This determination shall be made by the Compensation and Leadership Committee of the Company’s Board of Directors (the “Compensation Committee”).

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

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3. Lapse of Restrictions.

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

(i)              years from the Date of Grant (the “Restricted Period”);

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

(iii) Upon termination of Grantee’s employment by Motorola or a Subsidiary by Total and Permanent Disability. “Total and Permanent Disability” means for (x) U.S. employees, entitlement to long term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or

(iv) If the Grantee dies.

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

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

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

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

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

c. “Retirement” for purposes of this Agreement means:

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

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

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

d. If during the Restricted Period the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Restricted Stock will continue to be subject to this Agreement. If the Restricted Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Restricted Stock even if the Grantee has not returned to active employment. “Leave of Absence” means a leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola.

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

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

5. Voting and Dividends. Subject to the restrictions contained in Section 3 hereof, Grantee shall have all rights of a stockholder of Motorola with respect to the Restricted Stock, including the right to vote the shares of Restricted Stock and the right to receive any cash or stock dividends payable with respect to Common Stock. Stock dividends issued with respect to the Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the same restrictions and other terms and conditions that apply to the shares with respect to which such dividends are issued. If a dividend is paid in shares of stock of another company or in other property, the Grantee will be credited with the number of shares of stock of that company or the amount of property which the Grantee otherwise would have received as the owner of a number of shares of Restricted Stock. The shares and property so credited will be subject to the same Restrictions and other terms and conditions applicable to the Restricted Stock and will be paid out in kind at the time the Restrictions lapse.

6. Delivery of Certificates or Equivalent. Upon the lapse of Restrictions applicable to the Restricted Stock, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of shares of Restricted Stock upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock equal to the number of shares of Restricted Stock upon which such Restrictions have lapsed.

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

8. Consent to Transfer Personal Data. By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant

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to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

9. Nature of Award. By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorola’s decision to make this Award in no way implies that similar awards may be granted in the future. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services.

10. Other Rights. The grant of Restricted Stock does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Motorola Subsidiary, to terminate Grantee’s employment at any time.

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

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

13. Actions of the Compensation Committee. The Compensation Committee may delegate its authority to administer this Award. The actions and determinations of the Compensation Committee or its delegate shall be binding upon all parties.

14. Acceptance of Terms and Conditions. By electronic acceptance of this Award of Restricted Stock within 30 days of the Date of Grant, you agree to be bound by the foregoing terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued under the Plan. If you do not electronically accept this Award within 30 days after the Date of Grant you will not be entitled to the Restricted Stock.

15. Plan Documents. The Plan and the Prospectus for the Plan are available at http://hr2.mot.com/stockadmin or from Motorola Global Rewards 1303 East Algonquin Road, Schaumburg, IL 60196 USA, (847) 576-7885.

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EX-10.12

EXHIBIT 10.12

RSU Agreement

Standard Cliff

7-04

RESTRICTED STOCK

UNIT AWARD AGREEMENT

This Restricted Stock Unit Award (“Award”) is made this      day of                  2004 (“Date of Grant”), by Motorola, Inc. (the “Company” or “Motorola”) to                                                   (the “Grantee”).

WHEREAS, Grantee is receiving the Award under the [PLAN NAME], as amended (the “Plan”); and

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

WHEREAS, it is a condition to Grantee receiving the Award that Grantee electronically accept the terms, conditions and restrictions applicable to the restricted stock units as set forth in this agreement.

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

1. Award of Restricted Stock Units. The Company hereby grants to Grantee a total of                                                   (                ) Motorola restricted stock units (the “Units”) subject to the terms and conditions set forth below.

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

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

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

c. If Grantee engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary, or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola or any Subsidiary, all Units shall be forfeited. This determination shall be made by the Compensation and Leadership Committee of the Company’s Board of Directors (the “Committee”).

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

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3. Lapse of Restrictions.

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

(i) Four (4) years from the Date of Grant (the “Restricted Period”);

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

(iii) Upon termination of Grantee’s employment by Motorola or a Subsidiary by Total and Permanent Disability. “Total and Permanent Disability” means for (x) U.S. employees, entitlement to long term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or

(iv) If the Grantee dies.

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

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

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

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

c. “Retirement” for purposes of this Agreement means:

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

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

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

d. If during the Restricted Period the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. If the Restricted Period expires while the Grantee is on a Leave of Absence the Grantee will be entitled to the Units even if the Grantee has not returned to active employment. “Leave of Absence” means a leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola.

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

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

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

6. Delivery of Certificates or Equivalent. Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed plus, in either case, a cash payment equal to the value of any fractional Unit then credited to the Grantee’s account.

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

8. Voting and Other Rights.

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

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

9. Consent to Transfer Personal Data. By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or

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details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

10. Nature of Award. By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorola’s decision to make this Award in no way implies that similar awards may be granted in the future. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services.

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

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

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

14. Actions by the Committee. The Committee may delegate its authority to administer this Agreement. The actions and determinations of the Committee or delegate shall be binding upon the parties.

15. Acceptance of Terms and Conditions. By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to you of the grant of this Award (“Email Notification Date”), you agree to be bound by the foregoing terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued under the Plan. If you do not electronically accept this Award within 30 days of the Email Notification Date you will not be entitled to the Units.

16. Plan Documents. The Plan and the Prospectus for the Plan are available at http://myhr.mot.com/finances/stock_options/index.jsp or from Motorola Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196, USA (847) 576-7885.

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EX-10.13

EXHIBIT 10.13

Tax Deferred

Periodic Vesting

7-04

RESTRICTED STOCK

UNIT AWARD AGREEMENT

This Restricted Stock Unit Award (“Award”) is made this              day of              2004 “Date of Grant”), by Motorola, Inc. (the “Company” or “Motorola”) to                              (the “Grantee”).

WHEREAS, Grantee is receiving the Award under the Motorola [Plan Name] (the “Plan”);

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

WHEREAS, it is a condition to Grantee receiving the Award that Grantee electronically accept the terms, conditions and restrictions applicable to the restricted units.

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

1. Award of Restricted Stock Units. The Company hereby grants to Grantee a total of __________ thousand (_________) Motorola restricted stock units (the “Units”) subject to the terms and conditions set forth below.

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

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

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

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

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3. Lapse of Restrictions.

a. The Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows:

(i) 25% on             , 2004; an additional 25% on             , 2005; an additional 25% on             , 2006; and the remaining Units on -             , 2007;

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

(iii) Upon termination of Grantee’s employment with Motorola or a Subsidiary by Total and Permanent Disability. “Total and Permanent Disability” means for (x) U.S. employees, entitlement to long term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or

(iv) If the Grantee dies.

b. If the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. The Restrictions will continue to lapse while the Grantee is on a Leave of Absence. “Leave of Absence” means a leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola.

4. Prohibited Activity. If Grantee engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary, or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola or any Subsidiary, at any time from the date of grant of this Award to the date of distribution, all Units, whether or not subject to Restrictions, shall be forfeited. This determination shall be made by the Compensation and Leadership Committee of the Company’s Board of Directors.

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

6. Dividend Equivalents. Upon the Company’s payment of a cash dividend with respect to its Common Stock, the number of Units shall be increased by the number obtained by dividing the amount of dividend the Grantee would have received had the Grantee owned a number of shares of Common Stock equal to the number of Units then credited to his or her account by the closing price of the Company’s Common Stock on the last trading day before the date of the dividend payment, as reported for the New York Stock Exchange – Composite

Transactions in the Wall Street Journal, Midwest edition. If a dividend is paid in shares of stock of another company or in other property, the Grantee will be credited with the number of shares of that company or the amount of property which would have been received had the Grantee owned a number of shares of Common Stock equal to the number of Units credited to his or her account. The shares or other property so credited will be subject to the same Restrictions and other terms and conditions applicable to the Units and will be paid out in kind at the time the Units are distributed.

7. Delivery of Certificates or Equivalent. Upon a Distribution Event, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units then subject to this Award which are free of Restrictions, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units then subject to this Award which are free of Restrictions, plus, in either case, a cash payment equal to the value of any fractional Unit then credited to the Grantee’s account. A “Distribution Event” shall occur upon a Change in Control of Motorola or upon the termination of the Grantee’s employment with Motorola or a Subsidiary by death, Total and Permanent Disability, or otherwise.

8. Withholding Taxes. The Company is entitled to withhold an amount equal to Motorola’s required minimum statutory withholdings taxes for the respective tax jurisdiction attributable to any share of Common Stock or property deliverable in connection with the Units. Grantee may satisfy any withholding obligation in whole or in part by electing to have Motorola retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date of delivery equal to the minimum amount required to be withheld. “Fair Market Value” for this purpose shall be the closing price for a share of Common Stock on the last trading day before the date of delivery as reported for the New York Stock Exchange - Composite Transactions in the Wall Street Journal, Midwest edition.

9. Voting and Other Rights.

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

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

10. Consent to Transfer Personal Data. By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or

unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

11. Nature of Award. By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorola’s decision to make this Award in no way implies that similar awards may be granted in the future. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services.

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

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

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

15. Actions by the Compensation and Leadership Committee. The Compensation and Leadership Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation and Leadership Committee or delegate shall be binding upon the parties.

16. Acceptance of Terms and Conditions. By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to you of the grant of this Award (“Email Notification Date”), you agree to be bound by the foregoing terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued

under the Plan. If you do not electronically accept this Award within 30 days of the Email Notification Date you will not be entitled to the Units.

17. Plan Documents. The Plan and the Prospectus for the Plan are available at http://myhr.mot.com/finances/stock_options/index.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 USA (847) 576-7885.

EX-10.14

EXHIBIT 10.14

Tax Deferred

Cliff Vesting

7-04

RESTRICTED STOCK

UNIT AWARD AGREEMENT

This Restricted Stock Unit Award (“Award”) is made this              day of              2004 “Date of Grant”), by Motorola, Inc. (the “Company” or “Motorola”) to                          (the “Grantee”).

WHEREAS, Grantee is receiving the Award under the [Plan Name] (the “Plan”);

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

WHEREAS, it is a condition to Grantee receiving the Award that Grantee electronically accept the terms, conditions and restrictions applicable to the restricted units.

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

1. Award of Restricted Stock Units. The Company hereby grants to Grantee a total of __________ thousand (_________) Motorola restricted stock units (the “Units”) subject to the terms and conditions set forth below.

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

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

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

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

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3. Lapse of Restrictions.

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

(i) Four (4) years from the Date of Grant (the “Restricted Period”);

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

(iii) Upon termination of Grantee’s employment with Motorola or a Subsidiary by Total and Permanent Disability. “Total and Permanent Disability” means for (x) U.S. employees, entitlement to long term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or

(iv) If the Grantee dies.

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

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

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

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

c. “Retirement” for purposes of this Agreement means:

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

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

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

d. If the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. The Restrictions will continue to lapse while the Grantee is on a Leave of Absence. “Leave of Absence” means a leave of

absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola.

4. Prohibited Activity. If Grantee engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary, or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola or any Subsidiary, at any time from the date of grant of this Award to the date of distribution, all Units, whether or not subject to Restrictions, shall be forfeited. This determination shall be made by the Compensation and Leadership Committee of the Company’s Board of Directors.

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

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

7. Delivery of Certificates or Equivalent. Upon a Distribution Event, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units then subject to this Award which are free of Restrictions, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units then subject to this Award which are free of Restrictions, plus, in either case, a cash payment equal to the value of any fractional Unit then credited to the Grantee’s account. A “Distribution Event” shall occur upon a Change in Control of Motorola or upon the termination of the Grantee’s employment with Motorola or a Subsidiary by death, Total and Permanent Disability, Retirement or otherwise.

8. Withholding Taxes. The Company is entitled to withhold an amount equal to Motorola’s required minimum statutory withholdings taxes for the respective tax jurisdiction attributable to any share of Common Stock or property deliverable in connection with the Units. Grantee may satisfy any withholding obligation in whole or in part by electing to have Motorola retain shares of Common Stock deliverable in connection with the Units having a Fair Market Value on the date of delivery equal to the minimum amount required to be withheld. “Fair Market Value” for this purpose shall be the closing price for a share of Common Stock on the last trading

day before the date of delivery as reported for the New York Stock Exchange - Composite Transactions in the Wall Street Journal, Midwest edition.

9. Voting and Other Rights.

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

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

10. Consent to Transfer Personal Data. By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

11. Nature of Award. By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorola’s decision to make this Award in no way implies that similar awards may be granted in the future. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received

under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services.

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

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

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

15. Actions by the Compensation and Leadership Committee. The Compensation and Leadership Committee may delegate its authority to administer this Agreement. The actions and determinations of the Compensation and Leadership Committee or delegate shall be binding upon the parties.

16. Acceptance of Terms and Conditions. By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to you of the grant of this Award (“Email Notification Date”), you agree to be bound by the foregoing terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued under the Plan. If you do not electronically accept this Award within 30 days of the Email Notification Date you will not be entitled to the Units.

17. Plan Documents. The Plan and the Prospectus for the Plan are available at http://myhr.mot.com/finances/stock_options/index.jsp or from Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196 USA (847) 576-7885.

EX-10.17

EXHIBIT 10.17

2004 Motorola Incentive Plan

Overview

The 2004 Motorola Incentive Plan (the “Plan”) has been established to retain employees through competitive rewards, attract premier talent, align individual efforts with business goals, and reward employees for strong business performance. The Plan is based on successive calendar-year performance periods commencing 1 January 2004 (each a “Plan Year”).

Eligibility

To be eligible to participate in this Plan, an employee must be:

• A full-time or part-time Motorola employee;

• In a Participating Organization and on the payroll of a Participating Country;

• Not a participant in any other annual group incentive or bonus plan (e.g., sales commission plans, etc.); and

• One of the following must also apply:

• Active on a Motorola payroll as of the end of the Plan Year (countries may establish more restrictive eligibility requirements for terminating employees);

• On a leave of absence as of the end of the Plan Year;

• Retired from Motorola during the Plan Year while actively employed or from a leave of absence; or

• Deceased during the Plan Year while actively employed or on a leave of absence.

Award Calculation

Awards will be calculated and paid after the close of each Plan Year on which the awards are based. The award amount will be based on Eligible Earnings, the Target Award %, and the Business and Individual Performance Factors, as follows:

Award = Eligible
Earnings x Target
Award % x Business
Performance
Factor x Individual
Performance
Factor

Eligible Earnings is defined below. Target Award %’s, Business Performance Factors and Individual Performance Factors for each Plan Year shall be determined by the Compensation and Leadership Committee of the Board of Directors (the “Compensation Committee”). Business Performance Factors shall be based on Operating Earnings, Operating Cash Flow, Revenue Growth, Quality and such other factors as may be determined by the Compensation Committee.

Administration

• The Compensation Committee has the responsibility for this Plan and may delegate to the MIP Plan Committee (the “MIP Committee”) the authority to manage, administer, and interpret the terms of the Plan. Unless otherwise determined, the MIP Committee will consist of the Senior Human Resources Officer, a senior Compensation Officer, and a senior Finance Officer.

• Any claims for payments under the Plan or any other matter relating to the Plan must be presented in writing to the MIP Committee within 60 days after the event that is the subject of the claim. The MIP Committee will then provide a response within 60 days, which response shall be final and binding.

General Provisions

• Awards are subject to all applicable taxes and other required deductions.

• The Plan will not be available to employees subject to the laws of any jurisdiction which prohibits any provisions of this Plan or in which tax or other business considerations make participation impracticable in the judgment of the MIP Committee.

• This Plan does not constitute a guarantee of employment nor does it restrict Motorola’s rights to terminate employment at any time or for any reason

• The Plan and any individual award is offered as a gratuitous award at the sole discretion of Motorola. The Plan does not create vested rights of any nature nor does it constitute a contract of employment or a contract of any other kind. The Plan does not create any customary concession or privilege to which there is any entitlement from year-to-year, except to the extent required under applicable law. Nothing in the Plan entitles an employee to any remuneration or benefits not set forth in the Plan nor does it restrict Motorola’s rights to increase or decrease the compensation of any employee, except as otherwise required under applicable law.

• The awards shall not become a part of any employment condition, regular salary, remuneration package, contract or agreement, but shall remain gratuitous in all respects. Awards are not to be taken into account for determining overtime pay, severance pay, termination pay, pay in lieu of notice, or any other form of pay or compensation.

• This Plan is provided at Motorola’s sole discretion and Motorola may modify or eliminate it at any time, prospectively or retroactively, without notice or obligation. In addition, there is no obligation to extend or establish a plan in subsequent years.

• The Plan shall not be pre-funded. Motorola shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of awards.

• Since employee retention is an important objective of this Plan and awards do not bear a precise arithmetic relationship to time worked within the calendar year or length of service with Motorola, employees who resign or are terminated for any reason prior to the end of the Plan Year other than death or retirement shall not receive a pro rata award.

• The award for an employee who has died prior to the end of the Plan Year while actively employed or on a leave of absence will be paid to the decedent’s estate.

• Awards for transferred, promoted or demoted employees will be calculated using the:

• Target Award % applicable to the employee’s country and grade at the end of the Plan Year

• Business Performance Factor prorated for the portion of the year the participant was in different Participating Organizations during the Plan Year.

Definitions

Eligible Earnings: The MIP Committee will determine Eligible Earnings for each country, consistent with their respective legal and practical requirements. The MIP Committee may determine inclusions and exclusions from Eligible Earnings as it deems appropriate and may vary its determinations by country.

Employee: a person in an employee-employer relationship with the Company whose base wage or base salary is processed for payment by the Company’s Payroll Department(s) and not by any other department of the Company (or by any other company). Exclusions include:

• Any independent contractor, consultant, or individual performing services for the Company who has entered into an independent contractor or consultant agreement;

• Any individual performing services under an independent contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement that the Company enters into for services;

• Any person classified by the Company as a temporary or contract labor (such as black badges, brown badges, contractors, contract employees, job shoppers) regardless of the length of service; and

• Any “leased employee” as defined in Section 414(n) of the U.S. Internal Revenue Code of 1986, as amended.

Retired: This Plan utilizes the definition of “retiree” that appears in the primary retirement plan covering the employee.

Operating Earnings: A measure of pre-tax profits, calculated according to Motorola’s financial standards and measured on an ongoing basis. In a general sense, Operating Earnings is Profit Before Tax, prior to expenses for net interest expense, foreign exchange gains or losses, and gains or losses on asset sales.

Operating Cash Flow: A measure of cash flow calculated according to Motorola’s financial standards, and measured on an as-reported basis.

Revenue Growth: A measure of net sales after discounts calculated according to Motorola’s financial standards, and measured on an as-reported basis.

Quality: A combination of measures of customer satisfaction, reliability, and cost of poor quality, as defined by Motorola senior leaders.

EX-10.18

EXHIBIT 10.18

Motorola Mid Range Incentive Plan (MRIP) of 2003,

As Amended

ELIGIBILITY

Senior and Executive Vice Presidents and other key employees of Motorola or a subsidiary, as recommended by the CEO and approved by the Compensation and Leadership Committee of the Board of Directors (“Committee”), are eligible to participate in the Motorola Mid Range Incentive Plan (MRIP) of 2003, as Amended (the “Plan”). The Chief Operating Officer and the Chief Executive Officer are also eligible to participate as approved by the Committee.

PARTICIPATION

Generally, officers who become eligible to participate during the first quarter of a performance cycle will participate in a full two-year performance cycle. The participation of Officers who are promoted or newly hired after the first quarter of a performance cycle shall be at the discretion of the Chief Executive Officer.

OVERVIEW

Here is an overview of the Plan:

» Performance Cycle

The Plan is based upon two-year performance cycles selected by the Committee with the first performance cycle beginning on January 1, 2003.

» Performance Measures

Performance measures for each cycle will be determined by the Committee based on cumulative improvement in the economic profit and cumulative sales growth during each two-year performance cycle of Motorola, Inc. Economic profit is defined as net operating profit after tax minus a capital charge.

Net operating profit after tax and sales for each year during a performance cycle shall be determined in accordance with generally accepted accounting principles but shall exclude the effect of all acquisitions with a purchase price of $250 million or more, all gains or losses on the sale of a business, any asset impairment equal to $100 million or more, and any other special items designated by the Committee.

» Maximum Earned Award

A participant’s maximum earned award will be two times his/her target award. A participant’s target award is established at the commencement of a performance cycle based on a percentage of the participant’s base pay in effect at that time.

» The Payout Process

• All earned awards will be paid in cash. Payments will be made as soon as administratively practicable following the close of a performance cycle.

• A participant has no right to any award until that award is paid.

• If the Committee determines, in its sole discretion, that a participant has willfully engaged in any activity at any time, prior to the payment of an award, that the Committee determines was, is, or will be harmful to the Company, the participant will forfeit any unpaid award.

SITUATIONS AFFECTING THE PLAN

» Change in Employment

• Generally, a participant will be eligible for payment of an earned award only if employment continues through the last day of the performance cycle.

• Pro rata awards may be possible, however, depending upon the type of the employment termination. The table below summarizes how earned awards will generally be prorated in accordance with the type of employment termination:

If employment terminates due to…	The earned award will be…
Death	Pro rata award based on the number of completed months of employment within the performance cycle.
Total and Permanent Disability	Pro rata award based on the number of completed months of employment within the performance cycle.
Retirement	Pro rata award based on the number of completed months of employment within the performance cycle.
Termination of Employment or Service Because of Serious Misconduct	Forfeited.
Change in Employment in Connection with a Divestiture	Forfeited.
Termination of Employment or Service for any Other Reason than Described Above	Forfeited.
For purposes of determining a prorated payout, completed months of employment will include only those months in which the participant is actually working

The prorated payout will be based on final performance results and paid as soon as administratively practicable after the end of a performance cycle.

For purposes of the Plan, “Total and Permanent Disability” and Retirement” will be defined as set forth below:

• Total and Permanent Disability means for (x) U.S. employees, entitlement to long-term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan and (y) non-U.S.

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employees, as established by applicable Motorola policy or as required by local regulations.

• Retirement means retirement from Motorola or a Subsidiary as follows:

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

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

(iii) Retiring at or after age 65, without regard to years of service;

(iv) Retiring with any other combination of age and service, at the discretion of the Committee.

Years of service will be based on the participant’s Service Club Date.

» Change of Control

If Motorola undergoes a Change of Control as defined in the Omnibus Incentive Plan of 2002 (“Omnibus Plan”):

• The cumulative sales growth and cumulative EP improvement will be determined as of the effective date of the Change of Control.

• Pro rata award payments will be made based on the number of completed months of the cycle as of the effective date of the Change of Control.

• Awards will be paid in cash as soon as administratively practicable following the effective date of the Change of Control.

DEFINITION OF TERMS

“Subsidiary” means an entity of which Motorola owns directly or indirectly at least 50% and that Motorola consolidates for financial reporting purposes.

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

If a term is used but not defined, it has the meaning given such term in the Omnibus Plan.

RESERVATION AND RETENTION OF COMPANY RIGHTS

• The selection of any employee for participation in the Plan will not give that participant any right to be retained in the employ of the Company.

• Participation in the Plan is completely at the discretion of Motorola, and Motorola’s decision to make an award in no way implies that similar awards may be granted in the future.

• Anyone claiming a benefit under the Plan will not have any right to or interest in any awards unless and until all terms, conditions, and provisions of Plan that affect that person have been fulfilled as specified herein.

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• No employee will at any time have a right to be selected for participation in a future plan for any fiscal year, despite having been selected for participation in a previous fiscal year.

GOVERNANCE

It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan, all of which will be binding upon the participant.

AMENDMENT, MODIFICATION, and TERMINATION

The Committee may amend, modify, or terminate the Plan and the terms applicable to any performance cycle at any time.

MISCELLANEOUS PROVISIONS

• Award opportunities may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

• The Company will have the right to require participants to remit to the Company an amount sufficient to satisfy federal, state, and local withholding tax requirements, or to deduct from any or all payments under the Plan amounts sufficient to satisfy all withholding tax requirements.

• To the extent permitted by law, amounts paid under the Plan will not be considered to be compensation for purposes of any benefit plan or program maintained by the Company.

• All obligations of the Company under the Plan with respect to payout of awards, and the corresponding rights granted thereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or other acquisition of all or substantially all of the business and/or assets of the Company.

• In the event that any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.

• No participant or beneficiary will have any interest whatsoever in any specific asset of the Company. To the extent that any person acquires a right to receive payments under the Plan, such right will be no greater than the right of any unsecured general creditor of the Company.

• To the extent not preempted by federal law, the Plan, and all agreements hereunder, will be construed in accordance with and governed by the laws of the state of Illinois without giving effect to the principles of conflicts of laws.

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• This Plan constitutes a legal document which governs all matters involved with its interpretation and administration and supersedes any writing or representation inconsistent with its terms.

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EX-10.34

EXHIBIT 10.34

RSU Agreement

Periodic Vest

7-04

RESTRICTED STOCK

UNIT AWARD AGREEMENT

This Restricted Stock Unit Award (“Award”) is made this      day of              2004 (“Date of Grant”), by Motorola, Inc. (the “Company” or “Motorola”) to                              (the “Grantee”).

WHEREAS, Grantee is receiving the Award under the [PLAN NAME], as amended (the “Plan”); and

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

WHEREAS, it is a condition to Grantee receiving the Award that Grantee electronically accept the terms, conditions and restrictions applicable to the restricted stock units as set forth in this agreement.

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

1. Award of Restricted Stock Units. The Company hereby grants to Grantee a total of                          (            ) Motorola restricted stock units (the “Units”) subject to the terms and conditions set forth below.

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

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

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

c. If Grantee engages, directly or indirectly, in any activity which is in competition with any activity of Motorola or any Subsidiary, or in any action or conduct which is in any manner adverse or in any way contrary to the interests of Motorola or any Subsidiary, all Units shall be forfeited. This determination shall be made by the Compensation and Leadership Committee of the Company’s Board of Directors (the “Committee”).

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

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3. Lapse of Restrictions.

a. The Restrictions applicable to the Units shall lapse, as long as the Units have not been forfeited as described in Section 2 above, as follows:

(i) (Insert progressive vesting schedule);

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

(iii) Upon termination of Grantee’s employment by Motorola or a Subsidiary by Total and Permanent Disability. “Total and Permanent Disability” means for (x) U.S. employees, entitlement to long term disability benefits under the Motorola Disability Income Plan, as amended and any successor plan or a determination of a permanent and total disability under a state workers compensation statute and (y) non-U.S. employees, as established by applicable Motorola policy or as required by local regulations; or

(iv) If the Grantee dies.

b. If the Grantee takes a Leave of Absence from Motorola or a Subsidiary, the Units will continue to be subject to this Agreement. The Restrictions will continue to lapse while the Grantee is on a Leave of Absence. “Leave of Absence” means a leave of absence from Motorola or a Subsidiary that is not a termination of employment, as determined by Motorola.

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

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

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

6. Delivery of Certificates or Equivalent. Upon the lapse of Restrictions applicable to the Units, the Company shall, at its election, either (i) deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Units upon which such Restrictions have lapsed, or (ii) establish a brokerage account for the Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of Units upon which such Restrictions have lapsed plus, in either case, a cash payment equal to the value of any fractional Unit then credited to the Grantee’s account.

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

8. Voting and Other Rights.

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

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

9. Consent to Transfer Personal Data By accepting this award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect your ability to participate in the Plan. Motorola, its Subsidiaries and your employer hold certain personal information about you, that may include your name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola, or details of all restricted stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). Motorola and/or its Subsidiaries will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and Motorola and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola; however, withdrawing your consent may affect your ability to participate in the Plan.

10. Nature of Award. By accepting this Award Agreement, the Grantee acknowledges his or her understanding that the grant of Units under this Award Agreement is completely at the discretion of Motorola, and that Motorola’s decision to make this Award in no way implies that similar awards may be granted in the future. In addition, the Grantee hereby acknowledges that he or she has entered into employment with Motorola or a Subsidiary upon terms that did not include this Award or similar awards, that his or her decision to continue employment is not dependent on an expectation of this Award or similar awards, and that any amount received under this Award is considered an amount in addition to that which the Grantee expects to be paid for the performance of his or her services.

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

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

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

14. Actions by the Committee. The Committee may delegate its authority to administer this Agreement. The action and determinations of the Committee or delegate shall be binding upon the parties.

15. Acceptance of Terms and Conditions. By electronically accepting this Award within 30 days after the date of the electronic mail notification by the Company to you of the grant of this Award (“Email Notification Date”), you agree to be bound by the foregoing terms and conditions, the Plan and any and all rules and regulations established by Motorola in connection with awards issued under the Plan. If you do not electronically accept this Award within 30 days of the Email Notification Date you will not be entitled to the Units.

16. Plan Documents. The Plan and the Prospectus for the Plan are available at http://myhr.mot.com/finances/stock_options/index.jsp or from Motorola Global Rewards, 1303 East Algonquin Road, Schaumburg, IL 60196, USA (847) 576-7885.

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EX-10.35

EXHIBIT 10.35

Deferred Stock Units Agreement

This Agreement made and entered into this          day of             , 200_ by and between Motorola, Inc. (“Motorola”) and the undersigned Non-Employee Director (“Director”) of the Motorola Board of Directors (“Board”).

Whereas, Director is acquiring the right to receive shares of Motorola Common Stock in the future in the form of Deferred Stock Units; and

Whereas, this right to receive Deferred Stock Units is conditioned upon the Director executing and delivering to Motorola an agreement evidencing the terms, conditions and restrictions applicable to the Deferred Stock Units.

Now Therefore, Motorola and Director mutually agree as follows:

1. The Deferred Stock Units that are subject to this Agreement are being issued to Director pursuant to the Non-Employee Directors Stock Plan (“Directors Plan”) or the Motorola Omnibus Incentive Plan of 2003 (“2003 Plan”). The terms and conditions of the Directors Plan and the 2003 Plan shall apply to this Agreement to the extent applicable. If a term is used but not defined, it has the meaning given such term in the applicable Directors Plan or 2003 Plan.

2. The Deferred Stock Units that are subject to this Agreement will be all of the Deferred Stock Units purchased by Director pursuant to the Plan and the Election Form executed by Director that is on file with Motorola.

3. The Deferred Stock Units may not be sold, assigned, transferred, pledged or encumbered by Director at any time.

4. Upon the termination of the Director’s service on the Board, the Company shall deliver to the Director a certificate representing a number of shares of Motorola Common Stock equal to the number of Deferred Stock Units then credited to the Director’s account, plus a cash payment equal to the value of any fractional Unit so credited.

5. Upon Motorola’s payment of a dividend with respect to its Common Stock:

(a) If the Director elected to receive dividends currently, the Director will receive a cash payment equal to the cash dividend the Director would have received had the Director owned a number of shares of Motorola Common Stock equal to the number of Deferred Stock Units then credited to his or her account; or,

(b) If the Director elected to receive dividend equivalents, the number of Deferred Stock Units credited to the Director shall be increased by the number obtained by dividing the amount of dividend the Director would have received had the Director owned a number of shares of Motorola Common Stock equal to the number of Deferred Stock Units then credited to his or her account by the closing price of the Motorola Common Stock on the day before the date of the dividend payment, as reported for the New York Stock Exchange-Composite Transaction in The Wall Street Journal, Midwest Edition.

In the event a dividend is paid in shares of stock of another company or in other property:

(a) If the Director elected to receive dividends currently, the Director will receive such shares or property equal to the number of shares of that company or the amount of property which would have been received had the Director owned a number of shares of Motorola Common Stock equal to the number of Deferred Stock Units credited to his or her account; or,

(b) If the Director elected to receive dividend equivalents, the Director will be credited with the number of shares of that company or the amount of property which would have been received had the Director owned a number of shares of Motorola Common Stock equal to the number of Deferred Stock Units credited to his or her account and any such shares and property shall be delivered to the Director upon termination of the Director’s service on the Board.

6. If the number of outstanding shares of Motorola Common Stock is changed as a result of stock dividend, stock split or the like without additional consideration to the Company, the number of Deferred Stock Units subject to this award shall be adjusted to correspond to the change in the outstanding shares of Common Stock.

7. The Director shall have no rights as a stockholder of Motorola with respect to the Deferred Stock Units including the right to vote and to receive dividends and other distributions until delivery of certificates representing shares of Common Stock in satisfaction of the Deferred Stock Units.

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

This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware except to the extent that any federal law otherwise controls.

In Witness Whereof, the parties have executed this Agreement on the date first above-written.

	Motorola, Inc.
	By:
Signature of Director
	Title:
Name of Director (Please Print)

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EX-12

EXHIBIT 12

Motorola, Inc. and Subsidiaries

Computation of Fixed Charges Ratio

(In Millions)	Six Months Ended July 3, 2004
Pretax income (loss) (1)	$	1,713
Fixed charges (as calculated below)		261
Earnings (2)	$	1,974
Fixed charges:
Interest expense	$	217
Rent expense interest factor		44
Total fixed charges (2)	$	261
Ratio of earnings to fixed charges		7.6

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

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

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Edward J. Zander, Chairman of the Board and Chief Executive Officer of Motorola, Inc., certify that:

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

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(s) 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)) for the registrant and 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) 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

(c) 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 affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) 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 function):

(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: August 10, 2004

By:	/S/     EDWARD J. ZANDER
	Edward J. Zander Chairman of the Board and Chief Executive Officer, Motorola, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

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

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

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(s) 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)) for the registrant and 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) 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

(c) 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 affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) 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 function):

(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: August 10, 2004

By:	/S/    DAVID W. DEVONSHIRE
	David W. Devonshire Executive Vice President and Chief Financial Officer, Motorola, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION

I, Edward J. Zander, Chairman of the Board and Chief Executive Officer of Motorola, Inc., certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the quarterly report on Form 10-Q for the quarterly period ended July 3, 2004 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) for the Securities Exchange Act of 1934
(15 U.S.C. 78m) and

(2) information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc.

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

Dated: August 10, 2004

/s/    EDWARD J. ZANDER        

Edward J. Zander

Chairman of the Board and Chief Executive Officer,

Motorola, Inc.

EX-32.2

Exhibit 32.2

CERTIFICATION

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

(1) the quarterly report on Form 10-Q for the quarterly period ended July 3, 2004 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) for the Securities Exchange Act of 1934 (15 U.S.C. 78m) and

(2) information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola, Inc.

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

Dated: August 10, 2004

/S/    DAVID W. DEVONSHIRE

David W. Devonshire

Executive Vice President and Chief Financial Officer,

Motorola, Inc.