BROADCOM CORPORATION STOCK OPTION AGREEMENT
Exhibit 10.21
OFFICER SEVERANCE PROGRAM PARTICIPANT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or of the board of directors of any Parent or
Subsidiary and consultants and other independent advisors who provide services to the Corporation
(or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant
Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The
Option Shares shall be purchasable from time to time during the option term specified in
Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10) years measured
from the Grant Date and shall accordingly expire at the close of business on the Expiration
Date, unless sooner terminated in accordance with Paragraph 5 or 7.
3. Limited Transferability. This option shall be neither transferable nor
assignable by Optionee other than by will or by the laws of inheritance following Optionee’s
death and may be exercised, during Optionee’s lifetime, only by Optionee. However, if this
option is designated a Non-Statutory Option in the Grant Notice, then this option may, in
connection with the Optionee’s estate plan, be assigned in whole or in part during Optionee’s
lifetime to one or more members of the Optionee’s immediate family or to a trust established for
the exclusive benefit of Optionee and/or one or more such family members. The assigned portion
shall be exercisable only by the person or persons who acquire a proprietary interest in the
option pursuant to such assignment. The terms applicable to the assigned portion shall be the
same as those in effect for this option immediately prior to such assignment.
4. Dates of Exercise. This option shall become exercisable for the Option Shares in
one or more installments as specified in the Grant Notice. As the option becomes exercisable for
such installments, those installments shall accumulate, and the option shall remain exercisable
for the accumulated installments until the Expiration Date or sooner termination of the option
term under Paragraph 5 or 7. Notwithstanding the foregoing, should the Optionee elect to
exercise this option during any period during which the Optionee is under investigation by the
Corporation for Misconduct, then any Option Shares acquired by the Optionee as a result of
such exercise and/or the net proceeds of any sale or sales of those acquired Option Shares (the
gross sale proceeds less the Exercise Price and any applicable withholding taxes due the
Corporation and broker commissions) during such period shall be held by the Corporation in
escrow until such time as the investigation is satisfactorily completed.
5. Cessation of Service/Termination of Option. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other than death,
Permanent Disability or Misconduct) while holding this option, then Optionee shall have a
period of three (3) months (commencing with the date of such cessation of Service) during
which to exercise this option, but in no event shall this option be exercisable at any time
after the Expiration Date.
(b) Should Optionee cease Service by reason his or her death, then this option, to the
extent outstanding at that time but not otherwise vested and exercisable for all the Option
Shares, shall immediately vest and become exercisable for all the Option Shares at the time
subject to this option and may be exercised for any or all of those Option Shares as
fully-vested shares. The personal representative of Optionee’s estate or the person or
persons to whom this option is transferred pursuant to Optionee’s will or in accordance with
the laws of inheritance following Optionee’s death or any person to whom this option is
transferred during Optionee’s lifetime pursuant to Paragraph 3, as the case may be, shall
have the right to exercise this option. However, such right shall lapse, and this option
shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee’s death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Permanent Disability, then this option,
to the extent outstanding at that time but not otherwise vested and exercisable for all the
Option Shares, shall immediately vest and become exercisable for all the Option Shares at the
time subject to this option and may be exercised for any or all of those Option Shares as
fully-vested shares. Optionee (or any person to whom this option is transferred during
Optionee’s lifetime pursuant to Paragraph 3) shall have a period of twelve (12) months
measured from the date of such cessation of Service during which to exercise this option. In
no event shall this option be exercisable at any time after the Expiration Date.
(d) The applicable post-Service exercise period in effect for this option pursuant to
the foregoing provisions of this Paragraph 5 shall automatically be extended by an additional
period of time equal in duration to any interval within that otherwise applicable
post-Service exercise period during which the exercise of this option or the immediate sale
of the Option Shares acquired hereunder cannot be effected in compliance with applicable
federal and state securities laws, but in no event shall such an extension result in the
continuation of this option beyond the Expiration Date.
(e) During the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of vested Option Shares for which the
option is exercisable at the time of Optionee’s cessation of Service, including any Option
Shares that vest on an accelerated basis upon Optionee’s cessation of Service by reason of
death or Permanent Disability. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding
for any vested Option Shares for which the option has not been exercised. Except as otherwise
provided in the Severance Agreement (as defined in Paragraph 6 below) or as otherwise
specifically authorized by the Plan Administrator pursuant to an express written agreement
with Optionee, no additional Option Shares shall vest, whether pursuant to the normal
exercise/vesting schedule set forth in the Grant Notice or the special vesting acceleration
provisions of Paragraph 7, following Optionee’s cessation of Service.
(f) Should Optionee’s Service be terminated for Misconduct or should Optionee engage in
Misconduct at any time Optionee holds this option, then this option shall terminate
immediately and cease to remain outstanding.
6. Officer Severance Agreement. Optionee is also a participant in the
Corporation’s special officer severance program pursuant to the terms of the letter agreement
between the Corporation and Optionee dated ___(the “Severance Agreement”). The
Severance Agreement sets forth certain terms and conditions under which Optionee’s equity or
equity-based awards from the Corporation, including this option, may vest in whole or in part
on an accelerated basis in connection with Optionee’s cessation of Employee status under
various specified circumstances. In addition, the post-Service exercise period for this option
may also, subject to the applicable terms and conditions of the Severance Agreement, be
extended under certain specified circumstances until the earlier of (A) the end of the
twenty-four (24)-month period measured from the date of Optionee’s cessation of Employee status
or (if later) the end of the one-month period measured from each installment date on which this
option become exercisable, whether pursuant to the terms of this Agreement or the Severance
Agreement, or (B) the Expiration Date of this option. The terms and provisions of the Severance
Agreement, as they apply to this option, are hereby incorporated by reference into this
Agreement and shall have the same force and effect as if expressly set forth in this Agreement.
In the event of any conflict between the provisions of this Agreement and those of the
Severance Agreement, the provisions of the Severance Agreement shall be controlling.
7. Special Acceleration of Option.
(a) This option to the extent outstanding at the time of a Change in Control but not
otherwise fully exercisable, shall NOT become exercisable on an accelerated basis if and to the
extent: (i) this option is, in connection with the Change in Control, to be assumed by the
successor corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction or (ii) this option is to be replaced
with a cash retention program of the successor corporation which preserves the spread existing
at the time of the Change in Control on the Option Shares for which this option is not otherwise
at that time exercisable (the excess of the Fair Market Value of those Option Shares over the
aggregate Exercise Price payable for such shares) and provides for the subsequent vesting and
payout of that spread in accordance with the same option exercise/vesting
schedule set forth in the Grant Notice and the special acceleration provisions of
Paragraphs 5(b) and 5(c) of this Agreement. However, if none of the foregoing conditions apply
to this option at the time of Change in Control, then this option shall automatically accelerate
so that such option shall, immediately prior to the effective date of that Change in Control,
become exercisable for all the shares of Common Stock at the time subject to this option and may
be exercised for any or all of those shares as fully vested shares of Common Stock.
(b) Immediately following the Change in Control, this option shall terminate and cease to
be outstanding, except to the extent this option is assumed by the successor corporation (or
parent thereof) in connection with the Change in Control or is otherwise to continue in full
force and effect pursuant to the terms of the Change in Control transaction.
(c) If this option is assumed in connection with a Change in Control or is otherwise to
continue in full force and effect, then this option shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Change in Control had the option been
exercised immediately prior to such Change in Control, and appropriate adjustments shall also be
made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the
extent the actual holders of the Corporation’s outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control transaction, the
successor corporation may, in connection with the assumption or continuation of this option,
substitute one or more shares of its own common stock with a fair market value equivalent to the
cash consideration paid per share of Common Stock in such Change in Control transaction,
provided the substituted common stock is readily tradable on an established United States
securities exchange.
(d) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
8. Adjustment in Option Shares. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares, spin-off transaction or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration or should the value of outstanding shares of
Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary
dividend or distribution, equitable adjustments shall be made by the Plan Administrator to (i)
the total number and/or class of securities subject to this option and (ii) the Exercise Price.
The adjustments shall be made by the Plan Administrator in such manner as the Plan Administrator
deems appropriate to reflect such change, and those adjustments shall be final, binding and
conclusive.
9. Shareholder Rights. The holder of this option shall not have any shareholder
rights with respect to the Option Shares until such person shall have exercised the option, paid
the Exercise Price and any required withholding taxes and become a holder of record of the
purchased shares.
10. Manner of Exercising Option.
(a) To exercise this option with respect to all or any part of the Option Shares for which
this option is at the time exercisable, Optionee (or any other person or persons exercising the
option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of Exercise for the Option Shares
for which the option is exercised or comply with such other procedures as the Corporation
may establish for notifying the Corporation of the exercise of this option for one or more
Option Shares.
(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the
following forms:
(A) cash or check made payable to the Corporation;
(B) shares of Common Stock valued at Fair Market Value on the Exercise Date and
held by Optionee (or any other person or persons exercising the option) for any
requisite period necessary to avoid a charge to the Corporation’s earnings for
financial reporting purposes; or
(C) through a special sale and remittance procedure pursuant to which Optionee (or
any other person or persons exercising the option) shall concurrently provide
irrevocable instructions (I) to a Corporation-designated brokerage firm(1)
to effect the immediate sale of the purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the Corporation
by reason of such exercise, and (II) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm on the settlement date to complete
the sale.
Except to the extent the sale and remittance procedure is utilized in connection
with the option exercise, payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and local
income and employment tax withholding requirements applicable to the option exercise.
| (1) | With respect to Section 16 Insiders, the brokerage firm need only be reasonably satisfactory to the Corporation for purposes of administering such procedure. |
(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a certificate for
the purchased Option Shares, with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional shares.
11. Authorized Leave of Absence/Change of Status.
(a) The following provisions shall apply in the event Optionee is absent from active
Service by reason of an approved leave of absence:
(i) Optionee shall not be deemed to have terminated Service while on a leave of absence
authorized by the Corporation (or any Parent or Subsidiary). However, Optionee shall not be
entitled to any Service vesting credit for the period of that leave, except to the extent
expressly provided otherwise by the Corporation’s then current written leave of absence policy.
In the absence of such Service vesting credit under that policy for all or any portion of the
leave, the vesting/exercise schedule set forth in the Grant Notice shall be suspended as of the
date the leave commences or (if later) the last day of any period for which Optionee may be
entitled to Service vesting credit with respect to that leave. As a result, this option may not
vest or otherwise become exercisable as to one or more installments of the Option Shares during
the period of such leave. In that event, Optionee shall have the opportunity to vest in those
installments through additional Service beyond the normal vesting/exercise schedule for this
option. The actual effect that a leave of absence will have upon the vesting of this option
will be determined by the Corporation’s policies governing those subjects that are in effect at
the time.
(ii) If the leave of absence continues for more than three (3) months or beyond any longer
period for which Optionee is provided with reemployment rights under law or by written
agreement, then this option if designated as an Incentive Option in the Grant Notice shall
automatically convert to a Non-Statutory Option upon the later of (x) the first date on which
the period of such leave exceeds six (6)-months or, if applicable, (y) the end of the three
(3)-month period measured from the first date Optionee is no longer provided with such
reemployment rights under law or by written agreement. Following any such conversion of this
option, all subsequent exercises of this option, whether effected before or after Optionee’s
return to active Employee status, shall result in an immediate taxable event, and the
Corporation shall be required to collect from Optionee the income and employment withholding
taxes applicable to such exercise.
(iii) In no event shall this option become exercisable for any additional Option Shares or
otherwise remain outstanding if Optionee does not resume Employee status prior to the Expiration
Date of the option term.
(b) The exercise/vesting schedule set forth for this option in the Grant Notice may also be
affected in the event Optionee changes from full-time to part-time Employee status. The
actual effect that such a change in Employee status will have upon the vesting of this option
will be determined by the Corporation’s policies governing such subject that are in effect at
the time.
12. Parachute Payment. In the event the accelerated vesting of this option would
otherwise constitute a parachute payment under Code Section 280G, then the applicable parachute
payment provisions of the Severance Agreement shall govern the Optionee’s rights and entitlements.
13. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and Optionee with all applicable requirements
of law relating thereto and with all applicable regulations of any Stock Exchange on which the
Common Stock may be listed for trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and sale of any
Common Stock pursuant to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to obtain all such
approvals.
14. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 3 and 7, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns
and the legal representatives, heirs and legatees of Optionee’s estate.
15. Notices. Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or delivered to Optionee shall
be in writing and addressed to Optionee at the address indicated below Optionee’s signature
line on the Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
16. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to the terms of
the Plan. The Plan Administrator shall have the discretionary authority to interpret and
construe any term or provision of the Plan or this Agreement, and such interpretation shall
be binding on all persons having an interest in this option.
17. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without resort to that
State’s conflict-of-laws rules.
18. Mandatory Arbitration. ANY AND ALL DISPUTES OR CONTROVERSIES BETWEEN
OPTIONEE AND THE CORPORATION ARISING OUT OF, RELATING TO OR OTHERWISE CONNECTED WITH THIS
AGREEMENT OR THE OPTION EVIDENCED HEREBY OR THE VALIDITY, CONSTRUCTION, PERFORMANCE OR
TERMINATION OF THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY BINDING ARBITRATION TO BE HELD
IN THE COUNTY IN WHICH THE OPTIONEE IS (OR HAS MOST RECENTLY BEEN) EMPLOYED BY THE
CORPORATION (OR ANY PARENT OR SUBSIDIARY) AT THE TIME OF SUCH ARBITRATION. THE ARBITRATION
PROCEEDINGS SHALL BE GOVERNED BY (i) THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT
DISPUTES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION AND (ii) THE FEDERAL
ARBITRATION ACT. THE ARBITRATOR SHALL HAVE THE SAME, BUT NO GREATER, REMEDIAL AUTHORITY AS
WOULD A COURT HEARING THE SAME DISPUTE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL,
CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION AND SHALL BE IN LIEU OF THE RIGHTS
THOSE PARTIES MAY OTHERWISE HAVE TO A JURY TRIAL; PROVIDED, HOWEVER, THAT SUCH DECISION SHALL
BE SUBJECT TO CORRECTION, CONFIRMATION OR VACATION IN ACCORDANCE WITH THE PROVISIONS AND
STANDARDS OF APPLICABLE LAW GOVERNING THE JUDICIAL REVIEW OF ARBITRATION AWARDS. THE
PREVAILING PARTY IN SUCH ARBITRATION, AS DETERMINED BY THE ARBITRATOR, AND IN ANY ENFORCEMENT
OR OTHER COURT PROCEEDINGS, SHALL BE ENTITLED, TO THE EXTENT PERMITTED BY LAW, TO
REIMBURSEMENT FROM THE OTHER PARTY FOR ALL OF THE PREVAILING PARTY’S COSTS, EXPENSES AND
ATTORNEY’S FEES. HOWEVER, THE ARBITRATOR’S COMPENSATION AND OTHER FEES AND COSTS UNIQUE TO
ARBITRATION SHALL IN ALL EVENTS BE PAID BY THE CORPORATION. JUDGMENT SHALL BE ENTERED ON THE
ARBITRATOR’S DECISION IN ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER OF SUCH
DISPUTE OR CONTROVERSY. NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY IN AN APPROPRIATE
MATTER APPLY TO A COURT PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8, OR ANY
COMPARABLE STATUTORY PROVISION OR COMMON LAW PRINCIPLE, FOR PROVISIONAL RELIEF, INCLUDING A
TEMPORARY RESTRAINING ORDER OR A PRELIMINARY INJUNCTION. TO THE EXTENT PERMITTED BY LAW, THE
PROCEEDINGS AND RESULTS, INCLUDING THE ARBITRATOR’S DECISION, SHALL BE KEPT CONFIDENTIAL.
19. Excess Shares. If the Option Shares covered by this Agreement exceed, as of
the Grant Date, the number of shares of Common Stock which may without shareholder approval
be issued under the Plan, then this option shall not become exercisable with respect to those
excess shares, unless shareholder approval of an amendment sufficiently increasing the number
of shares of Common Stock issuable under the Plan is obtained in accordance with the
provisions of the Plan.
20. Additional Terms Applicable to an Incentive Option. In the event this option
is designated an Incentive Option in the Grant Notice, the following terms and conditions
shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as an Incentive
Option if (and to the extent) this option is exercised for one or more Option Shares: (A)
more than three (3) months after the date Optionee ceases to be an Employee for any reason
other than death or Total and Permanent Disability or (B) more than twelve (12) months
after the date Optionee ceases to be an Employee by reason of Total and Permanent
Disability. For such purpose Total and Permanent Disability shall mean the inability of
Optionee to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to continue for
a consecutive period of twelve (12) months or more.
(b) No installment under this option shall qualify for favorable tax treatment as an
Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the
Grant Date) of the Common Stock for which such installment first becomes exercisable
hereunder would, when added to the aggregate value (determined as of the respective date
or dates of grant) of the Common Stock or other securities for which this option or any
other Incentive Options granted to Optionee prior to the Grant Date (whether under the
Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be
exceeded in any calendar year, this option shall nevertheless become exercisable for the
excess shares in such calendar year as a Non-Statutory Option.
(c) Should the exercisability of this option be accelerated upon a Change in Control,
then this option shall qualify for favorable tax treatment as an Incentive Option only to
the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock for which this option first becomes exercisable in the calendar year in which the
Change in Control occurs does not, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities for which this
option or one or more other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the applicable One Hundred Thousand
Dollar ($100,000) limitation be exceeded in the calendar year of such Change in Control,
the option may nevertheless be exercised for the excess shares in such calendar year as a
Non-Statutory Option.
(d) Should Optionee hold, in addition to this option, one or more other options to
purchase Common Stock which become exercisable for the first time in the same calendar
year as this option, then for purposes of the foregoing limitations on the exercisability
of such options as Incentive Options, this option and each of those other options shall be
deemed to become first exercisable in that calendar year on the basis of the chronological
order in which they were granted, except to the extent otherwise provided under applicable
law or regulation.
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation’s Board of Directors.
C. Change in Control shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:
(i) a shareholder-approved merger, consolidation or other reorganization, unless
securities representing more than fifty percent (50%) of the total combined voting
power of the outstanding securities of the successor corporation are immediately
after such transaction, beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned Broadcom’s
outstanding voting securities immediately prior to such transaction,
(ii) a shareholder-approved sale, transfer or other disposition of all or
substantially all of Broadcom’s assets,
(iii) the closing of any transaction or series of related transactions pursuant
to which any person or any group of persons comprising a “group” within the meaning
of Rule 13d-5(b)(1) of Securities Exchange Act of 1934, as amended (the “1934 Act”),
other than Broadcom or a person that, prior to such transaction or series of related
transactions, directly or indirectly controls, is controlled by or is under common
control with, Broadcom, becomes directly or indirectly (whether as a result of a
single acquisition or by reason of one or more acquisitions within the twelve
(12)-month period ending with the most recent acquisition) the beneficial owner
(within the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities possessing (or
convertible into or exercisable for securities possessing) more than fifty percent
(50%) of the total combined voting power of Broadcom’s securities (as measured in
terms of the power to vote with respect to the election of Board members) outstanding
immediately after the consummation of such transaction or series of related
transactions, whether the transaction or transactions involve a direct issuance from
Broadcom or the acquisition of outstanding securities held by one or more of
Broadcom’s existing shareholders, or
(iv) a change in the composition of the Board over a period of twenty-four (24)
consecutive months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or nomination.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation’s Class A Common Stock.
G. Corporation shall mean Broadcom Corporation, a California corporation, and any
corporate successor to all or substantially all of the assets or voting stock of Broadcom
Corporation, which shall by appropriate action adopt the Plan.
H. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.
I. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 10 of the Agreement.
J. Exercise Price shall mean the exercise price per Option Share as specified in the
Grant Notice.
K. Expiration Date shall mean the date on which the option expires as specified in the
Grant Notice.
L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ Global Select
MarketSM, then the Fair Market Value shall be the closing selling price per share of
Common Stock at the close of regular hours trading (i.e., before after- hours trading begins) on
the NASDAQ Global Select Market on the date in question, as such price is reported by the
National Association of Securities Dealers. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any other Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock at the close of
regular hours trading (i.e., before after-hours trading begins) on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary market for the Common
Stock, as such price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last preceding date for
which such quotation exists.
▇. ▇▇▇▇▇ Date shall mean the date of grant of the option as specified in the Grant
Notice.
▇. ▇▇▇▇▇ Notice shall mean the Notice of Grant of Stock Option, in written or
electronic format, accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Incentive Option shall mean an option that satisfies the requirements of Code
Section 422.
P. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information
or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude
or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss
Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for
any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of
the Plan or this Agreement, to constitute grounds for termination for Misconduct.
Q. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.
R. Notice of Exercise shall mean the notice of exercise in form and substance as
prescribed by the Corporation.
S. Option Shares shall mean the number of shares of Common Stock subject to the option
as specified in the Grant Notice.
T. Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Permanent Disability shall mean the inability of Optionee to perform his or her
duties with the Corporation (or any Parent or Subsidiary) on a full-time basis for one hundred
eighty (180) consecutive business days as a result of incapacity due to mental or physical illness
that is (i) determined to be total and permanent by two (2) physicians selected by the Corporation
or its insurers and reasonably acceptable to Optionee or Optionee’s legal representative, and (ii)
entitles Optionee to the payment of long-term disability benefits from the Corporation’s long-term
disability plan. The process for determining Optionee’s Permanent Disability in accordance with
the foregoing shall be completed no later than the later of (i) the close of the calendar year in
which Optionee’s Service terminates by reason of the physical or mental impairment triggering the
determination process or (ii) the fifteenth day of the third calendar month following such
termination of Service.
W. Plan shall mean the Corporation’s 1998 Stock Incentive Plan.
X. Plan Administrator shall mean either the Board or a committee of the Board acting
in its capacity as administrator of the Plan.
Y. Section 16 Insider shall mean an officer or director of the Corporation subject to
the short-swing profit liabilities of Section 16 of the Securities Exchange Act of 1934, as
amended.
Z. Service shall mean the Optionee’s performance of services for the Corporation (or
any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the option grant. For purposes of this Agreement, Optionee
shall be deemed to cease Service immediately upon the occurrence of either of the following events:
(i) Optionee no longer performs services in any of the foregoing capacities for the Corporation or
any Parent or Subsidiary or (ii) the entity for which Optionee is performing such services ceases
to remain a Parent or Subsidiary of the Corporation, even though the Optionee may subsequently
continue to perform services for that entity.
AA. Stock Exchange shall mean the American Stock Exchange, the NASDAQ Global Select
Market, the NASDAQ Global Market or the New York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.