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EXHIBIT 99.5
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
ALTOCOM, INC.
1997 STOCK PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day
of August, 1999 by Broadcom Corporation, a California corporation ("Broadcom").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of the Common Stock of AltoCom,
Inc., a California corporation ("AltoCom"), which were granted to Optionee under
the AltoCom, Inc. 1997 Stock Plan (the "Plan") and are each evidenced by the
following agreement between AltoCom and Optionee: a Stock Option Agreement (the
"Option Agreement").
WHEREAS, AltoCom has been acquired by Broadcom through the
merger (the "Merger") of Alto Acquisition Corp. ("MergerSub"), a wholly-owned
subsidiary of Broadcom, with and into AltoCom, pursuant to the Merger Agreement
and Plan of Reorganization dated August 10, 1999 by and among Broadcom,
MergerSub and AltoCom (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of AltoCom under all outstanding
options under the Plan at the consummation of the Merger and to issue to the
holder of each outstanding option an agreement evidencing the assumption of such
option.
WHEREAS, pursuant to the provisions of the Reorganization
Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is
.07184670 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of AltoCom Common Stock ("AltoCom Stock").
WHEREAS, this Stock Option Assumption Agreement is effective
as of the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Broadcom in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of AltoCom Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "AltoCom Options") and the exercise price payable per share
are set forth in Exhibit(s) A hereto. Broadcom hereby assumes, as of the
Effective Time, all the duties and obligations of AltoCom under each
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of the AltoCom Options. In connection with such assumption, the number of shares
of Broadcom Stock purchasable under each AltoCom Option hereby assumed and the
exercise price payable thereunder have been adjusted to reflect the Exchange
Ratio. Accordingly, the number of shares of Broadcom Stock subject to each
AltoCom Option hereby assumed shall be as specified for that option in attached
Exhibit(s) A, and the adjusted exercise price payable per share of Broadcom
Stock under the assumed AltoCom Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed AltoCom
Option is to assure that the difference between the aggregate fair market value
of the shares of Broadcom Stock purchasable under each such option and the
aggregate exercise price of such shares as adjusted pursuant to this Agreement
will, immediately after the consummation of the Merger, be not less than the
difference which existed, immediately prior to the Merger, between the then
aggregate fair market value of the AltoCom Stock subject to the AltoCom Option
and the aggregate exercise price of such shares in effect at such time under the
Option Agreement. Such adjustments are also intended to preserve, immediately
after the Merger, on a per share basis, the same ratio of exercise price per
option share to fair market value per share as that which existed under the
AltoCom Option immediately prior to the Merger. Such adjustments are also
intended to preserve, to the extent applicable, the Incentive Stock Option
status of the assumed AltoCom Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each AltoCom Option hereby
assumed by Broadcom:
(a) Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (as incorporated into such Option
Agreement) (i) to the "Company" shall mean Broadcom, (ii) to "Stock"
shall mean Broadcom Stock, (iii) to the "Board of Directors" shall mean
the Board of Directors of Broadcom and (iv) to the "Committee" shall
mean the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date of each assumed
AltoCom Option and all other provisions which govern either the
exercise or the termination of the assumed AltoCom Option shall remain
the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Stock Option Assumption
Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option Agreement, none of
your options assumed by Broadcom in connection with the transaction
will terminate and cease to outstanding upon the consummation of the
Merger. Each AltoCom Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed AltoCom Option shall thereafter
continue to vest for any remaining unvested shares of Broadcom Stock
subject to that option on the same terms and in accordance with the
same installment vesting schedule as those in effect under
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the applicable Option Agreement immediately prior to the Effective
Time; provided, however, that the number of shares of Broadcom Stock
subject to each such installment shall be adjusted to reflect the
Exchange Ratio.
(d) For purposes of applying any and all provisions of the
Option Agreement and the Plan relating to Optionee's status as an
employee of or a consultant to AltoCom, Optionee shall be deemed to
continue in such status as an employee or a consultant for so long as
Optionee renders services as an employee of or a consultant to Broadcom
or any present or future Broadcom subsidiary. Accordingly, the
provisions of the Option Agreement governing the termination of the
assumed AltoCom Options upon Optionee's cessation of service as an
employee of or a consultant to AltoCom shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Broadcom and its subsidiaries, and each assumed AltoCom Option shall
accordingly terminate, within the designated time period in effect
under the Option Agreement for that option, following such cessation of
service as an employee of or a consultant to Broadcom and its
subsidiaries.
(e) The adjusted exercise price payable for the Broadcom Stock
subject to each assumed AltoCom Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option.
For purposes of determining the holding period of any shares of
Broadcom Stock delivered in payment of such adjusted exercise price,
the period for which such shares were held as AltoCom Stock prior to
the Merger shall be included.
(f) In order to exercise each assumed AltoCom Option, Optionee
must deliver to Broadcom a written notice of exercise in which the
number of shares of Broadcom Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Broadcom
Stock or must specify the arrangement for the payment of the purchase
price as permitted in Section 5 of the Plan. This notice should be
delivered to Broadcom at the following address:
Broadcom Corporation
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager of Shareholder Services
4. Except to the extent specifically modified by this Stock Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
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IN WITNESS WHEREOF, Broadcom has caused this Stock Option Assumption
Agreement to be executed on its behalf by its duly-authorized officer as of the
31st day of August, 1999.
BROADCOM CORPORATION
By:
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▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Vice President, General Counsel
and Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock
Option Assumption Agreement and understands and agrees that all rights and
liabilities with respect to each of his or her AltoCom Options hereby assumed by
Broadcom are as set forth in the Option Agreement, the Plan and this Stock
Option Assumption Agreement.
DATED: __________________, 1999
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SIGNATURE OF OPTIONEE
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PRINT NAME
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