Exhibit 10.19
BROADCOM CORPORATION
STOCK OPTION AGREEMENT
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 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws
of descent and distribution 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 6. 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 any
Exercise Price payment or 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 die while holding this option, then the
personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's
will or in accordance with the laws of inheritance shall have the
right to exercise this option. 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 while holding this option, then Optionee shall have a
period of twelve (12) months (commencing with 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. 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. However, this option shall, immediately upon Optionee's
cessation of Service for any reason, terminate and cease to be
outstanding with respect to any Option Shares in which Optionee is
not otherwise at that time vested or for which this option is not
otherwise at that time exercisable.
(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. 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 incentive 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 subsequent payout of that spread in accordance
with the same option exercise/vesting schedule set forth in the Grant Notice.
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.
(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.
7. 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 or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the total number and/or class of securities subject to this option
and (ii) the Exercise Price to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
8. 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.
9. 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 held by Optionee (or any other
person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; 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 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.
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(1) With respect to Section 16 Insiders, the brokerage firm need only be
reasonably satisfactory to the Corporation for purposes of administering
such procedure.
(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.
(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.
10. 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. For more information concerning the
effect that a leave of absence will have upon the vesting of this option, please
consult the Corporation's then current policies on Service/vesting credit during
leaves of absence.
(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. For more information concerning the effect that such
a change in Employee status will have upon the vesting of this option, please
consult the Corporation's then current polices on Service/vesting credit after a
change from full-time to part-time employee status.
11. 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 (or the
NASDAQ National Market(R), if applicable) 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.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, 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.
13. 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.
14. 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.
15. 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.
16. 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 (PROVIDED, HOWEVER, IF THE CORPORATION IS NOT THE PREVAILING PARTY,
THEN THE ARBITRATOR'S COMPENSATION, FEES AND COSTS SHALL BE PAID BY THE
CORPORATION IF SUCH COMPENSATION, FEES AND COSTS ARE REQUIRED TO BE PAID
BY THE CORPORATION IN ACCORDANCE WITH APPLICABLE LAW). 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.
17. 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.
18. 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 Permanent Disability or (B) more than
twelve (12) months after the date Optionee ceases to be an Employee
by reason of Permanent Disability.
(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 or consolidation in which
securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are transferred
to a person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) a shareholder-approved sale, transfer or other disposition of
all or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's
shareholders.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's Class A Common Stock.
F. 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.
G. 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.
H. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per Option Share as
specified in the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
K. 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 National
Market, 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 National 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 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.
L. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.
M. GRANT 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.
N. INCENTIVE OPTION shall mean an option that satisfies the requirements
of Code Section 422.
O. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by such person 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 the 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.
P. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
Q. NOTICE OF EXERCISE shall mean the notice of exercise in form and
substance as prescribed by the Corporation.
R. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option as specified in the Grant Notice.
S. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
T. 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.
U. 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 which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
V. PLAN shall mean the Corporation's 1998 Stock Incentive Plan.
W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
X. 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.
Y. 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.
Z. STOCK EXCHANGE shall mean either the American Stock Exchange or the New
York Stock Exchange.
AA. 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.