EXHIBIT 10.9
BROADCOM CORPORATION
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Broadcom Corporation (the "Corporation"):
Optionee: Scott A. McGregor
Grant Date:
Vesting Commencement Date:
Exercise Price: $ per share
Number of Option Shares:
Expiration Date:
Type of Option: Incentive Stock Option or Non-Statutory
Stock Option
Exercise Schedule: [for initial grants: The Option shall become exercisable
for twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the Vesting Commencement
Date and shall become exercisable for the balance of the Option Shares in
thirty-six (36) successive equal monthly installments upon Optionee's
completion of each additional month of Service over the thirty-six (36)
month period measured from the first anniversary of the Vesting Commencement
Date.] [For subsequent grants: The Option shall become exercisable in
forty-eight (48) successive equal monthly installments upon Optionee's
completion of each additional month of Service over the forty-eight (48)
month period measured from the first anniversary of the Vesting Commencement
Date. In no event shall the Option become exercisable for any additional
Option Shares after Optionee's cessation of Service.] In no event shall the
Option become exercisable for any additional Option Shares after Optionee's
cessation of Service.
Optionee understands and agrees that the Option is granted subject to and in
accordance with the terms of the Broadcom Corporation 1998 Stock Incentive Plan,
as amended and restated (the "Plan"). Optionee further agrees to be bound by the
terms of the Plan and the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Appendix A. Optionee hereby acknowledges receipt of
a copy of the official prospectus for the Plan in the form attached hereto as
Appendix B. A copy of the Plan is available upon request made to the Corporate
Secretary at the Corporation's principal offices. The Option shall also be
governed by (i) the terms of the Addendum to Stock Option Agreement attached
hereto as Appendix C and (ii) the terms of the Special Stock Retention Addendum
to Stock Option Agreement attached hereto as Appendix D.
No Employment or Service Contract. Nothing in this Notice or in the attached
Stock Option Agreement or in the Plan shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Stock Option Agreement.
Date: ___________ __, 200_
Broadcom Corporation
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Optionee
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By: Address
Title:
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ATTACHMENTS: A -- STOCK OPTION AGREEMENT; B -- PLAN SUMMARY AND PROSPECTUS;
C -- ADDENDUM TO STOCK OPTION AGREEMENT; D. -- STOCK RETENTION ADDENDUM
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, except as set
forth herein, 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.
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(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.
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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.
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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.
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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.
(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. 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.
11. 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.
12. 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.
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13. 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.
14. 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.
15. 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 PURSUANT TO SECTION 12 OF
APPENDIX I TO THE LETTER AGREEMENT BETWEEN OPTIONEE AND THE CORPORATION
DATED OCTOBER 25, 2004, WHICH IS INCORPORATED BY REFERENCE HEREIN AS IF SET
FORTH FULLY HEREIN.
16. 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.
17. 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
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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.
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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 1934 Act) 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 1934 Act.
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.
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby made a
part of that certain Stock Option Agreement (the "Option Agreement") by and
between Broadcom Corporation, a California corporation (the "Corporation"), and
Scott A. McGregor ("Optionee") evidencing a stock option granted this day to
Optionee (the "Option") under the terms of the Corporation's 1998 Stock
Incentive Plan, as amended and restated (the "Plan"). The provisions of this
Addendum shall be effective immediately.
Optionee has entered into an employment agreement with the Corporation
pursuant to that certain letter from the Corporation dated October 25, 2004 (the
"Letter Agreement"). The purpose of this Addendum is to supplement the terms of
the Option Agreement so that those terms conform to the special benefits to
which Optionee will become entitled pursuant to the terms of the Letter
Agreement.
All capitalized terms in this Addendum, to the extent not otherwise defined
herein, shall have the meanings assigned to them in the Letter Agreement,
including Appendix II thereto.
SPECIAL OPTION BENEFITS
1. If either the Corporation terminates Optionee's employment in a Notice of
Termination specifying no reason or a reason other than Cause or Disability, or
Optionee terminates his employment with the Corporation in a Notice of
Termination specifying Good Reason, and Optionee's employment has not terminated
automatically as a result of Optionee's death, then Optionee shall immediately
become entitled to the following additional benefits to the extent the Option is
at that time outstanding:
(i) Optionee shall, immediately on the Date of Termination, be credited
with an additional twenty-four (24) months of employment with the
Corporation for purposes of the vesting schedule in effect for the Option so
that Optionee shall be immediately vested in the Option to the same extent
as if Optionee had completed an additional twenty-four (24) months of
employment with the Corporation prior to the Date of Termination, and
(ii) the Option shall remain exercisable, for any or all of the shares
in which Optionee is vested on the Date of Termination (including the shares
which vest on an accelerated basis in accordance with subparagraph (i)
above), until the EARLIER of (A) the expiration of the twenty-four
(24)-month period measured from the Date of Termination or (B) the specified
expiration date of the Option term.
2. If Optionee's employment is terminated by reason of death or Disability,
then Optionee shall, immediately on the Date of Termination, become fully vested
in the Option (to the extent outstanding on such date) and the Option shall
remain exercisable until the EARLIER of (A) the expiration of the twelve
(12)-month period measured form the Date of Termination or (B) the specified
expiration date of the Option term.
3. To the extent any of the benefits provided pursuant to this Addendum
shall be deemed to constitute a parachute payment under Section 280G of the
Internal Revenue Code, then those benefits shall be subject to the parachute
payment limitation provisions of the Letter Agreement.
4. In no event shall Optionee be entitled to any benefits pursuant to this
Addendum unless (i) Optionee shall have executed and delivered to the
Corporation the separation agreement required under Paragraph 11 of Appendix II
to the Letter Agreement and (ii) Optionee is in material compliance with his
obligations to the Corporation pursuant to his Confidentiality and Invention
Assignment Agreement during and subsequent to Optionee's employment.
5. To the extent the provisions of this Addendum conflict with the
provisions of the Option Agreement (including, without limitation, the
provisions of Paragraph 5 of such Option Agreement), the provisions of this
Addendum shall be controlling.
6. Except to the extent modified by this Addendum, all the terms and
conditions of the Option Agreement shall continue in full force effect.
7. Optionee hereby acknowledges that the Option shall cease to qualify for
favorable tax treatment as an incentive stock option under the federal tax laws
(if the Option is designated as an Incentive Stock Option in the Notice of Grant
of Stock Option relating to such Option) if (and to the extent) the Option is
exercised: (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. For purposes of this Paragraph 7, the terms
"EMPLOYEE" and "PERMANENT DISABILITY" shall have the meanings assigned to them
in the Option Agreement.
IN WITNESS WHEREOF, BROADCOM CORPORATION has caused this Addendum to be
executed by its duly-authorized officer, and Optionee has executed this
Addendum, all as of the Effective Date specified below.
Broadcom Corporation
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By:
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Title:
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Optionee
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Scott A. McGregor
EFFECTIVE DATE: ________ __, 20__