Exhibit 10.7
RESTRICTED STOCK UNIT AWARD AGREEMENT
Dear Mr. Ross:
Broadcom Corporation (the "Corporation") is pleased to inform you that you have
been awarded Restricted Stock Units (the "Units") under the Corporation's 1998
Stock Incentive Plan, as amended and restated (the "Plan"). To the extent they
become vested, the Units will entitle you to receive shares of the Corporation's
Class A common stock (the "Common Stock") in a series of installments over your
period of continued Service with the Corporation.
The Units are a non-voting bookkeeping device used under the Plan solely to
determine any share issuance to eventually be made to you if and when the Units
vest. Each Unit represents the right to receive one share of the Corporation's
Common Stock on the vesting date of that Unit. Unlike a typical stock option
grant, the shares will be issued to you for your continued Service over the
vesting period, without any cash payment required from you. However, you must
arrange with the Corporation for the payment of the applicable income and
employment withholding taxes (described below) that the Corporation must collect
upon the issuance of those shares.
Capitalized terms not otherwise defined in the body of this Agreement shall have
the meaning assigned to them in the attached Appendix.
This Agreement sets forth the number of Units and underlying number of shares of
Common Stock subject to your award, the applicable vesting schedule for those
Units and underlying shares, the dates on which your vested shares will be
issued to you and the remaining terms and conditions governing your award (the
"Award").
Award Date: September 9, 2004
Number of Units 100,000 units representing an equal number of
Subject to Award: shares of Common Stock (the "Shares")
Vesting Schedule: The Shares will vest as follows: (i) 5,556 of
the Shares will vest upon your continuation in
Service through November 15, 2004; (ii) an
additional 83,330 of the Shares will vest in a
series of ten (10) successive equal quarterly
installments upon your completion of each three
(3)-month period of Service over the thirty
(30)-month period measured from November 15,
2004 and continuing through May, 15, 2007; and
(iii) the remaining 11,114 of the Shares will
vest upon your continuation in Service through
August 15, 2007. The Shares will be subject to
accelerated vesting in accordance with the
provisions of Paragraphs 2 and 9 of this
Agreement.
Issuance Schedule The Shares will be issued immediately upon the
vesting of Units in accordance with the
foregoing Vesting Schedule. In no event,
however, will any Shares actually be issued to
you unless and until the applicable Withholding
Taxes (if any) are collected from you.
Other important features of your Award are as follows:
1. FORFEITABILITY. Subject to the provisions of Section 2 below, should
you cease Service prior to vesting in one or more Units subject to your Award,
your Award will be cancelled with respect to those unvested Units (and the
underlying Shares) on the first date you are no longer in Service, regardless of
the reason for the termination of your Service, whether with or without cause,
voluntary or involuntary. The number of your Units will be reduced accordingly,
and you will cease to have any right or entitlement to receive any Shares under
those cancelled Units.
The vesting schedule requires your continued Service through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Award and the rights and benefits under this Agreement.
Service for only a portion of a vesting period, even if a substantial portion,
will not entitle you to any proportionate vesting or avoid or mitigate the
forfeiture that occurs upon the termination of your Service.
2. ACCELERATED VESTING. The Shares subject to your Award will immediately
vest in full and be issued to you upon the occurrence of either of the following
events (i) your cessation of Service by reason of your death or Permanent
Disability; or (ii) the assumption of duties on a full-time basis of your
successor as Chief Executive Officer of the Corporation.
3. TRANSFERABILITY. Prior to your actual receipt of the Shares in which
you vest under your Award, you may not transfer any interest in your Award, your
Units or the underlying Shares or pledge or otherwise hedge the sale of those
Units or Shares, including (without limitation) any short sale or any
acquisition or disposition of any put or call option or other instrument tied to
the value of those Shares. Any attempt by you to do so will result in an
immediate forfeiture of all of the Units awarded to you hereunder. However, your
right to receive any Shares which have vested under your Units at or prior to
your death but which remain unissued at the time of your death may be
transferred pursuant to the provisions of your will or trust or the laws of
inheritance or to your designated beneficiary following your death. You may make
such a beneficiary designation at any time by filing the appropriate form with
the Plan Administrator or its designee.
4. SHAREHOLDER RIGHTS. The Units create no fiduciary duty to you, and
shall create only a contractual obligation on the part of the Corporation to
issue Shares, subject to vesting and other terms and conditions of this
Agreement and the Plan. The Units shall not be treated as property or as a trust
fund of any kind.
You will not have any shareholder rights, including voting rights or
dividend rights, with respect to the Shares subject to your Award until you
become the record holder of those Shares upon their actual issuance to you
following the Corporation's collection of the
applicable Withholding Taxes. Except as otherwise provided in Paragraph 5, no
adjustments will be made for dividends or other rights of a holder for which the
record date is prior to the date of issuance of the stock certificate evidencing
the shares.
Issuance of Shares following vesting of the corresponding Units
shall be in complete satisfaction of such vested Units.
5. ADJUSTMENTS. Should any change be made to the Common Stock subject to
your Award 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 will be made to the number and/or class
of securities issuable hereunder and the number and/or class of securities that
vest on each vesting date pursuant to the Vesting Schedule set forth above.
6. FEDERAL INCOME TAXATION. You will recognize ordinary income for federal
income tax purposes on each date the Shares subject to your Award vest, whether
pursuant to the normal Vesting Schedule above or the special acceleration
provisions of Paragraph 2 or Paragraph 9 of this Agreement, and the Corporation
must collect from you the applicable income taxes required to be withheld as a
result of that income. The amount of your taxable income on each vesting date
will be equal to the Fair Market Value per share of Common Stock on that date
times the number of Shares in which you vest on that date.
7. FICA TAXES. The Corporation must also collect from you the employee
portion of the FICA (Social Security and Medicare) taxes that become due as the
Shares subject to your Award vest in accordance with the provisions of this
Agreement. The FICA taxes due on each such vesting date will be based on the
Fair Market Value per share of Common Stock on that date.
8. WITHHOLDING TAXES. All applicable Withholding Taxes, as determined by
the Corporation, must be collected from you as and when they become due. You
must pay such Withholding Taxes by delivering your separate check payable to the
Corporation in the amount of such Withholding Taxes. However, the Plan
Administrator may, in its sole discretion and pursuant to procedures authorized
and established by the Plan Administrator for such purpose, permit you to pay
the Withholding Taxes that the Corporation must collect as the Shares vest under
the Award by allowing you to direct the Corporation to withhold a portion of
those vested Shares with a Fair Market Value (measured as of the vesting date)
equal to the amount of such Withholding Taxes; PROVIDED, HOWEVER, that the
amount of any Shares so withheld shall not exceed the amount necessary to
satisfy the Corporation's required tax withholding obligations using the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to supplemental taxable income. You will be
notified in writing in the event such Share withholding mechanism is actually to
be made available to you with respect to one or more Shares that vest under this
Agreement.
If any withholding event occurs other than with respect to the
vesting of such Units, or if the Corporation for any reason is unable to satisfy
the withholding obligations with respect to the vesting of the Units through any
of the collection procedures specified in this Paragraph 8, the Corporation
shall be entitled to require you to make a cash payment and/or to
deduct from other compensation payable to you the amount of any such withholding
obligation.
9. CHANGE IN CONTROL. Should the closing of a Change in Control
transaction occur during your period of Service, the Shares subject to your
Award will vest in full on an accelerated basis immediately prior to such
closing, and those vested Shares shall be immediately issued to you (or
otherwise converted into the right to receive the same consideration per share
of Common Stock payable to the other shareholders of the Corporation in
consummation of the Change in Control), subject to the Corporation's collection
of all applicable federal and state Withholding Taxes.
10. SECURITIES LAW COMPLIANCE. The Corporation will use its reasonable
commercial efforts to assure that all Shares issued pursuant to this Agreement
are registered under the federal securities laws. However, no Shares will be
issued pursuant to your Award if such issuance would otherwise constitute a
violation of any applicable federal or state securities laws or regulations or
the requirements of the NASDAQ National Market or any Stock Exchange on which
the Common Stock may then be listed. 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 of any Shares hereunder shall defer the
Corporation's liability with respect to the non-issuance of such Shares until
such approval shall have been obtained.
11. TRANSFER RESTRICTION. None of the issued Shares may be sold or
transferred in contravention of (i) any market blackout periods the Corporation
may impose from time to time or (ii) the Corporation's insider trading policies
to the extent applicable to you from time to time.
12. BENEFIT LIMIT. In the event the accelerated vesting and issuance of
the Shares subject to your Award would (along with any other benefits or
payments to which you may be entitled in connection with any change in control
or ownership of the Corporation or the subsequent termination of your Service)
otherwise constitute a parachute payment under Code Section 280G (such other
benefits or payments and the Shares subject to accelerated vesting are referred
to collectively as the "Parachute Payments"), the accelerated vesting and
issuance of those Shares shall be subject to possible reduction under this
Paragraph 11. Such accelerated vesting and issuance of Shares shall be reduced
to the extent necessary to assure that you receive only the GREATER of the
after-tax amount, taking into account any excise tax you incur under Code
Section 4999, of (i) Parachute Payments that do not cause you to incur any
excise tax under Code Section 4999, or (ii) all Parachute Payments without
reduction. The extent of any reduction in accelerated vesting under this
Paragraph 11 shall be determined by the Corporation in its sole discretion, and
the Corporation in its sole discretion may, in lieu of reducing the accelerated
vesting, reduce or eliminate any of the other Parachute Payments to the extent
necessary to satisfy this Paragraph 11.
13. NOTICE. Any notice to be given or delivered to the Corporation
relating to this Agreement shall be in writing and addressed to the Corporation
at its principal corporate offices. Any notice to be given or delivered to you
relating to this Agreement shall be in writing and addressed to you at the
address indicated below your signature line on the last page of this Agreement
or such other address of which you later advise the Corporation in writing. 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. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Corporation and its successors and
assigns and upon you and the legal representatives, heirs and the legatees of
your estate.
15. CONSTRUCTION. This Agreement and the Award 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 the Award.
16. 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.
17. AT WILL EMPLOYMENT. Nothing in this Agreement or your Award will
provide you with any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way your right or the
right of the Corporation to terminate your Service at any time for any reason,
with or without cause, or for no reason.
18. MANDATORY ARBITRATION. ANY AND ALL DISPUTES OR CONTROVERSIES BETWEEN
YOU AND THE CORPORATION ARISING OUT OF, RELATING TO OR OTHERWISE CONNECTED WITH
THIS AGREEMENT OR THE AWARD OF RESTRICTED STOCK UNITS 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 YOU
ARE (OR HAVE 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 (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), EXPENSES AND
ATTORNEY'S FEES. 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. REMAINING TERMS. The remaining terms and conditions of your Award are
governed by the Plan, and your Award is also subject to all interpretations,
amendments, rules and regulations that may from time to time be adopted under
the Plan. The official prospectus summarizing the principal features of the Plan
and a special supplement discussing the restricted stock units issuable under
the Plan are available for review on the Corporation's website at
INTRANET.BROADCOM.COM/STOCK/DOCS/98PSP.DOC.
Please review the prospectus and the attached supplement carefully
so that you fully understand your rights and benefits under your Award and the
limitations, restrictions and vesting provisions applicable to the Award. In the
event of any conflict between the provisions of this Agreement and those of the
Plan, the provisions of the Plan shall be controlling.
You acknowledge reading and understanding the prospectus for the
Plan, its supplement, and this Agreement. Provisions of the Plan that confer
discretionary authority on Board or the Plan Administrator do not (and shall not
be deemed to) confer in you any rights unless such rights are expressly set
forth herein or are otherwise in the sole discretion of the Board or the Plan
Administrator conferred by appropriate action after the date hereof.
Please execute the Acknowledgment section below to indicate your acceptance of
the terms and conditions of your Award.
BROADCOM CORPORATION
/s/ WILLIAM J. RUEHLE
____________________________________
BY: WILLIAM J. RUEHLE
________________________________
TITLE: VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
_____________________________
ACKNOWLEDGMENT
I hereby acknowledge and accept the foregoing terms and conditions of the
Restricted Stock Unit award evidenced hereby. I further acknowledge and agree
that the foregoing sets forth the entire understanding between the Corporation
and me regarding my entitlement to receive the shares of the Corporation's Class
A common stock subject to such award and supersedes all prior oral and written
agreements on that subject.
SIGNATURE: /S/ ALAN E. ROSS
ADDRESS: ___________________________
___________________________
DATED: SEPTEMBER 9, 2004
APPENDIX
The following definitions shall be in effect under the Agreement:
AGREEMENT shall mean this Restricted Stock Unit Agreement.
BOARD shall mean the Corporation's Board of Directors.
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, 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.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMON STOCK shall mean the Corporation's Class A Common Stock.
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.
EMPLOYEE shall mean an individual who performs services while in the
employ of the Corporation or any Parent or Subsidiary, subject to the control
and direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
FAIR MARKET VALUE shall mean the fair market value per share of Common
Stock determined in accordance with the following provisions:
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(i) If the Common Stock is at the time traded on the NASDAQ National
Market, 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, 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, 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, the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
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.
PLAN ADMINISTRATOR shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.
PERMANENT DISABILITY shall mean your inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment or which expected to result in death or has lasted or can be
expected to last for a continuous period of twelve (12) months or more.
SERVICE shall mean your 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. For purposes
of this Agreement, you shall be deemed to cease Service immediately upon the
occurrence of either of the following events: (i) you no longer perform services
in any of the foregoing capacities for the Corporation or any Parent or
Subsidiary or (ii) the entity for which you are performing such services ceases
to remain a Parent or Subsidiary of the Corporation, even though you may
subsequently continue to perform services for that entity.
STOCK EXCHANGE shall mean either the American Stock Exchange or the New
York Stock Exchange.
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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.
WITHHOLDING TAXES shall mean the federal, state and local income and
employment taxes required to be withheld by the Corporation in connection with
the issuance of the shares of Common Stock that vest under the Award.
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