FORM OF SECOND AMENDED AND RESTATED SHAREHOLDER AGREEMENT

Exhibit 4.1

 

FORM OF SECOND AMENDED AND RESTATED SHAREHOLDER AGREEMENT

among

Avago Technologies Limited,

Silver Lake Partners II Cayman, L.P.,

Silver Lake Technology Investors II Cayman, L.P.

Integral Capital Partners VII, L.P.

KKR Millennium Fund (Overseas), Limited Partnership,

KKR European Fund, Limited Partnership,

KKR European Fund II, Limited Partnership,

KKR Partners (International), Limited Partnership,

Capstone Equity Investors LLC,

Avago Investment Partners, Limited Partnership,

Bali Investments S.à r.l.,

Seletar Investments Pte. Ltd.,

Geyser Investment Pte Ltd and

certain other Persons

Dated as of August 11, 2009

 

TABLE OF CONTENTS

 

 

- i -

 

- ii -

 

- iii -

FORM OF SECOND AMENDED AND RESTATED SHAREHOLDER AGREEMENT

This Second Amended and Restated Shareholder Agreement (this “ Agreement ”) is made as of August 11, 2009 by and among:

 

(i)

Avago Technologies Limited (Registration No. 200510713C), a public limited company incorporated in Singapore (together with its successors and permitted assigns, the “ Company ”);

 

(ii)

Bali Investments S.à r.l., a company organized under the laws of Luxembourg (together with its Permitted Transferees, “ Luxco ”);

 

(iii)

Silver Lake Partners II Cayman, L.P. (“ SLP Cayman ”), Silver Lake Technology Investors II Cayman, L.P. (together with SLP Cayman and, together with their Permitted Transferees, “ Silver Lake ”) and Integral Capital Partners VII, L.P. (together with its Permitted Transferees, “ Integral Capital ”) (collectively with Silver Lake and together with their Permitted Transferees, “ SLP ”);

 

(iv)

KKR Millennium Fund (Overseas), Limited Partnership (“ KKR Millennium ”), KKR European Fund, Limited Partnership (“ KKR Europe ”), KKR European Fund II, Limited Partnership (“ KKR Europe II ”), and KKR Partners (International), Limited Partnership (collectively, and together with their Permitted Transferees, “ KKR ”); and

 

(v)

Avago Investment Partners, Limited Partnership, a limited partnership formed under the Exempt Limited Partnership Law (2003 Revision) of the Cayman Islands (together with its Permitted Transferees, “ Avago Partners ”).

Parties not executing this Agreement but which are parties to the Amended Agreement and therefore bound by the provisions hereof are the following:

 

(i)

Capstone Equity Investors LLC, a Delaware limited liability company (together with its Permitted Transferees, “ Capstone ”);

 

(ii)

Seletar Investments Pte. Ltd., a private limited company organized under the laws of Singapore (together with its Permitted Transferees, “ Temasek ”);

 

(iii)

Geyser Investment Pte Ltd, a private limited company organized under the laws of Singapore (together with its Permitted Transferees, “ Geyser ”); and

 

(iv)

such other Persons, if any, that from time to time become parties hereto as transferees of Shares pursuant to Section 3.3 (collectively, together with the Sponsors, the “ Shareholders ”).

RECITALS

WHEREAS, the Company and the Sponsors other than Capstone are party to that certain Shareholder Agreement (the “ Original Agreement ”), dated December 1, 2005 (the “ Original Agreement Effective Date ”), and the Company and the Sponsors are party to that certain Amended and Restated Shareholder Agreement (the “ Amended Agreement ”), dated February 3, 2006 (the “ Amended Agreement Effective Date ”), which amended and restated the Original Agreement in its entirety;

WHEREAS, Section 9.2 of the Amended Agreement provides that the Amended Agreement may be amended with an agreement in writing signed by the Company and Sponsors holding not less than 70% of the Outstanding Company Shares;

WHEREAS, the Company and Sponsors holding 70% or more of the Outstanding Company Shares desire to, and by the execution of this Agreement do hereby, amend and restate the Amended Agreement in its entirety to read as set forth herein;

WHEREAS, subject to the approval of the Company’s shareholders, the directors of the Company are authorized by the Company Memorandum of Association to issue ordinary shares of the Company’s share capital (the “ Company Shares ”);

WHEREAS, as of the Effective Date, Luxco is owned by SLP, KKR, Capstone and Avago Partners;

WHEREAS, as of the Effective Date, each of the Sponsors owns the number of Company Shares set forth opposite such Sponsor’s name on Schedule I attached hereto, including in the case of SLP, KKR, Capstone and Avago Partners, their pro rata share of Company Shares owned by Luxco, based upon their ownership of Luxco equity securities;

WHEREAS, certain managers of the Company and its Subsidiaries have purchased or may purchase Company Shares, or have received or may receive Options exercisable for Company Shares, pursuant to the Company’s Equity Incentive Plan for Executive Employees of Avago Technologies Limited and Subsidiaries (the “ Management Equity Plan ”). With respect to Company Shares purchased by such certain managers under the Management Equity Plan and in certain instances other compensatory plans maintained by the Company, or any Company Shares issued to such certain managers upon exercise of any Options granted under the Management Equity Plan and in certain instances other compensatory plans maintained by the Company, the holders thereof (and their permitted transferees) (collectively, the “ Management Shareholders ”) are or will be subject to the terms of a Management Shareholder Agreement, dated as of February 3, 2006 (as amended from time to time, the “ Management Shareholder Agreement ”), among the Company and the Management Shareholders; and

WHEREAS, the parties hereto desire to establish the composition of the Company’s board of directors (the “ Board ”), to restrict the sale, assignment, transfer, encumbrance or other disposition of Company Shares, to provide for certain additional covenants and to provide for certain rights and obligations as between themselves in relation to the affairs of the Company and its Subsidiaries as hereinafter provided.

 

- 2 -

AGREEMENT

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement intending to be bound hereby agree as follows:

1. AMENDMENT AND RESTATEMENT; EFFECTIVE DATE . This Agreement amends and restates the Amended Agreement in full to read as set forth herein, and this Agreement shall become effective as of the date first written above (the “ Effective Date ”).

2. VOTING AGREEMENT .

2.1 Board of Directors .

2.1.1. Board Size . The authorized number of directors of the Board shall be fixed at eleven (11), or such other number as is determined from time to time pursuant to Section 2.1.6 or Section 2.5.1.

2.1.2. Designation of Directors . Subject to Sections 2.1.3, 2.1.5 and 2.1.6 and the Company Articles of Association, the following persons shall be elected to the Board:

(a) three (3) persons designated by Silver Lake, who shall initially be James A. Davidson, Kenneth Y. Hao and John R. Joyce (the “ SLP Designees ”);

(b) three (3) persons designated by KKR, one of whom shall be designated by KKR Millennium, who shall initially be David Kerko, one of whom shall be designated by KKR Europe, who shall initially be Adam H. Clammer, and one of whom shall be designated by KKR Europe II, who shall initially be James H. Greene, Jr. (the “ KKR Designees ”);

(c) one (1) person designated by Temasek, who shall initially be Bock Seng Tan, and who shall at all times be a person who qualifies as the Company’s Singapore resident director (the “ Temasek Designee ” and together with the SLP Designees and KKR Designees, the “ Sponsor Designees ”);

(d) one (1) person who shall be the then current Chief Executive Officer of the Company; and

(e) three (3) persons who shall, for so long as Section 2.5 shall be effective, be approved by Majority Sponsor Approval.

2.1.3. Board Observer . Subject to the Company Articles of Association, Geyser shall be entitled to designate one (1) person (the “ Observer ”), who shall be reasonably acceptable to the Company and shall initially be Tay Lim Hock, to attend all meetings of the Board, and the Company shall provide to the Observer, concurrently with the members of the Board and in the same manner, notice of such meetings and a copy of all materials provided to such members; provided , however , the Board, by majority vote, shall be entitled to exclude the Observer from portions of any Board meeting and to cause

 

- 3 -

portions of any Board materials delivered to the Observer to be redacted where and to the extent that the Board determines that exclusion is reasonably necessary to preserve attorney-client privilege; provided , further , for the avoidance of doubt, the Observer shall be subject to the confidentiality obligations set forth in Section 6.2 hereof and Geyser shall be responsible for the Observer’s compliance therewith.

2.1.4. Sell-Down Provisions . In the event that Silver Lake has sold any of its Company Equity Shares or otherwise transferred any of its Company Equity Shares to an unaffiliated entity, or Luxco has sold any of its Company Equity Shares and distributed the proceeds to Silver Lake, and SLP (x) ceases to own at least 24% of the Outstanding Company Shares but continues to own at least 15% of the Outstanding Company Shares, Silver Lake shall no longer have the right to designate three (3) Sponsor Designees and shall have the right to designate only two (2) Sponsor Designees, (y) ceases to own at least 15% of the Outstanding Company Shares but continues to own at least 5% of the Outstanding Company Shares, Silver Lake shall no longer have the right to designate two (2) Sponsor Designees and shall have the right to designate only one (1) Sponsor Designee, and (z) ceases to own at least 5% of the Outstanding Company Shares, Silver Lake shall no longer have the right to designate any Sponsor Designees.

(a) In the event that KKR has sold any of its Company Equity Shares or otherwise transferred any of its Company Equity Shares to an unaffiliated entity, or Luxco has sold any of its Company Equity Shares and distributed the proceeds to KKR, and KKR (x) ceases to own at least 24% of the Outstanding Company Shares but continues to own at least 15% of the Outstanding Company Shares, it shall no longer have the right to designate three (3) Sponsor Designees and shall have the right to designate only two (2) Sponsor Designees (in which case, the Board Designators (as defined below) will be KKR Millennium and KKR Europe II), (y) ceases to own at least 15% of the Outstanding Company Shares but continues to own at least 5% of the Outstanding Company Shares, it shall no longer have the right to designate two (2) Sponsor Designees and shall have the right to designate only one (1) Sponsor Designee (in which case, the Board Designator will be KKR Europe II), and (z) ceases to own at least 5% of the Outstanding Company Shares, it shall no longer have the right to designate any Sponsor Designees.

(b) In the event that Temasek ceases to own the lesser of (x) at least 2.5% of the Outstanding Company Shares, provided that it has not sold any of its Company Equity Shares, or (y) at least 5% of the Outstanding Company Shares, it shall no longer have the right to designate the Temasek Designee.

(c) In the event that Geyser ceases to own the lesser of (x) at least 2.5% of the Outstanding Company Shares, provided that it has not sold any of its Company Equity Shares, or (y) at least 5% of the Outstanding Company Shares, it shall no longer have the right to designate the Observer.

2.1.5. Company Articles of Association . Notwithstanding the provisions of Sections 2.1.2, 2.1.3 and 2.1.4, the rights to designate the Sponsor Designees and the Observer provided for in Section 2.1.2, 2.1.3 and 2.1.4 are subject to the Company Articles of Association and applicable laws.

 

- 4 -

2.1.6. Additional Independent Directors . For so long as Section 2.5 shall be effective, the number of directors designated pursuant to Section 2.1.2(e) may from time to time temporarily be increased above the number set forth in such section if Majority Sponsor Approval is received in advance of any such designation; provided, however, that any such Majority Sponsor Approval may be revoked at any time, without notice and without cause, by a subsequent Majority Sponsor Approval to such effect, whereupon the excess director or directors above and beyond the number permitted by Section 2.1.2(e), as identified in the Majority Sponsor Approval, shall immediately be removed from the Board and the Board size and composition returned to that specified in Section 2.1.2; and provided, further, however, in the event of any vacancy of any such Board seat in excess of that permitted by Section 2.1.2(e), such vacancy may not be filled without Majority Sponsor Approval. As of the date of the adoption hereof, it is acknowledged that Majority Sponsor Approval has been provided for Section 2.1.2(e) temporarily to permit four (4) directors.

2.2 Removal and Replacement; Vacancies .

2.2.1. Removal and Replacement; Vacancies Generally . Subject to Section 2.2.2, the Company Articles of Association and applicable laws, members of the Board designated by Silver Lake, KKR Millennium, KKR Europe, KKR Europe II or Temasek (each, a “ Board Designator ”), as the case may be, may be removed by, and only by, the affirmative vote or written consent of such Board Designator. If, prior to his or her election to the Board, any person is unable or unwilling to serve as a Sponsor Designee, then the applicable Board Designator shall, subject to Section 2.1.3, be entitled to designate a replacement. If, following election to the Board, any Sponsor Designee resigns, is removed, or is unable to serve for any reason prior to the expiration of his or her term as a director, then, subject to Section 2.1.3, the Company Articles of Association and applicable laws, the applicable Board Designator shall be entitled to designate a replacement. If any Board Designator entitled to designate a person to fill any directorship fails to do so, then such directorship shall remain vacant until filled by such Board Designator.

2.2.2. Vacancies upon a Reduction in a Sponsor’s Ownership Percentage . To the extent that, pursuant to Section 2.1.4, there is any reduction in the number of Sponsor Designees that any Board Designator is entitled to designate, then such Board Designator shall send a written notice to the Secretary of the Company stating the name of the Sponsor Designee(s) to be removed from the Board and, upon receipt of such notice by the Secretary of the Company (or, in the event such Board Designator fails to deliver such notice within ten (10) days after written request from the Company, such selection of a Sponsor Designee(s) of such Board Designator shall be made by the Company by lot), such Sponsor Designee(s) shall be deemed to have resigned from the Board, and the vacancy or vacancies created thereby (and, thereafter, any vacancies created in that particular directorship) shall be filled by a person designated by the Board acting in accordance with the Company’s nomination and governance procedures.

 

- 5 -

2.3 Directors of Subsidiaries . Subject to applicable laws, the size and composition of the boards of directors of the Company’s Subsidiaries shall be as determined by the Board; provided that, if at any time any Person other than an employee of the Company or any of its Subsidiaries (other than a Person who is also an employee, partner, member, shareholder or Affiliate of any Sponsor) or a local qualifying director is appointed to the board of directors of any Subsidiary of the Company, then each Board Designator shall have the right to designate a number of members to such board of directors in the same proportion as such Board Designator has the right to designate Sponsor Designees to the Board under Section 2.1.

2.4 Committees .

2.4.1. Composition . The Board may from time to time designate one or more committees, each of which shall have such number of members as is determined from time to time by the Board acting in accordance with the Company’s nomination and governance procedures; provided that for so long as Silver Lake or KKR is entitled to designate one or more Sponsor Designees under Section 2.1, it shall have the right to designate one of its Sponsor Designees to serve as a member of each of the Board’s committees (and if it has more than one Sponsor Designee, it may appoint a different Sponsor Designee to different Board committees); provided , further , however, that no such right to designate one or more Sponsor Designees to a Board committee would violate the U.S. federal securities laws or the requirements of the primary United States exchange on which the Company Shares are listed for trading. To the extent that a Sponsor Designee is removed from the Board pursuant to Section 2.2.2, such Sponsor Designee shall be deemed to have resigned from all committees upon which such Sponsor Designee is serving. Any vacancies on the Board’s committees created thereby (and, thereafter, any vacancies created in these committee memberships) shall, subject to this Section 2.4.1 to the extent Silver Lake or KKR continues to have the right to appoint one of its Sponsor Designees to the Board’s committees, be filled by the Board acting in accordance with the Company’s nomination and governance procedures.

2.4.2. Authority . Each of the Board’s committees, to the extent provided in the enabling resolution of such committee, the Company Articles of Association or this Agreement, shall have and may exercise all of the authority of the Board delegated to such committee. Any such delegation may be revoked at any time by action of the Board. Notwithstanding the foregoing, no committee of the Board shall have the power to act for the Board where such action would require Majority Sponsor Approval or otherwise expressly require the vote or consent of a majority of the Board’s directors under applicable law, the Company Memorandum of Association or Company Articles of Association or this Agreement.

2.5 Actions Requiring Majority Sponsor Approval . Except as expressly provided in this Section 2.5 and subject to the Company Articles of Association and applicable laws, until such time as the Shareholders beneficially own, collectively, less than 50% of the Outstanding Company Shares, Majority Sponsor Approval is required for the following actions by the Company and/or its Subsidiaries:

2.5.1. Composition of the Board . Except as otherwise expressly provided in this Agreement, change the size or the composition of the Board or any committee of the Board or the board of directors or similar governing body of any Subsidiary; provided , however , the prior written consent of Temasek shall also be required to amend, delete or otherwise change its rights under Section 2.1.4(c); provided , further , the prior written consent of Geyser shall also be required to amend, delete or otherwise change its rights under Section 2.1.4(d).

 

- 6 -

2.5.2. Change in Control . Enter into or effect a Change in Control.

2.5.3. Certain Dispositions . Directly or indirectly, enter into or effect any transaction or series of related transactions involving the sale, lease, license, exchange or other disposal (including by merger, consolidation, sale of stock, or sale of assets) by the Company or the Subsidiaries of any assets having a fair market value or for consideration having a fair market value (in each case as reasonably determined by the Board) in excess of US$300,000,000, other than transactions solely between and among the Company and Wholly Owned Subsidiaries.

2.5.4. Certain Acquisitions . Directly or indirectly, enter into or effect any transaction or series of related transactions involving the purchase, lease, license, exchange or other acquisition (including by merger, consolidation, acquisition of stock, or acquisition of assets) by the Company or the Subsidiaries of any assets and/or equity securities of any Person for consideration having a fair market value (as reasonably determined by the Board) in excess of US$300,000,000, other than transactions solely between and among the Company and Wholly Owned Subsidiaries.

2.5.5. Certain Joint Ventures and Business Alliances . Enter into any joint venture or similar business alliance involving investment, contribution or disposition by the Company or the Subsidiaries of assets (including stock of Subsidiaries) having a fair market value (as reasonably determined by the Board) in excess of US$300,000,000 other than transactions solely between and among the Company and Wholly Owned Subsidiaries.

2.5.6. Certain Indebtedness . Incur (or extend, supplement, or otherwise modify any of the material terms of) any indebtedness (including any refinancing of existing indebtedness); assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person (provided that the Company or any Subsidiary may provide cross-guarantees for any indebtedness in existence as of the Original Agreement Effective Date or that has otherwise been approved under this Section 2.5.6); enter into (or extend, supplement, or otherwise modify any of the material terms of) any agreement under which it may incur indebtedness in the future; or make any loan, advance or capital contribution to any Person (other than the Company or any Wholly Owned Subsidiaries); or make any voluntary prepayment of indebtedness of the Company or any of the Subsidiaries outside the ordinary course of business; in each case in an aggregate principal amount in excess of US$300,000,000 in any transaction or series of related transactions, and other than (x) a draw down in the ordinary course of business under a debt agreement entered into prior to the date of such draw down, the execution of which previously received Majority Sponsor Approval or (y) occurred on or prior to the Original Agreement Effective Date.

 

- 7 -

2.5.7. Dissolution; Liquidation; Reorganization; Bankruptcy . Dissolve, liquidate or engage in any recapitalization or reorganization of the Company or any Subsidiary or initiate a voluntary liquidation, dissolution, receivership, bankruptcy or other insolvency proceeding involving the Company or any Subsidiary.

2.5.8. Affiliated Transactions . Enter into or effect any transaction with a Majority Sponsor (or with an Affiliate of such Majority Sponsor, or with any officer, director, or employee of such Majority Sponsor or its Affiliates), other than this Agreement, the Securities Subscription Agreement, the Luxco Securities Subscription Agreement, the Advisory Agreement and the Registration Rights Agreement and other than transactions which do not have a materially disproportionate effect on any of the Sponsors, in their capacity as Shareholders, relative to the other Sponsors; and such Majority Sponsor shall be excluded from the determination of Majority Sponsor Approval for such transaction under this Section 2.5.8.

2.5.9. Nature of Business . Make any material change in the nature of the business conducted by the Company and its Subsidiaries.

2.5.10. Management Shareholder Agreement; Capstone Shareholder Agreement . Amend, waive or otherwise modify the Management Shareholder Agreement or Capstone Shareholder Agreement in any material respect.

2.6 Disproportionate Effects on Co-Investors . Except for such actions as are specifically set forth in this Agreement, the Company shall not take any action in respect of any class of its shares that shall have a materially disproportionate effect on the Co-Investors, in their capacity as Shareholders of such class of shares, as compared to the Majority Sponsors, in their capacity as Shareholders of such class of shares, without first obtaining the prior written consent of the Co-Investors holding a majority of the number of such class of shares held by all the Co-Investors. Without limiting the foregoing, the Company agrees that any repurchase or redemption of equity or debt securities by it, other than any repurchase or redemption of equity securities from any current or former director, executive officer or employee of the Company where such equity securities were issued pursuant to or in connection with any compensatory plan, and other than pursuant to the Capstone Shareholder Agreement, will be made pro rata, based upon the ownership of such securities, among the Sponsors.

2.7 Further Assurances by all Shareholders .

2.7.1. Board of Directors Provisions . Each Shareholder hereby agrees to take, at any time and from time to time, all actions necessary or desirable (whether in such Shareholder’s capacity as a shareholder, director or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for the purposes of achieving a quorum and voting such Shareholder’s Shares or execution of a written consent in lieu of attending a meeting) to accomplish the provisions of Sections

 

- 8 -

2.1 through 2.4, and the Company agrees to take, at any time and from time to time, all actions necessary or desirable within its control (including, without limitation, calling special board and shareholder meetings) to ensure that the provisions of Sections 2.1 through 2.4 are accomplished.

2.7.2. Approved Change in Control . With respect to any Change in Control that has received the Majority Sponsor Approval required under Section 2.5.2, each Shareholder agrees to cast all votes to which such Shareholder is entitled in respect of the Shares, whether at any annual or special meeting, by written consent or otherwise, in such manner as the Majority Sponsors may instruct by written notice to approve, effect, or implement such approved transaction. Each Shareholder hereby grants to the Majority Sponsors an irrevocable proxy coupled with an interest to vote, including in any action by written consent, such Shareholder’s Shares in accordance with such Shareholder’s agreements contained in this Section 2.7.2, which proxy shall be valid and remain in effect until the provisions of this Section 2.7.2 expire pursuant to Section 2.9.

2.8 Actions in Contravention . Subject to applicable law, neither the Company nor any of its Subsidiaries will give effect to any action by any Shareholder or any other Person which is in contravention of this Section 2.

2.9 Period . Each of the foregoing provisions of this Section 2 shall expire upon the consummation of a Change in Control that has received Majority Sponsor Approval.

3. TRANSFER RESTRICTIONS.

3.1 General Transfer Restrictions Each Shareholder understands and agrees that the Shares held by such Shareholder on the date hereof have not been registered under the Securities Act or registered or qualified under any state or foreign securities laws. No Shareholder shall Transfer such Shares (or solicit any offers in respect of any Transfer of such Shares), except in compliance with the Securities Act, any applicable state or foreign securities laws and any restrictions on Transfer contained in this Agreement or any other provisions set forth in the Securities Subscription Agreement (or, in the case of Luxco, the Luxco Securities Subscription Agreement), the Registration Rights Agreement or any other agreements or instruments pursuant to which such Shares were issued.

3.2 Allowed Transfers . Until the expiration of the provisions of this Section 3, no Shareholder shall Transfer any of such Shareholder’s Shares to any other Person except as follows:

3.2.1. Permitted Transferees . Any Shareholder may Transfer any or all of such Shareholder’s Shares to such Shareholder’s Permitted Transferees and, after complying with the terms of Section 3.3, such a Permitted Transferee shall be deemed to be a Shareholder hereunder.

 

- 9 -

3.2.2. Public Transfers .

(a) Any Shareholder may Transfer any or all of such Shareholders’ Shares in a Public Offering in accordance with and pursuant to the Registration Rights Agreement.

(b) From and after the closing of the Initial Public Offering, a Majority Sponsor may Transfer any or all of such Majority Sponsor’s Shares pursuant to Rule 144 and in compliance with Section 3.4, or pursuant to a block sale to a financial institution in the ordinary course of its trading business; provided that any Transfer pursuant to this Section 3.2.2(b) occurring during the two-year period commencing on the closing of the Initial Public Offering shall not be made without Majority Sponsor Approval.

(c) Shares Transferred pursuant to this Section 3.2.2 shall conclusively be deemed thereafter not to be Shares under this Agreement.

3.2.3. Distributions and Charitable Contributions . From and after the closing of the Initial Public Offering, any Majority Sponsor may Transfer any or all of such Shareholder’s Shares (a) in a pro rata Transfer to its partners, members or shareholders, as applicable, or (b) to a Charitable Organization, in each case without regard to any other restrictions on transfer contained elsewhere in this Agreement; provided that any Transfer pursuant to this Section 3.2.3 occurring during the two-year period commencing on the closing of the Initial Public Offering shall not be made without Majority Sponsor Approval. Any Shares so Transferred shall conclusively be deemed thereafter not to be Shares under this Agreement.

3.2.4. Participation in Drag-Along and Tag-Along .

(a) Drag-Along . Any Shareholder shall Transfer any or all of such Shareholder’s Shares to the extent required pursuant to Section 4.2.

(b) Tag-Along . A Participating Seller may Transfer Shares pursuant to and in accordance with the provisions of Section 4.1, so long as each transferee agrees to be bound by the terms of this Agreement in accordance with Section 3.3 (if not already bound hereby).

3.2.5. Transfers by Co-Investors . In the event that a Co-Investor’s Current Percentage Ownership of Shares is greater than the Current Percentage Ownership of Shares of whichever of Silver Lake or KKR has the smallest Current Percentage Ownership of Shares at such time, such Co-Investor may Transfer any of such Co-Investor’s Shares provided that following any such Transfer such Co-Investor’s Current Percentage Ownership of Shares shall not be less than the Current Percentage Ownership of Shares of whichever of Silver Lake or KKR has the smallest Current Percentage Ownership of Shares at such time. Any Shares so Transferred shall conclusively be deemed thereafter to be Shares under this Agreement and each transferee shall be bound by the terms of this Agreement in accordance with Section 3.3; provided , however , that if such Shares are Transferred (a) in a Public Offering, (b) from and after the closing of the Initial Public Offering, (i) pursuant to Rule 144 or a block sale to a

 

- 10 -

financial institution in the ordinary course of its trading business, in each case in compliance with Section 3.4, or (ii) pursuant to Regulation S under the Securities Act if such Shares following such Transfer are not “restricted securities” as defined in Rule 144, (c) in a pro rata Transfer to its partners, members or shareholders, as applicable, or (d) to a Charitable Organization, then the Shares Transferred pursuant to this Section 3.2.5 shall conclusively be deemed thereafter not to be Shares under this Agreement.

3.2.6. Other Private Transfers . In addition to any Transfers made in accordance with Sections 3.2.1, 3.2.2, 3.2.3, 3.2.4, 3.2.5 and 3.2.7, any Shareholder may Transfer any or all of such Shareholder’s Shares with Majority Sponsor Approval if such Transfer takes place before the closing of the Initial Public Offering and in compliance with Sections 3.3 and 4.1. Any Shares so Transferred shall conclusively be deemed thereafter to be Shares under this Agreement and each transferee shall be bound by the terms of this Agreement in accordance with Section 3.3.

3.2.7. Luxco and Avago Partners Distributions . Luxco may at any time effect a Transfer of any or all of its Shares in a pro rata Transfer to its shareholders, without regard to any other restrictions on transfer contained elsewhere in this Agreement. Following such a distribution by Luxco, Avago Partners may at any time effect a Transfer of any or all of its Shares in a pro rata Transfer to its partners, without regard to any other restrictions on transfer contained elsewhere in this Agreement. Any Shares so Transferred by Luxco or Avago Partners shall conclusively be deemed thereafter to be Shares under this Agreement, each transferee shall be bound by the terms of this Agreement and, following any such Transfer by Avago Partners, its partners shall be deemed to be Sponsors hereunder.

3.3 Certain Transferees to Become Parties . Any transferee receiving Shares in a Transfer pursuant to Section 3.2.1, 3.2.4(b), 3.2.5 (except a Transfer following which the Shares are deemed not to be Shares hereunder), 3.2.6 or 3.2.7 shall become a Shareholder, party to this Agreement and subject to the terms and conditions of, and be entitled to enforce, this Agreement to the same extent, and in the same capacity, as the Person that Transfers such Shares to such transferee; provided that only a Permitted Transferee of a Sponsor will be deemed to be a Sponsor for purposes of this Agreement (and shall be deemed to be the same Sponsor as the Sponsor which Transferred to it). For the avoidance of doubt, (a) any transferee receiving Shares in a Transfer pursuant to Section 3.2.4(b), 3.2.5 (except a Transfer following which the Shares are deemed not to be Shares hereunder), 3.2.6 or 3.2.7 that is not a Permitted Transferee of a Sponsor will become a party to this Agreement without the benefit of the right to designate board and committee members, or to approve certain actions of the Company and its Subsidiaries, under Section 2; and (b) any transferee receiving Shares in a Transfer pursuant to Section 3.2.4(b), 3.2.5 (except a Transfer following which the Shares are deemed not to be Shares hereunder), 3.2.6 or 3.2.7 that is neither an existing Shareholder nor a Permitted Transferee of a Sponsor will become party to this Agreement as a Shareholder without the benefit of the rights of Tag Along Holders (Section 4.1). Prior to the Transfer of any Shares to any transferee pursuant to Section 3.2.1, 3.2.4(b), 3.2.5 (except a Transfer following which the Shares are deemed not to be Shares hereunder), 3.2.6 or 3.2.7, and as a condition thereto, each Shareholder effecting such Transfer shall (x) cause such transferee to deliver to the Company and each of the Sponsors its written agreement, in form and substance reasonably satisfactory to the Company, to be bound

 

- 11 -

by the terms and conditions of this Agreement to the extent described in the preceding sentence and (y) if such Transfer is to a Permitted Transferee, remain directly liable for the performance by such Permitted Transferee of all obligations of such transferee under this Agreement.

3.4 Restrictions on Public Transfers under Rule 144 . After the Initial Public Offering, and subject to the provisions of Sections 3.2.2 and 3.2.5, if any Shareholders’ sales of Shares pursuant to Rule 144 would be subject to aggregation (each such Shareholder whose Shares would be subject to aggregation, a “ Related Holder ”), then each such Related Holder shall promptly notify each other Related Holder (a) when it has commenced a measurement period for purposes of the Rule 144 group volume limit in connection with a Sale that is subject to such limit and (b) what the volume limit for that measurement period, determined as of its commencement, will be. Subject to Sections 3.2.2 and 3.2.5, each Related Holder shall be entitled to effect Sales that are subject to the Rule 144 group volume limit pro rata during the applicable measurement period based on its percentage ownership of Shares held by all such Related Holders at the start of such measurement period. The provisions of this Section 3.4 shall not apply to any Transfer of Shares (x) in a Public Offering or (y) not subject to volume limitation under Rule 144.

3.5 Impermissible Transfer . Subject to applicable law, any attempted Transfer of Shares not permitted under the terms of this Section 3 shall be null and void, and the Company shall not in any way give effect to any such impermissible Transfer.

3.6 Notice of Transfer . To the extent that, prior to the Initial Public Offering, any Shareholder or Permitted Transferee shall Transfer any Shares, such Shareholder or Permitted Transferee shall, within three (3) Business Days following consummation of such Transfer, deliver notice thereof to the Company and each Sponsor.

3.7 Period . Each of the foregoing provisions of this Section 3 shall expire upon the earlier of (i) a Change in Control and (ii) Majority Sponsor Approval of the termination in full of the provisions of this Section 3 after the Initial Public Offering.

4. “TAG ALONG” AND “DRAG ALONG” RIGHTS.

4.1 Tag Along . If any Prospective Selling Shareholder proposes to Sell any Shares to any Prospective Buyer(s) other than in a Transfer pursuant to Section 3.2.1, 3.2.2, 3.2.3 or 3.2.7:

4.1.1. Notice . The Prospective Selling Shareholder shall, prior to any such proposed Transfer, deliver a written notice (the “ Tag Along Notice ”) to each Co-Investor (each such Co-Investor, a “ Tag Along Holder ”). The Tag Along Notice shall include:

(a) the principal terms and conditions of the proposed Sale, including (i) the number and class of the Shares to be purchased from the Prospective Selling Shareholder, (ii) the fraction(s) expressed as a percentage, determined by dividing the number of Shares of each class to be purchased from the Prospective Selling Shareholder by the total number of Shares of each such class held by the Prospective Selling Shareholder (for each class, the “ Tag Along Sale Percentage ”) (it being understood that the Company shall reasonably cooperate with the Prospective Selling Shareholder in respect of the determination of each applicable

 

- 12 -

Tag Along Sale Percentage), (iii) the purchase price or the formula by which such price is to be determined and the payment terms, including a description of any non-cash consideration sufficiently detailed to permit valuation thereof, (iv) the name and address of each Prospective Buyer and (v) if known, the proposed Transfer date; and

(b) an invitation to each Tag Along Holder to make an offer to include in the proposed Sale to the applicable Prospective Buyer(s) Shares of the same class(es) being sold by the Prospective Selling Shareholder held by such Tag Along Holder (not in any event to exceed the Tag Along Sale Percentage of the total number of Shares of the applicable class held by such Tag Along Holder), on the same terms and conditions (subject to Section 4.4.3 in the case of Options, Warrants and Convertible Securities), with respect to each Share Sold, as the Prospective Selling Shareholder shall Sell each of its Shares. For purposes of this Section 4.1, but subject to Section 4.4.3, all Options, Warrants and Convertible Securities will be treated as the same class of Shares for which they may be exercised.

4.1.2. Exercise . Within ten (10) Business Days after the date of delivery of the Tag Along Notice (such date the “ Tag Along Deadline ”), each Tag Along Holder desiring to make an offer to include Shares in the proposed Sale (each a “ Participating Seller ” and, together with the Prospective Selling Shareholder and any other shareholders of the Company entitled to participate in the proposed Transfer, collectively, the “ Tag Along Sellers ”) shall deliver a written notice (the “ Tag Along Offer ”) to the Prospective Selling Shareholder indicating the number of Shares which such Participating Seller desires to have included in the proposed Sale (subject to the limitation set forth in Section 4.1.1(b)). Each Tag Along Holder who does not make a Tag Along Offer in compliance with the above requirements, including the time period, shall be deemed to have waived all of such Tag Along Holder’s rights to participate in such Sale, and the Tag Along Sellers shall thereafter be free to Sell to the Prospective Buyer, at a purchase price no greater than the purchase price set forth in the Tag Along Notice and on other terms and conditions which are not materially more favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, without any further obligation to such non-accepting Tag Along Holder(s) pursuant to this Section 4.1.

4.1.3. Irrevocable Offer . The offer of each Participating Seller contained in such Participating Seller’s Tag Along Offer shall be irrevocable, and, to the extent such offer is accepted, such Participating Seller shall be bound and obligated to Sell in the proposed Sale on the same terms and conditions, with respect to each Share Sold (subject to Section 4.4.3 in the case of Options, Warrants and Convertible Securities), as the Prospective Selling Shareholder, up to such number of Shares as such Participating Seller shall have specified in such holder’s Tag Along Offer; provided , however , that if the principal terms of the proposed Sale change with the result that the purchase price shall be less than the purchase price set forth in the Tag Along Notice or the other terms and conditions shall be materially less favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, the Prospective Seller shall provide written notice thereof to each Participating Seller and each Participating Seller shall be permitted to withdraw the

 

- 13 -

offer contained in such holder’s Tag Along Offer by written notice to the Prospective Selling Shareholder within three (3) Business Days after delivery of such written notice from the Prospective Selling Shareholder and upon such withdrawal shall be released from such Participating Seller’s obligations thereunder.

4.1.4. Reduction of Shares Sold . The Prospective Selling Shareholder shall attempt to obtain the inclusion in the proposed Sale of the entire number of Shares which each of the Tag Along Sellers requested to have included in the Sale (as evidenced in the case of the Prospective Selling Shareholder by the Tag Along Notice and in the case of each Participating Seller by such Participating Seller’s Tag Along Offer). In the event the Prospective Selling Shareholder shall be unable to obtain the inclusion of such entire number of Shares in the proposed Sale, the number of Shares to be sold in the proposed Sale shall be allocated among the Tag Along Sellers in proportion, as nearly as practicable, as follows:

(a) there shall be first allocated to each Tag Along Seller a number of Shares equal to the lesser of (i) the number of Shares of the applicable class offered (or proposed, in the case of the Prospective Selling Shareholder) to be included by such Tag Along Seller in the proposed Sale pursuant to this Section 4.1, and (ii) a number of Shares equal to such Tag Along Seller’s Pro Rata Portion; and

(b) the balance, if any, not allocated pursuant to clause (a) above shall be allocated to the Prospective Selling Shareholder and each other Tag Along Seller which offered to sell a number of Shares of the applicable class in excess of such Person’s Pro Rata Portion, pro rata to each Tag Along Seller based upon the amount of such excess, or in such manner as the Tag Along Sellers may otherwise agree.

4.1.5. Additional Compliance . If, prior to consummation, the terms of the proposed Sale shall change with the result that the purchase price to be paid in such proposed Sale shall be greater than the purchase price set forth in the Tag Along Notice or the other terms of such proposed Sale shall be materially more favorable to the Tag Along Sellers than those set forth in the Tag Along Notice, the Tag Along Notice shall be null and void, and it shall be necessary for a separate Tag Along Notice to be delivered, and the terms and provisions of this Section 4.1 separately complied with, in order to consummate such proposed Sale pursuant to this Section 4.1; provided , however , that in the case of such a separate Tag Along Notice, the applicable period to which reference is made in Section 4.1.2 shall be three (3) Business Days. In addition, if the Prospective Selling Shareholders have not completed the proposed Sale by the end of the 180th day after the date of delivery of the Tag Along Notice, each Participating Seller shall be released from such Participating Seller’s obligations under such Participating Seller’s Tag Along Offer, the Tag Along Notice shall be null and void, and it s