OFFICER SEVERANCE PROGRAM
PARTICIPANT
BROADCOM CORPORATION
STOCK OPTION AGREEMENT
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
7.
3. Limited
Transferability . This option shall be neither
transferable nor assignable by Optionee other than by will or by
the laws of inheritance 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 7. 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
the Exercise Price and any applicable 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 cease Service by reason his or her death, then this
option, to the extent outstanding at that time but not otherwise
vested and exercisable for all the Option Shares, shall immediately
vest and become exercisable for all the Option Shares at the time
subject to this option and may be exercised for any or all of those
Option Shares as fully-vested shares. The personal representative
of Optionee’s estate or the person or persons to whom this
option is transferred pursuant to Optionee’s will or in
accordance with the laws of inheritance following Optionee’s
death or any person to whom this option is transferred during
Optionee’s lifetime pursuant to Paragraph 3, as the case
may be, shall have the right to exercise this option. However, 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, then this
option, to the extent outstanding at that time but not otherwise
vested and exercisable for all the Option Shares, shall immediately
vest and become exercisable for all the Option Shares at the time
subject to this option and may be exercised for any or all of those
Option Shares as fully-vested shares. Optionee (or any person to
whom this option is transferred during Optionee’s lifetime
pursuant to Paragraph 3) shall have a period of twelve
(12) months measured from 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, including any Option Shares
that vest on an accelerated basis upon Optionee’s cessation
of Service by reason of death or Permanent Disability. 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. Except as otherwise provided in the Severance
Agreement (as defined in Paragraph 6 below) or as otherwise
specifically authorized by the Plan Administrator pursuant to an
express written agreement with Optionee, no additional Option
Shares shall vest, whether pursuant to the normal exercise/vesting
schedule set forth in the Grant Notice or the special vesting
acceleration provisions of Paragraph 7, following
Optionee’s cessation of Service.
(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. Officer
Severance Agreement . Optionee is also a participant in the
Corporation’s special officer severance program pursuant to
the terms of the letter agreement between the Corporation and
Optionee dated ___(the “Severance Agreement”). The
Severance Agreement sets forth certain terms and conditions under
which Optionee’s equity or equity-based awards from the
Corporation, including this option, may vest in whole or in part on
an accelerated basis in connection with Optionee’s cessation
of Employee status under various specified circumstances. In
addition, the post-Service exercise period for this option may
also, subject to the applicable terms and conditions of the
Severance Agreement, be extended under certain specified
circumstances until the earlier of (A) the end
of the twenty-four (24)-month period measured from the date of
Optionee’s cessation of Employee status or (if later) the end
of the one-month period measured from each installment date on
which this option become exercisable, whether pursuant to the terms
of this Agreement or the Severance Agreement, or (B) the
Expiration Date of this option. The terms and provisions of the
Severance Agreement, as they apply to this option, are hereby
incorporated by reference into this Agreement and shall have the
same force and effect as if expressly set forth in this Agreement.
In the event of any conflict between the provisions of this
Agreement and those of the Severance Agreement, the provisions of
the Severance Agreement shall be controlling.
7. 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 retention 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 the subsequent vesting and payout of that
spread in accordance with the same option
exercise/vesting
schedule set
forth in the Grant Notice and the special acceleration provisions
of Paragraphs 5(b) and 5(c) of this Agreement. 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, provided the
substituted common stock is readily tradable on an established
United States securities exchange.
(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.
8.
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, spin-off transaction or other change affecting the
outstanding Common Stock as a class without the Corporation’s
receipt of consideration or should the value of outstanding shares
of Common Stock be substantially reduced as a result of a spin-off
transaction or an extraordinary dividend or distribution, equitable
adjustments shall be made by the Plan Administrator to (i) the
total number and/or class of securities subject to this option and
(ii) the Exercise Price. The adjustments shall be made by the
Plan Administrator in such manner as the Plan Administrator deems
appropriate to reflect such change, and those adjustments shall be
final, binding and conclusive.
9.
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.
10. 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 valued at Fair Market Value on the Exercise Date and
held by Optionee (or any other person or persons exercising the
option) for any requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes;
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 on the settlement date to complete the sale.
Except to the
extent the sale and remittance procedure is utilized in connection
with the option exercise, payment of the Exercise Price must
accompany the Notice of Exercise del
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