Exhibit 10.20
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 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 6. Notwithstanding the foregoing, should the Optionee elect
to exercise this option during any period during which the Optionee is under
investigation by the

 

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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
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 that number of unvested Option Shares equal to the Accelerated
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 that number of unvested Option Shares equal to the Accelerated
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.

 

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     (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 which become Accelerated Shares 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 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 6, 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. 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.

 

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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.
     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, 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.
     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;

 

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     (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 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. Authorized Leave of Absence/Change of Status.
(a) The following provisions shall apply in the event Optionee is absent from
active Service by reason of an approved leave of absence:
               (i) Optionee shall not be deemed to have terminated Service while
on a leave of absence authorized by the Corporation (or any Parent or
Subsidiary). However, Optionee shall not be entitled to any Service vesting
credit for the period of that leave, except to the extent expressly provided
otherwise by the Corporation’s then current written leave of absence policy. In
the absence of such Service vesting credit under that policy for all or any
portion of the leave, the vesting/exercise schedule set forth in the Grant
Notice shall be
 

(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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suspended as of the date the leave commences or (if later) the last day of any
period for which Optionee may be entitled to Service vesting credit with respect
to that leave. As a result, this option may not vest or otherwise become
exercisable as to one or more installments of the Option Shares during the
period of such leave. In that event, Optionee shall have the opportunity to vest
in those installments through additional Service beyond the normal
vesting/exercise schedule for this option. The actual effect that a leave of
absence will have upon the vesting of this option will be determined by the
Corporation’s policies governing those subjects that are in effect at the time.
               (ii) If the leave of absence continues for more than three
(3) months or beyond any longer period for which Optionee is provided with
reemployment rights under law or by written agreement, then this option if
designated as an Incentive Option in the Grant Notice shall automatically
convert to a Non-Statutory Option upon the later of (x) the first date on which
the period of such leave exceeds six (6)-months or, if applicable, (y) the end
of the three (3)-month period measured from the first date Optionee is no longer
provided with such reemployment rights under law or by written agreement.
Following any such conversion of this option, all subsequent exercises of this
option, whether effected before or after Optionee’s return to active Employee
status, shall result in an immediate taxable event, and the Corporation shall be
required to collect from Optionee the income and employment withholding taxes
applicable to such exercise.
               (iii) In no event shall this option become exercisable for any
additional Option Shares or otherwise remain outstanding if Optionee does not
resume Employee status prior to the Expiration Date of the option term.
(b) The exercise/vesting schedule set forth for this option in the Grant Notice
may also be affected in the event Optionee changes from full-time to part-time
Employee status. The actual effect that such a change in Employee status will
have upon the vesting of this option will be determined by the Corporation’s
policies governing such subject that are in effect at the time.
     11. Compliance with Laws and Regulations.
     (a) The exercise of this option and the issuance of the Option Shares upon
such exercise shall be subject to compliance by the Corporation and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any Stock Exchange 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.

 

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     12. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee’s assigns and the legal representatives, heirs and legatees
of Optionee’s estate.
     13. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee’s signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
     14. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. The Plan Administrator shall have the discretionary
authority to interpret and construe any term or provision of the Plan or this
Agreement, and such interpretation shall be binding on all persons having an
interest in this option.
     15. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without
resort to that State’s conflict-of-laws rules.
     16. Mandatory Arbitration. ANY AND ALL DISPUTES OR CONTROVERSIES BETWEEN
OPTIONEE AND THE CORPORATION ARISING OUT OF, RELATING TO OR OTHERWISE CONNECTED
WITH THIS AGREEMENT OR THE OPTION EVIDENCED HEREBY OR THE VALIDITY,
CONSTRUCTION, PERFORMANCE OR TERMINATION OF THIS AGREEMENT SHALL BE SETTLED
EXCLUSIVELY BY BINDING ARBITRATION TO BE HELD IN THE COUNTY IN WHICH THE
OPTIONEE IS (OR HAS MOST RECENTLY BEEN) EMPLOYED BY THE CORPORATION (OR ANY
PARENT OR SUBSIDIARY) AT THE TIME OF SUCH ARBITRATION. THE ARBITRATION
PROCEEDINGS SHALL BE GOVERNED BY (i) THE NATIONAL RULES FOR THE RESOLUTION OF
EMPLOYMENT DISPUTES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION AND
(ii) THE FEDERAL ARBITRATION ACT. THE ARBITRATOR SHALL HAVE THE SAME, BUT NO
GREATER, REMEDIAL AUTHORITY AS WOULD A COURT HEARING THE SAME DISPUTE. THE
DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES
TO THE ARBITRATION AND SHALL BE IN LIEU OF THE RIGHTS THOSE PARTIES MAY
OTHERWISE HAVE TO A JURY TRIAL; PROVIDED, HOWEVER, THAT SUCH DECISION SHALL BE
SUBJECT TO CORRECTION, CONFIRMATION OR VACATION IN ACCORDANCE WITH THE
PROVISIONS AND STANDARDS OF APPLICABLE LAW GOVERNING THE JUDICIAL REVIEW OF
ARBITRATION AWARDS. THE PREVAILING PARTY IN SUCH ARBITRATION, AS DETERMINED BY
THE ARBITRATOR, AND IN ANY ENFORCEMENT OR OTHER COURT

 

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PROCEEDINGS, SHALL BE ENTITLED, TO THE EXTENT PERMITTED BY LAW, TO REIMBURSEMENT
FROM THE OTHER PARTY FOR ALL OF THE PREVAILING PARTY’S COSTS, EXPENSES AND
ATTORNEY’S FEES. HOWEVER, THE ARBITRATOR’S COMPENSATION AND OTHER FEES AND COSTS
UNIQUE TO ARBITRATION SHALL IN ALL EVENTS BE PAID BY THE CORPORATION. JUDGMENT
SHALL BE ENTERED ON THE ARBITRATOR’S DECISION IN ANY COURT HAVING JURISDICTION
OVER THE SUBJECT MATTER OF SUCH DISPUTE OR CONTROVERSY. NOTWITHSTANDING THE
FOREGOING, EITHER PARTY MAY IN AN APPROPRIATE MATTER APPLY TO A COURT PURSUANT
TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8, OR ANY COMPARABLE
STATUTORY PROVISION OR COMMON LAW PRINCIPLE, FOR PROVISIONAL RELIEF, INCLUDING A
TEMPORARY RESTRAINING ORDER OR A PRELIMINARY INJUNCTION. TO THE EXTENT PERMITTED
BY LAW, THE PROCEEDINGS AND RESULTS, INCLUDING THE ARBITRATOR’S DECISION, SHALL
BE KEPT CONFIDENTIAL.
     17. Excess Shares. If the Option Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall not become
exercisable with respect to those excess shares, unless shareholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
issuable under the Plan is obtained in accordance with the provisions of the
Plan.
     18. Additional Terms Applicable to an Incentive Option. In the event this
option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
     (a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares: (A) more than three (3) months after the date Optionee ceases to
be an Employee for any reason other than death or Total and Permanent Disability
or (B) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Total and Permanent Disability. For such purpose Total and
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 expected to result in death or to continue for a consecutive
period of twelve (12) months or more.
     (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

 

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Subsidiary) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred
Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this
option shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
     (c) Should the exercisability of this option be accelerated upon a Change
in Control, then this option shall qualify for favorable tax treatment as an
Incentive Option only to the extent the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which this option first becomes
exercisable in the calendar year in which the Change in Control occurs does not,
when added to the aggregate value (determined as of the respective date or dates
of grant) of the Common Stock or other securities for which this option or one
or more other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar year,
exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should the
applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in the
calendar year of such Change in Control, the option may nevertheless be
exercised for the excess shares in such calendar year as a Non-Statutory Option.
     (d) Should Optionee hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first time in
the same calendar year as this option, then for purposes of the foregoing
limitations on the exercisability of such options as Incentive Options, this
option and each of those other options shall be deemed to become first
exercisable in that calendar year on the basis of the chronological order in
which they were granted, except to the extent otherwise provided under
applicable law or regulation.

 

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APPENDIX
     The following definitions shall be in effect under the Agreement:
     A. Accelerated Shares shall mean the number of Option Shares determined by
multiplying the number of Option Shares (if any) which are unvested immediately
prior to the Optionee’s cessation of Service by reason of death or Permanent
Disability by a fraction, (i) the numerator of which shall be the number of
months (rounded to the nearest whole month) that Optionee has remained in
Employee status with the Corporation (or any Parent, Subsidiary or company
acquired by the Corporation), up to a maximum of 48 months, and (ii) the
denominator of which shall be 48.
     B. Agreement shall mean this Stock Option Agreement.
     C. Board shall mean the Corporation’s Board of Directors.
     D. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
     (i) a shareholder-approved merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or
     (ii) a shareholder-approved sale, transfer or other disposition of all or
substantially all of the Corporation’s assets in complete liquidation or
dissolution of the Corporation, or
     (iii) the acquisition, directly or indirectly by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation’s
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation’s shareholders.
     E. Code shall mean the Internal Revenue Code of 1986, as amended.
     F. Common Stock shall mean the Corporation’s Class A Common Stock.
     G. 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.

 

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     H. 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.
     I. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
     J. Exercise Price shall mean the exercise price per Option Share as
specified in the Grant Notice.
     K. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
     L. 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 Global Select
MarketSM, 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 Global Select 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 other 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.
     M. Grant Date shall mean the date of grant of the option as specified in
the Grant Notice.
     N. 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.
     O. Incentive Option shall mean an option that satisfies the requirements of
Code Section 422.

 

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     P. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee 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 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.
     Q. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
     R. Notice of Exercise shall mean the notice of exercise in form and
substance as prescribed by the Corporation.
     S. Option Shares shall mean the number of shares of Common Stock subject to
the option as specified in the Grant Notice.
     T. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
     U. 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.
     V. 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 both (i) expected to result in death or
determined to be total and permanent by two (2) physicians selected by the
Corporation or its insurers and acceptable to Optionee or Optionee’s legal
representative, and (ii) entitles Optionee to the payment of long-term
disability benefits from the Corporation’s long-term disability plan. The
process for determining Optionee’s Permanent Disability in accordance with the
foregoing shall be completed no later than the later of (i) the close of the
calendar year in which Optionee’s Service terminates by reason of the physical
or mental impairment triggering the determination process or (ii) the fifteenth
day of the third calendar month following such termination of Service.
     W. Plan shall mean the Corporation’s 1998 Stock Incentive Plan.
     X. Plan Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.

 

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     Y. Section 16 Insider shall mean an officer or director of the Corporation
subject to the short-swing profit liabilities of Section 16 of the Securities
Exchange Act of 1934, as amended.
     Z. 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. 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.
     AA. Stock Exchange shall mean the American Stock Exchange, the NASDAQ
Global Select Market, the NASDAQ Global Market or the New York Stock Exchange.
     BB. 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.