Exhibit 10.1
Confidential Treatment Requested by Broadcom Corporation — #1     
Reference Number: [      ]                                Account Number:
[     ]

     
Morgan Stanley
  MORGAN STANLEY & CO. INCORPORATED
 
  1585 BROADWAY
 
  NEW YORK, NY 10036-8293
 
  (212) 761-4000

February 1, 2011
Fixed Dollar Collared Accelerated Share Repurchase Transaction
Broadcom Corporation
5300 California Avenue
Irvine, CA 92617-3038
Dear Sir/Madam:
The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the Transaction entered into between Morgan Stanley &
Co. Incorporated (“MSCO”) and Broadcom Corporation (the “Issuer”) on the Trade
Date specified below (the “Transaction”). This confirmation constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”)) (the “Equity Definitions”) are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation will govern. Any reference
to a currency shall have the meaning contained in Annex A to the 1998 ISDA FX
and Currency Option Definitions, as published by ISDA.
1. This Confirmation evidences a complete and binding agreement between MSCO and
Issuer as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall be subject to an agreement (the “Agreement”) in the form
of the 2002 ISDA Master Agreement (the “ISDA Form”) as if MSCO and Issuer had
executed an agreement in such form without any Schedule. For the avoidance of
doubt, the Transaction shall be the only transaction under the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:

     
GENERAL TERMS:
   
 
   
Trade Date:
  As specified in Schedule I
 
   
Buyer:
  Issuer
 
   
Seller:
  MSCO
 
   
Shares:
  Common Stock of Issuer (Ticker: “BRCM”)
 
   
Number of Shares:
  The number of Shares delivered in accordance with Physical Settlement below.
 
   
Tranches:
  The Transaction will be divided into multiple Tranches, each

 

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Confidential Treatment Requested by Broadcom Corporation — #2

     
 
  with the terms set forth in this Confirmation, and in particular with the
Prepayment Amount, Observation Dates, the Scheduled Valuation Date and the
Lock-Out Date set forth in Schedule I. The payments and deliveries to be made
upon settlement of the Transaction will be determined separately for each
Tranche as if each Tranche were a separate Transaction under the Agreement.
 
   
Forward Price:
  A price per Share (as determined by the Calculation Agent) equal to (i) Mean
of 10b-18 VWAPs minus (ii) the Discount Percentage (as specified in Schedule I)
multiplied by the Mean of 10b-18 VWAPs; provided, however, that if the Forward
Price would otherwise be: (A) greater than the Forward Cap Price, the Forward
Price shall equal the Forward Cap Price (as specified in Schedule I), or
(B) less than the Forward Floor Price, the Forward Price shall equal the Forward
Floor Price (as specified in Schedule I)
 
   
10b-18 VWAP:
  For each Observation Date that is a Trading Day during the Calculation Period
or the Initial Hedge Period, a price per share (as determined by the Calculation
Agent) equal to the volume-weighted average price of the Rule 10b-18 eligible
trades in the Shares for the entirety of such Trading Day as determined by
reference to the screen entitled “BRCM.UQ <Equity> AQR SEC” or any successor
page as reported by Bloomberg L.P. (without regard to pre-open or after hours
trading outside of any regular trading session for such Trading Day or block
trades (as defined in Rule 10b-18(b)(5) of the Securities Exchange Act of 1934
as amended (the “Exchange Act”)) on such Trading Day).
 
   
Mean of 10b-18 VWAPs:
  The arithmetic mean of the 10b-18 VWAP on each Observation Date that is a
Trading Day during the Calculation Period.
 
   
Observation Dates:
  As specified in Schedule I.
 
   
Calculation Period:
  The period from and including the first Observation Date that is a Trading Day
that occurs after the Initial Hedge Completion Date to but excluding the
relevant Valuation Date; provided, however, that if the Valuation Date is the
Scheduled Valuation Date, then the Valuation Date shall be included in the
Calculation Period.
 
   
Trading Day:
  Any Exchange Business Day that is not a Disrupted Day.
 
   
Initial Shares:
  As specified in Schedule I
 
   
Initial Share Delivery Date:
  The First Exchange Business Day following the Trade Date. On the Initial Share
Delivery Date, Seller shall deliver a number of Shares equal to the Initial
Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with

 

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Confidential Treatment Requested by Broadcom Corporation — #3

     
 
  the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes
of such Section 9.4.
 
   
Initial Hedge Period:
  The period from and including the first Observation Date that is a Trading Day
that occurs after the Trade Date (the “Initial Hedge Start Date”) to and
including the Initial Hedge Completion Date
 
   
Initial Hedge Completion Date:
  The Observation Date on which MSCO completes its initial hedge, as determined
by MSCO in its good faith and commercially reasonable discretion, but in no
event shall the Initial Hedge Completion Date occur later than the [*] Trading
Day after the Initial Hedge Start Date.
 
   
 
  On or prior to the Exchange Business Day following the Initial Hedge
Completion Date for any Tranche, MSCO shall provide Issuer with written notice
specifying the first day of the Calculation Period and the Initial Hedge Period
Reference Price, the Forward Cap Price and the Forward Floor Price (with such
prices expressed in USD) for such Tranche.
 
   
Initial Hedge Period Reference Price:
  An amount in USD equal to the arithmetic mean (not a weighted average) of the
10b-18 VWAP on each Observation Date that is a Trading Day from, and including,
the first Observation Date that is a Trading Day immediately following the Trade
Date to, and including, the Initial Hedge Completion Date.
 
   
Additional Shares:
  A number of Shares equal to (i) the Prepayment Amount (as defined below)
divided by the Forward Cap Price (as specified in Schedule I) minus (ii) the
Initial Shares delivered to Issuer by MSCO.
 
   
Additional Share Delivery Date:
  One Exchange Business Day following the Initial Hedge Completion Date. On the
Additional Share Delivery Date, Seller shall deliver a number of shares equal to
the Additional Shares to Buyer in accordance with Section 9.4 of the Equity
Definitions, with the Additional Share Delivery Date deemed to be a “Settlement
Date” for purposes of such Section 9.4.
 
   
Prepayment:
  Applicable
 
   
Prepayment Amount:
  As specified in Schedule I
 
   
Commission Amount:
  As specified in Schedule I
 
   
Adjustment Amount:
  As specified in Schedule I
 
   
Structuring Fee:
  As specified in Schedule I
 
   
Prepayment Date:
  The First Exchange Business Day following the Trade Date. On the Prepayment
Date, Buyer shall pay to Seller the Prepayment Amount, the Commission Amount,
the

 

*   This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

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Confidential Treatment Requested by Broadcom Corporation — #4

     
 
  Adjustment Amount and the Structuring Fee.
 
   
Exchange:
  NASDAQ GS
 
   
Related Exchange:
  The primary exchange on which options or futures on the relevant Shares are
traded.
 
   
Market Disruption Event:
  The definition of “Market Disruption Event” in Section 6.3(a) of the Equity
Definitions is hereby amended by replacing the words “at any time during the
one-hour period that ends at the relevant Valuation Time” in the third line
thereof with the words “at any time on any Observation Date during the
Calculation Period or Initial Hedge Period or” after the word “material”.
 
   
 
  Notwithstanding anything to the contrary in the Equity Definitions, if any
Observation Date in the Calculation Period or the Initial Hedge Period is a
Disrupted Day, the Calculation Agent shall have the option in its good faith and
commercially reasonable discretion either (i) to determine the weighting of each
Rule 10b-18 eligible transaction in the Shares on the relevant Disrupted Day
using its commercially reasonable judgment for purposes of calculating the
Forward Price, as applicable, (ii) to elect to extend the Calculation Period or
the Initial Hedge Period by a number of Observation Dates equal to the number of
Disrupted Days during the Calculation Period or the Initial Hedge Period or
(iii) to suspend the Calculation Period or the Initial Hedge Period, as
appropriate, until the circumstances giving rise to such suspension have ceased,
in either case, by delivering notice in writing to Issuer of (x) the
circumstances giving rise to such Disrupted Day and (y) any such weighting,
extension or suspension as soon as reasonably practicable after the occurrence
of such Disrupted Day and, with respect to a Disrupted Day arising with respect
to any Requirements (as defined in Section 10), shall subsequently notify Issuer
on the day Seller believes that the circumstances giving rise to such Disrupted
Day have changed. For the avoidance of doubt, (I) if Calculation Agent elects
the option described in clause (i) above, then such Disrupted Day shall be
deemed to be a Trading Day for purposes of calculating the Forward Price or the
Initial Hedge Period Reference Price, as the case may be and (II) any
adjustments made by Calculation Agent as a result of any Disrupted Day shall be
Fair Value Adjustments (as defined below).
 
   
VALUATION:
   
 
   
Valuation Time:
  The Scheduled Closing Time on the relevant Exchange
 
   
Valuation Date:
  The earlier of (i) the Scheduled Valuation Date (as specified in Schedule I)
and (ii) any date after the Lock-Out Date (as specified in Schedule I) specified
by MSCO to Issuer by 9:00pm EST on such date as a Valuation Date, in each case,

 

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Confidential Treatment Requested by Broadcom Corporation — #5

     
 
  subject to extension in accordance with “Market Disruption Event” above or
Section 9 or Section 10 below; provided, however, that if a Valuation Date
occurs pursuant to clause (ii) above, then (A) the Calculation Period for this
Transaction (or portion thereof) shall be deemed to end as of the Trading Day
immediately preceding the relevant Valuation Date and (B) MSCO shall have the
right to specify a Valuation Date with respect to any portion of this
Transaction as it selects (any such Valuation Date on a portion of this
Transaction for less than the full Prepayment Amount, a “Partial Acceleration
Date”); provided, however, that MSCO can only elect to declare a Partial
Acceleration Date if the portion of the transaction subject to the Partial
Acceleration Date is in an increment of USD25,000,000.
 
   
 
  In the case of a Partial Acceleration Date, MSCO shall specify in its notice
to Issuer designating a Valuation Date in connection with a Partial Acceleration
Date the percentage of the Prepayment Amount that is subject to such Valuation
Date and Calculation Agent shall adjust all terms of this Transaction as it
deems reasonable in a good faith and commercially reasonable manner in order to
take into account the occurrence of any Partial Acceleration Date (including
cumulative adjustments to take into account all Partial Acceleration Dates that
occur during the term of this Transaction).
 
   
 
  On each Valuation Date, Calculation Agent shall calculate the Settlement
Amount.
 
   
SETTLEMENT TERMS:
   
 
   
Physical Settlement:
  Applicable.
 
   
 
  On the relevant Settlement Date, Seller shall deliver to Buyer a number of
Shares equal to (a) (i) the Prepayment Amount divided by (ii) the Forward Price
as determined on the relevant Valuation Date, minus (b) the Initial Shares minus
(c) the Additional Shares, rounded to the nearest whole number of Shares (such
number of Shares, the “Settlement Amount”).
 
   
Settlement Currency:
  USD
 
   
Settlement Date:
  Three Exchange Business Days after the relevant Valuation Date, or if such
date is not a Clearance System Business Day or if there is a Settlement
Disruption Event on such day, the immediately succeeding Clearance System
Business Day on which there is no Settlement Disruption Event.
 
   
SHARE ADJUSTMENTS:
   
 
   
Potential Adjustment Event:
  Notwithstanding anything to the contrary in Section 11.2(e) of the Equity
Definitions, each of (i) an Extraordinary Dividend,

 

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Confidential Treatment Requested by Broadcom Corporation — #6

     
 
  (ii) any issuance of Shares in connection with a Compensatory Plan (as defined
in Section 11(a)), or (iii) any repurchases of Shares hereunder or under any
other plan or transaction of Issuer shall not constitute a Potential Adjustment
Event.
 
   
Extraordinary Dividend:
  Any dividend or distribution on the Shares with an ex-dividend date occurring
during the period from and including the Trade Date to and including the
Valuation Date (other than any dividend or distribution of the type described in
Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions)
(a “Dividend”) that is either (i) a non-regularly scheduled Dividend or (ii) the
amount or value of which (as determined by the Calculation Agent) exceeds the
Ordinary Dividend Amount.
 
   
Ordinary Dividend Amount:
  For any calendar quarter, USD 0.09
 
   
Agreement Regarding Dividends:
  Notwithstanding any other provision of this Confirmation, the Definitions, or
the Agreement to the contrary, in calculating any adjustment pursuant to
Article 11 of the Equity Definitions or any amount payable in respect of any
termination or cancellation of the Transaction pursuant to Article 12 of the
Equity Definitions or Section 6 of the Agreement, the Calculation Agent shall
not take into account changes to any dividends since the Trade Date. For the
avoidance of doubt, if an Early Termination Date occurs in respect of the
Transaction, the amount payable pursuant to Section 6 of the Agreement in
respect of such Early Termination Date shall be determined without regard to the
difference between actual dividends declared (including Extraordinary Dividends)
and expected dividends as of the Trade Date.
 
   
Method of Adjustment:
  Calculation Agent Adjustment; provided that if Seller suspends trading in the
Shares for all or any portion of a Trading Day within the Calculation Period,
the suspension shall be treated as a Potential Adjustment Event subject to
Calculation Agent Adjustment. In the case of a suspension arising as a result of
any Requirements (as defined in Section 10), the Calculation Agent shall make
such adjustments prior to the period of suspension, if it is practical to do so.
Otherwise, and in all cases of a suspension as contemplated under “Market
Disruption Event” above, the Calculation Agent shall make such adjustments
promptly following the period of suspension.
 
   
 
  With respect to any Potential Adjustment Event, all adjustments made by the
Calculation Agent pursuant to “Calculation Agent Adjustment” shall be Fair Value
Adjustments. “Fair Value Adjustments” means, in respect of any event,
adjustments to any relevant terms of the Transaction as necessary to preserve as
nearly as practicable the fair value of such Transaction to MSCO prior to such

 

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Confidential Treatment Requested by Broadcom Corporation — #7

     
 
  event, where the Calculation Agent, in making Fair Value Adjustments, shall
take into account any increase or decrease in such fair value to MSCO as a
result of the relevant event, based on stock price volatility, interest rates,
strike price, stock loan rate, liquidity and VWAP averaging dates.
 
   
EXTRAORDINARY EVENTS:
   
 
   
Consequences of Merger Events:
   
 
   
Share-for-Share:
  Modified Calculation Agent Adjustment
 
   
Share-for-Other:
  Cancellation and Payment on that portion of the Other Consideration that
consists of cash; Modified Calculation Agent Adjustment on the remainder of the
Other Consideration
 
   
Share-for-Combined:
  Modified Calculation Agent Adjustment
 
   
Tender Offer:
  Applicable
 
   
CONSEQUENCES OF TENDER OFFERS:
   
 
   
Share-for-Share:
  Modified Calculation Agent Adjustment
 
   
Share-for-Other:
  Modified Calculation Agent Adjustment
 
   
Share-for-Combined:
  Modified Calculation Agent Adjustment
 
    For purposes of this Transaction, the definition of Merger Date in
Section 12.1(c) shall be amended to read, “Merger Date shall mean the
Announcement Date.” For purposes of this Transaction, the definition of Tender
Offer Date in Section 12.1(e) shall be amended to read, “Tender Offer Date shall
mean the Announcement Date.”
 
   
Composition of Combined Consideration:
  Applicable
 
   
Nationalization, Insolvency or Delisting:
  Cancellation and Payment (Calculation Agent Determination)
 
    With respect to any consequences of an Extraordinary Event to which Modified
Calculation Agent Adjustment applies, any adjustments made by the Calculation
Agent pursuant to “Modified Calculation Agent Adjustment” shall be Fair Value
Adjustments.
 
   
Additional Disruption Events:
   
 
   
Change in Law:
  Applicable; provided that the parties agree that, for the avoidance of doubt,
for purposes of Section 12.9(a)(ii) of the Equity Definitions, “any applicable
law or regulation” shall include the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, any rules and regulations promulgated thereunder and any
similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 or any similar legal certainty
provision in any legislation enacted, or rule or

 

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Confidential Treatment Requested by Broadcom Corporation — #8

     
 
  regulation promulgated and the consequences specified in Section 12.9(b)(i) of
the Equity Definitions shall apply to any Change in Law arising from any such
act, rule or regulation”.
 
   
Failure to Deliver:
  Applicable
 
   
Insolvency Filing:
  Applicable
 
   
Hedging Disruption:
  Applicable
 
   
Increased Cost of Hedging:
  Not Applicable
 
   
Loss of Stock Borrow:
Maximum Stock Loan Rate:
  Applicable
[*]bps
 
   
Increased Cost of Stock Borrow:
  Applicable
Initial Stock Loan Rate:
  25bps
 
   
Determining Party:
  For all Extraordinary Events, MSCO; provided that, upon receipt of written
request from Issuer, Determining Party shall promptly (but in no event later
than within seven Scheduled Trading Days from the receipt of such request)
provide Issuer with a written explanation describing in reasonable detail any
determination made by it (including any quotations, market data or information
from internal sources used in making such determinations, but without disclosing
MSCO’s proprietary models).
 
   
Hedging Party:
  For all Additional Disruption Events, MSCO
 
   
Non-Reliance:
  Applicable
 
   
AGREEMENTS AND ACKNOWLEDGMENTS:
   
 
   
Regarding Hedging Activities:
  Applicable
 
   
Additional Acknowledgments:
  Applicable
 
   
3. Calculation Agent:
  MSCO; provided that, upon receipt of written request from Issuer, Calculation
Agent shall promptly (but in no event later than within seven Scheduled Trading
Days from the receipt of such request) provide Issuer with a written explanation
describing in reasonable detail any calculation, adjustment or determination
made by it (including any quotations, market data or information from internal
sources used in making such calculations, adjustments or determinations, but
without disclosing MSCO’s proprietary models).
 
   
4. Account Details:
  To be provided.

5. (a) Nationalization, Insolvency or Delisting. The words “the Transaction will
be cancelled,” in the first line of Section 12.6(c)(ii) are replaced with the
words “MSCO will have the right to cancel this Transaction,”.
 

*   This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

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Confidential Treatment Requested by Broadcom Corporation — #9
     (b) Additional Termination Event. The declaration of any Extraordinary
Dividend by Issuer during the period from and including the Trade Date to but
excluding the final Valuation Date shall constitute an Additional Termination
Event with this Transaction as the only “Affected Transaction” and Issuer as the
sole “Affected Party”.
     (c) For the avoidance of doubt, this Transaction shall be deemed to be a
“Share Forward Transaction” for purposes of the Equity Definitions; provided,
however, that in Section 9.2(a)(iii) of the Equity Definitions the words “the
Excess Dividend Amount, if any, and” shall be deleted.
     (d) The proviso appearing in parentheses beginning on the fifth row from
the end of Section 11.2(c) is removed.
6. Certain Payments and Deliveries by MSCO. Notwithstanding anything to the
contrary herein, or in the Equity Definitions, if at any time (i) an Early
Termination Date occurs and MSCO would be required to make a payment pursuant to
Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer occurs and MSCO
would be required to make a payment pursuant to Sections 12.3 and 12.7 of the
Equity Definitions, (iii) a Merger Event occurs and MSCO would be required to
make a payment pursuant to Sections 12.2 and 12.7 of the Equity Definitions
(iv) an Additional Disruption Event occurs and MSCO would be required to make a
payment pursuant to Sections 12.8 and 12.9 of the Equity Definitions or (v) a
Nationalization, Insolvency or Delisting occurs and MSCO would be required to
make a payment pursuant to Sections 12.6 and 12.7 of the Equity Definitions,
then Issuer shall have the option to require MSCO to make such payment in cash
or to settle such payment amount in Shares (or, in the case of a Merger Event, a
number of units, each comprising the number or amount of the securities or
property that a hypothetical holder of one Share would receive in such Merger
Event (each such unit, an “Alternative Delivery Unit” and, the securities or
property comprising such unit, “Alternative Delivery Property”)) (any such
payment described in Sections 6(i), (ii), (iii), (iv) or (v) above, an “MSCO
Payment Amount”). If Issuer elects for MSCO to settle an MSCO Payment Amount in
Shares or Alternative Delivery Property, then on the date such MSCO Payment
Amount is due, a Settlement Balance shall be established with an initial balance
equal to the MSCO Payment Amount. On such date, MSCO shall commence purchasing
Shares or Alternative Delivery Property for delivery to Issuer. At the end of
each Trading Day on which MSCO purchases Shares or Alternative Delivery Property
pursuant to this Section 6, MSCO shall reduce the Settlement Balance by the
amount, determined in a good faith and commercially reasonable manner, paid by
MSCO to purchase the Shares or Alternative Delivery Property purchased on such
Trading Day. MSCO shall deliver any Shares or Alternative Delivery Property
purchased on a Trading Day to Issuer on the third Exchange Business Day
following the relevant Trading Day. MSCO shall continue purchasing Shares or
Alternative Delivery Property until the Settlement Balance has been reduced to
zero.
7. Certain Payments and Deliveries by Issuer. (a) Notwithstanding anything to
the contrary herein, or in the Equity Definitions, if at any time (i) an Early
Termination Date occurs and Issuer would be required to make a payment pursuant
to Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer occurs and
Issuer would be required to make a payment pursuant to Sections 12.3 and 12.7 of
the Equity Definitions, (iii) a Merger Event occurs and Issuer would be required
to make a payment pursuant to Sections 12.2 and 12.7 of the Equity Definitions,
(iv) an Additional Disruption Event occurs and Issuer would be required to make
a payment pursuant to Sections 12.8 and 12.9 of the Equity Definitions or (v) a
Nationalization, Insolvency or Delisting occurs and Issuer would be required to
make a payment pursuant to Sections 12.6 and 12.7 of the Equity Definitions (any
such payment described in Sections 7(i), (ii), (iii), (iv) or (v) above, an
“Early Settlement Payment”), then Issuer shall have the option, in lieu of
making such cash payment, to settle its payment obligations under Sections 7(i),
(ii), (iii), (iv) or (v) above in Shares or Alternative Delivery Property (such
Shares or Alternative Delivery Property, the “Early Settlement Shares”). In
order to elect to deliver Early Settlement Shares, (i) Issuer must notify MSCO
of its election by no later than 4 p.m. EST on the date that is three Exchange
Business Days before the date that the Early Settlement Payment is due,
(ii) must specify whether such Early Settlement Shares are to be sold by means
of a registered offering or by means of a private placement and (iii) the
conditions described in Section 8 below must be satisfied on each day Early
Settlement Shares are to be sold by Seller in connection with Buyer’s election
to deliver Early Settlement Shares in connection with the settlement of an Early
Settlement Payment.

 

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Confidential Treatment Requested by Broadcom Corporation — #10
     (b) For the avoidance of doubt, nothing in this Confirmation shall be
interpreted as requiring Issuer to deliver cash in respect of the settlement of
the Transaction contemplated by this Confirmation following payment by Issuer of
the relevant Prepayment Amount, except in circumstances where the required cash
settlement thereof is permitted for classification of the contract as equity by
ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity as in
effect on the Trade Date (including, without limitation, where Issuer so elects
to deliver cash or fails timely to elect to deliver Shares or Early Settlement
Shares in respect of the settlement of the Transaction).
8. Conditions to Delivery of Early Settlement Shares.
Issuer may only deliver Early Settlement Shares and Make-Whole Shares (as
defined below) subject to satisfaction of the following conditions:
     (a) If Issuer timely elects to deliver Early Settlement Shares and
Make-Whole Shares by means of a registered offering, the following provisions
shall apply:
     (i) On the later of (A) the Trading Day following the Issuer’s election to
deliver Early Settlement Shares and any Make-Whole Shares by means of a
registered offering (the “Registration Notice Date”), and (B) the date on which
the Registration Statement is declared effective by the SEC or becomes effective
(the “Registered Share Delivery Date”), the Issuer shall deliver to MSCO a
number of Early Settlement Shares equal to the quotient of (I) the relevant
Early Settlement Payment divided by (II) the market value per Share on the date
of such delivery as reasonably determined by the Calculation Agent.
     (ii) Promptly following the Registration Notice Date, the Issuer shall file
with the SEC a registration statement (“Registration Statement”) covering the
public resale by MSCO of the Early Settlement Shares and any Make-Whole Shares
(collectively, the “Registered Securities”) on a continuous or delayed basis
pursuant to Rule 415 (or any similar or successor rule), if available, under the
Securities Act; provided that no such filing shall be required pursuant to this
paragraph (ii) if the Issuer shall have filed a similar registration statement
with unused capacity at least equal to the relevant Early Settlement Payment and
such registration statement has become effective or been declared effective by
the SEC on or prior to the Registration Notice Date and no stop order is in
effect with respect to such registration statement as of the Registration Notice
Date. The Issuer shall use its commercially reasonable efforts to file an
automatic shelf registration statement or have the Registration Statement
declared effective by the SEC as promptly as possible.
     (iii) Promptly following the Registration Notice Date, the Issuer shall
afford MSCO a reasonable opportunity to conduct a due diligence investigation
with respect to the Issuer customary in scope for underwritten offerings of
equity securities of similar size by similar issuers (including, without
limitation, the availability of senior management to respond to questions
regarding the business and financial condition of the Issuer and the right to
have made available to MSCO for inspection all financial and other records,
pertinent corporate documents and other information reasonably requested by
MSCO), and MSCO shall be satisfied in all material respects with the results of
such due diligence investigation of the Issuer. For the avoidance of doubt, the
Issuer shall not have the right to deliver Shares pursuant to this Section 8(a)
(and the conditions to delivery of Early Settlement Shares specified in this
Section 8(a) shall not be satisfied) until MSCO is satisfied in all material
respects with the results of such due diligence investigation of the Issuer.
     (iv) From the effectiveness of the Registration Statement until all
Registered Securities have been sold by MSCO, the Issuer shall, at the request
of MSCO, make available to MSCO a printed prospectus relating to the Registered
Securities in form and substance (including, without limitation, any sections
describing the plan of distribution) reasonably satisfactory to MSCO (a
“Prospectus”,

 

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Confidential Treatment Requested by Broadcom Corporation — #11
which term shall include any prospectus supplement thereto), in such quantities
as MSCO shall reasonably request.
     (v) The Issuer shall use its commercially reasonable best efforts to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Prospectus and, if any such order is issued, to obtain the lifting thereof as
soon thereafter as is possible. If the Registration Statement, the Prospectus or
any document incorporated therein by reference contains a misstatement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make any statement therein not misleading, the Issuer shall as
promptly as practicable file any required document and prepare and furnish to
MSCO a reasonable number of copies of such supplement or amendment thereto as
may be necessary so that the Prospectus, as thereafter delivered to the
purchasers of the Registered Securities will not contain a misstatement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make any statement therein not misleading.
     (vi) On or prior to the Registered Share Delivery Date, the Issuer shall
enter into an agreement (a “Transfer Agreement”) with MSCO (or any affiliate of
MSCO designated by MSCO) in connection with the public resale of the Registered
Securities, substantially similar to underwriting agreements customary for
underwritten offerings of equity securities of similar size by similar issuers,
in form and substance satisfactory to MSCO (or such affiliate), which Transfer
Agreement shall (without limitation of the foregoing):
     (A) contain provisions substantially similar to those contained in such
underwriting agreements relating to the indemnification of, and contribution in
connection with the liability of, MSCO and its affiliates,
     (B) provide for delivery to MSCO (or such affiliate) of customary opinions
(including, without limitation, accounting comfort letters, opinions relating to
the due authorization, valid issuance and fully paid and non-assessable nature
of the Registered Securities and the lack of material misstatements and
omissions in the Registration Statement, the Prospectus and the Issuer’s filings
under the Exchange Act of 1934, as amended and modified (the “Exchange Act”));
and
     (C) provide for the payment by the Issuer of all fees and expenses in
connection with such resale, including all registration costs and all fees and
expenses of counsel for MSCO (or such affiliate), but such Transfer Agreement
shall not provide for any underwriter discount or commission.
     (vii) On the Registered Share Delivery Date, a balance (the “Settlement
Balance”) shall be established with an initial balance equal to the applicable
amount of the relevant Early Settlement Payment. Following the delivery of Early
Settlement Shares or any Make-Whole Shares, Seller shall sell all such Early
Settlement Shares or Make-Whole Shares in a good faith and commercially
reasonable manner.
     (viii) At the end of each day upon which sales have been made, the
Settlement Balance shall be (A) reduced by an amount equal to the aggregate
proceeds received by MSCO upon settlement of the sale of such Share, and
(B) increased by an amount (as reasonably determined by the Calculation Agent)
equal to MSCO’s commercially reasonable funding cost with respect to the
then-current Settlement Balance as of the close of business on such day.
     (ix) If, on any date, the Settlement Balance has been reduced to zero but
not all of the Early Settlement Shares have been sold, no additional Early
Settlement Shares shall be sold and MSCO shall promptly deliver to the Issuer
(A) any remaining Early Settlement Shares and (B) if the Settlement

 

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Confidential Treatment Requested by Broadcom Corporation — #12
Balance has been reduced to an amount less than zero, an amount in cash equal to
the absolute value of the then-current Settlement Balance.
     (x) If, on any date, all of the Early Settlement Shares have been sold and
the Settlement Balance has not been reduced to zero, the Issuer shall promptly
deliver to MSCO an additional number of Shares (“Make-Whole Shares”) equal to
(A) the Settlement Balance as of such date divided by (B) the market value per
Share on the date of such delivery as reasonably determined by the Calculation
Agent. This clause (x) shall be applied successively until the Settlement
Balance is reduced to zero.
     (xi) If at any time the number of Shares covered by the Registration
Statement is less than the number of Registered Securities required to be
delivered pursuant to this Section 8(a), the Issuer shall, at the request of
MSCO, file additional registration statement(s) to register the sale of all
Registered Securities required to be delivered to MSCO.
     (xii) The Issuer shall cooperate with MSCO and use all commercially
reasonable efforts to take any other action necessary to effect the intent of
the provisions set forth in this Section 8(a).
     (b) If Issuer timely elects to deliver Early Settlement Shares and
Make-Whole Shares by means of a private placement, the following provisions
shall apply:
          (i) all Early Settlement Shares and Make-Whole Shares shall be
delivered to the Seller (or any affiliate of the Seller designated by the
Seller) pursuant to the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereof;
          (ii) Seller and any potential purchaser of any such Shares from the
Seller (or any affiliate of the Seller designated by the Seller) identified by
Seller shall have been afforded a commercially reasonable opportunity to conduct
a due diligence investigation with respect to Issuer customary in scope for
private placements of equity securities of similar size by similar issuers
(including, without limitation, the right to have made available to them for
inspection all financial and other records, pertinent corporate documents and
other information reasonably requested by them) and Buyer shall not disclose
material non-public information in connection with such due diligence
investigation; and
          (iii) an agreement (a “Private Placement Agreement”) shall have been
entered into between Issuer and the Seller (or any affiliate of the Seller
designated by the Seller) in connection with the private placement of such
Shares by Issuer to the Seller (or any such affiliate) and the private resale of
such Shares by the Seller (or any such affiliate), substantially similar to
private placement purchase agreements customary for private placements of equity
securities of similar size by similar issuers, in form and substance
commercially reasonably satisfactory to the Seller and the Issuer, which Private
Placement Agreement shall include, without limitation, provisions substantially
similar to those contained in such private placement purchase agreements
relating to the indemnification of, and contribution in connection with the
liability of, the Seller and its affiliates, and shall provide for the payment
by Issuer of all fees and expenses in connection with such resale, including all
reasonable fees and expenses of one counsel for the Seller but not including any
underwriter or broker discounts and commissions, and shall contain
representations, warranties and agreements of Issuer and Seller reasonably
necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for such
resales.
          (iv) If Issuer elects to deliver Early Settlement Shares to satisfy
its payment obligation of an Early Settlement Payment, neither Issuer nor Seller
shall take or cause to be taken any action that would make unavailable either
(i) the exemption set forth in Section 4(2) of the Securities Act for the sale
of any Early Settlement Shares or Make-Whole Shares by Issuer to the Seller or
(ii) an exemption from the registration requirements of the Securities Act
reasonably acceptable to the Seller for resales of Early Settlement Shares and
Make-Whole Shares by the Seller.

 

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Confidential Treatment Requested by Broadcom Corporation — #13
          (v) On the date requested by MSCO, (A) Issuer shall deliver a number
of Early Settlement Shares equal to the quotient of (I) the relevant Early
Settlement Payment divided by (II) a per share value, determined by MSCO in a
commercially reasonable manner and which may be based on indicative bids from
institutional “accredited investors” (as defined in Rule 501 under the
Securities Act of 1933, as amended (the “Securities Act”)) and (B) the
provisions of Sections 8(a)(vii) —(x) shall apply to the Early Settlement Shares
delivered pursuant to this Section 8(b)(v). For purposes of applying the
foregoing, the Registered Share Delivery Date referred to in 8(a)(vii) shall be
the date on which Issuer delivers the Early Settlement Shares.
          (c) The provisions of Section 8(b) shall apply to any then-current
Settlement Balance if (i) on any given day, Issuer cannot satisfy any of the
conditions of Section 8(a) or (ii) for a period of at least ten (10) consecutive
Exchange Business Days, MSCO has determined that it is inadvisable to effect
sales of Registered Securities.
          (d) If Issuer elects to deliver Early Settlement Shares to satisfy its
payment obligation of an Early Settlement Payment, then, if necessary, Issuer
shall use its commercially reasonable best efforts to cause the number of
authorized but unissued Shares of Common Stock to be increased to an amount
sufficient to permit Issuer to fulfill its obligations to satisfy its payment
obligation of an Early Settlement Payment by delivering Early Settlement Shares.
9. Special Provisions for Merger Events. Notwithstanding anything to the
contrary herein or in the Equity Definitions, to the extent that an Announcement
Date for a potential Merger Transaction occurs during the term of this
Transaction and such Announcement Date does not cause this Transaction to
terminate in whole under the provisions of “Extraordinary Event” in paragraph 2
above:
     (a) As soon as practicable following the public announcement of such
potential Merger Transaction, Issuer shall provide MSCO with written notice of
such announcement;
     (b) Promptly after request from MSCO, Issuer shall provide MSCO with
written notice specifying (i) Issuer’s average daily Rule 10b-18 Purchases (as
defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) during the three
full calendar months immediately preceding the Announcement Date that were not
effected through MSCO or its affiliates and (ii) the number of Shares purchased
pursuant to the block purchase proviso in Rule 10b-18(b)(4) under the Exchange
Act for the three full calendar months preceding the Announcement Date. Such
written notice shall be deemed to be a certification by Issuer to MSCO that such
information is true and correct. Issuer understands that MSCO will use this
information in calculating the trading volume for purposes of Rule 10b-18; and
     (c) Issuer acknowledges that any notice delivered under this Section 9 may
cause a deemed Market Disruption Event to occur pursuant to Section 10;
accordingly, Issuer acknowledges that its delivery of such notice must comply
with the standards set forth in Section 12(c).
     “Merger Transaction” means any merger, acquisition or similar transaction
involving a recapitalization of Issuer as contemplated by Rule 10b-18(a)(13)(iv)
under the Exchange Act.
10. Seller Adjustments. In the event that Seller determines in its good faith
and commercially reasonable discretion, based on advice of counsel, that it is
appropriate with regard to any legal, regulatory or self-regulatory requirements
or related policies and procedures (whether or not such requirements, policies
or procedures are imposed by law or have been voluntarily adopted by Seller, and
including, without limitation, Rule 10b-18, Rule 10b-5, Regulation 13D-G and
Regulation 14E, “Requirements”), for Seller to refrain from purchasing Shares or
to purchase fewer than the number of Shares Seller would otherwise purchase on
any Trading Day during the duration of this Transaction, then Seller may elect
to deem that a Market Disruption Event has occurred and will be continuing on
such Trading Day, which shall be a Disrupted Day for purposes of “Market
Disruption Event” above; provided that if any such deemed Market Disruption
Event results in the

 

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Confidential Treatment Requested by Broadcom Corporation — #14
Scheduled Valuation Date being postponed to a date that is on or after June 30,
2011 then such postponement will constitute an Additional Termination Event,
with (i) Issuer as the sole “Affected Party”, (ii) the Transaction as the sole
“Affected Transaction” and (iii) such date as the Early Termination Date.
11. Covenants.
(a) The Buyer covenants and agrees:
          (i) that during the term of this Agreement, neither it nor any
“affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) shall
directly or indirectly (which shall be deemed to include the writing or purchase
of any cash-settled derivative instrument) purchase Shares (or any security
convertible into or exchangeable for Shares) without the prior written approval
of Seller (including, without limitation, any Rule 10b-18 purchases of blocks
(as defined in Rule 10b-18 under the Exchange Act)), except through MSCO;
          (ii) that it shall report the Transaction to the extent required under
the Exchange Act and the rules and regulations thereunder;
          (iii) that as of (i) the Trade Date and (ii) the date of any election
by Issuer that Shares or Alternative Delivery Property be delivered by it or by
MSCO pursuant to Section 6 or 7, Issuer is in compliance with its reporting
obligations under the Exchange Act and its most recent Annual Report on Form
10-K;
          (iv) that it is not relying, and has not relied, upon Seller or any of
its representatives or advisors with respect to the legal, accounting, tax or
other implications of this Agreement and that it has conducted its own analyses
of the legal, accounting, tax and other implications of this Agreement, and that
Seller and its affiliates may from time to time effect transactions for their
own account or the account of customers and hold positions in securities or
options on securities of the Buyer and that Seller and its affiliates may
continue to conduct such transactions during the term of this Agreement; and
          (v) that the Shares are not, and Issuer will not cause the Shares to
be, subject to a “restricted period” (as defined in Regulation M promulgated
under the Exchange Act) at any time during the Regulation M Period (as defined
below) unless Issuer has provided written notice to MSCO of such restricted
period not later than the Scheduled Trading Day immediately preceding the first
day of such “restricted period” (such event, a “Regulation M Event”); Issuer
acknowledges that any such notice may cause a deemed Market Disruption Event to
occur pursuant to Section 10; accordingly, Issuer acknowledges that its delivery
of such notice must comply with the standards set forth in Section 12(c);
provided, however, that Issuer may only declare up to 3 Regulation M Events
during the Regulation M Period. “Regulation M Period” means, the period
commencing on the first day of the Initial Hedge Period and ending on the
earliest of (i) the Scheduled Valuation Date, (ii) the third Exchange Business
Day immediately following the last day of the Calculation Period, or such
earlier day as elected by MSCO and notified to Issuer (or, if later, the
Lock-out Date), and (iii) in the event Section 6 applies to a Transaction, and
Issuer elects to require MSCO to deliver Shares or Alternative Delivery Property
pursuant to such Section 6, the date reasonably determined by the Calculation
Agent and notified to Issuer,
          provided that this Section 11(a) shall not (i) limit the Buyer’s
ability, pursuant to its employee incentive plan or dividend reinvestment
program, to re-acquire Shares in connection with the related equity
transactions, (ii) limit Buyer’s ability to withhold shares to cover tax
liabilities associated with such equity transactions or (iii) limit Buyer’s
ability to grant stock and options to “affiliated purchasers” (as defined in
Rule 10b-18) or the ability of such affiliated purchasers to acquire such stock
or options, in connection with the Buyer’s compensation policies for directors,
officers and employees or any agreements with respect to the compensation of
directors, officers or employees of any entities that are acquisition targets of
Issuer, and in connection with any such purchase Buyer will be deemed to
represent to Seller that such purchase does not constitute a “Rule 10b-18
Purchase” (as defined in Rule 10b-18) (any such incentive or compensatory plan,
program or policy of Issuer, a “Compensatory Plan”).

 

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Confidential Treatment Requested by Broadcom Corporation — #15
(b) On each day during the term of the Transaction, on which MSCO effects any
purchases of Shares with respect to the Transaction (other than purchases in
connection with any dynamic adjustments to MSCO’s hedge position in respect of
the market risk associated with the equity options embedded in the Transaction),
it shall effect all purchases of Shares made for the purpose of covering any
short position in Shares that was established for the purposes of hedging MSCO’s
equity price risk in respect of the Transaction, in a manner that MSCO
reasonably believes, based on the representations, warranties and agreements of
Issuer set forth herein, would comply with the limitations set forth in clauses
(b)(1), (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18, as if MSCO were the
“Issuer” or an “affiliated purchaser” (as such term is defined in Rule 10b-18)
of Issuer and such rule were applicable to such purchases; provided, however,
that it is understood and agreed that Seller will not be obligated to comply
with this paragraph in connection with Seller’s ability to declare a Valuation
Date other than the Scheduled Valuation Date or if an Event of Default,
Additional Disruption Event, Extraordinary Event or Additional Termination Event
occurs.
12. Representations, Warranties and Acknowledgments.
(a) The Buyer hereby represents and warrants to Seller as of the Trade Date
that:
          (i) as of the date hereof, the Buyer is not in possession of any
material, non-public information with respect to the Buyer or any of its
securities;
          (ii) the transactions contemplated by this Confirmation have been
authorized under Buyer’s publicly announced program to repurchase Shares;
          (iii) the Buyer is not entering into this Agreement (x) to facilitate
a distribution of the Shares (or any security convertible into or exchangeable
for Shares) or (y) in connection with a future issuance of securities, in either
case, except in connection with a Compensatory Plan or other publicly disclosed
transaction;
          (iv) the Buyer is not entering into this Agreement to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress the price of the Shares (or any
security convertible into or exchangeable for Shares);
          (v) it will not be engaged in an “issuer tender offer” as such term is
defined in Rule 13e-4 under the Exchange Act nor is it aware of any third party
tender offer with respect to the Shares within the meaning of Rule 13e-1 under
the Exchange Act; and
          (vi) the Buyer is as of the date hereof, and after giving effect to
the transactions contemplated hereby will be, Solvent. As used in this
paragraph, the term “Solvent” means, with respect to a particular date, that on
such date (A) the present fair market value (or present fair saleable value) of
the assets of the Buyer is not less than the total amount required to pay the
liabilities of the Buyer on its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured, (B) the Buyer is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (C) assuming consummation of the transactions as
contemplated by this Agreement, the Buyer is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature, (D) the Buyer is
not engaged in any business or transaction, and does not propose to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which the Buyer is engaged and (E) the Buyer is not
a defendant in any civil action that could reasonably be expected to result in a
judgment that Buyer is or would become unable to satisfy.
(b) Seller and the Buyer each hereby acknowledges that any transactions by
Seller in the Shares will be undertaken by Seller, as the case may be, as
principal for its own account. All of the actions to be taken by Seller in
connection with this Agreement, shall be taken by Seller independently and
without any advance or subsequent consultation with the Buyer.

 

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Confidential Treatment Requested by Broadcom Corporation — #16
(c) 10b5-1 Plan.
          (i) Each of MSCO and Issuer is entering into this Confirmation and the
Transaction hereunder in good faith and not as part of a plan or scheme to evade
the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) or any
other antifraud or anti-manipulation provisions of the federal or applicable
state securities laws and, with respect to Issuer, that it has not entered into
or altered and will not enter into or alter any corresponding or hedging
transaction or position with respect to the Shares. Each of MSCO and Issuer
acknowledges that it is the intent of the parties that the Transaction entered
into under this Confirmation comply with the requirements of paragraphs
(c)(1)(i)(A) and (B) of Rule 10b5-1 and the Transaction entered into under this
Confirmation be interpreted to comply with the requirements of Rule 10b5-1(c).
          (ii) Issuer will not seek to control or influence MSCO’s decision to
make any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3))
under the Transaction entered into under this Confirmation, including, without
limitation, MSCO’s decision to enter into or unwind any Hedge Positions in
respect of the Transaction. Issuer represents and warrants that it has consulted
with its own advisors as to the legal aspects of its adoption and implementation
of this Confirmation under Rule 10b5-1.
          (iii) Each of MSCO and Issuer hereby acknowledges and agrees that any
amendment, modification, waiver or termination of this Confirmation must be
effected in accordance with the requirements for the amendment or termination of
a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the
foregoing, any such amendment, modification, waiver or termination shall be made
in good faith and not as part of a plan or scheme to evade the prohibitions of
Rule 10b-5, and no such amendment, modification or waiver shall be made at any
time at which Issuer is aware of any material non-public information regarding
Issuer or the Shares.
13. Acknowledgements of Buyer Regarding Hedging and Market Activity. Buyer
agrees, understands and acknowledges that:

  (a)   during the period from (and including) the Trade Date to (and including)
the Settlement Date, Seller and its affiliates may buy or sell Shares or other
securities or buy or sell options or futures contracts or enter into swaps or
other derivative securities in order to adjust its hedge position with respect
to the transactions contemplated by this Transaction;     (b)   Seller and its
affiliates also may be active in the market for the Shares other than in
connection with hedging activities in relation to the transactions contemplated
by this Transaction;     (c)   Seller shall make its own determination as to
whether, when and in what manner any hedging or market activities in the
Issuer’s securities shall be conducted and shall do so in a manner that it deems
appropriate to hedge its price and market risk with respect to 10b-18 VWAP; and
    (d)   any market activities of Seller and its affiliates with respect to the
Shares may affect the market price and volatility of the Shares, as well as the
10b-18 VWAP, each in a manner that may be adverse to Buyer.

14. In the event that Seller becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person in connection with
any matter referred to in this Agreement to the extent that such action,
proceeding or investigation results from the breach by the Buyer of any of its
representations, warranties or covenants hereunder, the Buyer will reimburse
Seller for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The Buyer also
will indemnify and hold Seller harmless against any losses, claims, damages or
liabilities to which it may become subject in connection with any matter
referred to in this Agreement to the extent any such loss, claim, damage or
liability results from the breach by the Buyer of any of its representations,
warranties or covenants hereunder, except to the extent that any such loss,
claim, damage or liability results from the gross negligence or bad faith of
Seller

 

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Confidential Treatment Requested by Broadcom Corporation — #17
in effecting the transactions which are the subject of this Agreement; provided,
however, that if it is determined by a court of competent jurisdiction in a
final judgment that Seller is not entitled to be indemnified hereunder in
connection with such matter, then Seller shall reimburse the Buyer for any
expenses paid pursuant to the first sentence of this Section 14. If for any
reason the foregoing indemnification is unavailable to Seller or insufficient to
hold it harmless, then the Buyer shall contribute to the amount paid or payable
by Seller as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the Buyer on one
hand and Seller on the other hand with respect to such loss, claim, damage, or
liability and any other relevant equitable considerations. The reimbursement,
indemnity and contribution obligations of the Buyer under this Section 14 shall
be in addition to any liability which the Buyer may otherwise have, shall extend
upon the same terms and conditions to any affiliate of Seller and the partners,
directors, officers, agents, employees and controlling persons (if any), as the
case may be, of Seller and any such affiliate and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Buyer, Seller, any such affiliate and any such person.
The Buyer also agrees that neither Seller nor any of such affiliates, partners,
directors, officers, agents, employees or controlling persons shall have any
liability to the Buyer for or in connection with any matter referred to in this
Agreement except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Buyer result from the gross negligence or bad faith of
Seller in effecting the transactions that are the subject of this Agreement. The
foregoing provisions shall survive any termination or completion of this
Agreement. For the purposes of this Section 14, the term “Seller” shall include
MSCO and its affiliates. The foregoing reimbursement, indemnity and contribution
obligations of the Buyer shall be paid promptly in cash.
15. The parties hereto agree and acknowledge that Seller is a “financial
participant” within the meaning of Section 101(22) of Title 11 of the United
States Code (the “Bankruptcy Code”). The parties hereto further agree and
acknowledge that this Transaction is either (i) a “securities contract” as such
term is defined in Section 741(7) of the Bankruptcy Code, in which case each
payment and delivery made pursuant to this Transaction is a “settlement
payment”, as such term is defined in Section 741(8) of the Bankruptcy Code, and
that Seller is entitled to the protections afforded by, among other sections,
Sections 362(b)(6), 546(e) and 555 of the Bankruptcy Code, or (ii) a “swap
agreement”, as such term is defined in Section 101(53B) of the Bankruptcy Code,
in which case each party is a “swap participant”, as such term is defined in
Section 101(53C) of the Bankruptcy Code, and that Seller is entitled to the
protections afforded by, among other sections, Sections 362(b)(17), 546(g) and
560 of the Bankruptcy Code.
16. Seller and Issuer hereby agree and acknowledge that Seller has authorized
the Issuer and each of its employees, representatives and other agents to
disclose this Transaction, including the tax treatment and tax structure thereof
and all materials relating thereto, to any and all persons, and there are no
express or implied agreements, arrangements or understandings to the contrary,
and authorizes the Issuer to use any information that the Issuer receives or has
received with respect to this Transaction in any manner.
17. Treatment in Bankruptcy; No Setoff; No Collateral.
     (a) In the event the Buyer becomes the subject of proceedings (“Bankruptcy
Proceedings”) under the U.S. Bankruptcy Code or any other applicable bankruptcy
or insolvency statute from time to time in effect, any rights or claims of
Seller hereunder in respect of this transaction shall rank for all purposes no
higher than, but on a parity with, the rights or claims of holders of Shares,
and Seller hereby agrees that its rights and claims hereunder shall be
subordinated to those of all parties with claims or rights against the Buyer
(other than common stockholders) to the extent necessary to assure such ranking.
Without limiting the generality of the foregoing, after the commencement of
Bankruptcy Proceedings, the claims of Seller hereunder shall for all purposes
have rights equivalent to the rights of a holder of a percentage of the Shares
equal to the aggregate amount of such claims (the “Claim Amount”) taken as a
percentage of the sum of (i) the Claim Amount and (ii) the aggregate fair market
value of all outstanding Shares on the record date for distributions made to the
holders of such Shares in the related Bankruptcy Proceedings. Notwithstanding
any right it might otherwise have to assert a higher priority claim in any such
Bankruptcy Proceedings, Seller shall be entitled to receive a distribution
solely to the extent and only in the form that a holder of such percentage of
the Shares would be entitled to receive in such Bankruptcy Proceedings, and,
from and after the commencement of such Bankruptcy

 

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Confidential Treatment Requested by Broadcom Corporation — #18
Proceedings, Seller expressly waives (i) any other rights or distributions to
which it might otherwise be entitled in such Bankruptcy Proceedings in respect
of its rights and claims hereunder and (ii) any rights of setoff it might
otherwise be entitled to assert in respect of such rights and claims.
     (b) Notwithstanding any provision of this Agreement or any other agreement
between the parties to the contrary, neither the obligations of the Buyer nor
the obligations of Seller hereunder are secured by any collateral, security
interest, pledge or lien.
18. Share Cap. Notwithstanding any other provision of this Agreement to the
contrary, in no event shall the Buyer be required to deliver to Seller a number
of Shares that exceeds the Share Cap (as specified in Schedule I), subject to
reduction by the number of Shares delivered hereunder by the Buyer on any prior
date.
19. Illegality. The parties agree that for the avoidance of doubt, for purposes
of Section 5(b)(i) of the Agreement, “any applicable law” shall include the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and
regulations promulgated thereunder and any similar law or regulation, without
regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date, and the consequences specified in the Agreement, including without
limitation, the consequences specified in Section 6 of the Agreement, shall
apply to any Illegality arising from any such act, rule or regulation.

20.   Account Details:

         
 
  Account for Payments to MSCO:   Citibank NY
 
       
 
      [*]
 
       
 
      Morgan Stanley
 
       
 
      [*]
 
       
 
      Broadcom Corporation
 
       
 
      [*]
 
       
 
  Account for Payments to Issuer:   To be provided by Issuer

21.   Contact Details for Purposes of Giving Notice:

         
 
  If to MSCO:   Anthony Cicia
 
      Email: Anthony.Cicia@morganstanley.com
 
      Phone: 212-761-7959
 
       
 
  If to Issuer:    

22.   Governing law: The laws of the State of New York.

      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY
WITH RESPECT TO ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
CONFIRMATION OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

*   This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

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Confidential Treatment Requested by Broadcom Corporation — #19
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us by facsimile to
the number provided on the attached facsimile cover page.
Confirmed as of the date first written above:

              BROADCOM CORPORATION   MORGAN STANLEY & CO. INCORPORATED   By: 
/s/ Eric Brandt   By:  /s/ Serkan Savasoglu   Name:  Eric Brandt     Name: 
Serkan Savasoglu   Title: EVP and CFO     Title: Managing Director

 

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Confidential Treatment Requested by Broadcom Corporation — #20
Schedule I
This Schedule I, dated February 1, 2011 may be amended and/or superseded from
time to time by mutual agreement of both parties. For the purposes of this
Transaction, the following terms shall have the following values/meanings:
Tranche #1:
1. The Trade Date shall be February 2, 2011
2. The Forward Cap Price equals [*]% of the Initial Hedge Period Reference Price
3. The Forward Floor Price equals [*]% of the Initial Hedge Period Reference
Price
4. The Discount Percentage equals [*]%
5. The Initial Shares equal 2,177,339.
6. The Prepayment Amount equals USD 150,000,000.
7. The Commission Amount equals [*]
8. The Adjustment Amount equals [*]
9. The Structuring Fee equals [*]
10. The Scheduled Valuation Date shall mean the [*]th Scheduled Trading Day
following the Initial Hedge Completion Date.
11. The Lock-Out Date shall mean the [*]th Scheduled Trading Day following the
Initial Hedge Completion Date; provided that under any circumstances where the
Calculation Period is extended, the Lock-Out Date shall be postponed by an equal
number of Observation Dates.
12. Observation Dates: [*]
Tranche #2:
1. The Trade Date shall be February 2, 2011
2. The Forward Cap Price equals [*]% of the Initial Hedge Period Reference Price
3. The Forward Floor Price equals [*]% of the Initial Hedge Period Reference
Price
4. The Discount Percentage equals [*]%
5. The Initial Shares equal 2,177,339.
6. The Prepayment Amount equals USD 150,000,000.
7. The Commission Amount equals [*]
8. The Adjustment Amount equals [*]
9. The Structuring Fee equals [*]
 

*   This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

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Confidential Treatment Requested by Broadcom Corporation — #21
10. The Scheduled Valuation Date shall mean the [*]th Scheduled Trading Day
following the Initial Hedge Completion Date.
11. The Lock-Out Date shall mean [*]th Scheduled Trading Day following the
Initial Hedge Completion Date; provided that under any circumstances where the
Calculation Period is extended, the Lock-Out Date shall be postponed by an equal
number of Observation Dates.
12. Observation Dates: [*]
GENERAL:
The Share Cap (applicable to both Tranches in aggregate) shall equal the lesser
of (i) 12.96 million Shares and (ii) 20% of the total number of Shares that
Issuer has outstanding as of any day.
 

*   This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

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Confidential Treatment Requested by Broadcom Corporation — #22
AGREED AND ACKNOWLEDGED (as of the date listed above)
BROADCOM CORPORATION

     
/s/ Eric Brandt
 
Name: Eric Brandt
   
Title: EVP and CFO
   

MORGAN STANLEY & CO. INCORPORATED

     
/s/ Serkan Savasoglu
 
Name: Serkan Savasoglu
   
Title: Managing Director