Exhibit 10.1



 












EXHIBIT 10.1




BROADCOM CORPORATION

1998 STOCK INCENTIVE PLAN




AMENDED AND RESTATED EFFECTIVE MARCH 11, 2005




ARTICLE ONE




GENERAL PROVISIONS




     I. PURPOSE OF THE PLAN



          This amended and restated 1998 Stock Incentive Plan is intended to promote the interests of
Broadcom Corporation, a California corporation, by providing eligible persons in the Corporation’s
service with the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in such service.



          Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms
in the attached Appendix.



     II. STRUCTURE OF THE PLAN



          A. The Plan as hereby amended and restated is divided into three equity incentive programs:



               - the Discretionary Grant Program, under which eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common Stock or stock appreciation
rights tied to the value of such Common Stock,



               - the Stock Issuance Program, under which eligible persons may be issued shares of Common
Stock pursuant to restricted stock awards, restricted stock units or other stock-based awards,
awarded by and at the discretion of the Plan Administrator, that vest upon the completion of a
designated service period and/or the attainment of pre-established performance milestones, or such
shares of Common Stock may be issued through direct purchase or as a bonus for services rendered
the Corporation (or any Parent or Subsidiary), and



               - the Director Automatic Grant Program, under which eligible non-employee Board members shall
automatically receive option grants and restricted stock units at designated intervals over their
period of continued Board service.



          B. The provisions of Articles One and Five shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan.



 









 





     III. ADMINISTRATION OF THE PLAN



          A. The Primary Committee shall have sole and exclusive authority to administer the
Discretionary Grant and Stock Issuance Programs with respect to Section 16 Insiders. Administration
of the Discretionary Grant and Stock Issuance Programs with respect to all other persons eligible
to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee
or a Secondary Committee, or the Board may retain the power to administer those programs with
respect to all such persons. However, any discretionary grants, stock issuances or other
stock-based awards to members of the Primary Committee must be authorized and approved by a
disinterested majority of the Board.



          B. Members of the Primary Committee or any Secondary Committee shall serve for such period as
the Board may determine and may be removed by the Board at any time. The Board may also at any
time terminate the functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.



          C. Each Plan Administrator shall, within the scope of its administrative functions under the
Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules
and regulations as it may deem appropriate for proper administration of the Discretionary Grant and
Stock Issuance Programs and to make such determinations under, and issue such interpretations of,
the provisions of those programs and any outstanding options, stock appreciation rights, stock
issuances, restricted stock unit awards or other stock-based awards thereunder as it may deem
necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an interest in the
Discretionary Grant and Stock Issuance Programs under its jurisdiction or any stock option, stock
appreciation right, stock issuance, restricted stock unit award or other stock-based award
thereunder.



          D. Service on the Primary Committee or the Secondary Committee shall constitute service as a
Board member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in
good faith with respect to the Plan or any stock option, stock appreciation right, stock issuance
or other stock-based award under the Plan.



          E. Administration of the Director Automatic Grant Program shall be self-executing in
accordance with the terms of that program, and no Plan Administrator shall exercise any
discretionary functions with respect to any stock option, restricted stock unit or other stock
issuances made under that program.



     IV. ELIGIBILITY



          A. The persons eligible to participate in the Discretionary Grant and Stock Issuance Programs
are as follows:



               (i) Employees,



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               (ii) non-employee members of the Board or the board of directors of any Parent
or Subsidiary, and



               (iii) consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary).



          B. Each Plan Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine (i) with respect to the grant of stock options or stock
appreciation rights under the Discretionary Grant Program, which eligible persons are to receive
such grants, the time or times when those grants are to be made, the number of shares to be covered
by each such grant, the status of a granted option as either an Incentive Option or a Non-Statutory
Option, the price per share of each grant (subject to the limitations
set forth in Article Two), the
time or times when each option or stock appreciation right is to become exercisable, the vesting
schedule (if any) applicable to the grant, and the maximum term for which the grant is to remain
outstanding, and (ii) with respect to stock issuances or other stock-based awards under the Stock
Issuance Program, which eligible persons are to receive such issuances or awards, the time or times
when the issuances or awards are to be made, the number of shares subject to each such issuance or
award, the vesting schedule (if any) applicable to the shares subject
to such issuance or award, and
the consideration for such shares.



          C. The Plan Administrator shall have the absolute discretion to grant options or stock
appreciation rights in accordance with the Discretionary Grant
Program and to effect stock issuances
or other stock-based awards in accordance with the Stock Issuance Program.



          D. Eligible Directors for purposes of the Director Automatic Grant Program shall be limited to
those individuals serving as non-employee Board members. A non-employee Board member who
has previously been in the employ of the Corporation (or any Parent or Subsidiary) shall not be
eligible to receive an option grant or restricted stock unit award under the Director Automatic
Grant Program at the time he or she first becomes a non-employee Board member, but shall be
eligible to receive periodic option grants and restricted stock unit awards under the Director
Automatic Grant Program while he or she continues to serve as a non-employee Board member.



     V. STOCK SUBJECT TO THE PLAN



          A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Corporation on the open market. Subject to the
automatic share increase provisions of Section V.B. of this Article One and any additional shares
authorized by the vote of the Board and approved by the shareholders, the number of shares of
Common Stock reserved for issuance over the term of the Plan shall not exceed 247,057,364
shares.1 Such reserve includes an additional increase of 10,000,000 shares authorized by
the Board on March 11, 2005 subject to shareholder approval at









	1	 	The Common Stock issuable under the Plan shall be
Class A Common Stock, except to the extent such stock is to be issued upon the
exercise of outstanding options incorporated from the Predecessor Plans. For
those options, the issuable stock shall be Class B Common Stock.




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the 2005 Annual Meeting of Shareholders (the “2005 Annual Meeting”). To the extent any
unvested shares of Common Stock outstanding under the Predecessor Plans as of the Plan Effective
Date are subsequently repurchased by the Corporation, at the option exercise price paid per share,
in connection with the holder’s termination of Service prior to vesting in those shares, the
repurchased shares shall be added to the reserve of Common Stock available for issuance under the
Plan, but in no event shall such addition exceed 18,000,000 shares.




          B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of January each calendar year during the term of
the Plan (beginning with calendar year 2000) by an amount equal to four and one-half percent (4.5%)
of the total number of shares of Class A and Class B Common Stock outstanding on the last trading
day in December of the immediately preceding calendar year, but in no event shall any such annual
increase exceed 25,000,000 shares (or 18,000,000 shares if the
change to such limitation is not approved
at the 2005 Annual Meeting).



          C. No one person participating in the Plan may receive stock options, stand-alone stock
appreciation rights, direct stock issuances (whether vested or unvested) and other stock-based
awards (whether in the form of restricted stock units or other share right awards) for more than
6,000,000 shares of Common Stock in the aggregate per calendar year.



          D. Shares of Common Stock subject to outstanding options (including options incorporated into
this Plan from the Predecessor Plans) or other awards made under the Plan shall be available for
subsequent issuance under the Plan to the extent (i) those options or awards expire or terminate
for any reason prior to the issuance of the shares of Common Stock subject to those options or
awards or (ii) the awards are cancelled in accordance with the cancellation-regrant provisions of
Article Two. Unvested shares issued under the Plan and subsequently cancelled or repurchased by
the Corporation at the original exercise or issue price paid per share pursuant to the
Corporation’s repurchase rights under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be available for subsequent
reissuance under the Plan. All shares that become available for reissuance under the Plan,
including the shares of Class B Common Stock subject to the outstanding options incorporated into
this Plan from the Predecessor Plans that expire or terminate unexercised and any unvested shares
of Class B Common Stock repurchased by the Corporation pursuant to its repurchase rights, shall be
issuable solely as Class A Common Stock. In addition, should the exercise price of an option under
the Plan be paid with shares of Common Stock, the authorized reserve of Common Stock under the Plan
shall be reduced only by the net number of shares issued under the exercised stock option. Should
shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise of an option or
stock appreciation right or the issuance of fully-vested shares under the Stock Issuance Program,
the number of shares of Common Stock available for issuance under the Plan shall be reduced only by
the net number of shares issued under the exercised stock option or stock appreciation right or the
net number of fully-vested shares issued under the Stock Issuance Program.



          E. If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change



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affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made by the Plan Administrator to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, stand-alone stock appreciation
rights, direct stock issuances, and other stock-based awards under the Plan per calendar year,
(iii) the number and/or class of securities for which stock option grants and restricted stock unit
awards are subsequently to be made under the Director Automatic Grant Program to new and continuing
non-employee Board members, (iv) the number and/or class of securities and the exercise or base
price per share in effect under each outstanding option or stock appreciation right under the Plan,
(v) the number and/or class of securities and exercise price per share in effect under each
outstanding option incorporated into this Plan from the Predecessor Plans, (vi) the number and/or
class of securities subject to each outstanding restricted stock unit or other stock-based award
under the Plan and the consideration (if any) payable per share thereunder, (vii) the maximum
number and/or class of securities by which the share reserve may increase automatically each
calendar year pursuant to the provisions of Section V.B of this Article One and (viii) the maximum
number and/or class of securities that may be added to the Plan through the repurchase of unvested
shares issued under the Predecessor Plans. Similar adjustments shall be made to the number of
shares of Class B Common Stock issuable under the Plan and the number of shares subject to
outstanding stock options for Class B shares and exercise price per share in effect under those
options in the event of any similar changes to the outstanding shares of Class B Common Stock.
Such adjustments to the outstanding options, stock appreciation rights or other stock-based awards
are to be effected in a manner that shall preclude the enlargement or dilution of rights and
benefits under those options, stock appreciation rights or other stock-based awards. The
adjustments determined by the Plan Administrator shall be final, binding and conclusive.



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ARTICLE TWO




DISCRETIONARY GRANT PROGRAM




     I. OPTION TERMS



          Each option shall be evidenced by one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall comply with the terms specified
below. Each document evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.



          A. Exercise Price.



               1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less
than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option
grant date.



               2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one or more of the forms specified below:




     (i) cash or check made payable to the Corporation,




     (ii) shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or




     (iii) to the extent the option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the Optionee shall
concurrently provide irrevocable instructions to (a) a brokerage firm designated by
the Corporation2 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 (b) the
Corporation to deliver the certificates for the purchased shares directly to such
brokerage firm to complete the sale.



          Except to the extent such sale and remittance procedure is utilized, payment of the exercise
price for the purchased shares must be made on the Exercise Date.









	2	 	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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          B. Exercise
and Term of Options. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option. However, no option shall have
a term in excess of ten (10) years measured from the option grant date.



          C. Effect
of Termination of Service.



               1. The following provisions shall govern the exercise of any options held by the Optionee at
the time of cessation of Service or death:




     (i) Any option outstanding at the time of the Optionee’s cessation of Service
for any reason shall remain exercisable for such period of time thereafter as shall
be determined by the Plan Administrator and set forth in the documents evidencing
the option, but no such option shall be exercisable after the expiration of the
option term.




     (ii) Any option held by the Optionee at the time of death and exercisable in
whole or in part at that time may be subsequently exercised by the personal
representative of the Optionee’s estate or by the person or persons to whom the
option is transferred pursuant to the Optionee’s will or the laws of inheritance or
by the Optionee’s designated beneficiary or beneficiaries of that option.




     (iii) Should the Optionee’s Service be terminated for Misconduct or should the
Optionee otherwise engage in Misconduct while holding one or more outstanding
options under this Article Two, all those options shall terminate immediately and
cease to be outstanding.




     (iv) During the applicable post-Service exercise period, the option may not be
exercised in the aggregate for more than the number of vested shares for which that
option is at the time exercisable. No additional shares shall vest under the option
following the Optionee’s cessation of Service, except to the extent (if any)
specifically authorized by the Plan Administrator in its sole discretion pursuant to
an express written agreement with Optionee. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the option
shall terminate and cease to be outstanding for any shares for which the option has
not been exercised.



          2. The Plan Administrator shall have complete discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding, to:




     (i) extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service from the limited exercise period
otherwise in effect for that option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event beyond the expiration of the
option term, and/or



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     (ii) permit the option to be exercised, during the applicable post-Service
exercise period, not only with respect to the number of vested shares of Common
Stock for which such option is exercisable at the time of the Optionee’s cessation
of Service but also with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.



          D. Shareholder Rights. The holder of an option shall have no shareholder rights with
respect to the shares subject to the option until such person shall have exercised the option, paid
the exercise price and become a holder of record of the purchased shares.



          E. Repurchase Rights. The Plan Administrator shall have the discretion to grant
options that are exercisable for unvested shares of Common Stock. Should the Optionee cease
Service while holding such unvested shares, the Corporation shall have the right to repurchase, at
the exercise price paid per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.



          F. Transferability
of Options. The transferability of options granted under the Plan
shall be governed by the following provisions:




     (i)
Incentive Options. During the lifetime of the Optionee, Incentive Options shall
be exercisable only by the Optionee and shall not be assignable or transferable other than by will
or the laws of inheritance following the Optionee’s death.




     (ii)
Non-Statutory Options. Non-Statutory Options shall be subject to the same
limitation on transfer as Incentive Options, except that the Plan Administrator may structure one
or more Non-Statutory Options so that the option may be assigned in whole or in part during the
Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established
exclusively for the Optionee and/or one or more such Family Members, to the extent such assignment
is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The
assigned portion may only be exercised by the person or persons who acquire a proprietary interest
in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment and shall be set forth
in such documents issued to the assignee as the Plan Administrator may deem appropriate.




     (iii)
Beneficiary Designations. Notwithstanding the foregoing, the Optionee may
designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Two (whether Incentive Options or Non-Statutory Options), and those options
shall, in accordance with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee’s death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and conditions of the
applicable agreement evidencing each such transferred option, including (without limitation) the
limited time period during which the option may be exercised following the Optionee’s death.



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     II. INCENTIVE OPTIONS



          The terms specified below, together with any additions, deletions or changes thereto imposed
from time to time pursuant to the provisions of the Code governing Incentive Options, shall be
applicable to all Incentive Options. Except as modified by the provisions of this Section II, all
the provisions of Articles One, Two and Five shall be applicable to Incentive Options. Options
that are specifically designated as Non-Statutory Options when issued under the Plan shall
not be subject to the terms of this Section II.



          A. Eligibility. Incentive Options may only be granted to Employees.



          B. Exercise
Price. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.



          C. Dollar
Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more options granted to
any Employee under the Plan (or any other option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the first time in the same
calendar year, then for purposes of the foregoing limitation on the exercisability of those
options as Incentive Options, such 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.



          D. 10%
Shareholder. If any Employee to whom an Incentive Option is granted is a 10%
Shareholder, then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option
term shall not exceed five (5) years measured from the option grant date.



     III.
STOCK APPRECIATION RIGHTS.



          A. Authority. The Plan Administrator shall have full power and authority, exercisable
in its sole discretion, to grant stock appreciation rights in accordance with this Section III to
selected Optionees or other individuals eligible to receive option grants under the Discretionary
Grant Program.



          B. Types. Three types of stock appreciation rights shall be authorized for issuance
under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”), (ii) stand-alone
stock appreciation rights (“Stand-alone Rights”) and (iii) limited stock appreciation rights
(“Limited Rights”).



          C. Tandem
Rights. The following terms and conditions shall govern the grant and
exercise of Tandem Rights.



               1. One or more Optionees may be granted a Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect



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between the exercise of the underlying stock option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation in an amount equal to
the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate exercise price payable for such vested shares.



               2. No such option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual option surrender or at any earlier time. If the
surrender is so approved, then the distribution to which the Optionee shall accordingly become
entitled under this Section III may be made in shares of Common Stock valued at Fair Market Value
on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.



               3. If the surrender of an option is not approved by the Plan Administrator, then the Optionee
shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised more than ten (10) years after the date
of the option grant.



          D. Stand-Alone
Rights. The following terms and conditions shall govern the grant and
exercise of Stand-alone Rights under this Article Two:



               1. One or more individuals eligible to participate in the Discretionary Grant Program may be
granted a Stand-alone Right not tied to any underlying option under this Discretionary Grant
Program. The Stand-alone Right shall relate to a specified number of shares of Common Stock and
shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no
event, however, may the Stand-alone Right have a maximum term in excess of ten (10) years measured
from the grant date. Upon exercise of the Stand-alone Right, the holder shall be entitled to
receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate
Fair Market Value (on the exercise date) of the shares of Common Stock underlying the exercised
right over (ii) the aggregate base price in effect for those shares.



               2. The number of shares of Common Stock underlying each Stand-alone Right and the base price
in effect for those shares shall be determined by the Plan Administrator in its sole discretion at
the time the Stand-alone Right is granted. In no event, however, may the base price per share be
less than the Fair Market Value per underlying share of Common Stock on the grant date.



               3. Stand-alone Rights shall be subject to the same transferability restrictions applicable to
Non-Statutory Options and may not be transferred during the holder’s lifetime, except to one or
more Family Members of the holder or to a trust established exclusively for the holder and/or such
Family Members, to the extent such assignment is in connection with the holder’s estate plan or
pursuant to a domestic relations order covering the Stand-alone Right as marital property. In
addition, one or more beneficiaries may be designated



10.









 







for an outstanding Stand-alone Right in accordance with substantially the same terms and
provisions as set forth in Section I.F of this Article Two.



               4. The distribution with respect to an exercised Stand-alone Right may be made in shares of
Common Stock valued at Fair Market Value on the exercise date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.



               5. The holder of a Stand-alone Right shall have no shareholder rights with respect to the
shares subject to the Stand-alone Right unless and until such person shall have exercised the
Stand-alone Right and become a holder of record of shares of Common Stock issued upon the exercise
of such Stand-alone Right.



          E. Limited
Rights. The following terms and conditions shall govern the grant and
exercise of Limited Rights under this Article Two:



               1. One or more Section 16 Insiders may, in the Plan Administrator’s sole discretion, be
granted Limited Rights with respect to their outstanding options under this Article Two.



               2. Upon the occurrence of a Hostile Take-Over, the Section 16 Insider shall have the
unconditional right (exercisable for a thirty (30)-day period following such Hostile Tender-Offer)
to surrender each option with such a Limited Right to the Corporation. The Section 16 Insider shall
in return be entitled to a cash distribution from the Corporation in an amount equal to the excess
of (i) the Take-Over Price of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise
price payable for those vested shares. Such cash distribution shall be made within five (5) days
following the option surrender date.



               3. The Plan Administrator shall pre-approve, at the time such Limited Right is granted, the
subsequent exercise of that right in accordance with the terms of the grant and the provisions of
this Section III. No additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become exercisable in accordance with the terms of
the instrument evidencing such grant.



          F. Post-Service
Exercise.  The provisions governing the exercise of Tandem,
Stand-alone and Limited Stock Appreciation Rights following the cessation of the recipient’s
Service shall be substantially the same as those set forth in Section I.C of this Article Two for
the options granted under the Discretionary Grant Program.



          G. Net Counting. Upon the exercise of any Tandem, Stand-alone or Limited Right under
this Section III, the share reserve under Section V of Article One shall only be reduced by the net
number of shares actually issued by the Corporation upon such exercise, and not by the gross number
of shares as to which such Tandem, Stand-alone or Limited Right is exercised.



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     IV. CHANGE IN CONTROL/HOSTILE TAKE-OVER



          A. No option or stock appreciation right outstanding at the time of a Change in Control shall
vest and become exercisable on an accelerated basis if and to the extent: (i) that option or stock
appreciation right is, in connection with the Change in Control, 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, (ii) such option or stock appreciation right is
replaced with a cash incentive program of the successor corporation that preserves the spread
existing at the time of the Change in Control on the shares of Common Stock as to which the option
or stock appreciation right is not otherwise at that time exercisable and provides for subsequent
payout in accordance with the same exercise/vesting schedule applicable to those shares or (iii)
the acceleration of such option or stock appreciation right is subject to other limitations imposed
by the Plan Administrator. However, if none of the foregoing conditions are satisfied, then each
option or stock appreciation right outstanding at the time of the Change in Control but not
otherwise exercisable as to all the shares at the time subject to that option or stock appreciation
right shall automatically accelerate so that each such option and stock appreciation right shall,
immediately prior to the effective date of the Change in Control, vest and become exercisable as to
all the shares of Common Stock at the time subject to that option or stock appreciation right and
may be exercised as to any or all of those shares as fully vested shares of Common Stock.



          B. All outstanding repurchase rights under the Discretionary Grant Program shall also
terminate automatically, and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control, except to the extent: (i) those
repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise
continue in full force and effect pursuant to the terms of the Change in Control transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator.



          C. Immediately following the consummation of the Change in Control, all outstanding options
and stock appreciation rights under the Discretionary Grant Program shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of the Change in
Control transaction.



          D. Each option that is assumed in connection with a Change in Control or otherwise continued
in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities that would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such Change in Control.
In the event outstanding Stand-alone Rights are to be assumed in connection with a Change in
Control transaction or otherwise continued in effect, the shares of Common Stock underlying each
such Stand-alone Right shall be adjusted immediately after such Change in Control to apply to the
number and class of securities into which those shares of Common Stock would have been converted in
consummation of such Change in Control had those shares actually been outstanding at that time.
Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise
price payable per share under each outstanding option, provided the aggregate exercise price
payable for such



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securities shall remain the same, (ii) the base price per share in effect under each
outstanding Stand-alone Right, provided the aggregate base price shall remain the same, (iii) the
maximum number and/or class of securities available for issuance over the remaining term of the
Plan, (iv) the maximum number and/or class of securities for which any one person may be granted
stock options, stand-alone stock appreciation rights, direct stock issuances and other stock-based
awards under the Plan per calendar year, (v) the maximum number and/or class of securities by which
the share reserve is to increase automatically each calendar year pursuant to the automatic share
increase provisions of the Plan, (vi) the number and/or class of securities for which stock option
grants and restricted stock unit awards are subsequently to be made under the Director Automatic
Grant Program to new and continuing non-employee Board members and (vii) the maximum number and
class of securities that may be added to the Plan through the repurchase of unvested shares issued
under the Predecessor Plans. 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, the successor corporation may, in connection with the assumption or continuation of the
outstanding options or stock appreciation rights under the Discretionary Grant Program, substitute,
for the securities underlying those assumed rights, 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.



          E. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options or stock appreciation rights under the Discretionary Grant Program so that
those options or stock appreciation rights shall, immediately prior to the effective date of a
Change in Control, vest and become exercisable as to all the shares at the time subject to those
options or stock appreciation rights and may be exercised as to any or all of those shares as fully
vested shares of Common Stock, whether or not those options or stock appreciation rights are to be
assumed or otherwise continued in full force and effect pursuant to the express terms of the Change
in Control transaction. In addition, the Plan Administrator shall have the discretionary authority
to structure one or more of the Corporation’s repurchase rights under the Discretionary Grant
Program so that those rights shall immediately terminate at the time of such Change in Control and
shall not be assignable to successor corporation (or parent thereof), and the shares subject to
those terminated rights shall accordingly vest in full at the time of such Change in Control.



          F. The Plan Administrator shall have full power and authority to structure one or more
outstanding options or stock appreciation rights under the Discretionary Grant Program so that
those options or stock appreciation rights shall immediately vest and become exercisable as to all
of the shares at the time subject to those options or stock appreciation rights in the event the
Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective date of any Change
in Control in which those options or stock appreciation rights do not otherwise vest on an
accelerated basis. Any options or stock appreciation rights so accelerated shall remain
exercisable as to fully vested shares until the expiration or sooner termination of their term. In
addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights
under the Discretionary Grant Program so that those rights shall immediately terminate with respect
to any shares held by the Optionee at the time of his or her Involuntary Termination, and the
shares subject to those terminated repurchase rights shall accordingly vest in full at that time.



13.









 





          G. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options or stock appreciation rights under the Discretionary Grant Program so that
those options or stock appreciation rights shall, immediately prior to the effective date of a
Hostile Take-Over, vest and become exercisable as to all the shares at the time subject to those
options or stock appreciation rights and may be exercised as to any or all of those shares as fully
vested shares of Common Stock. In addition, the Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation’s repurchase rights under the Discretionary
Grant Program so that those rights shall terminate automatically upon the consummation of such
Hostile Take-Over, and the shares subject to those terminated rights shall thereupon vest in full.
Alternatively, the Plan Administrator may condition the automatic acceleration of one or more
outstanding options or stock appreciation rights under the Discretionary Grant Program and the
termination of one or more of the Corporation’s outstanding repurchase rights under such program
upon the Involuntary Termination of the Optionee’s Service within a designated period (not to
exceed eighteen (18) months) following the effective date of such Hostile Take-Over. Each option
or stock appreciation rights so accelerated shall remain exercisable for fully vested shares until
the expiration or sooner termination of the term.



          H. The portion of any Incentive Option accelerated in connection with a Change in Control
shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option
under the Federal tax laws.



          I. The outstanding options and stock appreciation rights shall in no 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.



     V. EXCHANGE/REPRICING PROGRAMS



          A. The Plan Administrator shall have the authority to effect, at any time and from time to
time, with the consent of the affected holders, the cancellation of any or all outstanding options
or stock appreciation rights under the Discretionary Grant Program (including outstanding options
transferred from the Predecessor Plan) and to grant in exchange one or more of the following: (i)
new options or stock appreciation rights covering the same or a different number of shares of
Common Stock but with an exercise or base price per share not less than the Fair Market Value per
share of Common Stock on the new grant date or (ii) cash or shares of Common Stock, whether vested
or unvested, equal in value to the value of the cancelled options or stock appreciation rights.



          B. The Plan Administrator shall also have the authority, exercisable at any time and from time
to time, with the consent of the affected holders, to reduce the exercise or base price of one or
more outstanding stock options or stock appreciation rights to a price not less than the then
current Fair Market Value per share of Common Stock or issue new stock options or stock
appreciation rights with a lower exercise or base price in immediate cancellation of outstanding
stock options or stock appreciation rights with a higher exercise or base price.



14.









 





ARTICLE THREE




STOCK ISSUANCE PROGRAM




     I. STOCK ISSUANCE TERMS



          A. Issuances. Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement that complies with the terms specified
below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share
right awards or restricted stock units, awarded by and at the discretion of the Plan Administrator,
that entitle the recipients to receive the shares underlying those awards or units upon the
attainment of designated performance goals and/or the satisfaction of specified Service
requirements, or upon the expiration of a designated time period following the vesting of those
awards or units.



          B. Issue
Price.



               1. The price per share at which shares of Common Stock may be issued under the Stock Issuance
Program shall be fixed by the Plan Administrator, but shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the issuance date.



               2. Shares of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration that the Plan Administrator may deem appropriate in each
individual instance:




     (i) cash or check made payable to the Corporation;




     (ii) past services rendered to the Corporation (or any Parent or Subsidiary);
or




     (iii) any other valid form of consideration permissible under the California
General Corporation Law at the time such shares are issued.



          C. Vesting
Provisions.



               1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more
installments over the Participant’s period of Service and/or upon attainment of specified
performance objectives. The elements of the vesting schedule applicable to any unvested shares of
Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator
and incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to share right awards or restricted stock units that entitle
the recipients to receive the shares



15.










 







underlying those awards or units upon the attainment of designated performance goals and/or
the satisfaction of specified Service requirements, or upon the expiration of a designated time
period following the vesting of those awards or units, including (without limitation) a deferred
distribution date following the termination of the Participant’s Service.



               2. The Plan Administrator shall also have the discretionary authority, consistent with Code
Section 162(m), to structure one or more stock issuances or restricted stock unit or share right
awards so that the shares of Common Stock subject to those issuances or awards shall vest (or vest
and become issuable) upon the achievement of certain pre-established corporate performance goals
based on one or more of the following criteria: (i) return on total shareholder equity; (ii) net
income per share of Common Stock; (iii) net income or operating income; (iv) earnings before
interest, taxes, depreciation, amortization and stock-compensation costs, or operating income
before depreciation and amortization; (v) sales or revenue targets; (vi) return on assets, capital
or investment; (vii) cash flow; (viii) market share; (ix) cost reduction goals; (x) budget
comparisons; (xi) implementation or completion of projects or processes strategic or critical to
the Corporation’s business operations; (xii) measures of customer satisfaction; (xiii) any
combination of, or a specified increase in, any of the foregoing; and (xiv) the formation of joint
ventures, research and development collaborations, marketing or customer service collaborations, or
the completion of other corporate transactions intended to enhance the Corporation’s revenue or
profitability or expand its customer base; provided, however, that for purposes of items (ii) and
(iii) above, the Plan Administrator may make adjustments, in conformity with those reported by the
Corporation in accordance with generally accepted accounting principles in the United States (“GAAP”) or on
a non-GAAP basis, which result in the exclusion of certain charges related to acquisitions,
stock-based compensation, employer payroll tax expense on certain stock option exercises,
settlement costs, restructuring costs, gains or losses on strategic investments, non-operating
gains or losses, certain other non-cash charges, valuation allowance on deferred tax assets, and
the related income tax effects, and any extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30. In addition, such performance goals may be based upon
the attainment of specified levels of the Corporation’s performance under one or more of the
measures described above relative to the performance of other entities and may also be based on the
performance of any of the Corporation’s business groups or divisions or any Parent or Subsidiary.
Performance goals may include a minimum threshold level of performance below which no award will be
earned, levels of performance at which specified portions of an award will be earned and a maximum
level of performance at which an award will be fully earned.



               3. Any new, substituted or additional securities or other property (including money paid other
than as a regular cash dividend) that the Participant may have the right to receive with respect to
the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.



               4. The Participant shall have full shareholder rights with respect to any shares of Common
Stock issued to the Participant under the Stock Issuance Program,



16.









 







whether or not the Participant’s interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular cash dividends paid
on such shares. The Participant shall not have any shareholder rights with respect to the shares of
Common Stock subject to a restricted stock unit or share right award until that award vests and the
shares of Common Stock are actually issued thereunder. However, dividend-equivalent units may be
paid or credited, either in cash or in actual or phantom shares of Common Stock, on outstanding
restricted stock unit or share right awards, subject to such terms and conditions as the Plan
Administrator may deem appropriate.



               5. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock issued under the Stock Issuance Program or should the performance objectives not be
attained with respect to one or more such unvested shares of Common Stock, then those shares shall
be immediately surrendered to the Corporation for cancellation, and the Participant shall have no
further shareholder rights with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash, cash equivalent or otherwise,
the Corporation shall repay to the Participant the same form of consideration as the Participant
paid for the surrendered shares.



               6. The Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock that would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives applicable to those
shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant’s cessation of Service or the attainment or non-attainment
of the applicable performance objectives. However, no vesting requirements tied to the attainment
of performance objectives may be waived with respect to shares that were intended at the time of
issuance to qualify as performance-based compensation under Code Section 162(m), except in the
event of the Participant’s Involuntary Termination or as otherwise provided in Section II.E of this
Article Three.



               7. Outstanding share right awards or restricted stock units under the Stock Issuance Program
shall automatically terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards or units, if the performance goals or Service requirements established
for such awards or units are not attained or satisfied. The Plan Administrator, however, shall
have the discretionary authority to issue vested shares of Common Stock under one or more
outstanding share right awards or restricted stock units as to which the designated performance
goals or Service requirements have not been attained or satisfied. However, no vesting
requirements tied to the attainment of performance goals may be waived with respect to awards or
units which were at the time of grant intended to qualify as performance-based compensation under
Code Section 162(m), except in the event of the Participant’s Involuntary Termination or as
otherwise provided in Section II.E of this Article Three.



     II. CHANGE IN CONTROL/HOSTILE TAKE-OVER



          A. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program
shall terminate automatically, and all the shares of Common Stock subject to



17.









 







those terminated rights shall immediately vest in full, in the event of any Change in Control,
except to the extent (i) those repurchase rights are to be assigned to the successor corporation
(or parent thereof) or otherwise continued in full force and effect pursuant to the express terms
of the Change in Control transaction or (ii) such accelerated vesting is precluded by other
limitations imposed in the Stock Issuance Agreement.



          B. Each outstanding restricted stock unit or share right award assumed in connection with a
Change in Control or otherwise continued in effect shall be adjusted immediately after the
consummation of that Change in Control to apply to the number and class of securities into which
the shares of Common Stock subject to the award immediately prior to the Change in Control would
have been converted in consummation of such Change in Control had those shares actually been
outstanding at that time, and appropriate adjustments shall also be made to the consideration (if
any) payable per share thereunder, provided that the aggregate amount of such consideration shall remain
the same. If any such restricted stock unit or share right award is not so assumed or otherwise
continued in effect, then such unit or award shall vest, and the shares of Common Stock subject to
that unit or award shall be issued as fully-vested shares, immediately prior to the consummation of
the Change in Control.



          C. The Plan Administrator shall have the discretionary authority to structure one or more
unvested stock issuances or one or more restricted stock unit or other share right awards under the
Stock Issuance Program so that the shares of Common Stock subject to those issuances or awards
shall automatically vest (or vest and become issuable) in whole or in part immediately upon the
occurrence of a Change in Control or upon the subsequent termination of the Participant’s Service
by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of that Change in Control transaction.



          D. The Plan Administrator shall also have the discretionary authority to structure one or more
unvested stock issuances or one or more restricted stock unit or other share right awards under the
Stock Issuance Program so that the shares of Common Stock subject to those issuances or awards
shall automatically vest (or vest and become issuable) in whole or in part immediately upon the
occurrence of a Hostile Take-Over or upon the subsequent termination of the Participant’s Service
by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of that Hostile Take-Over.



          E. The Plan Administrator’s authority under Paragraphs C and D of this Section II shall also
extend to any stock issuances, restricted stock units or other share right awards intended to
qualify as performance-based compensation under Code Section 162(m), even though the automatic
vesting of those issuances, units or awards pursuant to Paragraph C or D of this Section II may
result in their loss of performance-based status under Code Section 162(m).



18.









 





ARTICLE FOUR




DIRECTOR AUTOMATIC GRANT PROGRAM




     I. TERMS



          This Article Four of the Plan has been amended and restated effective as of March 11, 2005,
subject to shareholder approval at the 2005 Annual Meeting. All options outstanding under the
Director Automatic Grant Program immediately prior to such amendment and restatement shall continue
in full force and effect in accordance with the existing terms of the agreements evidencing those
options, and nothing in this amended and restated Article Four shall affect those options.



          A. Grant Dates. Grants under this amended and restated Article Four shall be made on
the dates specified below:



               1. Each individual who is first elected or appointed as a non-employee Board member at any
time on or after March 11, 2005 shall automatically be granted, on the date of such initial
election or appointment, a Non-Statutory Option to purchase 50,000 shares of Common Stock and
restricted stock units covering an additional 16,668 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any Parent or Subsidiary.



               2. Each non-employee Board member, including any non-employee Board member previously in the
employ of the Corporation (or any Parent or Subsidiary), shall receive a renewal grant of stock
options for 50,000 shares of Common Stock and restricted stock units covering an additional 16,668
shares of Common Stock immediately upon his or her completion of each successive four (4)-year
period of continued service as an Eligible Director;3 provided, however, that for each
Eligible Director who had completed at least four (4) years of Board service as of the date of the
Corporation’s 2002 Annual Meeting of Shareholders, the next such renewal grant shall be made upon
his completion of four (4) years of Board service measured from the date of that Annual
Meeting,3



               3. On the date of each annual meeting of shareholders, beginning with the 2005 Annual Meeting,
each individual who is to continue to serve as an Eligible Director, whether or not that individual
is standing for re-election to the Board at that particular annual meeting of shareholders, shall
automatically be granted a Non-Statutory Option to purchase 7,500 shares of Common Stock and
restricted stock units covering an additional 2,500 shares of Common Stock. There shall be no limit
on the number of such option grants and restricted stock unit awards any one Eligible Director may
receive over his or her period of Board service, and non-employee Board members who have previously
been in the employ of the Corporation (or any Parent or Subsidiary) shall be eligible to receive
one or more such annual option grants and restricted stock unit awards over their period of
continued Board service. Such









	3	 	The four (4)-year qualification period for the
50,000-share renewal option grant and the 16,668-share renewal restricted stock
unit award shall not include any period during which the Eligible Director
serves as an executive officer or other employee of the Corporation or any
Parent or Subsidiary.




19.









 









grant shall be in addition to any initial or renewal option grant for 50,000 shares of Common
Stock and restricted stock unit award covering an additional 16,668 shares of Common Stock which
such individual may be entitled to receive in the same calendar year as his or her annual grant
under this paragraph A.3.




          B. Exercise
Price.



               1. The exercise price per share for each option granted under this Article Four shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.



               2. The exercise price shall be payable in one or more of the alternative forms authorized
under the Discretionary Grant Program. Except to the extent the sale and remittance procedure
specified thereunder is utilized, payment of the exercise price for the purchased shares must be
made on the Exercise Date.



          C. Option
Term. Each option granted under this Article Four shall have a term of ten
(10) years measured from the option grant date.



          D. Exercise and Vesting of Options. Each option granted under this Article Four shall
be immediately exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation, at the exercise price
paid per share, upon the Optionee’s cessation of Board service prior to vesting in those shares.
The shares subject to each 50,000-share grant shall vest, and the Corporation’s repurchase right
shall lapse, in a series of four (4) successive equal annual installments upon the Optionee’s
completion of each year of service as a Board member over the four (4)-year period measured from
the option grant date. The shares subject to each annual 7,500-share option grant shall vest, and
the Corporation’s repurchase right shall lapse, upon the earlier of (i) the Optionee’s completion
of the one (1)-year period of Board service measured from the grant date or (ii) the Optionee’s
continuation in Board service through the day immediately preceding the date of the first annual
meeting of shareholders following the annual meeting of shareholders at which such option was
granted.



          E. Vesting of Restricted Stock Units and Issuance of Shares. Each restricted stock
unit award for 16,668 shares shall vest in a series of four (4) successive equal annual
installments over the four (4)-year period measured from the February 5, May 5, August 5 or
November 5, whichever comes first, next succeeding the date on which the award is made. Each such
installment of the 16,668-share restricted stock unit award shall vest only if the Eligible
Director continues in service as a Board member through the vesting date for that installment. Each
restricted stock unit award for 2,500 shares shall vest in one (1) annual installment upon the
Eligible Director’s continuation in Board service through the earlier of (i) the 5th day of May in
the year immediately following the year in which the award is made or (ii) the day immediately
preceding the date of the first annual meeting of shareholders following the award date. However,
each restricted stock unit award held by an Eligible Director under the Director Automatic Grant
Program will immediately vest in full upon his or her cessation of Board service by reason of death
or Permanent Disability. As the restricted stock units under the



20.









 







Director Automatic Grant Program vest in one or more installments, the shares of Common Stock
underlying those vested units shall be promptly issued.



          F. Limited Transferability of Options. Each option granted under the Director
Automatic Grant Program may be assigned in whole or in part during the Optionee’s lifetime to one
or more Family Members of the Optionee or to a trust established exclusively for Optionee and/or
for one or more such Family Members, to the extent such assignment is in connection with the
Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment and shall be set forth in such documents issued to
the assignee as the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding options under this
Article Four, and those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options subject to all the
terms and conditions of the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be exercised following the
Optionee’s death.



          G. Termination of Board Service. The following provisions shall govern the exercise
of any outstanding options under the Director Automatic Grant Program held by the Optionee at the
time the Optionee ceases to serve as a Board member:




     (i) The Optionee (or, in the event of Optionee’s death, the personal
representative of the Optionee’s estate or the person or persons to whom the option
is transferred pursuant to the Optionee’s will or the laws of inheritance or the
designated beneficiary or beneficiaries of such option) shall have a twelve
(12)-month period following the date of such cessation of Board service in which to
exercise each such option.




     (ii) During the twelve (12)-month exercise period, the option may not be
exercised in the aggregate for more than the number of vested shares of Common Stock
for which the option is exercisable at the time of the Optionee’s cessation of Board
service.




     (iii) Should the Optionee cease to serve as a Board member by reason of death
or Permanent Disability, all shares at the time subject to the option shall
immediately vest so that such option may, during the twelve (12)-month exercise
period following such cessation of Board service, be exercised for all or any
portion of those shares as fully-vested shares of Common Stock.




     (iv) In no event shall the option remain exercisable after the expiration of
its term. Upon the expiration of the twelve (12)-month exercise period or (if
earlier) upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the



21.









 






Optionee’s cessation of Board service for any reason other than death or
Permanent Disability, terminate and cease to be outstanding to the extent the option
is not otherwise at that time exercisable for vested shares.



     II. CHANGE IN CONTROL/ HOSTILE TAKE-OVER



          A. In the event of any Change in Control while the Eligible Director remains a Board member,
the following provisions shall apply:




     (i) The shares of Common Stock at the time subject to each outstanding option held by such
Eligible Director under the Director Automatic Grant Program but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to the effective date
of the Change in Control, become exercisable for all the option shares as fully-vested shares of
Common Stock and may be exercised for any or all of those vested shares. Immediately following the
consummation of the Change in Control, each automatic option grant shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the express terms of the Change in Control
transaction.




     (ii) The shares of Common Stock which are at the time of such Change in Control subject to any
outstanding restricted stock units awarded to such Director under the Director Automatic Grant
Program shall, immediately prior to the effective date of the Change in Control, vest in full and
be issued to such individual as soon as administratively practicable thereafter, but in no event
later than fifteen (15) business days.



          B. In the event of a Hostile Take-Over while the Eligible Director remains a Board member, the
following provisions shall apply:




     (i) The shares of Common Stock at the time subject to each option outstanding option held by
such Eligible Director under the Director Automatic Grant Program but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to the effective date
of the Hostile Take-Over, become exercisable for all the option shares as fully-vested shares of
Common Stock and may be exercised for any or all of those vested shares. Each such option shall
remain exercisable for such fully-vested option shares until the expiration or sooner termination
of the option term or the surrender of the option in connection with that Hostile Take-Over.




     (ii) The shares of Common Stock which are at the time of such Hostile Take-Over subject to any
outstanding restricted stock units awarded to such Eligible Director under the Director Automatic
Grant Program shall, immediately prior to the effective date of the Hostile Take-Over, vest in full
and be issued to such individual as soon as administratively practicable thereafter, but in no
event later than fifteen (15) business days.



          C. All outstanding repurchase rights under the Director Automatic Grant Program shall
automatically terminate, and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control or Hostile Take-Over.



22.









 





          D. Upon the occurrence of a Hostile Take-Over, the Eligible Director shall have a thirty
(30)-day period in which to surrender to the Corporation each of his or her outstanding option
grants under the Director Automatic Grant Program. Such Eligible Director shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to each surrendered option
(whether or not the Eligible Director is otherwise at the time vested in those shares) over (ii)
the aggregate exercise price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. No approval or consent of
the Board or any Plan Administrator shall be required at the time of the actual option surrender
and cash distribution.



          E. Each option that is assumed in connection with a Change in Control or otherwise continued
in full force and effect shall be appropriately adjusted, immediately after such Change in Control,
to apply to the number and class of securities that would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same. To the extent the actual holders of the Corporation’s
outstanding Common Stock receive cash consideration for their Common Stock in consummation of the
Change in Control transaction, the successor corporation may, in connection with the assumption of
the outstanding options under the Director Automatic Grant Program, 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.



          F. The grant of options or the award of restricted stock units under the Director Automatic
Grant Program shall in no 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.



     III. REMAINING TERMS



     The remaining terms of each option granted under the Director Automatic Grant Program shall be
the same as the terms in effect for option grants made under the Discretionary Grant Program.



23.









 





ARTICLE FIVE




MISCELLANEOUS




     I. TAX WITHHOLDING



          A. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of options
or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable federal, state and local income and employment tax withholding requirements.



          B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options, stock appreciation rights, restricted stock units or any other share right awards pursuant
to which vested shares of Common Stock are to be issued under the Plan (other than the options and
restricted stock units granted under the Director Automatic Grant Program) and any or all
Participants to whom vested or unvested shares of Common Stock are issued in a direct issuance
under the Stock Issuance Program with the right to utilize either or both of the following methods
to satisfy all or part of the Withholding Taxes to which such holders may become subject in
connection with the exercise of their options or stock appreciation rights, the issuance to them of
vested shares or the subsequent vesting of unvested shares issued to them:



               Stock Withholding: The election to have the Corporation withhold, from the shares of
Common Stock otherwise issuable upon the exercise of such Non-Statutory Option or stock
appreciation right or upon the issuance of fully-vested shares, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one
hundred percent (100%)) designated by the holder and make a cash payment equal to such Fair Market
Value directly to the appropriate taxing authorities on the individual’s behalf. The shares of
Common Stock so withheld shall not reduce the number of shares of Common Stock authorized for
issuance under the Plan.



               Stock Delivery: The election to deliver to the Corporation, at the time the
Non-Statutory Option or stock appreciation right is exercised, the vested shares are issued or the
unvested shares subsequently vest, one or more shares of Common Stock previously acquired by such
holder (other than in connection with such exercise, share issuance or share vesting triggering the
Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by the holder. The shares of Common
Stock so delivered shall not be added to the shares of Common Stock authorized for issuance under
the Plan.



     II. SHARE ESCROW/LEGENDS



          Unvested shares issued under the Plan may, in the Plan Administrator’s discretion, be held in
escrow by the Corporation until the Participant’s interest in such shares vests or may be issued
directly to the Participant with restrictive legends on the certificates evidencing those unvested
shares.



24.









 





     III. EFFECTIVE DATE AND TERM OF THE PLAN



          A. The Plan became effective immediately on the Plan Effective Date. Options, stock
appreciation rights, restricted stock units and other stock or stock-based awards may be granted
under the Discretionary Grant Program, the Stock Issuance Program and the Director Automatic Grant
Program at any time on or after the Plan Effective Date.



          B. The Plan shall serve as the successor to the Predecessor Plans, and no further option
grants or direct stock issuances shall be made under the Predecessor Plans after April 16, 1998.
All options outstanding under the Predecessor Plans on April 16, 1998 were incorporated into the
Plan at that time and are treated as outstanding options under the Plan. However, each outstanding
option so incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect or otherwise modify
the rights or obligations of the holders of such incorporated options with respect to their
acquisition of shares of Common Stock.



          C. One or more provisions of the Plan, including (without limitation) the option/vesting
acceleration provisions of Article Two relating to Changes in Control and Hostile Take-Overs, may,
in the Plan Administrator’s discretion, be extended to one or more options incorporated from the
Predecessor Plans that do not otherwise contain such provisions.



          D. The Plan was amended and restated by the Board on March 11, 2005 (the “2005 Restatement”),
subject to shareholder approval at the 2005 Annual Meeting, to (i) increase the number of shares of
Common Stock reserved for issuance under the Plan by 10,000,000 shares, (ii) restructure the
Director Automatic Grant Program for new and continuing non-employee Board members to
substitute restricted stock units for a portion of each stock option grant such individuals would
otherwise receive under the existing terms of that program,
(iii) modify the performance criteria that may serve as a
vesting requirement for one or more awards made under the plan, (iv) change the limitation on the
amount by which the share reserve under the Plan may automatically increase each year from
18,000,000 to 25,000,000 shares of Common Stock, (v) eliminate the Salary Investment and Director
Fee Option Grant Programs and (vi) effect various technical revisions to facilitate plan
administration. Such revisions shall not become effective unless the shareholders approve the 2005
Restatement at the 2005 Annual Meeting. Should shareholder approval not be obtained at the 2005
Annual Meeting, the proposed 10,000,000 share increase to the Plan, the change in the limitation on
the amount by which the share reserve under the Plan may automatically increase each year, the
revisions to the Director Automatic Grant Program and the modifications to performance-based
vesting will not be implemented. The Plan will, however, continue in
effect as it existed immediately prior to March 11, 2005
amendment and restatement, and option grants,
restricted stock unit awards and other equity awards will continue to be made under the Plan until
all the shares available for issuance under the Plan have been issued pursuant to equity awards
made under the plan. In addition, the Director Automatic Option Grant Program for the non-employee
Board members will continue in effect in accordance with the provisions of that program as they
existed immediately prior to the March 11, 2005 revisions, but neither the Salary Investment Option
Grant Program nor the Director Fee Option Grant Program will be implemented.



          E. The Plan shall terminate upon the earliest to occur of (i) February 28, 2014, (ii)
the date on which all shares available for issuance under the Plan shall have been issued as
fully-vested shares or (iii) the termination of all outstanding options, stock appreciation



25.









 







rights, restricted stock units and other share right awards in connection with a Change in
Control. Should the Plan terminate February 28, 2014, all option grants, stock appreciation
rights, unvested stock issuances, restricted stock units and other share right awards outstanding
at that time shall continue to have force and effect in accordance with the provisions of the
documents evidencing such grants, issuances or awards.



     IV. AMENDMENT OF THE PLAN



          A. The Board shall have complete and exclusive power and authority to amend or modify the Plan
in any or all respects. However, no such amendment or modification shall adversely affect the
rights and obligations with respect to stock options, stock appreciation rights, unvested stock
issuances or other stock-based awards at the time outstanding under the Plan unless the Optionee or
the Participant consents to such amendment or modification. In addition, shareholder approval will
be required for any amendment to the Plan that (i) materially increases the number of shares of
Common Stock available for issuance under the Plan, (ii) materially expands the class of
individuals eligible to receive option grants or other awards under the Plan, (iii) materially
increases the benefits accruing to the Optionees and Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (iv)
materially extends the term of the Plan or (v) expands the types of awards available for issuance
under the Plan.



          B. Options and stock appreciation rights may be granted under the Discretionary Grant and
Director Automatic Grant Programs and restricted stock units and other stock-based awards may be
issued under those Programs and the Stock Issuance Program that in each instance involve shares of
Common Stock in excess of the number of shares then available for issuance under the Plan, provided
no shares shall actually be issued pursuant to those grants or awards until the number of shares of
Common Stock available for issuance under the Plan is sufficiently increased either by (1) the
automatic annual share increase provisions of Section V.B. of Article One or (2) shareholder
approval of an amendment of the Plan sufficiently increasing the share reserve. If shareholder
approval is required and is not obtained within twelve (12) months after the date the first excess
issuances are made against the contingent increase, any unexercised options, stock appreciation
rights or other stock-based awards granted on the basis of such excess shares shall terminate and
cease to be outstanding.



     V. USE OF PROCEEDS



          Any cash proceeds received by the Corporation from the sale of shares of Common Stock under
the Plan shall be used for general corporate purposes.



     VI. REGULATORY APPROVALS



          A. The implementation of the Plan, the grant of any stock option, stock appreciation right,
restricted stock units or other stock-based award under the Plan and the issuance of any shares of
Common Stock (i) upon the exercise of any granted option or stock appreciation right or (ii)
pursuant to any other award under the Plan shall be subject to the Corporation’s procurement of all
approvals and permits required by regulatory authorities having



26.









 







jurisdiction over the Plan, the stock options, stock appreciation rights, restricted stock
units or other stock-based awards granted under it and the shares of Common Stock issued pursuant
to it.



          B. No shares of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the NASDAQ National MarketÒ, if applicable) on which
Common Stock is then listed for trading.



     VII. NO EMPLOYMENT/SERVICE RIGHTS



          Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of
the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.



27.









 





APPENDIX




          The following definitions shall be in effect under the Plan:



          A. Board shall mean the Corporation’s Board of Directors.



          B. 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 and
Exchange Act of 1934, as amended (the “1934 Act”)) 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.



          C. Code shall mean the Internal Revenue Code of 1986, as amended.



          D. Common Stock shall mean the Corporation’s Class A Common Stock.



          E. 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.



          F. Director Automatic Grant Program shall mean the director automatic grant program in
effect under Article Four of the Plan for the Eligible Directors.



          G. Discretionary Grant Program shall mean the discretionary grant program in effect
under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be
granted to one or more eligible individuals.



          H. Eligible Director shall mean a non-employee Board member eligible to participate in
the Director Automatic Grant Program in accordance with the eligibility provisions of Articles One
and Four.



A-1.









 





          I. 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.



          J. Exercise Date shall mean the date on which the Corporation shall have received
written notice of the option exercise.



          K. 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 National Market,
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 National Market on the date in question, as such price is
reported by the National Association of Securities Dealers. If there is no closing
selling price for the Common Stock on the date in question, 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 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.



          L. Family Member means, with respect to a particular Optionee or Participant, any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, bother-in-law or
sister-in-law.



          M. Hostile Take-Over shall mean either of the following events effecting a change in
control or ownership of the Corporation:




     (i) 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 1934 Act) 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 that the Board does not
recommend such shareholders to accept, or




     (ii) a change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board



A-2.









 






members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at the time the
Board approved such election or nomination.



          N. Incentive Option shall mean an option that satisfies the requirements of Code
Section 422.



          O. Involuntary Termination shall mean the termination of the Service of any individual
that occurs by reason of:




     (i) such individual’s involuntary dismissal or discharge by the Corporation for
reasons other than Misconduct, or




     (ii) such individual’s voluntary resignation following (A) a change in his or
her position with the Corporation that materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B) a
reduction in his or her level of compensation (including base salary, fringe
benefits and target bonus under any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of such
individual’s place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation without the
individual’s consent.



          P. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any
other intentional misconduct by such person 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 any Optionee, Participant or 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, to constitute grounds for termination for
Misconduct.



          Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.



          R. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.



          S. Optionee shall mean any person to whom an option is granted under the Discretionary
Grant or Director Automatic Grant Program.



          T. 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



A-3.









 







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.



          U. Participant shall mean any person who is issued shares of Common Stock or
restricted stock units or other stock-based awards under the Stock Issuance Program.



          V. Permanent Disability or Permanently Disabled shall mean the inability of the
Optionee or the Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more. However, solely for purposes of the Director
Automatic Grant Program, Permanent Disability or Permanently Disabled shall mean the inability of
the non-employee Board member to perform his or her usual duties as a Board member by reason of any
medically determinable physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.



          W. Plan shall mean the Corporation’s 1998 Stock Incentive Plan, as set forth in this
document.



          X. Plan Administrator shall mean the particular entity, whether the Primary Committee,
the Board or the Secondary Committee, which is authorized to administer the Discretionary Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under those programs with respect to the
persons under its jurisdiction.



          Y. Plan Effective Date shall mean February 3, 1998.



          Z. Predecessor Plans shall collectively mean the Corporation’s 1994 Amended and
Restated Stock Option Plan and the Special Stock Option Plan, as in effect immediately prior to the
Plan Effective Date hereunder.



          AA. Primary Committee shall mean the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Grant and Stock Issuance Programs
with respect to Section 16 Insiders.



          BB. Secondary Committee shall mean a committee of two or more Board members appointed
by the Board to administer the Discretionary Grant and Stock Issuance Programs with respect to
eligible persons other than Section 16 Insiders.



          CC. Section 16 Insider shall mean an officer or director of the Corporation subject to
the short-swing profit liabilities of Section 16 of the 1934 Act.



          DD. Service shall mean the performance of services for the Corporation (or any Parent
or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the stock option, restricted
stock unit award, stock appreciation right, stock issuance or
other stock-based award thereunder. For purposes of the Plan, an Optionee or Participant shall be
deemed to cease Service immediately upon the occurrence of the either of the following events: (i)
the Optionee or Participant no longer performs services in any of the



A-4.









 







foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for
which the Optionee or Participant is performing such services ceases to remain a Parent or
Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to
perform services for that entity.



          EE. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.



          FF. Stock Issuance Agreement shall mean the agreement entered into by the Corporation
and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance
Program.



          GG. Stock Issuance Program shall mean the stock issuance program in effect under
Article Three of the Plan.



          HH. 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.



          II. Take-Over Price shall mean the greater of (i) the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation in connection with a Hostile
Take-Over or, if applicable, (ii) the highest reported price per share of Common Stock paid by the
tender offeror in effecting such Hostile Take-Over through the acquisition of such Common Stock.
However, if the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the
clause (i) price per share.



          JJ. 10% Shareholder shall mean the owner of stock (as determined under Code Section
424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or any Parent or Subsidiary).



          KK. Underwriting Agreement shall mean the agreement between the Corporation and the
underwriter or underwriters managing the initial public offering of the Common Stock.



          LL. Withholding Taxes shall mean the federal, state and local income and employment
taxes to which the holder of a stock option, stock appreciation right, shares of Common Stock,
restricted stock units or other stock-based awards under the Plan may become subject in connection
with the grant or exercise of those stock options or stock appreciation rights or the issuance or vesting
of shares.




A-5.