Document:

exv10w4

 

Exhibit 10.4

BROADCOM CORPORATION

1998 STOCK INCENTIVE PLAN

AMENDED AND RESTATED EFFECTIVE MARCH 21, 2003

ARTICLE ONE

GENERAL PROVISIONS

     I.     PURPOSE OF THE PLAN

          This 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 shall have the meanings assigned to such terms in the
attached Appendix.

          All share numbers in this March 2002 restatement reflect (i) the
two-for-one split of the Common Stock which was effected on February 17, 1999
through the payment of a dividend of one additional share of Common Stock for
every share of Common Stock outstanding on February 5, 1999 and (ii) the
two-for-one split of the Common Stock which was effected on February 11, 2000
through the payment of a dividend of one additional share of Common Stock for
every share of Common Stock outstanding on January 31, 2000.

     II.     STRUCTURE OF THE PLAN

          A.  The Plan shall be divided into five separate equity incentive programs:

               - the Discretionary Option Grant Program under which eligible persons may,
at the discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock,

               - the Salary Investment Option Grant Program under which eligible
employees may elect to have a portion of their base salary invested each year
in special option grants,

              - the Stock Issuance Program under which eligible persons may, at the
discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus
for services rendered the Corporation (or any Parent or Subsidiary),

 

 

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

               - the Director Fee Option Grant Program under which non-employee Board
members may elect to have all or any portion of their annual retainer fee
otherwise payable in cash applied to a special stock option grant.

          B. The provisions of Articles One and Seven 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 Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option
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 option grants or stock issuances for 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 of time 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 Option 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 or stock issuances 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 Option Grant and Stock Issuance Programs under
its jurisdiction or any stock option or stock issuance thereunder.

          D.  The Primary Committee shall have the sole and exclusive authority to
determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant
Program for one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.

2.

 

          E.  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 option grants or stock
issuances under the Plan.

          F.  Administration of the Automatic Option Grant and Director Fee Option
Grant Programs shall be self-executing in accordance with the terms of those
programs, and no Plan Administrator shall exercise any discretionary functions
with respect to any option grants or stock issuances made under those programs.

     IV.     ELIGIBILITY

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

		
	 	     (i) Employees,
	 
	 	     (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.  Only Employees who are Section 16 Insiders or other highly compensated
individuals shall be eligible to participate in the Salary Investment Option
Grant Program.

          C.  Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine, (i) with respect
to the option grants under the Discretionary Option 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 the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive such issuances, the time or times when the issuances are
to be made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration for
such shares.

          D.  The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.

3.

 

          E.  The individuals who shall be eligible to participate in the Automatic
Option Grant Program shall be limited to (i) those individuals who first become
non-employee Board members after the Underwriting Date, whether through
appointment by the Board or election by the Corporation’s shareholders, and
(ii) those individuals who continue to serve as non-employee Board members at
one or more Annual Shareholders Meetings held after the Underwriting Date,
including any individuals who first became non-employee Board members prior to
such Underwriting Date. 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 under the Automatic Option Grant Program at
the time he or she first becomes a non-employee Board member, but shall be
eligible to receive periodic option grants under the Automatic Option Grant
Program while he or she continues to serve as a non-employee Board member.

          F.  All non-employee Board members shall be eligible to participate in the
Director Fee Option Grant Program.

     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. The number of shares of Common Stock reserved
for issuance over the term of the Plan shall not exceed 196,413,480
shares.1 
Such reserve shall consist of (i) the 63,922,252 shares which were transferred
as of the Plan Effective Date from the Predecessor Plans to this Plan,
including the shares subject to outstanding options under that Predecessor
Plans, (ii) plus an additional increase of 1,619,168 shares on January 4, 1999
pursuant to the automatic share increase provisions of Section V.B of this
Article One, plus (iii) an additional increase of 20,000,000 shares authorized
by the Board on September 24, 1999 and approved by the shareholders at the
Special Shareholders Meeting held on November 22, 1999, plus (iv) an additional
increase of 9,416,902 shares on January 3, 2000 pursuant to the automatic share
increase provisions of Section V.B of this Article One, plus (v) an additional
increase of 15,000,000 shares authorized by the Board on February 29, 2000 and
approved by the shareholders at the 2000 Annual Meeting, plus (vi) an
additional increase of 10,994,485 shares on January 2, 2001 pursuant to the
automatic share increase provisions of Section V.B of this Article One, plus
(vii) an additional increase of 25,000,000 shares authorized by the Board on
April 20, 2001 and approved by the shareholders at the 2001 Annual Meeting,
plus (viii) an additional increase of 11,959,496 shares on January 2, 2002
pursuant to the automatic share increase provisions of Section V.B of this
Article One, plus (ix) an additional increase of 13,000,000 shares authorized
by the Board on March 7, 2002 and approved by the shareholders at the 2002
Annual Meeting, plus (x) an additional increase of 12,501,177 shares on January
2, 2003 pursuant to the automatic share increase provisions of Section V.B of
this Article One, plus (xi) an additional increase of 13,000,000 shares
authorized by the Board on March 21, 2003, subject to shareholder approval at
the 2003 Annual Meeting. To the extent any unvested shares

	           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.

4.

 

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 18,000,000 shares.

          C.  No one person participating in the Plan may receive stock options,
separately exercisable stock appreciation rights and direct stock issuances or
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) shall be
available for subsequent issuance under the Plan to the extent (i) those
options expire or terminate for any reason prior to exercise in full or (ii)
the options 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 reissuance through one or more subsequent option grants or direct
stock issuances under the Plan. All shares which 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 which 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
or 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 the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for
issuance under the Plan shall be reduced only by the net number of shares of
Common Stock issued to the holder of such option or stock issuance, and not by
the gross number of shares for which the option is exercised or which vest
under the stock issuance. However, shares of Common Stock underlying one or
more stock appreciation rights exercised under Section IV of Article Two,
Section III of Article Three, Section II of Article Five or Section III of
Article Six of the Plan shall not be available for subsequent issuance under
the Plan.

          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 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

5.

 

and/or class of securities for which any one person may be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances or share right awards under the Plan per calendar year, (iii) the
number and/or class of securities for which grants are subsequently to be made
under the Automatic Option Grant Program to new and continuing non-employee
Board members, (iv) the number and/or class of securities and the exercise
price per share in effect under each outstanding option 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 maximum number and/or class of securities by which the share reserve
is to increase automatically each calendar year pursuant to the provisions of
Section V.B of this Article One and (vii) the maximum number and/or class of
securities which may be added to the Plan through the repurchase of unvested
shares issued under the Predecessor Plans. Such adjustments to the outstanding
options are to be effected in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options. The adjustments determined
by the Plan Administrator shall be final, binding and conclusive.

6.

 

ARTICLE TWO

DISCRETIONARY OPTION 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, subject to the provisions of Section I of Article Seven and
the documents evidencing the option, 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 Corporation-designated brokerage firm 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 in order 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.

          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.

7.

 

     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, then 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 the option is exercisable on the
date of the Optionee’s cessation of Service. 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 vested shares for which the option
has not been exercised. However, the option shall, immediately
upon the Optionee’s cessation of Service, terminate and cease to
be outstanding to the extent the option is not otherwise at that
time exercisable for vested shares.

               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

		
	 	         (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.

8.

 

          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 which 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. Limited Transferability of 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. Non-Statutory Options shall be subject to the
same limitation, except that a Non-Statutory Option may be assigned in whole or
in part during the Optionee’s lifetime to one or more members of the Optionee’s
family or to a trust established exclusively for one or more such family
members or to Optionee’s former spouse, 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. Notwithstanding the foregoing, the Optionee may also designate
one or more persons as the beneficiary or beneficiaries of his or her
outstanding options under this Article Two, 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.

     II.     INCENTIVE OPTIONS

          The terms specified below 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 Seven shall be applicable to Incentive Options. Options
which 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.

9.

 

          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, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

          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.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

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

          B. All outstanding repurchase rights 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 at the time
the repurchase right is issued.

          C. Immediately following the consummation of the Change in Control, all
outstanding options 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.

10.

 

          D. Each option which 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
which 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 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 securities shall
remain the same, (ii) the maximum number and/or class of securities available
for issuance over the remaining term of the Plan, (iii) the maximum number
and/or class of securities by which the share reserve is to increase each
calendar year pursuant to the automatic share increase provisions of the Plan,
(iv) the maximum number and/or class of securities for which any one person may
be granted options, separately exercisable stock appreciation rights and direct
stock issuances or share right awards under the Plan per calendar year and (v)
the maximum number and class of securities which 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 transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Discretionary Option 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.

          E. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date
of a Change in Control, vest and become exercisable for all the option shares
on an accelerated basis and may be exercised for any or all of the option
shares as fully vested shares of Common Stock, whether or not those options 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 Option 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 under the Discretionary Option Grant Program so
that those options shall vest and become exercisable for all the option shares
on an accelerated basis 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 do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully vested shares until the
expiration or sooner termination of the option term. In addition, the Plan
Administrator may structure one or more of the Corporation’s repurchase rights
under the Discretionary Option 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.

11.

 

          G. The Plan Administrator shall have the discretionary authority to structure
one or more outstanding options under the Discretionary Option Grant Program so
that those options shall, immediately prior to the effective date of a Hostile
Take-Over, vest and become exercisable for all the option shares on an
accelerated basis and may be exercised for any or all of the option 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 Option 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 under the
Discretionary Option 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 so accelerated shall remain exercisable for
fully vested shares until the expiration or sooner termination of the option
term.

          H. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or 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
Nonstatutory Option under the Federal tax laws.

          I. The outstanding options 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.

     IV.     CANCELLATION AND REGRANT OF OPTIONS

          The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plans) and to grant in substitution new options covering the same or a
different number of shares of Common Stock but with an exercise price per share
based on the Fair Market Value per share of Common Stock on the new grant date.

     V.     STOCK APPRECIATION RIGHTS

               A. The Plan Administrator shall have full power and authority to grant to
selected Optionees tandem stock appreciation rights and/or limited stock
appreciation rights.

               B. The following terms shall govern the grant and exercise of tandem stock
appreciation rights:

		
	 	             (i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option
for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount
equal to the excess of (a) the Fair Market Value (on the option

12.

 

		
	 	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 (b) the aggregate exercise price payable for
such shares.
	 
	 	            (ii) 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
be entitled 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.
	 
	 	          (iii) 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 (a) five (5)
business days after the receipt of the rejection notice or (b) the
last day on which the option is otherwise exercisable in
accordance with the terms of the documents evidencing such option,
but in no event may such rights be exercised more than ten (10)
years after the option grant date.

                        C. The following terms shall govern the grant and exercise of limited
stock appreciation rights:

		
	 	          (i) One or more Section 16 Insiders may be granted limited
stock appreciation rights with respect to their outstanding
options.

		
	 	          (ii) Upon the occurrence of a Hostile Take-Over, each
individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable
for a thirty (30)-day period following such Hostile Take-Over) to
surrender each such option to the Corporation. In return for the
surrendered option, the Optionee shall receive a cash distribution
from the Corporation in an amount equal to the excess of (A) the
Take-Over Price of the shares of Common Stock at the time subject
to such option (whether or not the option is otherwise vested and
exercisable for those shares) over (B) the aggregate exercise
price payable for those shares. Such cash distribution shall be
paid within five (5) days following the option surrender date.
	 
	 	          (iii) At the time such limited stock appreciation right is
granted, the Plan Administrator shall pre-approve any subsequent
exercise of that right in accordance with the terms of this
Paragraph C. Accordingly, no further approval of the Plan
Administrator or the Board shall be required at the time of the
actual option surrender and cash distribution.
	 
	 	          (iv) The balance of the option (if any) shall remain
outstanding and exercisable in accordance with the documents
evidencing such option.

13.

 

ARTICLE THREE

SALARY INVESTMENT OPTION GRANT PROGRAM

     I.     OPTION GRANTS

          The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Grant Program on the first trading day in January of the calendar
year for which the salary reduction is to be in effect.

     II.     OPTION TERMS

          Each option shall be a Non-Statutory Option 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.

          A. Exercise Price.

               1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) 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 alternative forms authorized
under the Discretionary Option 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.

          B. Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):

X = A ÷ (B x 66-2/3%), where

X is the number of option shares,

14.

 

		
	 	        A is the dollar amount of the reduction in the
Optionee’s base salary for the calendar year to be in effect
pursuant to this program, and
	 
	 	        B is the Fair Market Value per share of Common Stock on
the option grant date.

          C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the Optionee’s
completion of each calendar month of Service in the calendar year for which the
salary reduction is in effect. Each option shall have a maximum term of ten
(10) years measured from the option grant date.

          D. Effect of Termination of Service. Should the Optionee cease Service
for any reason while holding one or more options under this Article Three, then
each such option shall remain exercisable, for any or all of the shares for
which the option is exercisable at the time of such cessation of Service, until
the earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such
cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee’s cessation of Service (less any shares subsequently purchased by
Optionee prior to death), 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 designated
beneficiary or beneficiaries of the option. Such right of exercise shall
lapse, and the option shall terminate, upon the earlier of (i) the expiration
of the ten (10)-year option term or (ii) the three (3)-year period measured
from the date of the Optionee’s cessation of Service. However, the option
shall, immediately upon the Optionee’s cessation of Service for any reason,
terminate and cease to remain outstanding with respect to any and all shares of
Common Stock for which the option is not otherwise at that time exercisable.

     III.  CHANGE IN CONTROL/ HOSTILE TAKE-OVER

          A. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of such Change in
Control, vest and become exercisable for all the shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Change in Control, 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. Any option so assumed or continued in effect shall remain
exercisable for the fully-vested shares until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee’s cessation of Service,
(iii) the termination of the option in connection with a subsequent Change in
Control or (iv) the surrender of the option in connection with a Hostile
Take-Over.

15.

 

          B. In the event of a Hostile Take-Over while the Optionee remains in Service,
each outstanding option held by such Optionee under this Salary Investment
Option Grant Program shall automatically accelerate so that each such option
shall, immediately prior to the effective date of such Hostile Take-Over, vest
and become exercisable for all the shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date
of the Optionee’s cessation of Service, (iii) the termination of the option in
connection with a Change in Control or (iv) the surrender of the option in
connection with that Hostile Take-Over.

          C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Salary Investment Option Grant
Program. The Optionee 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 the surrendered option
(whether or not the option is otherwise at the time exercisable for 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. The Primary Committee shall, at the time the
option with such limited stock appreciation right is granted under the Salary
Investment Option Grant Program, pre-approve any subsequent exercise of that
right in accordance with the terms of this Paragraph C. Accordingly, no
further approval of the Primary Committee or the Board shall be required at the
time of the actual option surrender and cash distribution.

          D. Each option which 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 which 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 Salary Investment Option 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.

          E. The grant of options under the Salary Investment Option 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.

16.

 

     IV.     REMAINING TERMS

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

17.

 

ARTICLE FOUR

STOCK ISSUANCE PROGRAM

     I.     STOCK ISSUANCE TERMS

          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 which
complies with the terms specified below. Shares of Common Stock may also be
issued under the Stock Issuance Program pursuant to share right awards which
entitle the recipients to receive those shares upon the attainment of
designated performance goals.

          A. Purchase Price.

               1. The purchase price per share 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. Subject to the provisions of Section I of Article Seven, shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which 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.

          B. 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 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 which entitle the recipients to receive those shares upon
the attainment of designated performance goals. Upon the attainment of such
performance goals, fully vested shares of Common Stock shall be issued in
satisfaction of those share right awards.

18.

 

               2. Any new, substituted or additional securities or other property (including
money paid other than as a regular cash dividend) which 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.

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

               4. 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 or cash equivalent (including the Participant’s purchase-money
indebtedness), the Corporation shall repay to the Participant the cash
consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to the surrendered shares.

               5. The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares. 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.

               6. Outstanding share right awards under the Stock Issuance Program shall
automatically terminate, and no shares of Common Stock shall actually be issued
in satisfaction of those awards, if the performance goals established for such
awards are not attained. The Plan Administrator, however, shall have the
discretionary authority to issue shares of Common Stock under one or more
outstanding share right awards as to which the designated performance goals
have not been attained.

     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 those terminated rights shall immediately vest in full, in the
event of any Change in Control,

19.

 

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. The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part upon the occurrence of a Change on Control and shall not be assignable
to the successor corporation (or parent thereof), and the shares of Common
Stock subject to those terminated rights shall immediately vest at the time of
such Change in Control.

               C. The Plan Administrator shall also have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights
shall immediately vest, upon the Involuntary Termination of the Participant’s
Service within a designated period (not to exceed eighteen (18) months)
following the effective date of any Change in Control in which those repurchase
rights do not otherwise terminate.

               D. The Plan Administrator shall also have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part upon the occurrence of a Hostile Take-Over, and the shares of Common
Stock subject to those terminated rights shall accordingly vest at the time of
such Hostile Take-Over.

     III.  SHARE ESCROW/LEGENDS

          Unvested shares 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.

20.

 

ARTICLE FIVE

AUTOMATIC OPTION GRANT PROGRAM

     The provisions of this Article Five reflect the amendments to the
Automatic Option Grant Program which were authorized by the Board on April 21,
2000 and March 7, 2002. The March 7, 2002 amendments are subject to
shareholder approval at the 2002 Annual Meeting.

     I.     OPTION TERMS

          A. Grant Dates. Option grants 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 7, 2002 shall automatically be
granted, on the date of such initial election or appointment, a Non-Statutory
Option to purchase 100,000 shares of Common Stock, provided that individual has
not previously been in the employ of the Corporation or any Parent or
Subsidiary.2 Such individual shall receive an additional 100,000-share
option grant once every four (4) years thereafter during his or her period of
continued service as an Eligible Director. Each such additional 100,000-share
grant shall be made immediately upon his or her completion of each subsequent
four (4)-year period of continued service as an Eligible Director.

               2. On the date of the 2002 Annual Shareholders Meeting, each individual
with at least four (4) years of continuous service as a non-employee Board
member shall automatically be granted a Non-Statutory Option to purchase
100,000 shares of Common Stock. Each such individual shall receive an
additional 100,000-share option grant once every four (4) years thereafter
during his or her period of continued service as an Eligible Director. Each
such additional 100,000-share grant shall be made immediately upon his or her
completion of each subsequent four (4)-year period of continued service as an
Eligible Director, with such service to be measured from the starting point of
the April 25, 2002 Annual Shareholders Meeting.

               3. If a continuing non-employee Board member has not, as of the date of
the 2002 Annual Shareholders Meeting, completed at least four (4) years of
continuous service as an Eligible Director, then that individual shall receive
his or her 100,000-share grant immediately upon his or her completion of four
(4) years of service in such capacity. Such individual shall receive an
additional 100,000-share option grant once every four (4) years thereafter
during his or her period of continued service as an Eligible Director. Each
such additional 100,000-share grant shall be made immediately upon his or her
completion of each subsequent four (4)-year period of continued service as an
Eligible Director.

	      2 Prior to April 21, 2000, the initial grant to a newly elected or appointed
non-employee Board member was for 160,000 shares, as adjusted for the two
2-for-1 splits of the Common Stock.

21.

 

               4. On the date of each Annual Shareholders 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, shall
automatically be granted a Non-Statutory Option to purchase 15,000 shares of
Common Stock, whether or not that individual has served as a non-employee Board
member for at least six (6) months. There shall be no limit on the number of
such 15,000-share option grants 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 over their
period of continued Board service. Such grant shall be in addition to any
100,000-share option grant to which such individual may be entitled to receive
in the same year as that Annual Shareholders Meeting pursuant to the provisions
of paragraphs A.1 through A.3 above.

          B. Exercise Price.

               1. The exercise price per share 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 Option 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 shall have a term of ten (10) years measured
from the option grant date.

          D. Exercise and Vesting of Options. Each option 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
100,000-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 15,000-share option grant shall vest, and the Corporation’s
repurchase right shall lapse, upon the Optionee’s completion of one (1) year of
Board service measured from the option grant date.

22.

 

          E. Limited Transferability of Options. Each option under this Article Five
may be assigned in whole or in part during the Optionee’s lifetime to one or
more members of the Optionee’s family or to a trust established exclusively for
one or more such family members or to Optionee’s former spouse, to the extent
such assignment is in connection with the Optionee’s estate plan or pursuant to
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 Five, 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.

          F. Termination of Board Service. The following provisions shall govern
the exercise of any options 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, then 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 the option 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 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.

23.

 

     II.     CHANGE IN CONTROL/ HOSTILE TAKE-OVER

          A. In the event of any Change in Control while the Optionee remains a
Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under the Automatic Option 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.

          B. In the event of a Hostile Take-Over while the Optionee remains a Board
member, the shares of Common Stock at the time subject to each option
outstanding under the Automatic Option 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.

          C. All outstanding repurchase rights under the Automatic Option 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.

          D. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding automatic option grants. The Optionee 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 Optionee 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 which 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 which 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

24.

 

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 Automatic Option 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 under the Automatic Option 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 Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.

25.

 

ARTICLE SIX

DIRECTOR FEE OPTION GRANT PROGRAM

     I.     OPTION GRANTS

          The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years for which the Director Fee Option Grant
Program is to be in effect. For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or
any portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program. Such election must be filed with
the Corporation’s Chief Financial Officer prior to the first day of the
calendar year for which the annual retainer fee which is the subject of that
election is otherwise payable. Each non-employee Board member who files such a
timely election shall automatically be granted an option under this Director
Fee Option Grant Program on the first trading day in January in the calendar
year for which the annual retainer fee which is the subject of that election
would otherwise be payable in cash.

     II.     OPTION TERMS

          Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.

          A. Exercise Price.

               1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) 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 alternative forms authorized
under the Discretionary Option 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.

          B. Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):

               X = A ÷ (B x 66-2/3%), where

               X is the number of option shares,

		
	 	        A is the portion of the annual retainer fee subject to
the non-employee Board member’s election, and

26.

 

		
	 	        B is the Fair Market Value per share of Common Stock on
the option grant date.

          C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) equal monthly installments upon the Optionee’s completion
of each calendar month of Board service during the calendar year for which the
retainer fee election is in effect. Each option shall have a maximum term of
ten (10) years measured from the option grant date.

          D. Limited Transferability of Options. Each option under this Article Six
may be assigned in whole or in part during the Optionee’s lifetime to one or
more members of the Optionee’s family or to a trust established exclusively for
one or more such family members or to Optionee’s former spouse, to the extent
such assignment is in connection with 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 Six, 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.

          E. Termination of Board Service. Should the Optionee cease Board service
for any reason (other than death or Permanent Disability) while holding one or
more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such
cessation of Board service. However, each option held by the Optionee under
this Director Fee Option Grant Program at the time of his or her cessation of
Board service shall immediately terminate and cease to remain outstanding with
respect to any and all shares of Common Stock for which the option is not
otherwise at that time exercisable.

          F. Death or Permanent Disability. Should the Optionee’s service as a
Board member cease by reason of death or Permanent Disability, then each option
held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (i) the expiration of the
ten (10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service. In the event of the
Optionee’s death while holding such option, the option may be 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 designated beneficiary or beneficiaries of such
option.

27.

 

               Should the Optionee die after cessation of Board service but while holding
one or more options under this Director Fee Option Grant Program, then each
such option may be exercised, for any or all of the shares for which the option
is exercisable at the time of the Optionee’s cessation of Board service (less
any shares subsequently purchased by Optionee prior to death), 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 designated beneficiary or beneficiaries of such option.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
three (3)-year period measured from the date of the Optionee’s cessation of
Board service.

     III.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

          A. In the event of any Change in Control while the Optionee remains a
Board member, each outstanding option held by such Optionee under this Director
Fee Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
vest and become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Change in Control, 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. Any option so assumed or continued in effect shall remain
exercisable for the fully-vested shares until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee’s cessation of Board
service, (iii) the termination of the option in connection with a subsequent
Change in Control transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

          B. In the event of a Hostile Take-Over while the Optionee remains a Board
member, each outstanding option held by such Optionee under this Director Fee
Option Grant Program shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Hostile Take-Over, vest
and become exercisable for all the shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date
of the Optionee’s cessation of Board service, (iii) the termination of the
option in connection with a Change in Control transaction or (iv) the
surrender of the option in connection with that Hostile Take-Over.

          C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee 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 option is otherwise at the time exercisable for those
shares) over (ii) the

28.

 

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.

          D. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable to
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 this Plan, 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.

          E. The grant of options under the Director Fee Option 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.

     IV.     REMAINING TERMS

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

29.

 

ARTICLE SEVEN

MISCELLANEOUS

     I.     FINANCING

          The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering
a full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

     II.     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 or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant or Director Fee Option Grant Program) with the right to use shares
of Common Stock in satisfaction of all or part of the Withholding Taxes to
which such holders may become subject in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:

               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 the vesting of such 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.

               Stock Delivery: The election to deliver to the Corporation, at the time
the Non-Statutory Option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such holder (other than in connection with
the option exercise 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.

30.

 

     III.  EFFECTIVE DATE AND TERM OF THE PLAN

          A.
The Plan became effective immediately on the Plan Effective Date.
However, the Salary Investment Option Grant Program and the Director Fee Option
Grant Program shall not be implemented until such time as the Primary Committee
may deem appropriate. Options may be granted under the Discretionary Option
Grant at any time on or after the Plan Effective Date, and the initial option
grants under the Automatic Option Grant Program shall also be made on the Plan
Effective Date to any non-employee Board members eligible for such grants at
that time. However, no options granted under the Plan may be exercised, and no
shares shall be issued under the Plan, until the Plan is approved by the
Corporation’s shareholders. If such shareholder approval is not obtained
within twelve (12) months after the Plan Effective Date, then all options
previously granted under this Plan shall terminate and cease to be outstanding,
and no further options shall be granted and no shares shall be issued under the
Plan.

          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 the Section 12 Registration Date. All options
outstanding under the Predecessor Plans on the Section 12 Registration Date
shall be incorporated into the Plan at that time and shall be 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 which
do not otherwise contain such provisions.

          D. The Plan was amended by the Board in September 1999 (the “September
1999 Restatement”) to effect the following changes:

	 	 	 	(i) increase the number of shares of Common Stock reserved
for issuance under the Plan by an additional 10,000,000 shares;
and

		
	 	       (ii) revise the automatic share increase provisions of the
Plan so that the number of shares of Common Stock by which the
share reserve is to increase automatically on the first trading
day of January each year shall be increased from 3% of the total
number of shares of Class A Common Stock outstanding on the last
trading day in December of the immediately preceding calendar year
to 4.5% of the total number of shares of Class A and Class B
Common Stock outstanding on the last trading day of December each
year, beginning with the January 3, 2000 annual increase, but in
no event shall any such annual increase exceed 18,000,000 shares
of Class A Common Stock.

31.

 

		
	 	       The amendment was approved by the shareholders at the Special Shareholders
Meeting held on November 22, 1999.

          E. The Plan was amended by the Board on February 29, 2000 (the “February
2000 Restatement”) to increase the number of shares of Common Stock reserved
for issuance under the Plan by an additional 15,000,000 shares, and such
increase was approved by the shareholders at the 2000 Annual Shareholders
Meeting.

          F. The Plan was amended by the Board on April 21, 2000 (the “April 2000
Restatement”) to revise the provisions of the Automatic Option Grant Program to
reduce the number of shares of Common Stock subject to the automatic option
grant made to each newly elected or appointed non-employee Board member from
160,000 shares of Common Stock to 80,000 shares of Common Stock.

          G. The Plan was amended by the Board on April 20, 2001 (the “April 2001
Restatement”) to increase the number of shares of Common Stock reserved for
issuance under the Plan by an additional 25,000,000 shares and such increase
was approved by the shareholders at the 2001 Annual Shareholders Meeting.

          H. The Plan was amended by the Board on March 7, 2002 in order to (i)
increase the number of shares of Common Stock for which each individual who is
to continue to serve as an Eligible Director shall receive an annual automatic
option grant under such program from 12,000 shares of Common Stock to 15,000
shares of Common Stock and eliminate the requirement that the non-employee
Board member must complete at least 6 months of service in such capacity before
he or she would be eligible to receive the first such annual option grant, (ii)
increase the number of shares of Common Stock for which a newly elected or
appointed Eligible Director is to receive as his or her initial annual
automatic option grant under such program from 80,000 shares of Common Stock to
100,000 shares of Common Stock and (iii) provide for additional 100,000-share
option grants to be made to each Eligible Director periodically upon his or her
completion of each four (4)-year period of continued service as an Eligible
Director. The amendment was approved by the shareholders at the 2002 Annual
Meeting.

           I. The Plan was amended by the Board on March 21, 2003 (the “March 2003
Restatement”) to (a) expand the types of acceptable consideration for which
shares may be issued under the Stock Issuance Program to include all items of
valid consideration permissible under the California General Corporate Law and
(b) increase the number of shares of Common Stock reserved for issuance under
the Plan by an additional 13,000,000 shares. No option grants made on the basis
of the 13,000,000-share increase authorized by the March 2003 Restatement shall
become exercisable in whole or in part unless and until the March 2003
Restatement is approved by the shareholders at the 2003 Annual Shareholders
Meeting. Should such shareholder approval not be obtained, then each option
grant made pursuant to the 13,000,000-share increase authorized by the March
2003 Restatement shall terminate and cease to be outstanding, and no further
option grants shall be made on the basis of that share increase. However, the
provisions of the Plan as in effect immediately prior to that 13,000,000-share
increase shall remain in effect, and option grants and direct stock issuances
may continue to be made pursuant to those provisions of the Plan.

32.

 

           J. The Plan shall terminate upon the earliest to occur of (i) January 31,
2008, (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 in connection with a Change in Control. Should the Plan
terminate on January 31, 2008, then all option grants and unvested stock
issuances outstanding at that time shall continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.

     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 or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require shareholder approval
pursuant to applicable laws or regulations.

          B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such shareholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically cancelled 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 granting of any stock option under
the Plan and the issuance of any shares of Common Stock (i) upon the exercise
of any granted option or (ii) under the Stock Issuance Program shall be subject
to the Corporation’s procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the stock options
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

33.

 

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 Market, 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.

34.

 

APPENDIX

          The following definitions shall be in effect under the Plan:

          A.
Automatic Option Grant Program shall mean the automatic option grant
program in effect under Article Five of the Plan.

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

          C. 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 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.

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

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

          F. 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.

          G. Director Fee Option Grant Program shall mean the special stock option
grant program in effect for non-employee Board members under Article Six of the
Plan.

          H. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under Article Two of the Plan.

 

          I. Eligible Director shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program or the Director Fee Option
Grant Program in accordance with the eligibility provisions of Articles One,
Five and Six.

          J. 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.

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

          L. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:

		
	 	     (i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question,
as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. 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 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.
	 
	 	     (iii) For purposes of any option grants made on the
Underwriting Date, the Fair Market Value shall be deemed to be
equal to the price per share at which the Common Stock is to be
sold in the initial public offering pursuant to the Underwriting
Agreement.

          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 which the Board does not recommend such
shareholders to accept, or

A-2.

 

		
	 	     (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 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 which satisfies the requirements
of Code Section 422.

          O. Involuntary Termination shall mean the termination of the Service of
any individual which 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 which
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 be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

          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 Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.

A-3.

 

           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 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
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 Automatic Option Grant and
Director Fee Option Grant Programs, 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 Option 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 Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate
in such program.

          BB. Salary Investment Option Grant Program shall mean the salary
investment option grant program in effect under Article Three of the Plan.

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

A-4.

 

          DD. Section 12 Registration Date shall mean the date on which the Common Stock
is first registered under Section 12 of the 1934 Act.

          EE. 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.

          FF. 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 option grant or stock issuance.

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

          HH. 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.

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

          JJ. 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.

          KK. 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 the 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.

          LL. 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).

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

          NN. Underwriting Date shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.

A-5.

 

          OO. Withholding Taxes shall mean the Federal, state and local income and
employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of those options or the vesting of those shares.

A-6.exv10w5

 

Exhibit 10.5

BROADCOM CORPORATION

1998 EMPLOYEE STOCK PURCHASE PLAN

(as Amended and Restated March 21, 2003)

	 	I.	 	PURPOSE OF THE PLAN

               This Employee Stock Purchase Plan is intended to promote the interests of
Broadcom Corporation by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.

               Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.

               All share numbers in this March 21, 2003 restatement reflect (i) the
two-for-one split of the Common Stock which was effected on February 17, 1999
through the payment of a dividend of one additional share of Common Stock for
every share of Common Stock outstanding on February 5, 1999 and (ii) the
two-for-one split of the Common Stock which was effected on February 11, 2000
through the payment of a dividend of one additional share of Common Stock for
every share of Common Stock outstanding on January 31, 2000.

	 	II.	 	ADMINISTRATION OF THE PLAN

               The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

	 	III.	 	STOCK SUBJECT TO PLAN

               A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock reserved for
issuance over the term of the Plan shall be limited to 6,694,509 shares. Such
reserve shall consist of (i) the initial share reserve of 3,000,000 shares,
(ii) an increase of 3,000,000 shares authorized by the Board on March 7, 2002
and approved by the shareholders at the 2002 Annual Meeting and (iii) an
additional increase of 694,509 shares effected in January 2003 pursuant to the
automatic share increase provisions of Section III.B.

 

               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 2003, by an
amount equal to twenty-five one hundredths of one percent (0.25%) of the
aggregate number of shares of Class A Common Stock 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 1,000,000
shares. Subject to shareholder approval at the 2003 Annual Meeting, the
foregoing automatic share increase provision shall be revised upward so that
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 remaining term of the Plan, beginning with calendar year 2004,
by an amount equal to one percent (1%) of the aggregate number of shares of
Class A Common Stock 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 3,000,000 shares.

               C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, 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, then appropriate
adjustments shall be made to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities by
which the share reserve under the Plan is to increase each calendar year
pursuant to the provisions of Section III.B, (iii) the maximum number and class
of securities purchasable per Participant on any one Purchase Date, (iv) the
maximum number and class of securities purchasable in total by all Participants
on any one Purchase Date and (v) the number and class of securities and the
price per share in effect under each outstanding purchase right in order to
prevent the dilution or enlargement of benefits thereunder.

	 	IV.	 	OFFERING PERIODS

               A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.

               B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. However, the initial offering period shall
commence at the Effective Time and terminate on the last business day in April
2000. The next offering period shall commence on the first business day in May
2000, and subsequent offering periods shall commence as designated by the Plan
Administrator.

               C. Each offering period shall be comprised of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in May each year to the last business day in October of the same
year and from the first business day in

2

 

November each year to the last business day in April of the following
year. However, the first Purchase Interval in effect under the initial
offering period shall commence at the Effective Time and terminate on the last
business day in October 1998.

               D. Should the Fair Market Value per share of Common Stock on any Purchase
Date within an offering period be less than the Fair Market Value per share of
Common Stock on the start date of that offering period, then that offering
period shall automatically terminate immediately after the purchase of shares
of Common Stock on such Purchase Date, and a new offering period shall commence
on the next business day following such Purchase Date. The new offering period
shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.

	 	V.	 	ELIGIBILITY

               A. Each individual who is an Eligible Employee on the start date of any
offering period under the Plan may enter that offering period on such start
date or on any subsequent Quarterly Entry Date within that offering period,
provided he or she remains an Eligible Employee.

               B. Each individual who first becomes an Eligible Employee after the start
date of an offering period may enter that offering period on any subsequent
Quarterly Entry Date within that offering period on which he or she is an
Eligible Employee.

               C. Each corporation acquired by the Corporation at any time after March 7,
2002 pursuant to a transaction in which that acquired corporation is to be
maintained as a separate Corporate Affiliate shall automatically become a
Participating Corporation effective as of the first Quarterly Entry Date
coincident with or next following the effective date of the acquisition.

               D. The date an individual enters an offering period shall be designated
his or her Entry Date for purposes of that offering period.

               E. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.

	 	VI.	 	PAYROLL DEDUCTIONS

               A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock during an offering period may be any multiple
of one percent (1%) of the Cash Earnings paid to the Participant during each
Purchase Interval within that offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

3

 

		
	 	     (i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction, by filing
the appropriate form with the Plan Administrator. Effective for
all offering periods beginning on or after May 1, 2003, the
reduction shall become effective on the first pay day of the month
following the month in which such form is filed, and there shall
be no limit on the number of such reductions a Participant may
effect during a Purchase Interval.1
	 
	 	     (ii) The Participant may, at any time during the offering
period, increase the rate of his or her payroll deduction by
filing the appropriate form with the Plan Administrator. Effective
for all offering periods beginning on or after May 1, 2003, the
new rate (which may not exceed the fifteen percent (15%) maximum)
shall become effective on the first pay day of the month following
the month in which such form is filed, and there shall be no limit
on the number of such increases a Participant may effect during a
Purchase Interval.2

               B. Payroll deductions shall begin on the first pay day following the
Participant’s Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant’s book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be required
to be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.

               C. Payroll deductions shall automatically cease upon the termination of
the Participant’s purchase right in accordance with the provisions of the Plan.

               D. The Participant’s acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant’s acquisition of
Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.

	 	VII.	 	PURCHASE RIGHTS

               A. Grant of Purchase Right. A Participant shall be granted a separate
purchase right for each offering period in which he or she participates. The
purchase right shall be granted on the Participant’s Entry Date into the
offering period and shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive installments over the

	          1 For offering periods beginning prior to May 1, 2003, no Participant may
effect more than one (1) such reduction per Purchase Interval, and any such
permissible reduction will become effective as soon as possible following the
filing of the elected reduction with the Plan Administrator.
	 
	          2 For offering periods beginning prior to May 1, 2003, any increase in the
rate of payroll deduction will only become effective as of the start of the
Purchase Interval immediately following the filing of the elected increase with
the Plan Administrator, and the Participant is accordingly allowed only one
such increase per Purchase Interval.

4

 

remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.

               Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.

               B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant on each such Purchase Date. The purchase shall
be effected by applying the Participant’s payroll deductions for the Purchase
Interval ending on such Purchase Date to the purchase of whole shares of Common
Stock at the purchase price in effect for the Participant for that Purchase
Date.

               C. Purchase Price. The purchase price per share at which Common Stock
will be purchased on the Participant’s behalf on each Purchase Date within the
offering period shall be equal to eighty-five percent (85%) of the lower of (i)
the Fair Market Value per share of Common Stock on the Participant’s Entry Date
into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.

               D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date during the offering period
shall be the number of whole shares obtained by dividing the amount collected
from the Participant through payroll deductions during the Purchase Interval
ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed Six Thousand (6,000) shares, subject to periodic adjustments in the
event of certain changes in the Corporation’s capitalization. In addition, the
maximum number of shares of Common Stock purchasable in total by all
Participants on any one Purchase Date in any offering period beginning on or
after May 1, 2003 shall not exceed One Million Two Hundred Thousand (1,200,000)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation’s capitalization. However, the Plan Administrator shall have the
discretionary authority, exercisable prior to the start of any offering period
under the Plan, to increase or decrease the limitations to be in effect for the
number of shares purchasable per Participant and in total by all Participants
on each Purchase Date during that offering period.

               E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
total by all Participants on such Purchase Date shall be promptly refunded.

5

 

               F. Withdrawal from Plan/Termination of Purchase Right: The following
provisions shall govern the withdrawal or the termination of outstanding
purchase rights:

		
	 	     (i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, withdraw from the
Plan by filing the appropriate form with the Plan Administrator
(or its designate), and no further payroll deductions shall be
collected from the Participant with respect to the offering period
in which such withdrawal occurs. Any payroll deductions collected
during the Purchase Interval in which such withdrawal occurs
shall, at the Participant’s election, be immediately refunded or
held for the purchase of shares on the next Purchase Date. If no
such election is made at the time such withdrawal, then the
payroll deductions collected with respect to the terminated right
shall be refunded as soon as possible.

		
	 	     (ii) In order to resume participation in the Plan, such
individual must re-enroll in the Plan (by making a timely filing
of the prescribed enrollment forms) on or before any subsequently
scheduled Quarterly Entry Date.

		
	 	     (iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in
status) while his or her purchase right remains outstanding, then
that purchase right shall immediately terminate, and all of the
Participant’s payroll deductions for the Purchase Interval in
which the purchase right so terminates shall be immediately
refunded. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence,
then the Participant shall have the right, exercisable up until
the last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to
date on his or her behalf for that Purchase Interval or (b) have
such funds held for the purchase of shares on his or her behalf on
the next scheduled Purchase Date. In no event, however, shall any
further payroll deductions be collected on the Participant’s
behalf during such leave. Upon the Participant’s return to active
service (i) within ninety (90) days following the commencement of
such leave or (ii) prior to the expiration of any longer period
for which such Participant’s right to reemployment with the
Corporation is guaranteed by either statute or contract, his or
her payroll deductions under the Plan shall automatically resume
at the rate in effect at the time the leave began, unless the
Participant withdraws from the Plan prior to his or her return.
An individual who returns to active employment following a leave
of absence which exceeds in duration the applicable (x) or (y)
time period shall be treated as a new Employee for purposes of
subsequent participation in the Plan and must accordingly
re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date
into the offering period.

6

 

               G. Change in Control. Each outstanding purchase right shall automatically be
exercised, immediately prior to the effective date of any Change in Control, by
applying the payroll deductions of each Participant for the Purchase Interval
in which such Change in Control occurs to the purchase of whole shares of
Common Stock at a purchase price per share equal to eighty-five percent (85%)
of the lower of (i) the Fair Market Value per share of Common Stock on the
Participant’s Entry Date into the offering period in which such Change in
Control occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Change in Control. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase, but not the
limitation applicable to the maximum number of shares of Common Stock
purchasable in total by all Participants.

               The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.

               H. Proration of Purchase Rights. Should the total number of shares of
Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.

               I. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.

               J. Shareholder Rights. A Participant shall have no shareholder rights
with respect to the shares subject to his or her outstanding purchase right
until the shares are purchased on the Participant’s behalf in accordance with
the provisions of the Plan and the Participant has become a holder of record of
the purchased shares.

	 	VIII.	 	ACCRUAL LIMITATIONS

               A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would
otherwise permit such Participant to purchase more than Twenty-Five Thousand
Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value per share on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.

7

 

               B. For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:

		
	 	     (i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each
successive Purchase Date during the offering period on which such
right remains outstanding.

		
	 	     (ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has
already accrued in the same calendar year the right to acquire
Common Stock under one (1) or more other purchase rights at a rate
equal to Twenty-Five Thousand Dollars ($25,000) worth of Common
Stock (determined on the basis of the Fair Market Value per share
on the date or dates of grant) for each calendar year such rights
were at any time outstanding.

               C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the
payroll deductions which the Participant made during that Purchase Interval
with respect to such purchase right shall be promptly refunded.

               D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

	 	IX.	 	EFFECTIVE DATE AND TERM OF THE PLAN

               A. The Plan was adopted by the Board on February 3, 1998 and became
effective at the Effective Time. However, no purchase rights granted under the
Plan were exercised, and no shares of Common Stock were issued hereunder, until
(i) the Plan had been approved by the shareholders of the Corporation and (ii)
the Corporation had complied with all applicable requirements of the 1933 Act
(including the registration of the shares of Common Stock issuable under the
Plan on a Form S-8 registration statement filed with the Securities and
Exchange Commission), all applicable listing requirements of any stock exchange
(or the Nasdaq National Market, if applicable) on which the Common Stock is
listed for trading and all other applicable requirements established by law or
regulation.

               B. Unless sooner terminated by the Board, the Plan shall terminate upon
the earliest of (i) the last business day in April 2008, (ii) the date on which
all shares available for issuance under the Plan shall have been sold pursuant
to purchase rights exercised under the Plan or (iii) the date on which all
purchase rights are exercised in connection with a Change in Control. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.

8

 

	 	X.	 	AMENDMENT/TERMINATION OF THE PLAN

               A. The Board may alter, amend, suspend or terminate the Plan at any time
to become effective immediately following the close of any Purchase Interval.
However, the Plan may be amended or terminated immediately upon Board action,
if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the Corporation to recognize
compensation expense in the absence of such amendment or termination.

               B. In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Corporation’s shareholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the
Corporation’s capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation
in the Plan.

               C. On March 7, 2002, the Board amended the Plan to (i) increase the number
of shares of Common Stock authorized for issuance under the Plan by an
additional 3,000,000 shares and (ii) to implement an automatic share increase
feature pursuant to the provisions of Section III.B. The amendment was
approved by the shareholders at the 2002 Annual Meeting.

               D. On October 31, 2002, the Board amended the Plan to increase the number
of shares of Common Stock purchasable in total by all Participants on each
Purchase Date within any offering period beginning on or after November 1, 2002
from 600,000 to 1,200,000 shares.

               E. On March 21, 2003, the Board amended the Plan to (i) revise the
automatic share increase provisions of Section III.B upward so that so that 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 remaining term of the Plan, beginning with calendar year 2004, by an
amount equal to one percent (1%) of the aggregate number of shares of Class A
Common Stock 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 3,000,000 shares, (ii) allow Participants who
withdraw from an offering period to rejoin the Plan on any subsequently
scheduled Quarterly Entry Date and, effective for all of offering periods
beginning on or after May 1, 2003, (iii) remove the limitation on the number of
times a Participant may change his or her rate of payroll deduction during a
Purchase Interval.

	 	XI.	 	GENERAL PROVISIONS

               A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation; however, each Plan Participant shall bear all costs
and expenses incurred by such individual in the sale or other disposition of
any shares purchased under the Plan.

9

 

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

               C. The provisions of the Plan shall be governed by the laws of the State
of California without resort to that State’s conflict-of-laws rules.

               D. The Corporation and each Participating Corporation shall have the right
to take whatever steps the Plan Administrator deems necessary or appropriate to
comply with all applicable federal, state, local and employment tax withholding
requirements, and the Corporation’s obligations to deliver shares under this
Plan shall be conditioned upon compliance with all such withholding tax
requirements. Without limiting the generality of the foregoing, the
Corporation and each Participating Corporation shall have the right to withhold
taxes from any other compensation or other amounts which it may owe to the
Participant, or to require the Participant to pay to the Corporation or the
Participating Corporation the amount of any taxes which the Corporation or the
Participating Corporation may be required to withhold with respect to such
shares. In this connection, the Plan Administrator may require the Participant
to notify the Plan Administrator, the Corporation or a Participating
Corporation before the Participant sells or otherwise disposes of any shares
acquired under the Plan.

10

 

Schedule A

Corporations Participating in

Employee Stock Purchase Plan

As of March 21, 2003

Broadcom Corporation

Altima Communications, Inc.

AltoCom, Inc.

Broadcom Asia Distribution Pte. Ltd.

Broadcom Canada Ltd.

Broadcom HomeNetworking, Inc.

Broadcom Japan K.K.

Broadcom India Private Limited

Broadcom Israel Ltd.

Broadcom Netherlands B.V.

Broadcom Singapore Pte Ltd.

Broadcom Taiwan Corporation

Broadcom UK Ltd.

ServerWorks Corporation

 

 

APPENDIX

               The following definitions shall be in effect under the Plan:

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

               B. Cash Earnings shall mean the (i) base salary payable to a Participant
by one or more Participating Companies during such individual’s period of
participation in one or more offering periods under the Plan plus (ii) all
overtime payments, bonuses, commissions, current profit-sharing distributions
and other incentive-type payments received during such period. Such Cash
Earnings shall be calculated before deduction of (A) any income or employment
tax withholdings or (B) any pre-tax contributions made by the Participant to
any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria
benefit program now or hereafter established by the Corporation or any
Corporate Affiliate. However, Cash Earnings shall not include any
contributions (other than Code Section 401(k) or Code Section 125 contributions
deducted from such Cash Earnings) made by the Corporation or any Corporate
Affiliate on the Participant’s behalf to any employee benefit or welfare plan
now or hereafter established.

               C. Change in Control shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

		
	 	     (i) a 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,

		
	 	     (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation 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 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.

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

               E. Common Stock shall mean the Corporation’s Class A common stock.

               F. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424), whether
now existing or subsequently established.

A-1

 

               G. Corporation shall mean Broadcom Corporation, a California corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of Broadcom Corporation which shall by appropriate action adopt the Plan.

               H. Effective Time shall mean the time at which the Underwriting Agreement
was executed and the Common Stock priced for the initial public offering. Any
Corporate Affiliate which becomes a Participating Corporation after such
Effective Time shall designate a subsequent Effective Time with respect to its
employee-Participants.

               I. Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly
expected to render more than twenty (20) hours of service per week for more
than five (5) months per calendar year for earnings considered wages under Code
Section 3401(a).

               J. Entry Date shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Time.

               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 on the date in question,
as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. 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 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.

		
	 	     (iii) For purposes of the initial offering period which began
at the Effective Time, the Fair Market Value shall be deemed to be
equal to the price per share at which the Common Stock was sold in
the initial public offering pursuant to the Underwriting
Agreement.

               L. 1933 Act shall mean the Securities Act of 1933, as amended.

A-2

 

               M. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.

               N. Participating Corporation shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan are listed in attached Schedule A.

               O. Plan shall mean the Corporation’s 1998 Employee Stock Purchase Plan, as
set forth in this document.

               P. Plan Administrator shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.

               Q. Purchase Date shall mean the last business day of each Purchase
Interval. The initial Purchase Date shall be October 30, 1998.

               R. Purchase Interval shall mean each successive six (6)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.

               S. Quarterly Entry Date shall mean the first business day in February,
May, August and November each year on which an Eligible Employee may first
enter an offering period. The first such Quarterly Entry Date shall be August
2, 1999.

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

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

A-3

 

BROADCOM CORPORATION

1998 EMPLOYEE STOCK PURCHASE PLAN- STOCK PURCHASE AGREEMENT

POST APRIL 1, 2003 ENTRY DATE INTO NOVEMBER 2002 OFFERING PERIOD

I hereby elect to participate in the 1998 Employee Stock Purchase Plan (the
“ESPP”) and hereby subscribe to purchase shares of Common Stock of Broadcom
Corporation (the “Corporation”) in accordance with the provisions of this
Agreement and the ESPP. I hereby authorize payroll deductions from each of my
paychecks following my entry into the offering period in the 1% multiple of my
eligible cash earnings (not to exceed a maximum of 15%) specified in my
attached Enrollment/Change Form.

Each offering period will be of a duration of 24 months or less and will be
divided into a series of consecutive purchase intervals. Those purchase
intervals will be of six months duration and begin on the first business day of
May and November each year during the offering period. My participation will
automatically remain in effect, in accordance with my most current payroll
deduction authorization, from one purchase interval to the next within the
offering period in which I join the ESPP and from one purchase interval to the
next within each subsequent offering period during the remaining term of the
ESPP, unless I withdraw from the ESPP or change the rate of my payroll
deduction or unless my employment status changes. I may reduce the rate of my
payroll deductions on one occasion per 6-month purchase interval, to become
effective with the filing of the change form, and I may increase my rate of
payroll deductions to become effective at the beginning of any subsequent
6-month purchase interval (May 1 or November 1). For offering periods
beginning on or after May 1, 2003, I may change my rate of payroll deductions
at any time, to become effective on the first pay day of the month following
the month in which I file my change request with the plan administrator, and
there will be no limit on the number of changes I may make per purchase
interval or per offering period.

My payroll deductions will be accumulated for the purchase of shares of the
Corporation’s Common Stock on the last business day of each purchase interval
within each offering period in which I participate. The purchase price per
share will be equal to 85% of the lower of (i) the fair market value per share
of Common Stock on my entry date into that offering period or (ii) the fair
market value per share on the purchase date. I will also be subject to ESPP
restrictions (i) limiting the maximum number of shares which I may purchase per
purchase interval and the maximum number of shares purchasable in the aggregate
by all participants on any one purchase date and (ii) prohibiting me from
purchasing more than $25,000 worth of Common Stock for each calendar year my
purchase right remains outstanding.

I may withdraw from the ESPP at any time prior to the last business day of a
purchase interval and elect either to have the Corporation refund all my
payroll deductions for that interval or to have such payroll deductions applied
to the purchase of Common Stock at the end of such interval. However, I may
not rejoin the ESPP until a new quarterly entry date (first business day in
February, May, August and November). Upon the termination of my employment for
any reason (including death or disability) or my loss of eligible employee
status, my participation in the ESPP will immediately cease and all my payroll
deductions for the purchase interval in which my employment terminates or my
loss of eligibility occurs will automatically be refunded. If I take an unpaid
leave of absence, my payroll deductions will immediately cease and any payroll
deductions for the purchase interval in which my leave begins will, at my
election, either be refunded or applied to the purchase of shares of Common
Stock at the end of that purchase interval. If I return to active service
within 90 days after the start of my leave, then my payroll deductions will at
that time automatically resume at the rate in effect for me when my leave
began.

The Corporation will issue a stock certificate for the shares purchased on my
behalf after the end of each purchase interval and the certificate will be
deposited directly in the Corporation-designated brokerage account established
on my behalf. I will notify the Corporation of any disposition of shares
purchased under the ESPP and I will satisfy all applicable income and
employment tax withholding requirements at the time of such disposition.

The Corporation has the right, exercisable in its sole discretion, to amend or
terminate the ESPP at any time, with such amendment or termination to become
effective immediately following the exercise of outstanding purchase rights at
the end of any current purchase interval. Should the Corporation elect to
terminate the ESPP, I will have no further rights to purchase shares of Common
Stock pursuant to this Agreement. I have received a copy of the Q&A Summary
identifying the major features of the ESPP. I have read this Agreement and the
Q&A Summary and hereby agree to be bound by the terms of both this Agreement
and the ESPP. The effectiveness of this Agreement is dependent upon my
eligibility to participate in the ESPP.

	 	 	 	 	 
	Date:	 	 	 	 
	 	 	

	 	

	 	 	 	 	Signature of Employee

	 	 	 	 	 	 	 
	Entry Date into Plan:	 	 	 	Printed Name:	 	 
	 	 	

	 	 	 	

 

Post April 30, 2003 Offering Period

BROADCOM CORPORATION

1998 EMPLOYEE STOCK PURCHASE PLAN — STOCK PURCHASE AGREEMENT

     I hereby elect to participate in the 1998 Employee Stock Purchase Plan
(the “ESPP”) and hereby subscribe to purchase shares of Common Stock of
Broadcom Corporation (the “Corporation”) in accordance with the provisions of
this Agreement and the ESPP. I hereby authorize payroll deductions from each
of my paychecks following my entry into the offering period in the 1% multiple
of my eligible cash earnings (not to exceed a maximum of 15%) specified in my
attached Enrollment/Change Form.

     Each offering period will be a duration of twenty-four months or less and
will be divided into a series of consecutive purchase intervals. Those
purchase intervals will be of six months duration and begin on the first
business day of May and November each year during the offering period. My
participation will automatically remain in effect, in accordance with my most
current payroll deduction authorization, from one purchase interval to the next
within the offering period in which I join the ESPP and from one purchase
interval to the next within each subsequent offering period during the
remaining term of the ESPP, unless I withdraw from the ESPP or change the rate
of my payroll deduction or unless my employment status changes. I may change
the rate of my payroll deductions at any time during the offering period, with
the change to become effective on the first pay day of the month following the
month in which I file my change request with the plan administrator, and there
will be no limit on the number of changes I may make per purchase interval or
per offering period.

     My payroll deductions will be accumulated for the purchase of shares of
the Corporation’s Common Stock on the last business day of each purchase
interval within each offering period in which I participate. The purchase
price per share will be equal to 85% of the lower of (i) the fair market value
per share of Common Stock on my entry date into the offering period or (ii) the
fair market value per share on the purchase date. I will also be subject to
ESPP restrictions (i) limiting the maximum number of shares which I may
purchase per purchase interval and the maximum number of shares purchasable in
the aggregate by all participants on any one purchase date and (ii) prohibiting
me from purchasing more than $25,000 worth of Common Stock for each calendar
year my purchase right remains outstanding.

     I may withdraw from the ESPP at any time prior to the last business day of
a purchase interval and elect either to have the Corporation refund all my
payroll deductions for that interval or to have such payroll deductions applied
to the purchase of Common Stock at the end of such interval. However, I may
not rejoin the ESPP until a new quarterly entry date (first business day in
February, May, August and November). Upon the termination of my employment for
any reason (including death or disability) or my loss of eligible employee
status, my participation in the ESPP will immediately cease and all my payroll
deductions for the purchase interval in which my employment terminates or my
loss of eligibility occurs will automatically be refunded.

     If I take an unpaid leave of absence, my payroll deductions will
immediately cease and any payroll deductions for the purchase interval in which
my leave begins will, at my election, either be refunded or applied to the
purchase of shares of Common Stock at the end of that purchase interval. If I
return to active service within ninety days after the start of my leave, then
my payroll deductions will at that time automatically resume at the rate in
effect for me when my leave began.

     The Corporation will issue a stock certificate for the shares purchased on
my behalf after the end of each purchase interval and the certificate will be
deposited directly in the Corporation-designated brokerage account established
on my behalf. I will notify the Corporation of any disposition of shares
purchased under the ESPP and I will satisfy all applicable income and
employment tax withholding requirements at the time of such disposition.

     The Corporation has the right, exercisable in its sole discretion, to
amend or terminate the ESPP at any time, with such amendment or termination to
become effective immediately following the exercise of outstanding purchase
rights at the end of any current purchase interval. Should the Corporation
elect to terminate the ESPP, I will have no further rights to purchase shares
of Common Stock pursuant to this Agreement. I have received a copy of the Q&A
Summary identifying the major features of the ESPP. I have read this Agreement
and the Q&A Summary and hereby agree to be bound by the terms of both this
Agreement and the ESPP. The effectiveness of this Agreement is dependent upon
my eligibility to participate in the ESPP.

	 	 	 	 	 	 	 	 	 	 	 
	Date:	 	 	 	 	,200	 	 	 	 	 
	 	 	

	 	 	 	 	 	

	 	

	 	 	 	 	 	 	 	 	 	 	Signature of Employee

	 	 	 	 	 	 	 	 	 	 	 
	Entry Date:	 	 	 	 	,200	 	 	 	 	 
	 	 	

	 	 	 	 	 	

	 	

	 	 	 	 	 	 	 	 	 	 	Printed Name

 

	 	 	 	 	 	 	 
	Return completed form to BRCM Shareholder Services in Irvine	 	
For Shareholder Services Use Only:
	 	Entered in EE	 	 
	 	 	 	 	 	 	

	If by fax to 949-450-1484 (original not required)	 	 	 	Faxed to Payroll (US)	 	 
	 	 	 	 	 	 	

	 	 	 	 	Faxed to Payroll (Intl)	 	 
	 	 	 	 	 	 	

BROADCOM CORPORATION

EMPLOYEE STOCK PURCHASE PLAN (“ESPP”) — ENROLLMENT / CHANGE FORM

SECTION 1: ACTIONS

	 	 	 	 	 
	 

	 	
New Enrollment
	 	Complete 2, 3, 7 and sign Stock Purchase Agreement
	 	 	
Re- Enrollment (May 1 or November 1 only)
	 	Complete 2, 3, 7 and sign Stock Purchase Agreement
	
	 	 	 	 
	 	 	
Payroll Deduction Change
	 	Complete 2, 4, 7
	
	 	 	 	 
	 	 	
Terminate Payroll Deductions
	 	Complete 2, 5, 7
	
	 	 	 	 
	 	 	
Leave of Absence
	 	Complete 2, 6, 7
	
	 	 	 	 

SECTION 2: PERSONNEL DATA (Please print)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	@broadcom.com
	

	Last Name (Surname)	 	
First Name
	 	Middle Initial
	 	Email
	 	 
	 	 	 	 	 	 	 	 	 
	

	Home Address	 	
Street
	 	 	 	Business Telephone	 	 
	 	 	 	 	 	 	 	 	 
	

	City	 	
State
	 	Country
	 	Zip Code	 	 

	 	 	 
	Social Security No. (U.S. Taxpayers only)	 	 
	 	 	

SECTION 3: NEW ENROLLMENT Deadline for receipt is on or before first business
day of February, May, August and, November.

Effective with the ESPP Enrollment Date:

First business day of February 200___, May 200___, August, 200___, November 200___;

Payroll Deduction Amount: ____% (write out % ___) of cash
earnings (must be a multiple of 1% up to a maximum of 15% of cash earnings).

SECTION 4: PAYROLL DEDUCTION CHANGE

Effective with the Pay Period Beginning ___/___/200___, I authorize the
following new level of payroll deductions: ____% (write out %____) of cash earnings (must be a multiple of 1% up to a maximum of
15% of cash earnings).

NOTE 4: You may reduce your rate of payroll deduction once per 6-month
purchase interval to become effective as soon as possible following the filing
of the change form. You may also increase your rate of payroll deduction to
become effective as of the start date of the next 6-month purchase interval
(May 1 or November 1 – due on or before these dates). Effective for offering
periods beginning on or after May 1, 2003, you may change your rate of payroll
deduction at any time to become effective on the first pay day of the month
following the month in which you file this change form, and there will be no
limit on the number of changes you may make.

SECTION 5: TERMINATE PAYROLL DEDUCTIONS

*Effective with the Pay Period Beginning ___/___/200___, I authorize the
termination of my payroll deductions.

*Not effective until discussed with and approved by BRCM Shareholder Services: By      Date ___/___/200___

In connection with my voluntary termination of payroll deductions (or an
approved leave of absence), I elect the following action regarding my ESPP
payroll deductions to date in the current purchase interval:

	 	 	 	 	 
	 	 	 	 	Purchase Broadcom Corporation shares on next scheduled purchase date, OR
	 	 	

	 	 
	 	 	 	 	Refund ESPP payroll deductions collected.
	 	 	

	 	 

NOTE 5A: Your election to terminate your payroll deductions may not be
changed, and you may not rejoin the plan until a new quarterly entry date (the
first business day of February, May, August or November). You will forfeit
your original subscription/enrollment price on re-enrollment.

NOTE 5B: If your employment terminates for any reason or your eligibility
status changes (<20 hours/week or <5 months/year), you will immediately
cease to participate in the ESPP and your ESPP payroll deductions collected in
that purchase interval will automatically be refunded to you.

SECTION 6: LEAVE OF ABSENCE

In connection with my leave of absence, I elect the following action with
respect to my ESPP payroll deductions to date:

	 	 	 	 	 
	 	 	 	 	Purchase shares of Broadcom Corporation on next scheduled purchase date, OR
	 	 	

	 	 
	 	 	 	 	Refund ESPP payroll deductions collected.
	 	 	

	 	 

NOTE 6: If you take an unpaid leave of absence, your payroll deductions will
immediately cease. If you return to active status within 90 days after the
start of your leave, your payroll deductions will at that time automatically
resume at the rate in effect for you when your leave began.

SECTION 7: AUTHORIZATION

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Signature of Employee:	 	 	 	/
	 	Date:
	 	 	 	 	,200	 	 	 
	 	 	

	 	 	 	 	 	

	 	 	 	 	 	

For assistance, email espp@broadcom.com

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