Document:

exv10w40

 

Exhibit 10.40

SILICON IMAGE, INC.

1999 EQUITY INCENTIVE PLAN

Adopted July 20, 1999

As Amended March 29, 2001

As Amended and Restated May 20, 2003

As Amended and Restated April 5, 2005

As Amended and Restated December 14, 2007

     1.      PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are important to the success of
the Company, its Parent and Subsidiaries, by offering them an opportunity to participate in the
Company’s future performance through awards of Options, Restricted Stock, Restricted Stock Units
and Stock Bonuses. Capitalized terms not defined in the text are defined in Section 24.

     2.      SHARES SUBJECT TO THE PLAN.

          2.1      Number of Shares Available. Subject to Sections 2.2 and 19, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan will be 2,000,000 Shares
plus Shares that are subject to: (a) issuance upon exercise of an Option but cease to be subject to
such Option for any reason other than exercise of such Option; (b) an Award granted hereunder but
are forfeited or are repurchased by the Company at the original issue price; and (c) an Award that
otherwise terminates without Shares being issued. In addition, any authorized shares not issued or
subject to outstanding grants under the Silicon Image, Inc. 1995 Equity Incentive Plan (the “Prior
Plan”) on the Effective Date (as defined below) and any shares issued under the Prior Plan that are
forfeited or repurchased by the Company or that are issuable upon exercise of options granted
pursuant to the Prior Plan that expire or become unexercisable for any reason without having been
exercised in full, will no longer be available for grant and issuance under the Prior Plan, but
will be available for grant and issuance under this Plan. In addition, on the first business day
of each calendar year of the Company during the term of the Plan, the aggregate number of Shares
reserved and available for grant and issuance pursuant to this Plan will be increased automatically
by a number of Shares equal to 5% of the total outstanding shares of the Company, provided,
that the Board or the Committee may in its sole discretion reduce the amount of the increase in any
particular year; and, provided further, that no more than 10,000,000 shares shall qualify
as ISOs (as defined in Section 5 below). At all times the Company shall reserve and keep available
a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding
Options granted under this Plan and all other outstanding but unvested Awards granted under this
Plan.

          2.2      Adjustment of Shares. In the event that the number of outstanding shares is
changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the Company without
consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Share
amounts set forth in Section 3 below, (c) the number of Shares subject to each Annual Grant
described in Section 10 below, (d) the Exercise Prices of and number of Shares subject to
outstanding Options, and (e) the number of Shares subject to other outstanding Awards will be
proportionately adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash payment equal to the
Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as
determined by the Committee.

     3.      ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only to employees
(including officers and directors who are also employees) of the Company or of a Parent or
Subsidiary of

 

 

the Company. All other Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent or Subsidiary of the Company;
provided such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising transaction. No person will
be eligible to receive more than 500,000 Shares in any calendar year under this Plan pursuant to
the grant of Awards hereunder, other than new employees of the Company or of a Parent or Subsidiary
of the Company (including new employees who are also officers and directors of the Company or any
Parent or Subsidiary of the Company), who are eligible to receive up to a maximum of 750,000 Shares
in the calendar year in which they commence their employment. A person may be granted more than
one Award under this Plan.

     4.      ADMINISTRATION.

          4.1      Committee Authority. This Plan will be administered by the Committee or by the
Board acting as the Committee. Except for automatic grants to Eligible Directors pursuant to
Section 10 hereof, and subject to the general purposes, terms and conditions of this Plan, and to
the direction of the Board, the Committee will have full power to implement and carry out this
Plan. Except for automatic grants to Eligible Directors pursuant to Section 10 hereof, the
Committee will have the authority to:

               (a)      construe and interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan;

               (b)      prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

               (c)      select persons to receive Awards;

               (d)      determine the form and terms of Awards;

               (e)      determine the number of Shares or other consideration subject to Awards;

               (f)      determine whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of the Company;

               (g)      grant waivers of Plan or Award conditions;

               (h)      determine the vesting, exercisability and payment of Awards;

               (i)      correct any defect, supply any omission or reconcile any inconsistency in this Plan, any
Award or any Award Agreement;

               (j)      determine whether an Award has been earned; and

               (k)      make all other determinations necessary or advisable for the administration of this Plan.

          4.2      Committee Discretion. Except for automatic grants to Eligible Directors pursuant
to Section 10 hereof, any determination made by the Committee with respect to any Award will be
made in its sole discretion at the time of grant of the Award or, unless in contravention of any
express term of this Plan or Award, at any later time, and such determination will be final and
binding on the

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Company and on all persons having an interest in any Award under this Plan. The Committee may
delegate to one or more officers of the Company the authority to grant an Award under this Plan to
Participants who are not Insiders of the Company.

     5.      OPTIONS. The Committee may grant Options to eligible persons and will determine
whether such Options will be Incentive Stock Options within the meaning of the Code (“ISO”) or
Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise
Price of the Option, the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:

          5.1      Form of Option Grant. Each Option granted under this Plan will be evidenced by an
Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option
Agreement”), and, except as otherwise required by the terms of Section 10 hereof, will be in such
form and contain such provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.

          5.2      Date of Grant. The date of grant of an Option will be the date on which the
Committee makes the determination to grant such Option, unless otherwise specified by the
Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant
within a reasonable time after the granting of the Option.

          5.3      Exercise Period. Except for automatic grants to Eligible Directors pursuant to
Section 10 hereof, Options may be exercisable within the times or upon the events determined by the
Committee as set forth in the Stock Option Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10) years from the
date the Option is granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will
be exercisable after the expiration of five (5) years from the date the ISO is granted. The
Committee also may provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.

          5.4      Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted and may be not less than 85% of the Fair Market Value of the
Shares on the date of grant; provided that: (i) the Exercise Price of an ISO will be not less than
100% of the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise Price of
any ISO granted to a Ten Percent Stockholder will not be less than 110% of the Fair Market Value of
the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with
Section 9 of this Plan.

          5.5      Method of Exercise. Options may be exercised only by delivery to the Company of a
written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the
Committee (which need not be the same for each Participant), stating the number of Shares being
purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any,
and such representations and agreements regarding Participant’s investment intent and access to
information and other matters, if any, as may be required or desirable by the Company to comply
with applicable securities laws, together with payment in full of the Exercise Price for the number
of Shares being purchased.

          5.6      Termination. Notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

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               (a) If the Participant is Terminated for any reason except death or Disability, then the
Participant may exercise such Participant’s Options only to the extent that such Options would have
been exercisable upon the Termination Date no later than three (3) months after the Termination
Date (or such shorter or longer time period not exceeding five (5) years as may be determined by
the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of the Options.

               (b) If the Participant is Terminated because of Participant’s death or Disability (or the
Participant dies within three (3) months after a Termination other than for Cause or because of
Participant’s Disability), then Participant’s Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination Date and must be exercised by
Participant (or Participant’s legal representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such exercise beyond (a) three (3) months
after the Termination Date when the Termination is for any reason other than the Participant’s
death or Disability, or (b) twelve (12) months after the Termination Date when the Termination is
for Participant’s death or Disability, deemed to be an NQSO), but in any event no later than the
expiration date of the Options.

          5.7      Limitations on Exercise. The Committee may specify a reasonable minimum number of
Shares that may be purchased on any exercise of an Option, provided that such minimum number will
not prevent Participant from exercising the Option for the full number of Shares for which it is
then exercisable.

          5.8      Limitations on ISOs. The aggregate Fair Market Value (determined as of the date
of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant
during any calendar year (under this Plan or under any other incentive stock option plan of the
Company, Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, then the Options for the first $100,000
worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the
event that the Code or the regulations promulgated thereunder are amended after the Effective Date
of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be
subject to ISOs, such different limit will be automatically incorporated herein and will apply to
any Options granted after the effective date of such amendment.

          5.9      Modification, Extension or Renewal. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution therefor, provided that
any such action may not, without the written consent of a Participant, impair any of such
Participant’s rights under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the
Code. The Committee may reduce the Exercise Price of outstanding Options without the consent of
Participants affected by a written notice to them; provided, however, that the
Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under
Section 5.4 of this Plan for Options granted on the date the action is taken to reduce the Exercise
Price.

          5.10      No Disqualification. Notwithstanding any other provision in this Plan, no term
of this Plan relating to ISO will be interpreted, amended or altered, nor will any discretion or
authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any ISO under Section
422 of the Code.

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     6.      RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to
an eligible person Shares that are subject to restrictions. The Committee will determine to whom
an offer will be made, the number of Shares the person may purchase, the price to be paid (the
"Purchase Price”), the restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:

          6.1      Form of Restricted Stock Award. All purchases under a Restricted Stock Award made
pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase
Agreement”) that will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the Participant’s
execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares
to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is
delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase
Agreement along with full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.

          6.2      Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock
Award will be determined by the Committee on the date the Restricted Stock Award is granted, except
in the case of a sale to a Ten Percent Stockholder, in which case the Purchase Price will be 100%
of the Fair Market Value. Payment of the Purchase Price may be made in accordance with Section 9
of this Plan.

          6.3      Terms of Restricted Stock Awards. Restricted Stock Awards shall be subject to
such restrictions as the Committee may impose. These restrictions may be based upon completion of
a specified number of years of service with the Company or upon completion of the performance goals
as set out in advance in the Participant’s individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine
the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b)
select from among the Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to the payment of any
Restricted Stock Award, the Committee shall determine the extent to which such Restricted Stock
Award has been earned. Performance Periods may overlap and Participants may participate
simultaneously with respect to Restricted Stock Awards that are subject to different Performance
Periods and having different performance goals and other criteria.

          6.4      Termination During Performance Period. If a Participant is Terminated during a
Performance Period for any reason, then such Participant will be entitled to payment (whether in
Shares, cash or otherwise) with respect to the Restricted Stock Award only to the extent earned as
of the date of Termination in accordance with the Restricted Stock Purchase Agreement, unless the
Committee will determine otherwise.

     7.      STOCK BONUSES.

          7.1      Awards of Stock Bonuses. A Stock Bonus is an award of Shares (which may consist
of Restricted Stock) for services rendered to the Company or any Parent or Subsidiary of the
Company. A Stock Bonus may be awarded for past services already rendered to the Company, or any
Parent or Subsidiary of the Company pursuant to an Award Agreement (the “Stock Bonus Agreement”)
that will be in such form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and conditions of this
Plan. A Stock Bonus may be awarded upon satisfaction of such performance goals as are set out in
advance in the Participant’s individual Award Agreement (the “Performance Stock Bonus Agreement”)
that will be in such form (which need not be the same for each Participant) as the Committee will
from time to time

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approve, and will comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of Participants, and may be
based upon the achievement of the Company, Parent or Subsidiary and/or individual performance
factors or upon such other criteria as the Committee may determine.

          7.2      Terms of Stock Bonuses. The Committee will determine the number of Shares to be
awarded to the Participant. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the Committee will: (a)
determine the nature, length and starting date of any Performance Period for each Stock Bonus; (b)
select from among the Performance Factors to be used to measure the performance, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to the payment of any
Stock Bonus, the Committee shall determine the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to
Stock Bonuses that are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with such performance
goals and criteria as may be determined by the Committee. The Committee may adjust the performance
goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.

          7.3      Form of Payment. The earned portion of a Stock Bonus may be paid currently or on
a deferred basis with such interest or dividend equivalent, if any, as the Committee may determine.
Payment may be made in the form of cash or whole Shares or a combination thereof, either in a lump
sum payment or in installments, all as the Committee will determine.

     8.      RESTRICTED STOCK UNITS.

          8.1      Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to
a Participant covering a number of Shares that may be settled in cash, or by issuance of those
Shares (which may consist of Restricted Stock), or by a combination of both. All RSUs shall be
made pursuant to an Award Agreement.

          8.2      Terms of RSUs. The Committee will determine the terms of an RSU including,
without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which
the RSU may vest; (c) the time or times during which the RSU may be settled and the consideration
to be distributed on settlement; and (d) the effect of the Participant’s Termination on each RSU.
An RSU may be awarded or earned upon satisfaction of such Performance Factors (if any) during any
Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is
being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the
nature, length and starting date of any Performance Period for the RSU; (y) select from among the
Performance Factors to be used to measure the performance, if any; and (z) determine the number of
Shares deemed subject to the RSU. Performance Periods may overlap and Participants may participate
simultaneously with respect to RSUs that are subject to different Performance Periods and different
Performance Factors and other criteria.

          8.3      Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as
practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The
Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of
both.

          8.4      Termination of Participant. Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by
the Committee).

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     9.      PAYMENT FOR SHARE PURCHASES.

          9.1      Payment. Payment for Shares purchased pursuant to this Plan may be made in cash
(by check) or, where expressly approved for the Participant by the Committee and where permitted by
law:

               (a)      by cancellation of indebtedness of the Company to the Participant;

               (b)      by surrender of shares that either: (1) have been owned by Participant for more than six
(6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been fully paid with respect
to such shares); or (2) were obtained by Participant in the public market;

               (c)      by tender of a full recourse promissory note having such terms as may be approved by the
Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company will not be entitled to purchase Shares with a promissory
note unless the note is adequately secured by collateral other than the Shares;

               (d)      by waiver of compensation due or accrued to the Participant for services rendered;

               (e)      with respect only to purchases upon exercise of an Option, and provided that a public
market for the Company’s stock exists:

                    (i)      through a “same day sale” commitment from the Participant and a broker-dealer that is a
member of the National Association of Securities Dealers (an “NASD Dealer”) whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the Company; or

                    (ii)      through a “margin” commitment from the Participant and a NASD Dealer whereby the
Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the
NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or

               (f)      by any combination of the foregoing.

          9.2      Loan Guarantees. The Committee may help the Participant pay for Shares purchased
under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant.

     10.      AUTOMATIC GRANTS TO ELIGIBLE DIRECTORS.

          10.1      Types of Options and Shares. Options granted under this Plan and subject to this
Section 10 shall be NQSOs.

          10.2      Eligibility. Options subject to this Section 10 shall be granted only to
Eligible Directors.

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          10.3      Annual Grants. Immediately following each annual meeting of stockholders, (a)
each Eligible Director will automatically be granted an Option for 20,000 Shares, provided the
Eligible Director is a member of the Board on such date and has served continuously as a member of
the Board of Directors of the Company for a period of at least one year since the date when such
Eligible Director first became a member of the Board; (b) each Eligible Director who is a member
of a standing committee of the Board will automatically be granted an Option for an additional
5,000 Shares for each such committee on which such Eligible Director serves, provided such Eligible
Director is a member of such committee on such date and has served continuously as a member of such
committee of the Company for a period of at least one year since the date when such Eligible
Director first joined such committee (provided that no further grants under this clause (b) shall
be made after the set of grants to be made following the 2008 annual meeting of stockholders); and
(c) if the Chairperson of the Board is an Eligible Director, the Chairperson of the Board will
automatically be granted an Option for an additional 5,000 shares, provided he or she is serving as
Chairperson of the Board on such date and has served continuously as Chairperson of the Board of
the Company for a period of at least one year since the date when such Eligible Director first
became Chairperson of the Board. The Options described in this Section 10.3 are referred to as the
“Annual Grants.”

          10.4      Exercise Price; Vesting; Exercise Period. The exercise price of an Annual Grant
shall be the Fair Market Value of the Shares at the time of grant. Provided the director continues
to provide services to the Company, an Annual Grant shall become vested and exercisable with
respect to one twenty-fourth (1/24) of the Shares each month following the date of grant until
fully vested; provided, however, that an Annual Grant shall become fully vested immediately prior
to the consummation of a Change in Control. The Exercise Period of an Annual Grant shall end five
(5) years after the date of grant.

     11.      WITHHOLDING TAXES.

          11.1      Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient
to satisfy federal, state, and local withholding tax requirements.

          11.2      Stock Withholding. When, under applicable tax laws, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is subject to tax
withholding and the Participant is obligated to pay the Company the amount required to be withheld,
the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding
tax obligation by electing to have the Company withhold from the Shares to be issued that number of
Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined
on the date that the amount of tax to be withheld is to be determined. All elections by a
Participant to have Shares withheld for this purpose will be made in accordance with the
requirements established by the Committee and be in writing in a form acceptable to the Committee.

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     12.      TRANSFERABILITY.

          12.1      Except as otherwise provided in this Section 12, Awards granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, and may not be made
subject to execution, attachment or similar process, otherwise than by will or by the laws of
descent and distribution or as determined by the Committee and set forth in the Award Agreement
with respect to Awards that are not ISOs.

          12.2      All Awards other than NQSO’s. All Awards other than NQSO’s shall be exercisable:
(i) during the Participant’s lifetime, only by (A) the Participant, or (B) the Participant’s
guardian or legal representative; and (ii) after Participant’s death, by the legal representative
of the Participant’s heirs or legatees.

          12.3      NQSOs. Unless otherwise restricted by the Committee, an NQSO shall be
exercisable: (i) during the Participant’s lifetime only by (A) the Participant, (B) the
Participant’s guardian or legal representative, (C) a Family Member of the Participant who has
acquired the NQSO by “permitted transfer;” and (ii) after Participant’s death, by the legal
representative of the Participant’s heirs or legatees. “Permitted transfer” means, as authorized
by this Plan and the Committee in an NQSO, any transfer effected by the Participant during the
Participant’s lifetime of an interest in such NQSO but only such transfers which are by gift or
domestic relations order. A permitted transfer does not include any transfer for value and neither
of the following are transfers for value: (a) a transfer of under a domestic relations order in
settlement of marital property rights or (b) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members or the Participant in exchange for an
interest in that entity.

     13.      PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

          13.1      Voting and Dividends. No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the Participant. After
Shares are issued to the Participant, the Participant will be a stockholder and have all the rights
of a stockholder with respect to such Shares, including the right to vote and receive all dividends
or other distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities the Participant may
become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split
or any other change in the corporate or capital structure of the Company will be subject to the
same restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with respect to Shares
that are repurchased at the Participant’s Purchase Price or Exercise Price pursuant to Section 13.

          13.2      Financial Statements. The Company will provide financial statements to each
Participant prior to such Participant’s purchase of Shares under this Plan, and to each Participant
annually during the period such Participant has Awards outstanding; provided,
however, the Company will not be required to provide such financial statements to
Participants whose services in connection with the Company assure them access to equivalent
information.

          13.3      Restrictions on Shares. At the discretion of the Committee, the Company may
reserve to itself and/or its assignee(s) in the Award Agreement a right to repurchase a portion of
or all Unvested Shares held by a Participant following such Participant’s Termination at any time
within ninety (90) days after the later of Participant’s Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at
the Participant’s Exercise Price or Purchase Price, as the case may be.

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     14.      CERTIFICATES. All certificates for Shares or other securities delivered under
this Plan will be subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other requirements of the SEC or any
stock exchange or automated quotation system upon which the Shares may be listed or quoted.

     15.      ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares,
the Committee may require the Participant to deposit all certificates representing Shares, together
with stock powers or other instruments of transfer approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until
such restrictions have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant who is permitted
to execute a promissory note as partial or full consideration for the purchase of Shares under this
Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased
as collateral to secure the payment of Participant’s obligation to the Company under the promissory
note; provided, however, that the Committee may require or accept other or
additional forms of collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory note notwithstanding
any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the
Shares, Participant will be required to execute and deliver a written pledge agreement in such form
as the Committee will from time to time approve. The Shares purchased with the promissory note may
be released from the pledge on a pro rata basis as the promissory note is paid.

     16.      EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from time to
time, authorize the Company, with the consent of the respective Participants, to issue new Awards
in exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may
at any time buy from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and conditions as the
Committee and the Participant may agree.

     17.      SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective
unless such Award is in compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in this Plan, the Company will have no obligation to issue or deliver certificates
for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and/or (b) completion of any registration or
other qualification of such Shares under any state or federal law or ruling of any governmental
body that the Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or failure to do so.

     18.      NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this
Plan will confer or be deemed to confer on any Participant any right to continue in the employ of,
or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company
or limit in any way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participant’s employment or other relationship at any time, with or without cause.

10

 

     19.      CORPORATE TRANSACTIONS.

          19.1      Assumption or Replacement of Awards by Successor. In the event of (a) a
dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is
not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary,
a reincorporation of the Company in a different jurisdiction, or other transaction in which there
is no substantial change in the stockholders of the Company or their relative stock holdings and
the Awards granted under this Plan are assumed, converted or replaced by the successor corporation,
which assumption will be binding on all Participants), (c) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company immediately prior to such
merger (other than any stockholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other equity interest in the
Company, (d) the sale of substantially all of the assets of the Company, or (e) the acquisition,
sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards (including without limitation Annual Grants
under Section 10) may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions no less favorable to the Participant. In the event
such successor corporation (if any) refuses to assume or substitute Awards, as provided above,
pursuant to a transaction described in this Section 19.1, such Awards (including without limitation
Annual Grants under Section 10) will expire on such transaction at such time and on such conditions
as the Committee will determine. Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, provide that the vesting of any or all Awards granted
pursuant to this Plan will accelerate upon a transaction described in this Section 19. If the
Committee exercises such discretion with respect to Options, such Options will become exercisable
in full prior to the consummation of such event at such time and on such conditions as the
Committee determines, and if such Options are not exercised prior to the consummation of the
corporate transaction, they shall terminate at such time as determined by the Committee.

          19.2      Other Treatment of Awards. Subject to any greater rights granted to Participants
under the foregoing provisions of this Section 19, in the event of the occurrence of any
transaction described in Section 19.1, any outstanding Awards (including without limitation Annual
Grants under Section 10) will be treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets.

          19.3      Assumption of Awards by the Company. The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in
substitution of such other company’s award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable upon exercise
of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the
event the Company elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted Exercise Price.

11

 

     20.      ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on the date on
which the registration statement filed by the Company with the SEC under the Securities Act
registering the initial public offering of the Company’s Common Stock is declared effective by the
SEC (the “Effective Date”). This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the Effective Date,
the Committee may grant Awards pursuant to this Plan; provided, however, that: (a)
no Option may be exercised prior to initial stockholder approval of this Plan; (b) no Option
granted pursuant to an increase in the number of Shares subject to this Plan approved by the Board
will be exercised prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is not obtained within the time period
provided herein, all Awards granted hereunder shall be cancelled, any Shares issued pursuant to any
Awards shall be cancelled and any purchase of Shares issued hereunder shall be rescinded; and (d)
in the event that stockholder approval of such increase is not obtained within the time period
provided herein, all Awards granted pursuant to such increase will be cancelled, any Shares issued
pursuant to any Award granted pursuant to such increase will be cancelled, and any purchase of
Shares pursuant to such increase will be rescinded.

     21.      TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this
Plan will terminate ten (10) years from the date this Plan is adopted by the Board or, if earlier,
the date of stockholder approval. This Plan and all agreements thereunder shall be governed by and
construed in accordance with the laws of the State of California.

     22.      AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend
this Plan in any respect, including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to this Plan; provided, however, that the Board
will not, without the approval of the stockholders of the Company, amend this Plan in any manner
that requires such stockholder approval.

     23.      NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the
submission of this Plan to the stockholders of the Company for approval, nor any provision of this
Plan will be construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.

     24.      DEFINITIONS. As used in this Plan, the following terms will have the following
meanings:

          "Award” means any award under this Plan, including any Option, Restricted Stock, Restricted
Stock Unit or Stock Bonus.

          "Award Agreement” means, with respect to each Award, the signed written agreement between the
Company and the Participant setting forth the terms and conditions of the Award.

          "Board” means the Board of Directors of the Company.

          "Cause” means the commission of an act of theft, embezzlement, fraud, dishonesty or a breach
of fiduciary duty to the Company or a Parent or Subsidiary of the Company.

          “Change of Control” means the consummation of any transaction or series of related
transactions which results in all of the holders of record of the Company’s capital stock
immediately prior to the transaction or transactions holding less than fifty percent (50%) of the
voting power of the

12

 

surviving entity in the transaction or transactions immediately after the transaction or
transactions, including the acquisition of the Company by another entity and any reorganization,
merger or consolidation, or which results in the sale of all or substantially all of the assets of
the Company; provided, however, if the surviving entity in the transaction or
transactions is wholly owned by another entity, then a Change of Control has occurred only if the
holders of record of the Company’s capital stock immediately prior to the transaction or
transactions hold less than fifty percent (50%) of the voting power of the other entity immediately
after the transaction or transactions.

          "Code” means the Internal Revenue Code of 1986, as amended.

          "Committee” means the Compensation Committee of the Board.

          "Company” means Silicon Image, Inc. or any successor corporation.

          "Disability” means a disability, whether temporary or permanent, partial or total, as
determined by the Committee. For ISO purposes, “Disability” means a disability within the meaning
of Code Section 22(e)(3).

          "Eligible Director” means a member of the Board (1) who is not an employee of the Company or
any Parent, Subsidiary or Affiliate of the Company, and (2) whose direct pecuniary interest (as
defined by the SEC in Rule 16a-1 promulgated under the Exchange Act) in the Company’s Common Stock
is less than five percent (5%) of total shares of Common Stock outstanding.

          "Exchange Act” means the Securities Exchange Act of 1934, as amended.

          "Exercise Price” means the price at which a holder of an Option may purchase the Shares
issuable upon exercise of the Option.

          "Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock
determined as follows:

               (a)      if such Common Stock is then quoted on the Nasdaq National Market, its closing price on
the Nasdaq National Market on the date of determination as reported in The Wall Street
Journal;

               (b)      if such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal national securities
exchange on which the Common Stock is listed or admitted to trading as reported in The Wall
Street Journal;

               (c)      if such Common Stock is publicly traded but is not quoted on the Nasdaq National Market
nor listed or admitted to trading on a national securities exchange, the average of the closing bid
and asked prices on the date of determination as reported in The Wall Street Journal;

               (d)      in the case of an Award made on the Effective Date, the price per share at which shares of
the Company’s Common Stock are initially offered for sale to the public by the Company’s
underwriters in the initial public offering of the Company’s Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act; or

               (e)      if none of the foregoing is applicable, by the Committee in good faith.

          "Family Member” includes any of the following:

13

 

               (a)      child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law of the Participant, including any such person with such relationship to the
Participant by adoption;

               (b)      any person (other than a tenant or employee) sharing the Participant’s household;

               (c)      a trust in which the persons in (a) and (b) have more than fifty percent of the beneficial
interest;

               (d)      a foundation in which the persons in (a) and (b) or the Participant control the management
of assets; or

               (e)      any other entity in which the persons in (a) and (b) or the Participant own more than
fifty percent of the voting interest.

          "Insider” means an officer or director of the Company or any other person whose transactions
in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

          "Option” means an award of an option to purchase Shares pursuant to Section 5.

          "Parent” means any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if each of such corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

          "Participant” means a person who receives an Award under this Plan.

          "Performance Factors” means the factors selected by the Committee from among the following
measures (calculated, when applicable, on a GAAP or non-GAAP basis) to determine whether the
performance goals established by the Committee and applicable to Awards have been satisfied:

               (a)      Net revenue and/or net revenue growth;

               (b)      Earnings before income taxes and amortization and/or earnings before income taxes and
amortization growth;

               (c)      Operating income and/or operating income growth;

               (d)      Net income and/or net income growth;

               (e)      Earnings per share and/or earnings per share growth;

               (f)      Total stockholder return and/or total stockholder return growth;

               (g)      Return on equity;

               (h)      Operating cash flow return on income;

               (i)      Adjusted operating cash flow return on income;

               (j)      Economic value added; and/or

14

 

               (k)      Individual confidential business objectives.

          "Performance Period” means the period of service determined by the Committee, not to exceed
five years, during which years of service or performance is to be measured for Restricted Stock
Awards, Stock Bonuses or Restricted Stock Units.

          "Plan” means this Silicon Image, Inc. 1999 Equity Incentive Plan, as amended from time to
time.

          "Restricted Stock Award” means an award of Shares pursuant to Section 6.

          "Restricted Stock Unit” means an award covering Shares pursuant to Section 8.

          "SEC” means the Securities and Exchange Commission.

          "Securities Act” means the Securities Act of 1933, as amended.

          "Shares” means shares of the Company’s Common Stock reserved for issuance under this Plan, as
adjusted pursuant to Sections 2 and 18, and any successor security.

          "Stock Bonus” means an award of Shares, or cash in lieu of Shares, pursuant to Section 7.

          "Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

          "Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant,
that the Participant has for any reason ceased to provide services as an employee, officer,
director, consultant, independent contractor, or advisor to the Company or a Parent or Subsidiary
of the Company. An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee,
provided, that such leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant
to formal policy adopted from time to time by the Company and issued and promulgated to employees
in writing. In the case of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on leave from the employ of the
Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement. The Committee will
have sole discretion to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the “Termination Date”).

          "Unvested Shares” means “Unvested Shares” as defined in the Award Agreement.

          "Vested Shares” means “Vested Shares” as defined in the Award Agreement.

15exv4w18

 

Exhibit 4.18

EQUITY INCENTIVE PLAN

FOR EXECUTIVE EMPLOYEES OF

AVAGO TECHNOLOGIES LIMITED AND SUBSIDIARIES

(AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 25, 2008)

1. Purpose of Plan

     The Equity Incentive Plan for Executive Employees of Avago Technologies Limited and
Subsidiaries, as amended and restated herein (the “Plan”) is designed:

     (a) to promote the long term financial interests and growth of Avago
Technologies Limited, a company organized under the laws of Singapore (the
“Company”), and its Subsidiaries by attracting and retaining management and
personnel with the training, experience and ability to enable them to make a
substantial contribution to the success of the Company’s business;

     (b) to motivate personnel by means of growth-related incentives to achieve long
range goals; and

     (c) to further the identity of interests of participants with those of the
shareholders of the Company through opportunities for share or share-based ownership
in the Company.

2. Definitions

     As used in the Plan, the following words shall have the following meanings:

     (a) “Affiliate” shall mean (i) with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person, and (ii) with respect to the Company, also any entity designated by the
Board of Directors of the Company in which the Company or one of its Affiliates has
an interest, (iii) with respect to Kohlberg Kravis Roberts & Co., (“KKR”), any
Affiliate of any partner of KKR and (iv) with respect to Silver Lake Partners,
(“SLP”), any Affiliate of any partner of SLP. For purposes of this Plan, “Person”
means an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature, and “control” shall have
the meaning given such term under Rule 405 of the Securities Act.

     (b) “Board of Directors” means the Board of Directors of the Company.

     (c) “Committee” means the Board of Directors or if administration of the Plan
is delegated by the Board of Directors to it, the Compensation Committee

 

 

of the
Board of Directors or such other committee of the Board of Directors designated by
the Board of Directors to administer the Plan.

     (d) “Consultant” means any consultant or adviser if: (i) the consultant or adviser
renders bona fide services to the Company or Subsidiary of the Company; (ii) the services
rendered by the consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities; and (iii) the consultant or adviser is a
natural person who has contracted directly with the Company or Subsidiary of the Company to
render such services.

     (e) “Employee” means a person, including an officer, in the regular employment
of the Company or one of its Subsidiaries.

     (f) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

     (g) “Fair Market Value” means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.

     (h) “Grant” means a Share Option or a Share Purchase Right.

     (i) “Grant Agreement” means an agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to a Grant. The
terms, conditions and limitations applicable to a Share Purchase Right may be set
forth in a Shareholders Agreement, which shall then constitute a Grant Agreement for
purposes of this Plan.

     (j) “Non-Employee Director” means a member of the Board of Directors who is not
an Employee.

     (k) “Participant” means an Employee, Consultant or Non-Employee Director to
whom one or more Grants have been made and such Grants have not all been forfeited
or terminated under the Plan.

     (l) “Securities Act” means the U.S. Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder.

     (m) “Share” means an ordinary share in the capital of the Company.

     (n) “Shareholder’s Agreement” means an agreement between the Company and an
Employee, Non-Employee Director or Consultant that sets forth the terms, conditions
and limitations applicable to Share Options and Shares, including Shares issued
under a Share Option and a Share Purchase Right.

     (o) “Share Options” means the “Non-Qualified Share Options” described in
Section 5.

2

 

     (p) “Share Purchase Right” means a right to purchase Shares pursuant to Section
6 hereof.

     (q) “Subsidiary” means any corporation (or other entity) other than the Company
in an unbroken chain of entities beginning with the Company if each of the entities,
or group of commonly controlled entities, other than the last entity in the unbroken
chain, then owns shares (or other equity interest) possessing 50% or more of the
total combined voting power of all classes of equity in one of the other entities in
such chain.

3. Administration of Plan

     (a) The Plan shall be administered by the Board of Directors or the Committee.
Unless otherwise determined by the Board of Directors, the members of the Committee
shall consist solely of individuals who are both “non-employee directors” as defined
by Rule 16b-3 promulgated under the Exchange Act and “outside directors” for
purposes of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended
(the “Code”), to the extent that the Company and its Employees are subject to
Section 16 of the Exchange Act or Section 162(m) of the Code. The Committee may
adopt its own rules of procedure, and the action of a majority of the Committee,
taken at a meeting or taken without a meeting by a writing signed by such majority,
shall constitute action by the Committee. The Committee shall have the power,
authority and the discretion to administer, construe and interpret the Plan and
Grant Agreements, to make rules for carrying out the Plan and to make changes in
such rules. Any such interpretations, rules, and administration shall be made and
done in good faith and consistent with the basic purposes of the Plan and be subject
to all applicable laws.

     (b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Company its duties under the Plan subject to such conditions
and limitations as the Committee shall prescribe except that only the Committee may
designate and make Grants to Non-Employee Directors and Participants who are subject
to Section 16 of the Exchange Act or Section 162(m) of the Code.

     (c) The Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons. The Committee, the Company, and the officers and
directors of the Company shall be entitled to rely upon the advice, opinions or
valuations of any such persons. Subject to the terms and conditions of this Plan
and any applicable Grant Agreement, all actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding upon
all Participants, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan or the
Grants, and all members of the Committee shall be fully protected by the
Company with respect to any such action, determination or interpretation.

3

 

4. Eligibility

     (a) The Committee may from time to time make Grants under the Plan to such
Employees, Non-Employee Directors or Consultants, and in such form and having such
terms, conditions and limitations as the Committee may determine. Grants may be
granted singly, in combination or in tandem. The terms, conditions and limitations
of each Grant under the Plan shall be set forth in a Grant Agreement, in a form
approved by the Committee, consistent, however, with the terms of the Plan;
provided, however, such Grant Agreement shall contain provisions dealing with the
treatment of Grants in the event of the termination, death or disability of the
Participant, and may also include provisions concerning the treatment of Grants in
the event of a change of control of the Company.

     (b) Notwithstanding anything in this Plan to the contrary, prior to the
Committee making a Grant under the Plan to an Employee, Non-Employee Director or
Consultant, such Employee, Non-Employee Director or Consultant shall have executed a
Shareholder’s Agreement in a form acceptable to the Company.

5. Share Options

     From time to time, the Committee may grant options to purchase Shares which are not
“incentive stock options,” within the meaning of Section 422 of the Code. At the time of a
Grant of a Share Option, the Committee shall determine, and shall have specified in the
Grant Agreement or other Plan rules, the option exercise period, the option exercise price,
and such other conditions or restrictions on the grant or exercise of the Share Option as
the Committee deems appropriate. In addition to other restrictions contained in the Plan
and Grant Agreement, Share Options granted under this Section 5 may not be exercised more
than 10 years (five years in the case of Grants to non-Employees) after the date of Grant.
Payment of the option exercise price shall be made in cash or, with the consent of the
Committee, in Shares (including Shares acquired by contemporaneous exercise of other Share
Options), or a combination thereof, in accordance with the terms of the Plan, the Grant
Agreement and any applicable guidelines of the Committee in effect at the time.

6. Share Purchase Rights

     Share Purchase Rights may be granted either alone, in addition to, or in tandem with Share
Options granted under the Plan. After the Committee determines that it will offer Share Purchase
Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions to which the offer is subject, which may include the number of Shares that such person
shall be entitled to purchase, the price to be paid, and the time within which such person must
accept such offer; provided, however, that the purchase price of such Shares shall not be
less than the purchase price required under applicable law. The offer shall be accepted by
execution of a Grant Agreement in the form determined by the Committee.

4

 

7. Limitations and Conditions

     (a) The aggregate number of Shares available for Grants under this Plan and the
Equity Incentive Plan for Senior Management Employees of Avago Technologies Limited
and Subsidiaries (the “Senior Management Plan”) shall be 30,000,000 Shares. The
issuance of a Share under the Senior Management Plan shall reduce the number of
Shares available for Grants under the Plan, and vice versa. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated, canceled or
expire unexercised, shall immediately become available for Grants.

     (b) The term of a Grant shall not exceed ten years (five years in the case of
non-Employee Participants). No Grants shall be made under the Plan beyond ten years
after the effective date of the Plan, but the terms of Grants made on or before the
expiration thereof may extend beyond such expiration. At the time a Grant is made
or amended or the terms or conditions of a Grant are changed, the Committee may
provide for limitations or conditions on such Grant.

     (c) Nothing contained herein shall affect the right of the Company or any
Subsidiary to terminate any Participant’s employment at any time or for any reason.

     (d) Except as otherwise prescribed by the Committee, the amounts of the Grants
for any employee of a Subsidiary, along with interest, dividends, and other expenses
accrued on deferred Grants shall be charged to the Participant’s employer during the
period for which the Grant is made. If the Participant is employed by more than one
Subsidiary or by a combination of the Company and a Subsidiary during the period for
which the Grant is made, the Participant’s Grant and related expenses will be
allocated between the companies employing the Participant in a manner prescribed by
the Committee.

     (e) Other than as specifically provided by will or by the applicable laws of
descent and distribution or the terms of any applicable trust, no benefit under the
Plan shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void.
No such benefit shall, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or torts of
the Participant.

     (f) A Participant shall not be, and shall not have any of the rights or
privileges of, a shareholder of the Company in respect of any Shares purchasable or
otherwise acquired in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Company to such Participants;
provided however that no delay in the issuance of certificates due to
be issued hereunder representing any such Shares shall operate to impair or
prejudice any Participant’s rights to participate in a corporate transaction
providing for the disposition of such Shares.

5

 

     (g) No election as to benefits or exercise of Share Options, Share Purchase
Rights or other rights may be made during a Participant’s lifetime by anyone other
than the Participant except by a legal representative appointed for or by the
Participant.

     (h) Absent express provisions to the contrary, no Grant under this Plan shall
be deemed “compensation” for purposes of computing benefits or contributions under
any retirement plan of the Company or its Subsidiaries and shall not affect any
benefits under any other benefit plan of any kind or subsequently in effect under
which the availability or amount of benefits is related to level of compensation.
This Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement
Income Security Act of 1974, as amended.

     (i) Unless the Committee determines otherwise, no benefit or promise under the
Plan shall be secured by any specific assets of the Company or any of its
Subsidiaries, nor shall any assets of the Company or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of the Company’s
obligations under the Plan.

8. Transfers and Leaves of Absence

     For purposes of the Plan, unless the Committee determines otherwise:  (a) a transfer of a
Participant’s employment without an intervening period of separation among the Company and any
Subsidiary shall not be deemed a termination of employment, and (b) a Participant who is granted in
writing a leave of absence shall be deemed to have remained in the employ of the Company or a
Subsidiary during such leave of absence.

9. Adjustments

     In the event of any change in the outstanding Shares (including an exchange for cash) by
reason of a stock split, reverse stock split, spin-off, stock dividend, stock combination or
reclassification, recapitalization, reorganization, consolidation, merger, change of control, or
similar event, the Committee shall adjust appropriately the number and kind of Shares subject to
the Plan and available for, covered by or issued pursuant to Grants and Share prices related to
outstanding Grants, and make such other revisions to outstanding Grants as it deems are equitably
required.

10. Merger, Consolidation, Exchange, Acquisition, Distribution, Liquidation or Dissolution

     In its sole discretion, and on such terms and conditions as it deems appropriate, coincident
with or after any Grant, the Committee may provide that such Grant cannot be exercised after the
consummation of the merger or consolidation of the Company into another corporation, the exchange
of all or substantially all of the assets of the Company for the
securities of another corporation, the acquisition by another corporation of 80% or more of
the Company’s then outstanding voting shares or the recapitalization, reclassification, liquidation
or dissolution of the Company, or other adjustment or event which results in Shares being exchanged
for or converted into cash, securities or other property, and if the Committee so provides, it
shall, on such terms and conditions as it deems appropriate in its absolute discretion, also
provide, either by the terms of such Grant or by a resolution adopted prior to the

6

 

consummation of
such merger, consolidation, exchange, acquisition, recapitalization, reclassification, liquidation
or dissolution, that, for some period of time prior to the consummation of such transaction or
event, such Grant shall be exercisable as to all shares subject thereto, notwithstanding anything
to the contrary herein (but subject to the provisions of Section 7(b)) and that, upon the
consummation of such event, such Grant shall terminate and be of no further force or effect;
provided, however, that the Committee may also provide, in its absolute discretion, that even if
the Grant shall remain exercisable after any such event, from and after such event, any such Grant
shall be exercisable only for the kind and amount of cash, securities and/or other property, or the
cash equivalent thereof (net of any applicable exercise price), receivable as a result of such
event by the holder of a number of shares for which such Grant could have been exercised
immediately prior to such event.

     In the event of a “spin-off” or other substantial distribution of assets of the Company which
has a material diminutive effect upon the Fair Market Value of the Company’s Shares, the Committee
shall in its discretion make an appropriate and equitable adjustment to any Grant exercise or
purchase price to reflect such diminution.

11. Amendment and Termination

     The Committee shall have the authority to make such amendments to any terms and conditions
applicable to outstanding Grants as are consistent with this Plan provided that, except for
adjustments under Section 9 or 10 hereof and subject to Section 15, no such action shall modify
such Grant in a manner adverse to the Participant without the Participant’s consent except as such
modification is provided for or contemplated in the terms of the Grant. The Board of Directors may
amend, suspend or terminate the Plan at any time.

12. Withholding Taxes

     The Company shall have the right to deduct from any cash payment or Share issuance made under
the Plan any taxes required by law to be withheld with respect to such payment or issuance. It
shall be a condition to the obligation of the Company to deliver Shares upon the exercise of a
Grant that the Participant pay to the Company such amount as may be requested by the Company for
the purpose of satisfying any liability for such withholding taxes. Any Grant Agreement may
provide that the Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in Shares (including Shares acquired
by contemporaneous exercise of other Grants).

13. Registration

     (a) If the Company shall have filed a registration statement pursuant to the
requirements of Section 12 of the Exchange Act, or engaged in a Public
Offering (as defined below), (i) the Company shall use reasonable efforts to
register the Share Options and the Shares to be acquired on exercise of the Share
Options on a Form S-8 Registration Statement or any successor to Form S-8 to the
extent that such registration is then available with respect to such Share Options
and Shares and (ii) the Company will use reasonable efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission (“SEC”)
thereunder, to the extent required from time to time to enable the

7

 

Participant to
sell Shares without registration under the Securities Act within the limitations of
the exemptions provided under any applicable rule or regulation of the SEC.
Notwithstanding anything contained in this Section 13, the Company may deregister
under Section 12 of the Exchange Act if it is then permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder. Nothing in this Section
13 shall be deemed to limit in any manner any otherwise applicable restrictions on
sales of Shares.

     (b) As used herein the term “Public Offering” shall mean the sale of Shares to
the public pursuant to a registration statement under the Securities Act which has
been declared effective by the SEC (other than a registration statement on Form S-8
or any other similar form) which results in an active trading market in the Shares.

14. Shareholder’s Agreement

     The Grants and the Shares issued to the Participant upon exercise of the Grant shall be
subject to all of the terms and provisions of the Grant Agreement and the Shareholder’s Agreement,
to the extent applicable to the Grant and such Shares. In the event of any conflict between the
Grant Agreement and the Plan, the terms of the Plan shall control. In the event of any conflict
between this Plan or the Grant Agreement and the Shareholder’s Agreement, the terms of the
Shareholder’s Agreement shall control.

15. Individuals Subject to Non-Singapore Jurisdictions

     To the extent necessary to comply with the laws of any relevant jurisdiction, notwithstanding
any provision in this Plan to the contrary, the Committee shall have the discretion to adopt, on
behalf of the Company, such amendments and/or one or more sub-plans applicable to Participants who
are subject to laws of jurisdictions outside of Singapore as the Committee deems necessary or
advisable in order to comply with applicable laws, regulations or customary business practice.

16. Effective and Termination Dates

     The Plan was originally effective as of December 1, 2005, the effective date of its approval
by the shareholders of the Company and shall terminate on November 30, 2015, subject to earlier
termination by the Board of Directors pursuant to Section 11. The Plan was previously amended and
restated by the Board of Directors effective as of April 14, 2006 and January 25,
2007. The Plan as amended and restated herein was adopted by the Board of Directors effective
as of February 25, 2008.

17. Shareholder Approval

     The Plan, as previously amended and restated effective as of April 14, 2006 and January 25,
2007 was approved by the Company’s shareholders on April 11, 2007.

18. Information Disclosure

     The Company shall provide Participants with the information described in Rules 701(e)(3), (4),
and (5) under the Securities Act no less frequently than every six (6) months

8

 

commencing no later
than February 28, 2008, with the financial statements therein being not more than 180 days old, in
any event, subject to each Participant agreeing, in a form acceptable to the Company, to keep the
information to be provided pursuant to this Section 18 confidential. The information required by
this Section 18 shall be provided to Participants by either physical or electronic delivery or by
written notice to the Participants of the availability of the information on an Internet site that
may be password-protected and of any password needed to access the information. For the avoidance
of doubt, if a Participant does not agree to keep the information to be provided pursuant to this
Section 18 confidential, then the Company may elect not to provide such Participant any information
under this Section 18.

9

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