NON-QUALIFIED SHARE OPTION AGREEMENT UNDER THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR SENIOR MANAGEMENT EMPLOYEES OF AVAGO TECHNOLOGIES LIMITED AND SUBSIDIARIES
Exhibit-10.24
U.S. Non-Employee Director — New Options
NON-QUALIFIED SHARE OPTION AGREEMENT
UNDER THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN
FOR SENIOR MANAGEMENT EMPLOYEES OF
AVAGO TECHNOLOGIES LIMITED AND SUBSIDIARIES
UNDER THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN
FOR SENIOR MANAGEMENT EMPLOYEES OF
AVAGO TECHNOLOGIES LIMITED AND SUBSIDIARIES
This
Non-Qualified Share Option Agreement (this “Agreement”), is
entered into as of «Grant Date» by and
between Avago Technologies Limited, a company organized under the laws of Singapore, hereinafter
referred to as the “Company,” and “Name”, a non-employee member of the Board of Directors of the Company,
hereinafter referred to as “Optionee.”
WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase ordinary shares
of the Company (“Shares”);
WHEREAS, the Company wishes to carry out the Plan (as defined below), the terms of which are
hereby incorporated by reference and made a part of this Agreement; and
WHEREAS, the Board of Directors of the Company has determined that it would be to the
advantage and best interest of the Company and its shareholders to grant the Non-Qualified Share
Option provided for herein to the Optionee as an incentive for increased efforts during his term of
service with the Company, and has advised the Company thereof and instructed the undersigned
officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in this Agreement, the terms defined in the Plan shall have the same
defined meanings in this Agreement unless the context clearly indicates to the contrary.
Section 1.1 — Affiliate
“Affiliate” shall mean (a) with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, and (b) with respect to the
Company, also any entity designated by the Board of Directors in which the Company or one of its
Affiliates has an interest, and (c) Kohlberg Kravis Xxxxxxx & Co., L.P. (“KKR”), Silver Lake
Partners LLC (“SLP”) and any Affiliate of any partner of KKR or SLP.
For purposes of this Agreement, “Person” means an individual, partnership, corporation,
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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.
Section 1.2 — Committee
“Committee” shall mean 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 any other
committee of the Board of Directors designated by the Board of Directors to administer the Plan.
Section 1.3 — Option
“Option” shall mean the Non-Qualified Share Option to purchase Shares granted under this
Agreement.
Section 1.4 — Permanent Disability
The Optionee shall be deemed to have a “Permanent Disability” if the Optionee is unable to
engage in the activities required by his employment by reason of any medically determined physical
or mental impairment which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months, as reasonably determined by
the Board of Directors in good faith and in its discretion.
Section 1.5 — Plan
“Plan” shall mean the Amended and Restated Equity Incentive Plan for Senior Management
Employees of Avago Technologies Limited and Subsidiaries, as the same may be amended from time to
time.
Section 1.6 — Pronouns
The masculine pronoun shall include the feminine and neuter, and the singular the plural,
where the context so indicates.
Section 1.7 — Secretary
“Secretary” shall mean the Secretary of the Company.
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Section 1.8 — Subsidiary
“Subsidiary” with respect to any entity shall mean any corporation in an unbroken chain of
corporations beginning with such entity if each of the corporations, or group of commonly
controlled corporations, other than the last corporation in the unbroken chain, then owns shares
possessing 50% or more of the total combined voting power of all classes of equity in one of the
other corporations in such chain.
Section 1.9 — Vesting Reference Date
“Vesting Reference Date” shall mean the date set forth on the signature page hereof.
ARTICLE II
GRANT OF OPTION
GRANT OF OPTION
Section 2.1 — Grant of Option
For good and valuable consideration, on and as of the date hereof the Company irrevocably
grants to the Optionee an Option to purchase any part or all of an aggregate of the number of
Shares set forth on the signature page hereof upon the terms and conditions set forth in this
Agreement.
Section 2.2 — Exercise Price
The per share exercise price of the Shares covered by the Option shall be the amount set forth
on the signature page hereof, which is equal to the Fair Market Value of the Shares on the date of
grant.
Section 2.3 — Consideration to the Company
In consideration of the granting of this Option by the Company, the Optionee agrees to render
faithful and efficient services to the Company, with such duties and responsibilities as the
Company shall from time to time prescribe. Nothing in this Agreement or in the Plan shall confer
upon the Optionee any right to continue in the service of the Company or any of its Subsidiaries or
Affiliates or shall interfere with or restrict in any way the rights of the Company and its
Subsidiaries and Affiliates, which are hereby expressly reserved, to terminate the service of the
Optionee at any time for any reason whatsoever, with or without Cause.
Section 2.4 — Adjustments in Option
Subject to Section 14 of the Plan, in the event that the outstanding Shares subject to an
Option are, from time to time, changed into or exchanged for cash or a different number or kind of
shares of the Company or other securities of the Company by reason of a merger,
consolidation, recapitalization, reclassification, stock split, stock dividend, combination of
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shares, or otherwise, the Committee shall make an appropriate and equitable adjustment in the
number and kind of shares or other consideration and the exercise price as to which such Option, or
portions thereof then unexercised, shall be exercisable in order to prevent dilution or enlargement
of the benefits intended to be made available with respect to any Option. Any such adjustment made
by the Committee shall be final and binding upon the Optionee, the Company and all other interested
persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 — Commencement of Exercisability
(a) The Option shall become exercisable with respect to 20% of the Shares subject to such
Option on each anniversary of the Vesting Reference Date, so that 100% of the Shares subject to the
Option shall be exercisable on the fifth anniversary of the Vesting Reference Date.
(b) Notwithstanding the foregoing, no Option or portion thereof shall become exercisable as to
any additional Shares following the Optionee’s cessation of service with the Company or a
Subsidiary as a Non-Employee Director, an Employee or a Consultant for any reason and any Option
which is non-exercisable as of the Optionee’s cessation of service with the Company or a Subsidiary
as a Non-Employee Director, Employee or Consultant shall be immediately cancelled.
Section 3.2 — Expiration of Option
Except as otherwise provided in the Plan, the Option may not be exercised to any extent by
anyone after the first to occur of the following events:
(a) The fifth anniversary of the date hereof;
(b) The first anniversary of the date of the Optionee’s cessation of service with the
Company or a Subsidiary as a Non-Employee Director, Employee or Consultant by reason of
death or Permanent Disability;
(c) The first business day which is ninety calendar days after the cessation of service
with the Company or a Subsidiary as a Non-Employee Director, Employee or Consultant for any
reason other than for Cause, death or Permanent Disability;
(d) The opening of business on the date of termination by the Company for Cause of the
Optionee’s service with the Company as a Non-Employee Director, Employee or Consultant; or
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(e) If the Committee so determines pursuant to Section 15 of the Plan, the effective
date of either the merger or consolidation of the Company into another Person, or the
exchange or acquisition by another Person of all or substantially all of the Company’s
assets or 80% or more of its then outstanding voting shares, or the recapitalization,
reclassification, liquidation or dissolution of the Company. At least ten (10) days prior
to the effective date of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution, the Committee shall give the
Optionee notice of such event if the Option has then neither been fully exercised nor become
unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 — Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an Option or any portion thereof.
After the death of the Optionee, any exercisable portion of an Option may, prior to the time when
an Option becomes unexercisable under Section 3.2, be exercised by his personal representative or
by any person empowered to do so under the Optionee’s will or under the then applicable laws of
descent and distribution.
Section 4.2 — Partial Exercise
Any exercisable portion of an Option or the entire Option, if then wholly exercisable, may be
exercised in whole or in part at any time prior to the time when the Option or portion thereof
becomes unexercisable under Section 3.2; provided, however, that any partial exercise shall be for
whole Shares only.
Section 4.3 - Notice of Intent to Exercise
Until such time as the Option and the Shares to be acquired pursuant to the exercise of the
Option are registered on a Form S-8 Registration Statement or any successor form thereto (or are
otherwise registered pursuant to the Securities Act), no less than ten (10) business days prior to
the date the Optionee, or other person then entitled to exercise, intends to exercise the Options
or any portion thereof, the Optionee, or such other person, shall provide the Company notice in
writing stating such intent.
Section 4.4 — Manner of Exercise
An Option, or any exercisable portion thereof, may be exercised solely by delivering to the
Secretary or his office all of the following prior to the time when the Option or such portion
becomes unexercisable under Section 3.2:
(a) Notice in writing signed by the Optionee or the other person then entitled to
exercise the Option or portion thereof, stating that the Option or portion thereof is
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thereby exercised, such notice complying with all applicable rules established by the
Committee;
(b) Full payment (in cash, by check or by a combination thereof or by such other means
as may be approved by the Committee in its sole discretion) for the Shares with respect to
which such Option or portion thereof is exercised;
(c) A bona fide written representation and agreement, in a form satisfactory to the
Committee, signed by the Optionee or other person then entitled to exercise such Option or
portion thereof, stating (i) that the Shares are being acquired for his own account, for
investment and without any present intention of distributing or reselling said shares or any
of them except as may be permitted under the Securities Act, and then applicable rules and
regulations thereunder, (ii) that, if applicable (as determined by the Company), the
Optionee has received, read and understood the Company’s Rule 701 Disclosure Statement and
(iii) that the Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from any loss,
damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above;
provided, however, that the Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act, any other
U.S. federal or state securities laws or regulations and any other applicable laws or
regulations;
(d) Full payment to the Company (in cash, by check or by a combination thereof) of all
amounts which, under federal, state or local law, it is required to withhold upon exercise
of the Option; and
(e) In the event the Option or portion thereof shall be exercised pursuant to Section
4.1 by any person or persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option.
Notwithstanding the foregoing, upon Optionee’s termination of service to the Company by the Company
without Cause, by the Optionee for Good Reason or by reason of death or Permanent Disability, in
satisfaction of the payments required by Sections 4.4(b) and (d) above, Optionee may execute a
cashless exercise, net of such payments, pursuant to a formal program adopted by the Company in
connection with the Plan provided that such a cashless exercise would not, as determined by the
Committee in its sole discretion, (i) cause the Company or its Subsidiaries to breach any debt
agreement to which the Company or any of its Subsidiaries is a party, (ii) result in a violation
under Section 409A of the Code or the regulations promulgated thereunder, (iii) be otherwise
prohibited by the Code or the regulations promulgated thereunder or (iv) result in negative
accounting treatment under Generally Accepted Accounting Principles (“GAAP”).
Without limiting the generality of this Section 4.4, the Committee may require an opinion of
counsel acceptable to it to the effect that any subsequent transfer of shares acquired on exercise
of an Option does not violate the Securities Act, and may issue stop-transfer orders covering
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such
Shares. Share certificates evidencing Shares issued on exercise of this Option shall bear an
appropriate legend referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above shall, however, not be
required if the Shares to be issued pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in respect of such Shares.
Section 4.5 — Conditions to Issuance of Certificates
The Shares deliverable upon the exercise of an Option, or any portion thereof, may be either
previously authorized but unissued Shares or, subject to applicable laws, issued Shares which have
then been reacquired by the Company. Such Shares shall be fully paid and nonassessable. The
Company shall not be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any governmental agency which the
Committee shall, in its absolute discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the exercise of the Option as
the Committee may from time to time establish for reasons of administrative convenience;
provided, however, that no delay in the issuance of any certificate to be issued hereunder
shall operate to prejudice or impair the Optionee’s rights to participate in a corporate
transaction providing for the disposition of Shares or to exercise his rights hereunder.
Section 4.6 — Rights as Shareholder
The holder of an Option shall not be, nor have any of the rights or privileges of, a
shareholder of the Company in respect of any Shares purchasable upon the exercise of the Option or
any portion thereof unless and until certificates representing such Shares shall have been issued
by the Company to such holder.
Section 4.7 Covenant Regarding 83(b) Election
The Optionee hereby covenants and agrees that, unless otherwise determined by the Company,
Optionee will make an election pursuant to Treasury Regulation 1.83-2 with respect to the Shares to
be acquired upon each exercise of the Optionee’s Options by filing with the Internal Revenue
Service such election substantially in the form attached hereto as Exhibit A; and the Optionee
further covenants and agrees that he will furnish the Company with copies of the forms of election
the Optionee files within 30 days after each exercise of the Optionee’s Options and with evidence
that each such election has been filed in a timely manner.
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ARTICLE V
MISCELLANEOUS
Section 5.1 — Administration
The Committee shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the Optionee, 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 Option.
In its absolute discretion, the Board of Directors may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan and this Agreement.
Section 5.2 — Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Optionee or his successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect; provided, however,
that this Section 5.2 shall not prevent transfers by will or by the applicable laws of descent and
distribution or any transfer to the Company contemplated in the Plan.
Section 5.3 — Shares to Be Reserved
The Company shall at all times during the term of the Option reserve and keep available such
number of Shares as will be sufficient to satisfy the requirements of this Agreement.
Section 5.4 — Notices
Any notice to be given under the terms of this Agreement to the Company shall be addressed to
the Company in care of its Secretary, and any notice to be given to the Optionee shall be addressed
to him at his most recent address as reflected in the Company’s records. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different address for notices
to be given to him or it. Any notice which is required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee’s personal representative if such
representative has previously informed the Company of his status and address by written notice
under this Section 5.4. Any notice shall have been deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, and delivered by hand (whether by
courier or otherwise) or sent by registered or certified mail, return receipt requested (with
postage prepaid).
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Section 5.5 — Titles
Titles are provided herein for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement.
Section 5.6 — Applicability of Plan
The Option and the Shares issued to the Optionee upon exercise of the Option shall be subject
to all of the terms and provisions of the Plan, to the extent applicable to the Option and such
Shares. In the event of any conflict between this Agreement and the Plan, the terms of the Plan
shall control.
Section 5.7 — Amendment
This Agreement may be amended only by a writing executed by the parties hereto, which
specifically states that it is amending this Agreement.
Section 5.8 — Jurisdiction
Any suit, action or proceeding against the Optionee with respect to this Agreement, or any
judgment entered by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of California, and the Optionee hereby submits to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. The
Optionee hereby irrevocably waives any objections which he may now or hereafter have to the laying
of the venue of any suit, action or proceeding arising out of or relating to this Agreement brought
in any court of competent jurisdiction in the State of California, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum. No suit, action or proceeding against the Company with respect
to this Agreement may be brought in any court, domestic or foreign, or before any similar domestic
or foreign authority other than in a court of competent jurisdiction in the State of California,
and the Optionee hereby irrevocably waives any right which he may otherwise have had to bring such
an action in any other court, domestic or foreign, or before any similar domestic or foreign
authority. The Company hereby submits to the jurisdiction of such courts for the purpose of any
such suit, action or proceeding.
(Signature Page Follows)
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IN WITNESS WHEREOF, this Non-Qualified Share Option Agreement has been executed and delivered by
the parties hereto as of the date first written above.
«NAME», OPTIONEE
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COMPANY | |||||
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Aggregate number of Shares for which the Option granted hereunder is exercisable: «Options»
Per share exercise price: «Exercise_Price»
Grant Date for purposes of the provisions set forth in the Plan: «Grant_Date»
Vesting Reference Date: «Vesting_Reference_Date»
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