Exhibit 10.7
AGREEMENT
This Agreement is made and entered into on this 17th day of December, 2006
by and between Broadcom Corporation ("Broadcom" or the "Company") and Xxxxxxx
Xxxxxx ("Xxxxxx"), the undersigned holder of options to purchase shares of the
Company's Class A common stock and Class B common stock.
Broadcom and Xxxxxx hereby agree as follows:
1. Xxxxxx holds the following outstanding options to purchase shares of
Broadcom Class B common stock granted before the Company's initial public
offering (the "Pre-IPO Options"):
EXERCISE PRICE PER
GRANT DATE OPTIONS SHARE
-----------------------------------------
03/02/98 300,000 $1.6667
2. Xxxxxx holds the following outstanding options to purchase shares of
Broadcom Class A common stock granted after the Company's initial public
offering, which are subject to the terms and provisions of Paragraph 5 of this
Agreement (the "Subject Options"):
ORIGINAL EXERCISE AMENDED EXERCISE
GRANT DATE OPTIONS PRICE PER SHARE PRICE PER SHARE
------------------------------------------------------------
11/03/98 885,000 $13.6355 $20.5000
08/05/02 450,000 $10.4933 $10.6800
3. Xxxxxx holds the following remaining outstanding options to purchase
shares of Broadcom Class A common stock granted after the Company's initial
public offering (the "Remainder Options"):
EXERCISE PRICE PER
GRANT DATE OPTIONS SHARE
-----------------------------------------
12/24/01 171,874 $26.5000
11/10/03 203,125 $23.4133
12/07/03 103,125 $22.6933
02/05/05 26,718 $21.4733
05/05/06 6,250 $41.1500
4. The Subject Options and the Remainder Options, together with any
unexercised or unvested options to purchase Broadcom Class A common stock Xxxxxx
holds or may have held, shall be known as the "Terminated Options" for purposes
of this Agreement.
5. To avoid adverse tax consequences under Section 409A of the Internal
Revenue Code, Xxxxxx desires to amend the Subject Options to increase the
Original Exercise Price Per Share in effect for the unexercised portion of the
Subject Options that is subject to Section 409A to the higher Amended Exercise
Price Per Share indicated in Paragraph 2 of this Agreement. Broadcom and Xxxxxx
agree that the Original Exercise Price Per Share for the Subject Options listed
in Paragraph 2 of this Agreement is hereby increased to the higher Amended
Exercise Price Per Share set forth for the Subject Options in Paragraph 2 of
this Agreement.
6. Xxxxxx agrees that he will not exercise or otherwise make any claim
to the Terminated Options. The Terminated Options shall be cancelled by Broadcom
and shall cease to be outstanding on December 19, 2006.
7. In the event that Broadcom asserts any claim against Xxxxxx, known
or unknown, including claims presently asserted in the pending shareholder
derivative litigations (the "Claims"), Broadcom and Xxxxxx agree that Xxxxxx is
entitled to a credit equal to the value of the Terminated Options (the
"Credit"), unless otherwise ordered or disapproved by a court, and subject to
the express conditions of this Paragraph. The Credit shall be calculated as the
product of the total number of shares of Broadcom Class A common stock
underlying the outstanding Terminated Options as of the date of this Agreement
and the difference between the exercise prices of the Terminated Options, as
amended, and $33.59 (the closing price per share of Broadcom Class A common
stock on December 15, 2006). Xxxxxx shall have a right to receive the Credit
only as against any damages or monetary relief that may be awarded to Broadcom
in connection with the Claims, or in any future settlement of the Claims. Xxxxxx
agrees as express conditions to any right Xxxxxx may claim to receive the
Credit, that (1) Xxxxxx must expressly invoke, in writing, his right to the
Credit, and (2) before Broadcom shall be obligated by this Agreement to issue
the Credit to Xxxxxx, Xxxxxx must deliver to Broadcom in cash an amount equal to
any withholding taxes or penalties Broadcom may be required to remit to the
Internal Revenue Service, applicable state taxing authorities, or any other
applicable taxing authorities with respect to the issuance of the Credit to
Xxxxxx, with such withholding taxes or penalties to be calculated for purposes
of this Agreement as if the Credit were an actual cash payment made to Xxxxxx.
In the event that any court disapproves the issuance of the Credit as against
any damages or monetary relief that may be awarded to Broadcom in connection
with the Claims, or in any future settlement of the Claims, the remaining
portions of this Agreement shall remain in full force and effect.
8. In exchange for Xxxxxx'x Pre-IPO Options, Broadcom shall pay Xxxxxx
the sum of $5,195,517.07, which is the difference between $1.6667 (the option
exercise price per share) and $33.59 (the closing price per share of Broadcom
Class A common stock on December 15, 2006) for each of the shares of Broadcom
Class B common stock underlying the Pre-IPO Options less the required
withholding taxes of $4,381,472.93. Such sum shall be paid immediately by
Broadcom via wire transfer to a financial institution account designated by
Xxxxxx.
9. Notwithstanding the provisions of Paragraphs 5, 7 and 8 of this
Agreement, Xxxxxx agrees that Broadcom is not obligated, and Xxxxxx shall make
no claim against
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Broadcom, for any liability Xxxxxx may incur pursuant to Section 409A of the
Internal Revenue Code. Xxxxxx will not receive any assistance from Broadcom or
otherwise be made whole to offset the Section 409A or other tax consequences
that may arise from the cancellation or termination of the Terminated Options or
from the payment described in paragraph 8 of this Agreement.
10. Nothing contained in this Agreement is intended to modify or alter
Broadcom's or Xxxxxx'x rights to contribution against any person or entity in
connection with claims presently asserted or that may be asserted in pending
shareholder class action or derivative litigations in which Broadcom or Xxxxxx
is named as a party, or any future litigation arising out of the same facts and
circumstances.
11. Nothing contained in this Agreement shall be deemed as an admission
by either Broadcom or Xxxxxx. This Agreement shall not be deemed or argued to
constitute a waiver of any rights, claims or defenses of either Broadcom or
Xxxxxx, and this Agreement does not constitute a release of any claims that
either party may have against the other.
12. Both Broadcom and Xxxxxx have cooperated in the drafting and
preparation of this Agreement. In any construction to be made of this Agreement,
the same shall not be construed against either party on the basis that the party
was the drafter.
13. This Agreement contains the entire agreement between Broadcom and
Xxxxxx relating to the Pre-IPO Options, Subject Options and Remainder Options,
and supersedes all prior negotiations, agreements and understandings, if any,
with respect thereto. This Agreement can be modified only in a writing signed by
both Xxxxxx and an authorized officer of Broadcom.
14. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original, and all of which shall constitute one
instrument.
AGREED AND ACCEPTED:
DATED: 12/17/2006 BROADCOM CORPORATION
BY: /s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
Senior Vice President
DATED: 12/17/2006 XXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
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