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EXHIBIT 99.7
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
PORTATEC CORPORATION
AMENDED AND RESTATED STOCK OPTION/STOCK ISSUANCE PLAN
This STOCK OPTION ASSUMPTION AGREEMENT by and between Broadcom Corporation,
a California corporation ("Broadcom"), and the undersigned individual
("Optionee") is effective as of July 3, 2001 (this "Assumption Agreement").
WHEREAS, Optionee holds one or more outstanding options to purchase shares
of the common stock ("PortaTec Stock") of PortaTec Corporation, a California
corporation ("PortaTec"), which were granted to Optionee under the PortaTec
Corporation Amended and Restated Stock Option/Stock Issuance Plan (the "Plan"),
and are each evidenced by a Stock Option Agreement(s).
WHEREAS, PortaTec has been acquired by Broadcom through the merger of
PortaTec with and into Broadcom (the "Merger"), pursuant to the Merger Agreement
and Plan of Reorganization, dated as of March 30, 2001 (the "Merger Agreement"),
by and among Broadcom and PortaTec and, with respect to Article 7 and Article 9
of the Merger Agreement only, Xxxxx-Xxxxx Xxxx, as Stockholder Agent, and U. S.
Stock Transfer Corporation, as Depositary Agent.
WHEREAS, the provisions of the Merger Agreement require Broadcom to assume
the obligations of PortaTec under the Plan and each outstanding option under the
Plan at the consummation of the Merger.
WHEREAS, Broadcom desires to issue to the holder of each such assumed
option (the "Assumed Option") an agreement evidencing the assumption of such
option.
WHEREAS, pursuant to the Merger Agreement, each outstanding share of
PortaTec Stock was converted into .0025 of a share (the "Exchange Ratio") of
Class A common stock, par value $0.0001 per share, of Broadcom ("Broadcom
Stock").
WHEREAS, the purpose of this Agreement is to evidence the assumption by
Broadcom of the outstanding options held by Optionee at the Effective Time and
to reflect certain adjustments to Optionee's outstanding options that have
become necessary in connection with their assumption by Broadcom.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of PortaTec Stock subject to the options
outstanding under the Plan held by Optionee immediately prior to the Effective
Time (the "PortaTec Options") and the exercise price payable per share are set
forth in Exhibit A attached hereto. Broadcom hereby assumes, as of the Effective
Time, all the duties and obligations of PortaTec under the Plan and each of the
PortaTec Options. In connection with such assumption, the
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number of shares of Broadcom Stock purchasable under each Assumed Option and the
exercise price payable thereunder have been adjusted to reflect the Exchange
Ratio. Accordingly, the number of shares of Broadcom Stock initially subject to
each Assumed Option shall be as specified for that option in attached Exhibit A,
and the adjusted exercise price payable per share of Broadcom Stock under the
Assumed Option shall also be as indicated for that option in Exhibit A attached
hereto.
2. The intent of the foregoing adjustments to each Assumed Option is to
assure that the difference between the aggregate fair market value of the shares
of Broadcom Stock purchasable under each such option and the aggregate exercise
price as adjusted pursuant to this Agreement will, immediately after the
consummation of the Merger, be no less than the difference which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the PortaTec Stock subject to the PortaTec Option and the aggregate exercise
price in effect at such time under the Stock Option Agreement(s). Such
adjustments are also intended to preserve, immediately after the Merger, on a
per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the PortaTec Option immediately prior
to the Merger. Such adjustments are also intended to preserve, to the extent
applicable, the incentive stock option status of the assumed PortaTec Options
under Section 422 of the Internal Revenue Code of 1986, as amended.
3. Unless the context otherwise requires, all references in the Stock
Option Agreement(s) and in the Plan (as incorporated into such Stock Option
Agreement(s)) shall be adjusted as follows: (i) all references to the "Company"
shall mean Broadcom, (ii) all references to the "Board" shall mean the Board of
Directors of Broadcom, (iii) all references to the "Committee" shall mean the
Option Committee of the Board and (iv) all references to "Common Stock" shall
mean Broadcom Stock.
4. The grant date and the expiration date of each Assumed Option and all
other provisions which govern either the exercise or the termination of the
Assumed Option shall remain the same as set forth in the Stock Option
Agreement(s) applicable to that option, and the provisions of the Plan and the
Stock Option Agreement(s) shall accordingly govern and control Optionee's rights
to purchase Broadcom Stock under the Assumed Option.
5. Pursuant to the terms of your Stock Option Agreement(s) and the Plan,
your Assumed Options shall not vest or become exercisable on an accelerated
basis upon the consummation of the Merger. Accordingly, each Assumed Option
shall continue to vest and become exercisable for unvested shares of Broadcom
Stock subject to that option on the same terms and in accordance with the same
installment vesting schedule as those in effect under the applicable Stock
Option Agreement(s) immediately prior to the Effective Time; provided, however,
that the number of shares of Broadcom Stock subject to each such installment
shall be adjusted to reflect the Exchange Ratio.
6. For purposes of applying any and all provisions of the Stock Option
Agreement(s) and/or the Plan relating to Optionee's continuous status as an
employee of or a consultant to PortaTec, Optionee shall be deemed to continue in
such status as an employee or a consultant for so long as Optionee renders
services as an employee or a consultant to Broadcom or any other present or
future subsidiary of Broadcom. Accordingly, the provisions of the Stock
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Option Agreement(s) governing the termination of the Assumed Options upon
Optionee's cessation of service as an employee of or a consultant to PortaTec
shall hereafter be applied on the basis of Optionee's cessation of employee or
consultant status with Broadcom or any other present or future subsidiaries of
Broadcom, and each Assumed Option shall accordingly terminate, within the
designated time period in effect under the Stock Option Agreement for that
option, following such cessation of service as an employee of or a consultant to
Broadcom or any other present or future subsidiaries of Broadcom.
7. The adjusted exercise price payable for the Broadcom Stock subject to
each Assumed Option shall be payable in any of the forms authorized under the
Stock Option Agreement applicable to that option.
8. In order to exercise each Assumed Option, Optionee must deliver to
Broadcom a written notice of exercise in which the number of shares of Broadcom
Stock to be purchased thereunder must be indicated. The exercise notice must be
accompanied by payment of the adjusted exercise price payable for the purchased
shares of Broadcom Stock or must specify the arrangement for the payment of the
purchase price as permitted by the applicable Stock Option Agreement. This
notice should be delivered to Broadcom at the following address:
Broadcom Corporation
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Manager of Shareholder Services
9. Any and all disputes or controversies between Optionee and Broadcom
arising out of, relating to or otherwise connected with Broadcom's assumption of
Optionee's Assumed Options under this Assumption Agreement or the validity,
construction, performance or termination of this Assumption Agreement shall be
settled exclusively by binding arbitration to be held in the county in which the
Optionee is (or has most recently been) employed by Broadcom (or any Parent or
Subsidiary) at the time of such arbitration. The arbitration proceedings shall
be governed by (i) the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association and (ii) the Federal
Arbitration Act. The arbitrator shall have the same, but no greater, remedial
authority as would a court hearing the same dispute. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration and shall be in lieu of the rights those parties may otherwise have
to a jury trial; provided, however, that such decision shall be subject to
correction, confirmation or vacation in accordance with the provisions and
standards of applicable law governing the judicial review of arbitration awards.
The prevailing party in such arbitration, as determined by the arbitrator, and
in any enforcement or other court proceedings, shall be entitled, to the extent
permitted by law, to reimbursement from the other party for all of the
prevailing party's costs (including but not limited to the arbitrator's
compensation), expenses and attorney's fees. Judgment shall be entered on the
arbitrator's decision in any court having jurisdiction over the subject matter
of such dispute or controversy. Notwithstanding the foregoing, either party may
in an appropriate matter apply to a court pursuant to California Code of Civil
Procedure Section 1281.8, or any comparable statutory provision or common law
principle, for provisional relief, including a temporary restraining order or a
preliminary injunction. To the extent permitted by law, the proceedings and
results, including the arbitrator's decision, shall be kept confidential.
10. Except to the extent specifically modified by this Assumption
Agreement, all of the terms and conditions of each Stock Option Agreement as in
effect immediately prior to the Merger shall continue in full force and effect
and shall not in any way be amended, revised or otherwise affected by this
Assumption Agreement.
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IN WITNESS WHEREOF, Broadcom Corporation has caused this Assumption
Agreement to be executed on its behalf by its duly authorized officer as of July
3, 2001.
BROADCOM CORPORATION
By:
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Xxxxx X. Xxxx
Vice President, General
Counsel and Secretary
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ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Assumption Agreement
and understands and agrees that all rights and liabilities with respect to each
of his or her PortaTec Options hereby assumed by Broadcom are as set forth in
the Stock Option Agreement, the Plan, and this Assumption Agreement.
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Signature of Optionee
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Printed Name
DATED:
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