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EXHIBIT 99.5
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between Broadcom Corporation (the "Corporation") and
______________________________ ("Optionee") evidencing the stock option (the
"Option") granted on this date to Optionee under the terms of the Corporation's
1998 Stock Incentive Plan, and such provisions shall be effective immediately.
All capitalized terms in this Addendum, to the extent not otherwise defined
herein, shall have the meanings assigned to them in the Option Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation right
exercisable upon the following terms and conditions:
(i) Optionee shall have the unconditional right,
exercisable at any time during the thirty (30)-day period immediately
following a Hostile Take-Over, to surrender the Option to the
Corporation, to the extent the Option is at the time exercisable for
one or more shares of Common Stock. In return for the surrendered
Option, Optionee shall receive a cash distribution from the
Corporation in an amount equal to the excess of (A) the Take-Over
Price of the shares of Common Stock for which the surrendered option
(or surrendered portion) is at the time exercisable over (B) the
aggregate Exercise Price payable for such shares.
(ii) To exercise this limited stock appreciation right,
Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in
which there is specified the number of Option Shares as to which the
Option is being surrendered. Such notice must be accompanied by the
return of Optionee's copy of the Option Agreement, together with any
written amendments to such Agreement. The cash distribution shall be
paid to Optionee within five (5) business days following such delivery
date. The exercise of the limited stock appreciation right in
accordance with the terms of this Addendum is hereby approved by the
Plan Administrator, in advance of such exercise, and no further
approval of the Plan Administrator or the Board shall be required at
the time of the actual option surrender and cash distribution. Upon
receipt of such cash distribution, the Option shall be cancelled with
respect to the Option Shares for which the Option has been
surrendered, and Optionee shall cease to have any further right to
acquire those Option Shares under the Option Agreement. The Option
shall, however, remain outstanding and exercisable for the balance of
the Option Shares (if any) in accordance with the terms of the Option
Agreement, and the Corporation shall issue a replacement
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stock option agreement (substantially in the same form of the surrendered
Option Agreement) for those remaining Option Shares.
(iii) In no event may this limited stock appreciation
right be exercised when there is not a positive spread between the
Fair Market Value of the Option Shares subject to the surrendered
option and the aggregate Exercise Price payable for such shares. This
limited stock appreciation right shall in all events terminate upon
the expiration or sooner termination of the Option term and may not be
assigned or transferred by Optionee, except to the extent the Option
is transferable in accordance with the provisions of the Option
Agreement.
2. For purposes of this Addendum, the following definitions shall be
in effect:
(i) A HOSTILE TAKE-OVER be deemed to occur upon the
acquisition, directly or indirectly, by any person or related group of
persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of
Rule 13d-3 of the 0000 Xxx) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's shareholders which the Board does not
recommend such shareholders to accept or (B) a change in the
composition of the Board over a period of thirty-six (36) consecutive
months or less such that a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to be
comprised of individuals who either (aa) have been Board members
continuously since the beginning of such period or (bb) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (aa)
who were still in office at the time the Board approved such election
or nomination.
(ii) TAKE-OVER PRICE shall mean the greater of (i) the
Fair Market Value per share of Common Stock on the date the option is
surrendered to the Corporation in connection with a Hostile Take-Over
or, if applicable, (ii) the highest reported price per share of Common
Stock paid by the tender offeror in effecting the Hostile Take-Over
through the acquisition of such Common Stock. However, if the
surrendered option is an Incentive Option, the Take-Over Price shall
not exceed the clause (i) price per share.
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IN WITNESS WHEREOF, Broadcom Corporation has caused this Addendum to
be executed by its duly-authorized officer as of the Effective Date
specified below.
BROADCOM CORPORATION
By:_________________________________
Title:______________________________
EFFECTIVE DATE: __________________, 199__
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