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EXHIBIT 99.3
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
ELEMENT 14, INC.
UNAPPROVED SHARE OPTION SCHEME
This STOCK OPTION ASSUMPTION AGREEMENT by and between Broadcom
Corporation, a California corporation ("Broadcom"), and the undersigned
individual ("Optionee") is effective as of November 22, 2000 (this "Assumption
Agreement").
WHEREAS, Optionee holds one or more outstanding options to purchase
shares of the common stock ("Element 14 Stock") of Element 14, Inc., a Delaware
corporation ("Element 14"), which were granted to Optionee under the Element 14,
Inc. Unapproved Share Option Scheme (the "Option Scheme"), and are each
evidenced by an Option Certificate(s).
WHEREAS, Element 14 has been acquired by Broadcom through the
merger of E14 Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Broadcom ("E14"), with and into Element 14 (the "Merger") pursuant
to the Merger Agreement and Plan of Reorganization, dated as of September 22,
2000 (the "Merger Agreement"), by and among Broadcom, E14 and Element 14 and,
with respect to Articles 7 and 9 of the Merger Agreement only, Rob Soni, 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 Element 14 under the Option Scheme and each
outstanding option under the Option Scheme at the consummation of the Merger.
WHEREAS, by an agreement by and between Element 14 and the
Optionee, it was agreed that the Optionee's options under the Option Scheme
would be assumed by the successor corporation (or a parent or subsidiary of the
successor corporation) in the event of a merger of Element 14 with or into
another corporation.
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 Element 14 Stock was converted into 0.13252068 (the "Exchange Ratio") of a
share 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 time
of the consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to Optionee's outstanding options which have become necessary in
connection with their assumption by Broadcom.
NOW, THEREFORE, it is hereby agreed as follows:
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1. The number of shares of Element 14 Stock subject to the options
outstanding under the Option Scheme held by Optionee immediately prior to the
Effective Time (the "Element 14 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 Element 14 under the
Option Scheme and each of the Element 14 Options. In connection with such
assumption, the 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
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 Element 14 Stock subject to the Element 14 Option and the aggregate exercise
price in effect at such time under the Option Certificate(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 Element 14 Option immediately prior to the
Merger.
3. Unless the context otherwise requires, all references in the
Option Certificate(s) and, if applicable, in the Option Scheme (as incorporated
into such Option Certificate(s)) shall be adjusted as follows: (i) all
references to the "Company" shall mean Broadcom, (ii) all references to "Common
Stock" shall mean a share of Broadcom Stock and (iii) all references to the
"Board" shall mean the Board of Directors of Broadcom.
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 Option
Certificate(s) applicable to that option, and the provisions of the Option
Scheme and the Option Certificate(s) shall accordingly govern and control
Optionee's rights to purchase Broadcom Stock under the Assumed Option.
5. Pursuant to the terms of your Option Certificate(s) and the
Option Scheme, 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
Option Certificate(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 Option
Certificate(s) and/or the Option Scheme relating to Optionee's status as an
employee of or a consultant to Element 14, Optionee shall be deemed to continue
in such status as an employee or a consultant
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for so long as Optionee renders services as an employee or a consultant to
Broadcom or any present or future subsidiary of Broadcom. Accordingly, the
provisions of the Option Certificate(s) governing the termination of the Assumed
Options upon Optionee's cessation of service as an employee of or a consultant
to Element 14 shall hereafter be applied on the basis of Optionee's cessation of
employee or consultant status with Broadcom or any present or future
subsidiaries of Broadcom, and each assumed Element 14 Option shall accordingly
terminate, within the designated time period in effect under the Option
Certificate for that option, following such cessation of service as an employee
of or a consultant to Broadcom or any 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 Option Certificate 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 Option Certificate.
This notice should be delivered to Broadcom at the following address:
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92618
Attention: Manager of Shareholder Services
9. Except to the extent specifically modified by this Assumption
Agreement, all of the terms and conditions of each Option Certificate 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
November 22, 2000.
BROADCOM CORPORATION
By:
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David A. Dull
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 Element 14 Options hereby assumed by Broadcom are
as set forth in the Option Certificate, the Option Scheme, and this Assumption
Agreement.
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Signature of Optionee
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Printed Name
DATED:
