EXHIBIT 10.1
May 27, 1998
Financiere et Industrielle Gaz et Eaux
0, xxx Xxxxxx Xxxxxx
00000, Xxxxx (Xxxxxx)
Attention: Xxxxxxxx Xxxxxxx
Re: Virata Limited - Agreement with respect to Board of Directors and
other shareholder rights
Gentlemen:
In connection with the private placement offering ("Offering") of Series D
Preference Shares of Virata Limited, a corporation organized in the United
Kingdom (the Company"), which are convertible into Ordinary Shares of the
Company ("Ordinary Shares"), and the purchase by Financiere et Industrielle Gaz
et Eaux, a company incorporated in France with its registered office as
described above ("Gaz et Eaux") of 7,348,111 Series D Preference Shares (the
"Gaz et Eaux Shares") in the Offering, representing 10.0% and 11.6% of both the
voting rights and the equity capital (fully diluted and outstanding,
respectively) of the Company, as shown on the attached exhibit set forth below
is our mutual understanding as to (i) the representation of Gaz et Eaux on the
Company's Board of Directors and (ii) certain other rights relating to the
capital of the Company it being understood that the basis of Gaz et Eaux's
decision to purchase the Gaz et Eaux Shares is that following such purchase, Gaz
et Eaux will hold more than 10% of the voting rights and equity capital of the
Company.
1. BOARD REPRESENTATION. As long as Gaz et Eaux shall continue to hold 5%
--------------------
of the outstanding voting rights of the Company, on an as-converted basis, each
of the undersigned (including Gaz et Eaux) hereby agrees to (A) in their
capacities as shareholders of the Company, vote their respective shares in
favour of and approve, and (B) cause their respective representative on the
Company's Board of Directors to approve, the election and appointment of a
person nominated by Gaz et Eaux to the Company's Board of Directors.
2. If, from time to time during the term of this letter agreement there is
(i) a dividend in the form of any security, stock split or other change in the
character or amount of any of the outstanding securities of the Company; or (ii)
any consolidation or merger immediately following which shareholders of the
Company hold more than fifty percent (50%) of the voting equity securities of
the surviving corporation, then, in such event, any and all new, substituted or
additional securities or other property to which any of the Insiders are
entitled by reason of their ownership of the Insider Shares shall be immediately
subject to the provisions of this letter agreement and be included in the term
"Insider Shares" for all purposes of this letter agreement with the same force
and effect as the Insider Shares presently subjected to this letter agreement
and with respect to which such securities or property were distributed. In the
event that any of the Insiders are issued or otherwise acquire any Company
securities, then such securities shall be immediately subject to all the
provisions of this letter agreement and also be included in the term
Page 1 of 7
"Insider Shares" for all purposes of this letter agreement with the same force
and effect as the Insider Shares then subject to this letter agreement.
3. CO-SALE RIGHTS. As long as Gaz et Eaux shall continue to hold 5% of
--------------
the outstanding voting rights of the Company, on an as-converted basis each of
the undersigned (including Gaz et Eaux) hereby agrees to the following terms:
(A) In the event one or more of the undersigned, including Gaz et Eaux
(each an "Insider"), propose to sell, assign, transfer or otherwise convey
shares representing fifty percent (50%) or more of the aggregate voting rights
exercisable at a general meeting of shareholders of the Company or 50% or more
of the share capital of the Company (the "Insider Shares"), in a single
transaction or a series of related transactions (collectively, a "Sale"), and
such 50% or more being determined after the other stockholders of the Company
have exercised their respective rights of first refusal in accordance with the
provisions of the Company's Articles of Association, then the Insiders proposing
such a Sale (each a "Selling Insider") shall offer in writing (the "Notice") to
the remaining Insiders (each a "Non-Selling Insider") the right to participate
in such Sale on the same terms and conditions available to such Selling
Insiders. The Notice shall describe in reasonable detail the proposed Sale,
including, without limitation, the number of Insider Shares to be sold or
transferred, the nature of such Sale, the consideration to be paid and the name
and address of each prospective purchaser or transferee.
(B) Upon written notice to the Selling Insiders within fifteen (15)
business days of receipt by Non-Selling Insiders of the Notice, each Non-Selling
Insider may elect to sell up to all the shares then held by it. To the extent a
Non-Selling Insider exercises such right of co-sale, the number of Insider
Shares that the Selling Insiders may sell in the Sale may be correspondingly
reduced.
(C) If a Non-Selling Insider elects to exercise its co-sale rights, such
Non-Selling Insider shall effect its participation in the Sale by promptly
delivering to the Selling Insiders one or more certificates, properly endorsed
for transfer, which represent the number of Insider Shares which such Non-
Selling Insider elects and has the right to sell. The stock certificate or
certificates delivered to the Selling Insiders pursuant to this paragraph (C)
shall be transferred to the prospective purchaser or transferee upon
consummation of the Sale pursuant to the teens and conditions specified in the
Notice, and the Selling Insiders shall, concurrently therewith, remit to each
Non-Selling Insider that portion of the Sale proceeds to which such Non-Selling
Insider is entitled by reason of its participation in such Sale. To the extent
that any prospective purchaser or transferee prohibits such assignment or
otherwise refuses to purchase stock or other securities from a Non-Selling
Insider exercising its right of co-sale hereunder, the Selling Insiders shall
not sell any Insider Shares to such prospective purchaser or transferee unless
and until, simultaneously with such Sale, the Selling Insiders purchase such
stock or other securities from such Non-Selling Insider.
(D) The exercise or non-exercise of the co-sale right of a Non-Selling
Insider hereunder to participate in any Sale of Insider Shares by the Selling
Insiders shall not adversely affect its right to participate in any subsequent
Sale pursuant to this letter agreement. If a Non-
Page 2 of 7
Selling Insider does not elect to participate in the Sale subject to the Notice,
the Selling Insiders may, not later than sixty (60) days after delivery of the
Notice to the Non-Selling Insiders, conclude a transfer of the Insider Shares
covered by the Notice on terms and conditions not more favourable to the Selling
Insiders than those described in the Notice. Any proposed Sale on terms and
conditions more favourable than those described in the Notice or more than sixty
(60) days after delivery thereof shall again be subject to the co-sale rights of
the Non-Selling Insiders contained in this letter agreement.
(E) Notwithstanding the above, such co-sale rights shall not apply to a
Sale or other conveyance of Insider Shares by the Selling Insiders which is:
(i) to a Selling Insider's spouse, parents, or children or other
members of the Selling Insider's family (including relatives by marriage),
or to a custodian, trustee or other fiduciary for the account of the
Selling Insider or members of his or her family in connection with a bona
----
fide estate planing transaction;
----
(ii) by way of bequest or inheritance upon death;
(iii) to a subsidiary, parent or subsidiary of a parent of a Selling
Insider;
(iv) to one or more of the Insiders;
(v) by way of any pledge of Insider Shares made by the Selling
Insider pursuant to a bona fide loan transaction that creates a mere
---------
security interest;
provided, however, that any transferees pursuant to this paragraph (E)
-----------------
shall receive and hold such Insider Shares subject in all respects to the
provisions of this letter agreement, and that there shall be no further transfer
of such shares except in accordance herewith.
(F) In the event a Selling Insider sells or transfers any Insider Shares in
contravention of the co-sale rights of Non-Selling Insiders under this letter
agreement, such sale or transfer shall be null and void and each of the Insiders
agrees that the Company will not transfer on its books any certificate
representing shares sold or transferred in violation of this letter agreement.
4. FUTURE SHARE ISSUES. Each of the undersigned (including Gaz et Eaux)
-------------------
agrees not to vote in favour of any resolution to disapply section 89 of the
Companies Xxx 0000, as amended, or such provision as may replace it or to
disapply or amend Article 5.1 of the Articles of Association of the Company or
such provision as may replace it (whether in a general meeting of shareholders
or a class meeting) ("Resolution") unless each of the undersigned is given an
opportunity by the Company to purchase (on terms which are no less favourable
than those offered to any other person and in any event in accordance with
sections 89 to 95 of the Companies Xxx 0000, as amended and with the said
Article 5) such number of the shares referred to in the Resolution as is
necessary to maintain their then percentage shareholding in the Company, or
their percentage voting rights exercisable at a general meeting of the Company,
PROVIDED THAT this letter agreement shall not apply in respect of any resolution
which is proposed in respect of any issue of shares:
Page 3 of 7
(i) to employees or future employees of the Company or any members
of its group; and
(ii) pursuant to any acquisition by the Company or any member of its
group whereby such shares are issued as consideration or part consideration
for such acquisition.
5. PARTICIPATION IN FUTURE CONVERSIONS. Without prejudice to Clause 4
-----------------------------------
above, each of the undersigned shall not vote in favour of any resolution, or
take any action which it is otherwise able to take, which relates to the
conversion of any issued shares into a class of shares with rights, preferences
or privileges ranking in priority to those of the "D" preference shares without
giving Gaz et Eaux the opportunity (in accordance with the procedure set out in
Article 90 of the Companies Xxx 0000, as amended, mutatis mutandis) to convert
up to such number of the "D" preference shares then held by it into shares of
the class to be created as is equal to the number of shares to be so converted.
6. AMENDMENT OF THE ARTICLES OF ASSOCIATION. Each of the undersigned
----------------------------------------
(including Gaz et Eaux) undertakes to vote in favour of a resolution (whether in
a general meeting of shareholders or a class meeting) to amend the Articles of
Association of the Company by the insertion of a new article 9.16 as follows:
"9.16 Notwithstanding any other provisions of these Articles a transfer of
any shares in the Company held by any "D" preferred shareholder may
be made to any other member in its Group without restriction as to
price or otherwise and any such transfer shall be registered by the
directors provided that the transferee remains a member of the
Group. For the avoidance of doubt, the benefit of this Article 9.16
shall apply to (i) distribution by holders of "D" preference shares
which are partnerships to their partners and (ii) distribution by
holders of "D" preference shares which are unit or investment trusts
to their trustees or beneficiaries. For the purposes of this Article
9.16 in respect of any member "Group" means any entity controlled
by, controlling or under common control with such member and
"control" means to own, directly or indirectly a majority of the
voting securities of such entity or such member."
and the undersigned shall undertake to table such a resolution at the next
general meeting of shareholders of the Company and Gaz et Eaux for such time as
it has a nominated representative on the Board of Directors shall cooperate in
that regard.
7. TERMINATION. This letter agreement shall terminate and be of no further
-----------
force and effect immediately upon the earlier of (i) the closing of an initial
public offering of securities of the Company, or (ii) the closing of the
acquisition of all or substantially all the assets or stock of the Company or
the consolidation or merger of the Company with or into any corporation or
corporations, unless the shareholders of the Company immediately prior to such
transaction are holders of a majority of the voting securities of the surviving
or acquiring corporation immediately thereafter (disregarding, for purposes of
this calculation, equity securities which any
Page 4 of 7
shareholder of the Company owned immediately prior to such merger or
consolidation as a shareholder of another party to the transaction).
8. GOVERNING LAW. This letter agreement shall be governed in all respects
-------------
by the laws of England and Wales.
9. SHAREHOLDINGS. Each of the undersigned, excluding Gaz et Eaux confirm
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that they are currently the legal and beneficial owners of the numbers and
classes of shares in the capital of the Company set opposite their respective
names in the attached Schedule.
10. FURTHER ADHERENCE. In the event that any of the undersigned
-----------------
(including Gaz et Eaux) wish to transfer any of their shares in the Company such
transfer shall be subject to the condition that the transferee shall first have
entered into an agreement with other parties to this Agreement whereby it agrees
to be bound (on terms satisfactory to such other parties) by provisions
corresponding to the provisions of this Agreement binding upon the transferor
(and the transferor is at the same time released from such provisions) and in
the event of such agreement not being so signed the transferor shall remain
bound by the terms of this Agreement as though it remained the holder of the
shares in question.
11. ENTIRE AGREEMENT; AMENDMENT. This letter agreement and the documents
---------------------------
referred to in it constitute the full and entire understanding and agreement
among the parties with regard to the subjects hereof. This letter agreement, or
any provision hereof, may be amended or waived only in writing signed by each of
the Insiders and the Company.
12. NOTICES, ETC. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be mailed by recognized
overnight courier, by registered or certified mail, postage prepaid, return
receipt requested, or otherwise delivered by hand or by messenger, addressed (a)
if to any of the Insiders, to the Company, or at such other address as an
Insider have furnished to the Company in writing, (b) if to Gaz et Eaux, at 0,
xxx Xxxxxx Xxxxxx, 00000, Xxxxx (France), Attention: Xxxxxxxx Xxxxxxx, or at
such address as Gaz et Eaux shall have furnished the Company in writing, or (c)
if to the Company, at Mount Pleasant House, 2 Mount Pleasant, Xxxxxxxxxx Xxxx,
Xxxxxxxxx XX0 0XX Xxxxxx Xxxxxxx, or at such other address as the Company shall
have furnished to each of the Insiders and Gaz et Eaux. If notice is provided
by mail or overnight courier, notice shall be deemed to be given upon actual
delivery.
13. COUNTERPARTS. This letter agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
14. SEVERABILITY. In the event that any provision of this letter
------------
agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this letter agreement will continue in full
force and effect without said provision and the parties agree to replace such
provision with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such provisions;
provided that no such severability will be effective against a party if it
materially and adversely changes the economic benefits of this letter agreement
to such party.
Page 5 of 7
SCHEDULE
Name of Shareholder Class of Shares Number of Shares Number of Shares Percentage of total Percentage of total
Held Outstanding Fully Diluted voting rights and equity voting rights and
capital outstanding equity capital fully
diluted
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Oracle Corporation Preference C & D 9,794,421 9,794,421 15.4% 13.3%
------------------------------------------------------------------------------------------------------------------------------------
Olivetti Telemedia Ordinary, 8,370,238 8,370,238 13.2% 11.4%
Investments B.V. Preference A and
Preference D
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Oak Investment Partners Preference D 7,945,331 7,945,331 11.8% 10.8%
------------------------------------------------------------------------------------------------------------------------------------
New Enterprise Preference D 5,582,979 5,582,979 8.6% 7.2%
Associates
------------------------------------------------------------------------------------------------------------------------------------
Providence Investment Ordinary, 1,589,152 1,589,152 2.5% 2.2%
Company Ltd. Preference A and
Preference D
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Prof. Xxxxxx Xxxxxx Ordinary and 1,540,000 1,540,000 2.4% 2.1%
Preference D
------------------------------------------------------------------------------------------------------------------------------------
Gaz et Eaux Preference D 7,348,111 7,348,111 11.6% 10.0%
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Subtotal for all 42,170,232 42,170,232 62.9% 57.4%
signatories
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Others 22,890,197 31,310,879 37.1% 42.2%
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Total 65,060,429 73,481,111 100.0% 100.0%
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Page 6 of 7
Virata Limited - Agreement with respect to Board of Directors and other
shareholder rights
IN WITNESS WHEREOF, each of the undersigned has caused this letter agreement to
be executed by its respective authorized represe as of the date first written
above.
Very truly yours,
ORACLE CORPORATION
By:
--------------------------
Name:
------------------------
Title:
-----------------------
OLIVETTI TELEMEDIA INVESTMENTS B.V.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
OAK INVESTMENT PARTNERS VI, LP & OAK VI
AFFILIATE FUND, LP
By:
--------------------------
Name:
------------------------
Title:
-----------------------
NEW ENTERPRISE ASSOCIATES
By:
--------------------------
Name:
------------------------
Title:
-----------------------
PROVIDENCE INVESTMENT COMPANY LTD.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
-----------------------------
PROF. XXXXXX XXXXXX
The undersigned hereby agrees to be bound by
and accepts the agreement set forth above as of
the ___ day of May, 1998
GAZ ET EAUX
By:
--------------------------
Name:
------------------------
Title:
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Page 7 of 7
Shareholder List
'C'
'A' 'B' Preference 'D'
Ordinary Preference Preference as-converted Preference Fully
Shares Shares of Shares of Shares of Shares of Post Holding Diluted
of 1p 50p 1p 1p 1p Conversion % %
Societe Financiere Mirelis SA - - 500,000 500,000 0.8% 0.7%
Pharos Genesis Fund Limited - - 454,546 454,546 0.7% 0.6%
Pharos Fund Limited - - 454,545 454,545 0.7% 0.6%
Pictet & Cie Geneva - - 450,000 450,000 0.7% 0.6%
Lighthouse Partners USA, LP - - 295,455 295,455 0.5% 0.4%
Faisal Finance (Jersey) Ltd. - - 272,727 272,727 0.4% 0.4%
Banque SCS Alliance S.A. - - 250,000 250,000 0.4% 0.3%
Faisal Finance (Switzerland) SA - - 250,000 250,000 0.4% 0.3%
Denmore Investments Limited - - 250,000 250,000 0.4% 0.3%
4 C Ventures L.P. - 0 239,920 239,920 0.4% 0.3%
GLG Finance SA - - 210,000 210,000 0.3% 0.3%
Galba Anstalt - - 201,200 201,200 0.3% 0.3%
L.B. Finance S.A. - - 200,000 200,000 0.3% 0.3%
Jordana-Gerhardt Family Trust - - 181,818 181,818 0.3% 0.2%
u/d/t 3/21/97 Clar
Oak VI Affiliates Fund Ltd - - 181,137 181,137 0.3% 0.2%
Xxxxxx X. Xxxxxxxxx III - - 180,000 180,000 0.3% 0.2%
LLOYDS BANK PLC NOMINEES - - 160,000 160,000 0.3% 0.2%
GLG Finance SA - - 150,000 150,000 0.2% 0.2%
Marcuard Xxxx & Cie S.A. - - 150,000 150,000 0.2% 0.2%
Banca Del Gottardo - - 150,000 150,000 0.2% 0.2%
Bank Xxxxxx Xxxx Zurich - - 140,000 140,000 0.2% 0.2%
BANQUE PRIVEE ED. XX XXXXXXXXXX - - 136,360 136,360 0.2% 0.2%
Algonquin Trust SA - - 100,000 100,000 0.2% 0.1%
Manpower SA. - - 100,000 100,000 0.2% 0.1%
Bank Xxxxxx Bar & CO AG - - 100,000 100,000 0.2% 0.1%
Thierry Saint-Loup - - 100,000 100,000 0.2% 0.1%
Xxxxx X. Xxxxxxx - - 100,000 100,000 0.2% 0.1%
Xxx X. Xxxxxx & Lon Kargionis-Xxxxxx, - - 100,000 100,000 0.2% 0.1%
Trustees
Xxxxxxx Xxxxxxxx - - 90,910 90,910 0.1% 0.1%
Lighthouse Genesis Partners USA, LP - - 68,182 68,182 0.1% 0.1%
Credit Suisse London Nominees Ltd. - - 60,000 60,000 0.1% 0.1%
Xxxxxx X. Xxxxxx - - 45,454 45,454 0.1% 0.1%
Xxxxxxx X. Xxxxxxxx - - 45,454 45,454 0.1% 0.1%
'C'
'A' 'B' Preference 'D'
Ordinary Preference Preference as-converted Preference Fully
Shares Shares of Shares of Shares of Shares of Post Holding Diluted
of 1p 50p 1p 1p 1p Conversion % %
Xxxxxx Xxxxxx 1,500,000 - - 40,000 1,540,000 2.4% 2.1%
Foundation de prevoyance Manpower - - 30,000 30,000 0.0% 0.0%
Xxxxxx X. Xxxxxxx - - 22,727 22,727 0.0% 0.0%
Xxxxxxx X'Xxxxx 380,208 - - 380,208 0.6% 0.5%
Xxxxx Woodruft 109,375 - - 109,375 0.2% 0.1%
RHM & RHR Trust Co Ltd 100,000 - - 100,000 0.2% 0.1%
Xxxxx Xxxxxx 100,000 - - 100,000 0.2% 0.1%
Xxxxx Xxxxxxxxxxxx 81,250 - - 81,250 0.1% 0.1%
Xxxxxxx Xxx 53,750 - - 53,750 0.1% 0.1%
Xxxxx Xxxxxx 51,250 - - 51,250 0.1% 0.1%
Xxxx Xxxxxxxxxx 45,833 - - 45,833 0.1% 0.1%
Xxxxx Xxxxx 43,750 - - 43,750 0.1% 0.1%
Xxxxxx Xxxx 38,541 - - 38,541 0.1% 0.1%
Xxxxx Xxxxxx 30,000 - - 30,000 0.0% 0.0%
Xxxxxx Xxxxxx 28,958 - - 28,958 0.0% 0.0%
Xxxxxx Xxxxx 24,170 - - 24,170 0.0% 0.0%
Xxxxxxx Xxxxx 20,000 - - 20,000 0.0% 0.0%
Xxxxx Xxxxxx 16,250 - - 16,250 0.0% 0.0%
Xxxx Whistlecraft 14,580 - - 14,580 0.0% 0.0%
Xxxxxxx Xxxxxxx 12,708 - - 12,708 0.0% 0.0%
Xxxxxx Xxxx 11,667 - - 11,667 0.0% 0.0%
Xxx Xxxxxx 8,750 - - 8,750 0.0% 0.0%
Xxxx Xxxxx 7,917 - - 7,917 0.0% 0.0%
Xxxxx Xxxx 6,771 - - 6,771 0.0% 0.0%
Xxx Xxxxxx 6,250 - - 6,250 0.0% 0.0%
Xxxx Xxxxxxx 6,250 - - 6,250 0.0% 0.0%
Xxxxxx Xxxxxx 5,833 - - 5,833 0.0% 0.0%
Xxx XxXxxxxxx 3,958 - - 3,958 0.0% 0.0%
Xxxxx Xxxx 2,708 - - 2,708 0.0% 0.0%
Xxx Xxxxx 2,500 - - 2,500 0.0% 0.0%
Xxxxxx Xxxxx 2,500 - - 2,500 0.0% 0.0%
Xxxx Xxxxxxxx 2,062 - - 2,062 0.0% 0.0%
Xxxx Xxxxxxxx 1,417 - - 1,417 0.0% 0.0%
'C'
'A' 'B' Preference 'D'
Ordinary Preference Preference as-converted Preference Fully
Shares Shares of Shares of Shares of Shares of Post Holding Diluted
of 1p 50p 1p 1p 1p Conversion % %
Xxxxx Xxxxxx 1,167 - - - 1,167 0.0% 0.0%
Xxxxxxxx Xxxxx 1,125 - - - 1,125 0.0% 0.0%
Xxxxxxx Xxxxxxxx 1,042 - - - 1,042 0.0% 0.0%
Xxxx Xxxxxxxxxx 000 - - - 000 0.0% 0.0%
Total Issued Share Capital 11,752,415 1,798,720 1,394,406 5,600,000 42,889,503 63,435,045 100.0% 86.3%
Employee Grants (Vested) 1,835,233 - - - - 1,835,233 2.5%
Equip Lease Vendor Warrant - - - 74,046 - 74,046 0.1%
Equip Lease Vendor Warrant - - - 14,400 - 14,400 0.0%
Xxxxxxx Option 75,000 - - - - 75,000 0.1%
Bank Warrant - - - 42,353 - 42,353 2.2%
Index Warrant - - - - 1,589,777 1,589,777 2.2%
Fully diluted @ 25 May 98 13,662,648 1,798,720 1,394,406 5,730,799 44,479,280 67,065,854 91.3%
Employee Grants (Unvested) 6,415,257 - - 6,415,257 8.7%
Fd w/ Unvest. Options @ 25 May 20,077,905 1,798,720 1,394,406 5,730,799 44,479,280 73,481,111 100.0%
