EXHIBIT 10.7
EXECUTION COPY
WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made as of the 4th day of June, 1998 between:
1. VIRATA LIMITED (Company Registration No. 2798338), the registered
office of which is situated at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("Grantor"); and
2. INDEX SECURITIES S.A., the principal office of which is situated
at ▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Grantee").
RECITALS
A. By a letter of engagement dated 23 January 1998 ("Engagement
Letter"), the Grantor appointed the Grantee to act as its
placement agent in connection with the private placing by the
Grantor of securities of the Grantor to private, corporate,
venture capital and institutional investors pursuant to a private
placement memorandum ("Offering").
B. By a resolution of the board of directors of the Grantor passed on
28 April 1998 the Grantor resolved to issue warrants conferring
the right on holders thereof to subscribe for up to [One Million,
Five Hundred Ninety-Five Thousand, Fifty-Four (1,595,054)] "D"
Preference Shares (as defined below) in the capital of the Grantor
on the terms and conditions contained in this Agreement.
C. The Grantor has agreed to grant to the Grantee, in consideration
for the services of the Grantee in connection with the Offering as
set out in the Engagement Letter, the right to subscribe for "D"
Preference Shares in the capital of the Grantor on the terms and
subject to the conditions herein contained.
AGREED TERMS
1. DEFINITIONS AND INTERPRETATION
1.1. In this Agreement the following words and expressions shall have the
following meanings unless the context requires otherwise:
"Articles" means the Articles of Association of the
Grantor from time to time;
"Business Day" means any weekday (Saturdays, Sundays and
public holidays excluded) upon which banks are
open for business in the City of London;
"Companies Act" means the Companies ▇▇▇ ▇▇▇▇ as amended;
"Consents" means the consents, waivers and resolutions
obtained or to be obtained by the Grantor
pursuant to Clause 5;
"'D' Preference Shares" means "D" preference shares of 1 ▇▇▇▇▇ each in
the capital of the Grantor having the rights
and privileges attached thereto as set out in
the Articles;
"Effective Date of Issue" means the date of allotment of "D" Preference
Shares in accordance with clause 4.2 following
the exercise of any Warrant;
"Final Date" means the last date on which the Warrants can
be exercised in accordance with Clause 3;
"Financial Services Act" means the Financial Services ▇▇▇ ▇▇▇▇;
"Holders" means the Grantee together with any other
person who is registered as the holder of a
Warrant pursuant to the terms hereof from time
to time, and "Holder" shall mean any one of
them;
"Listing" means the inclusion of any part of the
Grantor's loan or share capital in the
Official List or on the Alternative Investment
Market or the London Stock Exchange or on any
recognized investment exchange (within the
meaning of the Financial Services Act)
including any Overseas Investment Exchange or
in or on any exchange or market replacing the
same;
"Listing Date" means the date of publication of listing
particulars (as defined in Section 144(2) of
the Financial Services Act) or of a prospectus
(as that term is used in the Companies Act and
the Public Offers of Securities Regulations
1995) published in connection with the
admission to dealings on a recognized
investment exchange (within the meaning of the
Financial Services Act) or of an equivalent
public offering document published in
connection with the admission to dealings on
any Overseas Investment Exchange which, in any
such case, is published in connection with a
Listing;
"London Stock Exchange" means London Stock Exchange Limited;
"Memorandum" means the Private Placement Memorandum of the
Grantor dated March 3, 1998;
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"1933 Act" means the Securities Act of 1933, as amended,
having effect in the United States of America;
"Merger Event" has the meaning given thereto in sub-clause
10.1.1;
"Notice of Exercise" means a notice substantially in the form set
out in the Second Schedule hereto and
delivered to the Grantor in accordance with
Clause 4.1;
"Ordinary Shares" means ordinary shares in the capital of the
Grantor having the rights and privileges
attached thereto as set out in the Articles;
"Overseas Investment
Exchange" means an investment exchange (or the successor
body to such exchange) listed in either
Schedule 1 or Schedule 2 to the Financial
Services ▇▇▇ ▇▇▇▇ (Investment Advertisements)
(Exemptions) Order 1995, or any statutory
instrument substantially re enacting the same;
"Person" means any body corporate, partnership, firm,
trust, association or other unincorporated
body of persons;
"Record Date" means in respect of any rights attached, or
benefits or entitlements accruing, to any
class of share or security in the capital of
the Grantor, the date by which holders of such
shares or securities are required to be
registered in the books of the Grantor as such
in order to qualify for such rights, benefits
or entitlements;
"Register" means the register of Holders to be maintained
by the Grantor pursuant to Clause 9;
"Transferee" has the meaning given thereto in the Transfer
Notice;
"Transfer Notice" means a notice of transfer of Warrants in the
form of the Third Schedule hereto served on
the Grantor in accordance with Clause 14;
"Warrants" means the rights created by this Agreement
entitling the Holder to subscribe for "D"
Preference Shares subject to the provisions of
this Agreement;
"Warrant Certificate" means a certificate representing the Warrant
or Warrants held by a Holder from time to time
to be issued pursuant to the terms of this
Agreement and to be in the form set out in the
First Schedule hereto;
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"Warrant Exercise Date" means the date on which one or more Warrants
are exercised in accordance with Clause 4;
"Warrant Exercise Period" means the period during which the Warrants may
be exercised as set out in Clause 3; and
"Warrant Exercise Price" means US$1.10 for each "D" Preference Share
for which the Holder subscribes under this
Agreement.
1.2. Save where the context otherwise requires, terms defined in the Articles
shall have the same meanings when used in this Agreement.
1.3. References to Clauses and Schedules are references to, respectively,
Clauses of, and Schedules to, this Agreement.
1.4. The expressions "subsidiary" and "holding company" shall have the
meanings ascribed to them in Section 736 of the Companies Act.
1.5. The Clause headings in this Agreement are inserted for convenience only
and shall be ignored in construing this Agreement.
1.6. Save as expressly provided herein, references to any statute, order or
regulation shall be construed as references to such statute, order or
regulation as re-enacted, amended, modified, replaced or consolidated
from time to time.
1.7. The singular includes the plural and vice versa.
2. GRANT OF THE RIGHT TO SUBSCRIBE FOR "D" PREFERENCE SHARES
2.1. In consideration of the Grantee providing its services as placement
agent pursuant to the Engagement Letter, the Grantor hereby grants to
the Grantee, upon the terms and subject to the conditions contained in
this Agreement, the right to subscribe at any time and from time to time
during the Warrant Exercise Period for up to an aggregate of [One
Million, Five Hundred Ninety-Five Thousand, Fifty-Four (1,595,054)] "D"
Preference Shares at the Warrant Exercise Price (subject always to the
provisions of Clause 10).
2.2. The right to subscribe for "D" Preference Shares hereby granted shall be
evidenced by Warrant Certificates and title to the Warrants represented
thereby and Warrants represented by all subsequently issued Warrant
Certificates shall be conclusively evidenced by entry of the Grantee or
the relevant Holder, as the case may be, as Holder thereof in the
Register in accordance with Clause 9. Such original Warrant Certificates
shall be issued and such entry with respect thereto effected forthwith
upon the execution and delivery of this Agreement on behalf of the
Grantee. All Warrants shall be held subject to the provisions of the
Memorandum and Articles and on the terms of this Agreement, which are
binding upon the Grantee and each of the Holders and all persons
claiming through or under them respectively.
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3. WARRANT EXERCISE PERIOD
Except as otherwise provided for herein, the period during which Warrants may be
exercised shall commence on the date of this Agreement and shall terminate at
5.00 p.m. on the date falling five (5) years thereafter.
4. EXERCISE OF WARRANTS
4.1. Warrants may be exercised, in whole or in part, at any time, or from
time to time, on or prior to the Final Date by tendering to the Grantor
at its registered office:
4.1.1. a Notice of Exercise duly completed and executed by or on behalf
of the Holder concerned;
4.1.2. the Warrant Certificate relating to the Warrants being
exercised; and
4.1.3. payment in full in respect of the aggregate Warrant Exercise
Price in accordance with clause 4.4.
Once lodged in the manner provided above, any such Notice of Exercise
shall be irrevocable, save with the consent of the Grantor.
4.2. "D" Preference Shares issued pursuant to the exercise of Warrants shall
be allotted subject to the provisions of the Articles and in compliance
with any applicable law, regulatory requirement, judgment, order or
decree, promptly after the date of full compliance with clause 4.1.
4.3. Promptly after the Effective Date of Issue, the Grantor shall execute
under its common seal (or otherwise as a deed), in accordance with the
Articles, and issue to the relevant Holder a share certificate for the
number of "D" Preference Shares subscribed and shall at the same time,
where all the Warrants comprised in the Warrant Certificate delivered to
the Grantor pursuant to clause 4.1.2 have not been exercised in full,
execute under its common seal (or otherwise as a deed) and issue to such
Holder a fresh Warrant Certificate indicating the number of Warrants in
respect of which the Holder is thereafter entitled to exercise. Share
certificates for the "D" Preference Shares shall be endorsed with the
warranty contained in the penultimate paragraph of the first page of the
Warrant Certificates. Any Warrant Certificate tendered pursuant to
Clause 4.1 will be canceled and destroyed by the Grantor.
4.4. The aggregate Warrant Exercise Price may be paid at the Holder's
election either by:
4.4.1. cheque or banker's draft or wire transfer; or
4.4.2. to the extent permitted by law, the surrender of Warrant
Certificates representing Warrants with a value equal to the
aggregate Warrant Exercise Price on the applicable Warrant
Exercise Date, as determined in accordance with clause 4.5; or
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4.4.3. to the extent permitted by law, a combination of the methods set
forth in sub-clauses 4.4.1. and 4.4.2 above.
4.5. The value of the Warrants surrendered by a Holder shall be determined by
multiplying (a) the number of Warrants surrendered by (b) the difference
between (1) the value of a "D" Preference Share on the Warrant Exercise
Date and (2) the Warrant Exercise Price. The value of a "D" Preference
Share shall be determined in good faith by the directors of the Grantor
if at the relevant time there has been no Listing of Ordinary Shares or
"D" Preference Shares.
4.6. To the extent a Holder surrenders Warrants in payment of the aggregate
Warrant Exercise Price pursuant to clause 4.4 and only a portion of the
Warrants comprised in the Warrant Certificate(s) delivered to the
Grantor are applied to such payment (and the remainder of the Warrants
are not otherwise exercised or surrendered), Grantor shall execute under
its common seal (or otherwise as a deed) and issue to such Holder a
fresh Warrant Certificate indicating the number of Warrants in respect
of which the Holder is thereafter entitled to exercise. Any Warrant
Certificate surrendered pursuant to clause 4.4. shall be canceled and
destroyed by the Grantor.
5. CONSENSUS
5.1. The Grantor hereby warrants that it has obtained all necessary Consents
of its bankers, shareholders or other persons from whom Consents are
required for the grant of the Warrants herein contained, the
subscription of "D" Preference Shares by the Grantee, and the full
implementation of this Agreement in accordance with its terms.
5.2. The Grantor undertakes that it shall use all reasonable commercial
endeavours throughout the Warrant Exercise Period to ensure the prompt
obtaining of any necessary Consents of its bankers, shareholders or
other persons from whom Consents are required for the exercise of the
Warrants, the subscription of "D" Preference Shares by the Holders and
the full implementation of this Agreement in accordance with its terms.
5.3. In particular, the Consents shall include such consents, waivers or
resolutions as are required to:
5.3.1. increase the authorized share capital of the Grantor to enable
it to issue up to the aggregate maximum of "D" Preference Shares
referred to in Clause 2.1;
5.3.2. give general and unconditional authority to the directors of the
Grantor pursuant to Section 80 of the Companies Act to exercise
all powers of the Grantor to allot and issue the "D" Preference
Shares to the Holders;
5.3.3. give general and unconditional authority to the directors of the
Grantor pursuant to Section 95 of the Companies Act to allot and
issue the "D" Preference Shares to the Holders as if Section
89(1) of the Companies Act did not apply to such allotment and
issue;
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5.3.4. fully and effectively waive all rights of pre-emption of any
person (whether such rights are contained in the Articles or
otherwise) to enable this Agreement to become effective and to
enable the "D" Preference Shares to be allotted and issued to
the Holders free of any such rights; and
5.3.5. attach to the "D" Preference Shares to be issued pursuant to the
exercise of Warrants at least the same rights and privileges
attaching to the existing issued "D" Preference Shares of 1
▇▇▇▇▇ each in the capital of the Grantor as at the date of this
Agreement so that the "D" Preference Shares to be issued rank
pari passu in all respects with such existing issued "D"
Preference Shares.
6. RESERVATION OF SHARES
During the Warrant Exercise Period the Grantor will keep available for issue
sufficient authorized and unissued "D" Preference Shares, free of pre-emptive,
option or other prior contractual rights, to satisfy in full all Warrants as and
when they may be exercised.
7. NO FRACTIONAL SHARES
No fractional shares or rights to shares shall be issued upon the exercise of
any Warrant. The number of "D" Preference Shares being issued shall be rounded
down to the nearest whole number, and the Grantor shall make a cash payment to
the Holder in lieu of the fractional share entitlement, such cash payment to be
calculated on the basis of the then current fair market value of a "D"
Preference Share (as estimated in good faith by the directors of the Grantor if
at the relevant time there has been no Listing of Ordinary Shares or "D"
Preference Shares).
8. NO RIGHTS AS SHAREHOLDERS
Save as provided by this Agreement, nothing herein contained shall entitle any
Holder to any voting rights or other rights as a shareholder of the Grantor
prior to the exercise of a Warrant.
9. REGISTER OF HOLDERS OF WARRANTS
9.1. The Grantor shall maintain a Register showing the names and addresses of
Holders and enter therein details of the issue and any permitted
transfer or change of ownership of Warrants. The Holders of any of the
Warrants may inspect the Register at reasonable times and on reasonable
notice during normal office hours.
9.2. The Grantor shall be entitled to treat the Holder of each Warrant as the
sole and absolute beneficial owner thereof. Accordingly, the Grantor
shall not be affected by notice (actual or constructive) of, and shall
not, except as ordered by a court of competent jurisdiction or as
required by applicable law, be bound to recognize, or record in the
Register any note or evidence of, any trust or any other right, title,
claim or interest in respect of a Warrant in favour, or for the benefit,
of any person other than the Holder.
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10. ADJUSTMENT RIGHTS
10.1. The number of "D" Preference Shares that may be subscribed pursuant to
the exercise of any Warrant is subject to adjustment as follows:
10.1.1. Reconstruction and Take-over. If, while any Warrant remains
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exercisable, in whole or in part, there shall be a
reconstruction in respect of the Grantor's share capital (other
than as referred to in the following provisions of this Clause
10), or the shares in the Grantor shall be transferred to a
company so that such company becomes the holding company of the
Grantor ("Merger Event"), then, as a condition of and at the
same time as such Merger Event, the Grantor shall (subject to
sub-clause 10.1.7) procure that the Holder of each Warrant is
granted by the reconstructed or transferee Person a substituted
Warrant to subscribe for securities in the capital of such
Person of a value (having regard to the rights and privileges
attaching to such securities) equivalent to the value of the
Warrants granted hereunder immediately prior to the Merger Event
(as certified in good faith by the Grantor's auditors on such
basis as they shall certify to be fair and reasonable having
regard to the terms upon which the holders of existing issued
"D" Preference Shares in the Grantor receive shares in such
reconstructed or transferee Person following such Merger Event).
The auditors' decision shall be final and binding and not
subject to review under Clause 10.1.10. If, however, the
auditors fail or decline to act, the provisions of sub-clause
10.1.10 shall take effect. The Grantee hereby expressly agrees
and acknowledges that the substitute Warrants may be in respect
of only one class of share, namely ordinary shares carrying the
unrestricted right to vote at general meetings. The Grantor
shall so far as it is able procure that such substitute Warrants
shall be granted by such Person so that the rights of the
Holders thereof (including adjustments of the Warrant Exercise
Price and the number of shares which may be subscribed) shall
correspond with the rights of Holders under this Agreement. The
Warrants granted hereunder shall cease to be capable of being
exercised immediately upon the grant of such substitute
Warrants. The board of directors of the Grantor shall in good
faith determine whether any adjustment to the provisions of this
Agreement is necessary or appropriate following the Merger Event
in order to preserve the rights and entitlements of the Holders
under this Agreement.
10.1.2. Reclassification of Shares. If, while any Warrant remains
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exercisable, in whole or in part, the Grantor at any time shall,
by consolidation, reclassification, exchange or subdivision or
otherwise, reclassify its "D" Preference Share capital to the
same or a different number of securities of any other class or
classes (which the Grantor undertakes to do solely in compliance
with, and to the extent permitted by, the Articles), then each
Warrant shall thereafter represent the right to subscribe for
such number and kind of securities as would have been issuable
as the result of such consolidation, reclassification, exchange
or subdivision with respect to the "D" Preference Shares which
would have been subscribed
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had such Warrant been exercised immediately prior to the date of
such consolidation, reclassification, exchange, subdivision or
other change.
10.1.3. Subdivision or Consolidation. If, while any Warrant remains
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exercisable, in whole or in part, the Grantor at any time shall
consolidate or subdivide its "D" Preference Share capital, the
Warrant Exercise Price shall be proportionately decreased in the
case of a subdivision, or proportionately increased in the case
of a consolidation (as certified in good faith by the Grantor's
auditors on such basis as they shall certify to be fair and
reasonable).
10.1.4. Rights Issues and Related Offers. If, while any Warrant remains
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exercisable, in whole or in part, the Grantor at any time makes
any offer or invitation (whether pursuant to the terms of pre-
emption rights or otherwise) to the holders of any of its "D"
Preference Share capital for subscription of any share or loan
capital of the Grantor, including an offer or invitation in
relation to any rights issue, the Grantor shall procure that at
the same time as such offer or invitation is made, a similar
offer or invitation (including an offer or invitation in
relation to any rights issue) is made to Holders as if each
Holder's rights to subscribe for "D" Preference Shares pursuant
to exercise of Warrants had been exercised immediately prior to
the Record Date applicable to such offer or invitation.
10.1.5. Winding-up of Grantor. If an order is made or an effective
---------------------
resolution is passed on or before the Final Date for the
voluntary winding-up of the Grantor (except for the purpose of
reconstruction in which case the provisions of sub-clause 10.1.1
shall apply) each Holder shall be entitled for the purpose of
ascertaining such Holder's rights in such winding-up to be
treated as if such Holder had, immediately before the date of
the making of the order or the passing of the resolution,
exercised its rights to subscribe for the maximum number of "D"
Preference Shares pursuant to exercise of the Warrants and in
that event such Holder shall be entitled to receive out of the
assets available in the liquidation pari passu with the holders
of the existing issued "D" Preference Shares such a sum as such
Holder would have received had such Holder been the holder of
the "D" Preference Shares to which such Holder would have become
entitled by virtue of such exercise, after deducting a sum equal
to the sum which would have been payable in respect of the
relevant Warrant Exercise Price. Subject to this sub-clause
10.1.5 all Warrants shall lapse on liquidation of the Grantor.
10.1.6. Schemes of Arrangement. The Grantor will procure that, while any
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Warrant remains exercisable, in whole or in part, there shall be
no compromise or scheme of arrangement (within the meaning of
Section 425 of the Companies Act) affecting the "D" Preference
Share capital of the Grantor unless either:
10.1.6.1. the Holders shall be granted substitute Warrants
pursuant to sub-clause 10.1.1; or
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10.1.6.2. the Holders shall be treated as members of the Grantor
to the extent of the maximum number of "D" Preference
Shares for which they shall be entitled to subscribe
pursuant to the exercise of Warrants and shall be a
party to such scheme.
The decision as to which of the above alternatives will apply shall be
that of the Grantor.
10.1.7. Take-over Bids. If, while any Warrant remains exercisable, in
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whole or in part, an offer is made or proposed to be made to
shareholders of the Grantor to acquire the whole or any part of
the issued share capital of the Grantor and the Grantor becomes
aware that, as a result of such offer, the right to cast a
majority of the votes which may ordinarily be cast at a General
Meeting of the Grantor may become vested in the offeror the
Grantor shall give notice thereof to the Holders as soon as
practicable and in any event within ten (10) Business Days of
its becoming so aware. For the avoidance of doubt, the
publication of a scheme of arrangement under the Companies Act
providing for the acquisition by any Person of the whole or any
part of the share capital of the Grantor and an agreement for
the purchase of shares by private treaty shall be deemed to be
the making of an offer for these purposes. The Grantor shall in
any such case procure either.
10.1.7.1. that the Holders shall be granted substitute Warrants
pursuant to Clause 10.1.1 or
10.1.7.2 that the benefit of such an offer is extended to each
of the Holders in respect of such number of "D"
Preference Shares as such Holder may specify (up to
its maximum entitlement to subscribe pursuant to the
exercise of its Warrant) subject only to payment of
the Warrant Exercise Price.
The decision as to which of the above alternatives will apply
shall be that of the Grantor.
10.1.8. Capitalization and Bonus Rights. If, while any Warrant remains
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exercisable, in whole or in part, the Grantor at any time shall
(a) capitalize any profits or reserves (including share premium
account and capital redemption reserve or (b) make any issue of
shares to its "D" Preference Shareholders by way of rights or
bonus, then the number of "D" Preference Shares referred to in
Clause 2.1 shall be increased by a number of additional "D"
Preference Shares to be calculated by dividing (1) the aggregate
number of shares which would be issued to the Holders under (a)
or (b) if the Holders had exercised their right to subscribe for
the maximum number of "D" Preference Shares on the Record Date
("Bonus Shares") by (2) the amount credited as fully paid up on
each Bonus Share.
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10.1.9. Notification. The Grantor undertakes that, without prejudice to
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its other obligations to notify the Grantee pursuant to this
Agreement, it shall notify the Holders by way of a copy of the
notice of Annual or Extraordinary General Meeting of the
Grantor (at the same time as such notice is issued to the
members of the Grantor) of any proposed amendment or
modification to the Memorandum or the Articles.
10.1.10. Resolution of Disputes as to Entitlements. If any question
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shall arise in regard to the number of "D" Preference Shares
that may be subscribed pursuant to the exercise of any Warrant
following the coming into effect of any adjustment referred to
in the provisions of this Clause 10, the same shall be referred
for determination to [the Grantor's Chartered Accountants] [a
Person nominated jointly for such purpose by the Grantor and
the relevant Holder or, failing agreement on such joint
nomination, by the firm of chartered accountants to be
nominated at the request of the Grantor or the relevant Holder
by the President for the time being of the Institute of
Chartered Accountants in England and Wales] and that any Person
so nominated shall be deemed to be acting as an expert or
experts and not as an arbitrator or arbitrators and his or
their decision shall accordingly be conclusive and binding on
all concerned.
10.1.11. Notice.
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10.1.11.1. The Grantor shall send to Holders:
10.1.11.1.1. prior written notice of the Record
Date applicable to any dividend,
distribution, issue or subscription
rights or the effective date of any
such capitalization referred to above
or the date set for determining
rights to vote in respect of any such
Merger Event, liquidation or winding-
up (as the context requires); and
10.1.11.1.2. in the case of any such Merger Event,
liquidation or winding-up, the
required notice, as prescribed by the
Articles, of the date when the same
shall take place (and specifying the
date on which the holders of
preference shares in the capital of
the Grantor shall be entitled to
exchange their shares for securities
or other property deliverable upon
such Merger Event, liquidation or
winding-up).
10.1.11.1.3 in the case of a Listing, not less
than ten (10) days' written notice
prior to the Listing Date applicable
thereto.
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10.1.11.2. Each such written notice to Holders shall
contain, in reasonable detail:
10.1.11.2.1. the event requiring the adjustment
10.1.11.2.2. the amount of the adjustment;
10.1.11.2.3. the method by which such adjustment
was calculated; and
10.1.11.2.4. the number of "D" Preference Shares
(or the number and class of the
securities for which the Warrants will
represent the right to subscribe
pursuant to this Clause 10 following
the relevant adjustment) to which such
Holder's Warrant enables the Holder to
subscribe after giving effect to such
adjustment.
10.1.11.3. For the avoidance of doubt, the Grantor shall not
require Holders' consent in any of the events
detailed above requiring prior written notice.
10.2. Replacement Warrant Certificates. The Grantor shall, forthwith upon any
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adjustment as is referred to above becoming effective, and at no charge
to each Holder:
10.2.1. issue to such Holder a replacement Warrant Certificate,
executed under the Grantor's common seal (or otherwise executed
as a deed), showing the Warrant Exercise Price and number of
"D" Preference Shares (or the securities for which the Warrants
represent the right to subscribe pursuant to this Clause 10
following such adjustment) that may be subscribed pursuant to
exercise of such Warrant following such adjustment becoming
effective, upon either:
10.2.1.1. the surrender of the existing Warrant Certificate;
or
10.2.1.2. an indemnity from the Holder in a form reasonably
satisfactory to the Grantor where the existing
Warrant Certificate has been lost, stolen, defaced,
mutilated or destroyed; and
10.2.2. upon such issue and surrender or indemnity, procure that an
appropriate record thereof is made in the Register.
Any Warrant Certificate surrendered pursuant to sub-clause 10.2.1 shall be
canceled and destroyed by the Grantor.
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11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GRANTOR
11.1. The Grantor hereby represents, warrants and covenants in favour of the
Grantee and each of the Holders as follows:
11.1.1. The Grantor is and shall (until it is dissolved) remain a
corporation duly incorporated and validly existing under the
laws of England and Wales and has all requisite corporate power
and authority to carry on its business as now conducted and as
proposed to be conducted.
11.1.2. The "D" Preference Shares to be issued upon valid exercise of
Warrants, when issued, will be validly issued, fully paid, not
subject to any calls for the payment of further capital, free
of any taxes, liens, charges or encumbrances of any nature
whatsoever and, based in part upon the representations of the
Grantee contained in this Agreement, will be issued in
compliance with applicable law, including, without limitation
the Companies Act. The Ordinary Shares into which the "D"
Preference Shares may be converted in accordance with the terms
of the Articles shall, upon such conversion, be duly and
validly issued, fully paid and not subject to any call for the
payment of further capital and issued in compliance with
applicable laws as aforesaid.
11.1.3. The existing issued shares in the capital of the Grantor were
duly and validly authorized allotted and issued, fully paid,
are not subject to any call for the payment of further capital
and were issued in compliance with applicable law, including,
without limitation, the Companies Act and all US federal and
state securities laws applicable at the relevant time to the
Grantor.
11.1.4. The Grantor has made available to the Grantee on the date of
this Agreement true, correct and complete copies of the
Memorandum and Articles, and the Grantor shall supply to each
Holder, within thirty (30) days of the relevant resolution
being passed, a copy of any resolution amending either the
Memorandum or the Articles.
11.1.5. The issue of the share certificates for "D" Preference Shares
upon exercise of Warrants shall be made without charge to the
Holder for any cost incurred by the Grantor in connection with
such exercise and the related issue of such "D" Preference
Shares.
11.1.6. The execution and delivery by the Grantor of this Agreement and
the performance of all its obligations hereunder, including
(but not limited to) the issue of the Warrants, have been duly
authorized by all necessary action on the part of the Grantor
and the entry by the Grantor into the Engagement Letter and
this Agreement does not conflict with, or contravene any
provision of the Memorandum or the Articles and does not
contravene any United Kingdom law or governmental rule,
regulation or order applicable to it, does not and will not
13
contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument to which it
is a party or by which it or any of its assets is bound, and
the Warrants and this Agreement constitute the legal and valid
obligations of the Grantor, enforceable against it in
accordance with their respective terms;
11.1.7. No consent or approval of, giving of notice to, registration
with, or taking of any other action in respect of any United
Kingdom governmental authority or agency is required with
respect to the execution, delivery and performance by the
Grantor of its obligations under the Warrants or/of this
Agreement, except for the filing of documents with the
Companies' Registry for England and Wales. Any such filings
shall be effected promptly and in any event within the period
permitted by Statute.
11.1.8. As the date of this Agreement the authorized share capital of
the Grantor is (Pounds)3,330,000 divided into 3,100,000 "A"
preference shares of 50 ▇▇▇▇▇ each, 25,000,000 "B" preference
shares of 1 ▇▇▇▇▇ each, 8,000,000 "C" preference shares of 1
▇▇▇▇▇ each, 50,000,000 "D" preference shares of 1 ▇▇▇▇▇ each
and 95,000,000 Ordinary Shares of 1 ▇▇▇▇▇ each.
11.1.9. There are no other options, warrants, conversion rights or
other rights at the date of this Agreement to subscribe,
purchase or otherwise acquire any authorized but unissued
shares in the Grantor's capital or other securities of the
Grantor save pursuant to
11.1.9.1. the Warrants and this Agreement;
11.1.9.2. the conversion rights detailed in the Articles;
11.1.9.3. any options in force which have been granted to
employees or former employees or the Grantor; and
11.1.9.4. otherwise detailed in the Private Placement
Memorandum dated 3 March 1998 (as amended).
11.1.10. The Grantor is not, pursuant to the terms of any agreement,
under any obligation to secure any Listing or make any offer to
the public in respect of any of its issued loan or share
capital.
11.2. In the event of any breach of any of the representations, warranties and
covenants set out in Clause 11.1, the Grantor shall have no liability in
respect of such breach unless written notice of claim in relation to
such breach is given by the relevant Holder no later than 12 months
following the date that such Holder became aware, or ought reasonably to
have become aware, of such breach.
14
12. HOLDERS' UNDERTAKINGS
12.1. Each Holder hereby undertakes and covenants to and in favour of the
Grantor:
12.1.1. not to create or permit to subsist any mortgage, charge,
assignation by way of security or other interest, agreement or
arrangement having the effect of conferring security on the
whole or any part of the Warrants; and
12.1.2. not to make any transfer or disposition of any Warrant or all
or any portion of the "D" Preference Shares in the United
States or to a United States person unless and until:
12.1.2.1. there is then in effect a registration statement
under the 1933 Act covering such proposed
disposition and such disposition is made in
accordance with such registration statement and all
applicable federal and state securities laws; or
12.1.2.2. such Holder shall have notified the Grantor of the
proposed disposition and shall have furnished the
Grantor with (a) a statement of the circumstances
surrounding the proposed disposition, (b) an
opinion of counsel (which counsel shall be external
to the Holder) addressed to the Grantor and in a
form reasonably acceptable to the Grantor, that
such disposition will not require registration of
such securities under the 1933 Act and that all
requisite action has been taken under any
applicable securities laws in connection with such
disposition; and (c) an undertaking that any
requisite action required in the future under any
applicable securities laws will be taken in a
timely manner.
12.2. Effective upon any Warrant Exercise Date, the Holder shall become a
party to the Grantor's Registration Rights Agreement.
13. GRANTEE'S UNDERTAKINGS
13.1. The Grantee hereby acknowledges that, in reliance upon the
representations and warranties of the Grantee set forth herein, the
Warrants are, and the "D" Preference Shares shall be, issued without
registration under the 1933 Act or any other federal or state securities
laws and consequently none of the Warrants or the "D" Preference Shares
(collectively, "Securities") may be sold, transferred or otherwise
disposed of without registration under the 1933 Act and any such other
applicable federal or state securities laws or in exception therefrom.
13.2. The Grantee hereby represents, warrants and covenants in favour of the
Grantor:
13.2.1. that the Securities are or will be acquired for investment and
not with a view to the sale or distribution of any part
thereof, and the Grantee has no present intention of selling or
engaging in any public distribution of the same;
15
13.2.2. that the Grantee has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits
and risk of its investment, and has the ability to bear the
economic risks of its investment;
13.2.3. that the Grantee understands that if the Grantor does not
register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to
Section 15(d) of the Securities Exchange Act of 1934, or if a
registration statement covering the securities under the 1933
Act is not in effect when Grantee desires to sell the Warrants
or the "D" Preference Shares issuable upon exercise of the
Warrants, Grantee may be required to hold such securities for
an indefinite period;
13.2.4. that the Grantee understands that any sale of the securities
which might be made by it in reliance upon Rule 144 under the
1933 Act may be only in accordance with the terms and
conditions of the that Rule; and
13.2.5. that the Grantee is an "accredited investor" within the meaning
of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
14. TRANSFERS
14.1. Subject to clause 12 and sub-clause 14.3, a Holder may transfer the
Warrants held by it or any part thereof, provided:
14.1.1. that the Holder shall deliver to the Grantor at least thirty
(30) days prior to any proposed transfer, a Notice of Transfer,
which shall include the identity of the proposed transferee;
14.1.2. that the Holder will not transfer the Warrants or any interest
therein to any party determined by the board of directors of
the Grantor to be a competitor of the Grantor;
14.1.3. the transferee agrees in writing to be subject to the terms
hereof to the same extent as if such transferee were an
original Holder hereunder, and only if such transfer is not in
violation of any federal or state securities laws; and
14.1.4. that in no event shall the aggregate number of transfers of
Warrants by all Holders exceed eight (8).
14.2. There shall not be included in any transfer any warrants other than the
Warrants constituted by this Agreement.
14.3. Upon compliance with clause 14.1, Grantor shall:
14.3.1. issue to the Holder, in the event the Holder transfers only a
portion of the Warrants comprised in a Warrant Certificate, and
the transferee new Warrant Certificates, upon either:
16
14.3.1.1. the surrender of the existing Warrant Certificate;
or
14.3.1.2. an indemnity from the Holder in a form reasonably
satisfactory to the Grantor where the existing
Warrant Certificate has been lost, stolen, defaced,
mutilated or destroyed; and
14.3.2. upon such issue and surrender or indemnity, procure that an
appropriate record of the transfer is made in the Register.
Any Warrant Certificate surrendered pursuant to sub-clause 14.3.1 shall be
canceled and destroyed by the Grantor.
15. NOTICES
15.1. Any notice or other written communication given under or in connection
with this Agreement may be delivered personally or sent by registered,
prepaid first class post, (airmail if overseas), recognized overnight
courier or by telex or facsimile.
15.2. The address for delivery of any notice to the Grantor shall be its
registered office marked for the attention of the Managing Director or,
if any other address for service has previously been notified to the
server, to the address so notified. The address for delivery of any
notice to any Holder shall be the address of such Holder set forth in
the Register or, if any other address for service has previously been
notified to the Grantor, to the address so notified.
15.3. Any such notice or other written communication shall be deemed to have
been served:
15.3.1. if delivered personally, at the time of delivery;
15.3.2. if posted, three (3) Business Days, or in the case of airmail,
five (5) Business days, after it was posted;
15.3.3. if sent through an overnight delivery service under
circumstances by which such service guarantees next day
service, the date following the date so sent; and
15.3.3. if sent by telex or facsimile message, at the time of
transmission and receipt of appropriate telephonic
confirmation, if sent during business hours (that is 9.30 a.m.
to 5.30 p.m. local time) in the place to which it was sent or,
if not sent during such normal business hours, at the beginning
of the next Business Day in the place to which it was sent.
15.4. In providing such service it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication
was properly addressed, stamped and posted or in the case of telex that
the intended recipient's answerback code is shown on the copy retained
by the sender at the beginning and end of the message or in the case of
a facsimile message that an activity or other report from the sender's
facsimile machine
17
can be produced in respect of the notice or other written communication
showing the recipient's facsimile number and the pages transmitted.
16. MISCELLANEOUS
16.1. This Agreement and the Warrants shall be governed by, and construed in
all respects in accordance with, the laws of England and Wales. Each of
the parties agrees that the courts of England shall have jurisdiction to
hear and settle any disputes or proceedings arising out of this
Agreement (other than any dispute arising under Clause 10.1 hereof, in
which event the provisions of sub-clause 10.1.2 shall apply).
16.2. In the event of any default hereunder, the non-defaulting party may
proceed to protect and enforce its rights by action at law, including,
but not limited to, an action for damages as a result of any such
default, and/or an action for specific performance for any default where
the non-defaulting party will not have an adequate remedy at law and
where damages will not be readily ascertainable.
16.3. The Grantor will not recommended the amendment of the Memorandum or
Articles in any manner which would have the effect of avoiding the
observance or performance of any of the terms of this Agreement or the
Warrants, or avoid or seek to avoid the observance or performance of any
of the terms of this Agreement or the Warrants by any other means, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Grantee and/or any
Holder under this Agreement.
16.4. The representations, warranties, covenants and conditions of the
respective parties contained herein are made or deemed made pursuant to
this Agreement shall survive the execution and delivery of this
Agreement.
16.5. In the event that any one or more of the provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall remain in full force and
effect, and the invalid, illegal or unenforceable provision shall be
replaced by a valid, legal and enforceable provision, which comes
closest to the intention of the parties underlying the invalid, illegal
or unenforceable provision.
16.6. Any provision of this Agreement may be amended by a written instrument,
signed by each Holder and by the Grantor.
18
IN WITNESS whereof these presents are executed as follows:
EXECUTED as a DEED and DELIVERED
as a Deed by
VIRATA LIMITED
By:
-------------------------------
Name:
Director
By:
-------------------------------
Name:
Director/Secretary
INDEX SECURITIES S.A.
By:
-------------------------------
Name:
Title:
19
THE FIRST SCHEDULE
FORM OF WARRANT CERTIFICATE ("D" PREFERENCE SHARES)
VIRATA LIMITED
(Registered No. 2798338)
("Company")
(Incorporated under the Companies Act 1985)
WARRANT TO SUBSCRIBE FOR "D" PREFERENCE SHARES OF 1 ▇▇▇▇▇ EACH
CERTIFICATE NO. ____. Date of Issue: As of ______________, 1998
THIS IS TO CERTIFY that ____________________ ("Holder") is entitled to
subscribe for up to ________________________ "D" Preference Shares of 1 ▇▇▇▇▇
each in the capital of the Company pursuant to this Warrant on the terms and
subject to the conditions set forth in the Warrant Agreement dated
__________________ 1998 between the Company and Index Securities S.A. ("Warrant
Agreement") and pursuant to a Resolution of the Board of Directors of the
Company dated 28 April 1998.
The Holder is deemed to have notice of, and to be bound by, the terms set
forth in the Warrant Agreement and shall hold this Warrant subject to the
Memorandum and Articles of Association of the Company.
UNITED STATES LAW: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY OTHER
FEDERAL OR STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE UNITED STATES OR TO ANY UNITED STATES
PERSON IF SUCH TRANSFER WOULD VIOLATE ANY FEDERAL OR STATE SECURITIES LAW OR IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR A VALID EXEMPTION THEREFROM.
The securities represented by this certificate are subject to the
provisions of the Warrant Agreement, a copy of which is on file at the
registered office of the Company.
Executed as a Deed and delivered as a Deed by Virata Limited as of this
_____ day of ________ 1998.
VIRATA LIMITED
By:
-------------------------------
Name:
Director
By:
-------------------------------
Name:
Director/Secretary
IMPORTANT NOTICE
1. This Warrant shall be exercisable only in accordance with Clause 4 of
the Warrant Agreement by completion of the Notice of Exercise in the form set
out in the Second Schedule to the Warrant Agreement and lodgement of such Notice
of Exercise and this Warrant at the then registered office of the Company,
together with the appropriate payment (if any) in respect of the relevant
Warrant Exercise Price. AT 5.00 P.M. (LONDON TIME) ON THE FINAL DATE (AS
DEFINED IN THE WARRANT AGREEMENT), THIS WARRANT WILL CEASE TO HAVE ANY VALUE OR
EFFECT, AND SHALL THEREAFTER BECOME VOID.
2. No transfer of this Warrant (or part thereof) will be registered unless
it is effected in accordance with the provisions of the Warrant Agreement and
those provisions (if any) of the Articles of Association of the Company as are
in force from time to time and expressed to be applicable to the Warrants.
3. The Holder of this Warrant will be entitled severally to enforce the
covenants and obligations on the part of the Company contained in the Warrant
Agreement without the need to join the original allottee or any intervening or
other Holder in the proceedings for such enforcement.
4. This Warrant shall (subject as provided in the Warrant Agreement) be
divisible and transferable, and new certificates in respect of Warrants shall be
issued in respect of the right to subscribe for any whole number of "D"
Preference Shares. New certificates in respect of Warrants shall be issued
following any adjustment of the entitlement of the Holder to subscribe for "D"
Preference Shares pursuant to Clause 10 of the Warrant Agreement.
5. Terms used herein and not otherwise herein defined shall have the same
meanings as are respectively ascribed thereto in the Warrant Agreement.
THE SECOND SCHEDULE
NOTICE OF EXERCISE ("D" PREFERENCE SHARES)
THIS NOTICE IS IRREVOCABLE EXCEPT WITH THE
CONSENT OF THE DIRECTORS OF THE COMPANY
To: The Directors
Virata Limited
("Company")
Date: As of ________________ 1998
1. I/We hereby exercise my/our entitlement, evidenced by the Warrant
Certificate attached hereto for an aggregate of _____________ Warrants, to
subscribe for ________________ "D" Preference Shares of 1 ▇▇▇▇▇ each in the
capital of the Company for which I/we [am] [are] entitled. We elect to pay the
Warrant Exercise Price of $______________, as required pursuant to Clause 4 of
the Warrant Agreement dated _____________ 1998 between the Company as Grantor
and Index Securities S.A. as Grantee ("Warrant Agreement"), as follows:
a. I/We attach a cheque in the amount of $______________.
b. I/We attach and surrender Warrant Certificate No. ___ with
respect to ____________ Warrants.
2. I/We hereby request that duly sealed Share Certificates for such "D"
Preference Shares be issued to me/us and sent by post at my/our risk to my/our
address being _________________.
3. I/We hereby agree that such "D" Preference Shares shall be accepted
subject to the Memorandum and Articles of Association of the Company.
4. I/We hereby warrant and undertake to the Company that this Warrant is
not charged or encumbered or subject to any other lien or security interest.
By: By:
----------------------------- -----------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
Address: Address:
------------------------ ------------------------
THE THIRD SCHEDULE
NOTICE OF TRANSFER OF WARRANTS ("D" PREFERENCE SHARES)
To:. The Directors
Virata Limited
("Company")
Date:_______________________ 1998
By this notice ("Notice"), I/we, ______________________ ("Transferor"), and
I/we, __________________ ("Transferee"), hereby give you notice of the proposed
transfer of Warrants to subscribe for ________________________ "D" Preference
Shares of in the capital of the Company pursuant to the Warrant Agreement dated
________________________ 1998 between the Company as Grantor and Index
Securities S.A., as Grantee ("Warrant Agreement").
For this purpose, we attach the Warrant Certificate issued on
________________ 1998 to the Transferor (Certificate No. _____]) entitling the
Transferor to subscribe up to ____________ "D" Preference Shares aforesaid.
Further, in consideration of the covenants on the part of the Company
contained in the Warrant Agreement, the Transferee hereby (i) confirms to the
Company that it has received an executed copy of the Warrant Agreement, and
understands its contents, (ii) undertakes to each of the Transferor and the
Company on the date of this Notice to accept and assume and be bound by in all
respects the terms of the Warrant Agreement as if originally named therein as
the Grantee and so that where this Notice relates to a transfer of part of the
Transferor's entitlement to subscribe "D" Preference Shares pursuant to the
exercise of Warrants, such terms shall be so accepted and assumed by the
Transferee severally with the Transferor, mutatis mutandis.
The Company is hereby requested to accept this Notice and to effect the
transfer of Warrants above referred to in the Register pursuant to the Warrant
Agreement. [A] Warrant Certificate[s] should be dispatched, at the risk of the
Transferee [and the Transferor] as follows:
Rights to Subscribe "D" ADDRESS
Preference Shares
Transferee: ___________ ________________________
________________________
________________________
[TRANSFEROR] ___________ ________________________
________________________
________________________
Yours faithfully
FOR AND ON BEHALF OF THE TRANSFEREE FOR AND ON BEHALF OF THE TRANSFEROR
By: By:
-------------------------------- --------------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
