EXHIBIT 10.7
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 Xxxxx Xxxxxxxx Xxxxx, 0 Xxxxx
Xxxxxxxx, Xxxxxxxxxx Xxxx, Xxxxxxxxx XX0 0XX ("Grantor"); and
2. INDEX SECURITIES S.A., the principal office of which is situated at
0, xxx xx Xxxxxxxxxx, 0000 Xxxxxx, Xxxxxxxxxxx ("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 Xxx 0000 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 xxxxx 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 Xxx 0000;
"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 Xxx 0000 (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 xxxxx
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
--------------------------
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
--------------------------------
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
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any 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
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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 xxxxx each, 25,000,000 "B" preference
shares of 1 xxxxx each, 8,000,000 "C" preference shares of 1
xxxxx each, 50,000,000 "D" preference shares of 1 xxxxx each and
95,000,000 Ordinary Shares of 1 xxxxx 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.
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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;
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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:
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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 can
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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.
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IN WITNESS whereof these presents are executed as follows:
EXECUTED as a DEED and DELIVERED
as a Deed by
VIRATA LIMITED
By: /s/
------------------------------
Name: Xxxxxxx Xxxxxx
Director
By: /s/
------------------------------
Name: Xxxxxx X. Xxxxxx
Director/Secretary
INDEX SECURITIES S.A.
By: /s/
------------------------------
Name: Xxxxxx Xxxxx
Title: President
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