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EXHIBIT 10.13
As of October 31, 1997
Xx. Xxxxx X. Xxxxxxxx
Co-Chairman and Chief Executive Officer
Broadcom Corporation
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000 PRIVILEGED AND CONFIDENTIAL
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Re: Purchase of Common Stock of Broadcom Corporation
Dear Xxxxx:
This letter agreement (the "Share Agreement") confirms the terms and
conditions of the purchase this date by Irell & Xxxxxxx LLP ("I&M") of 150,000
shares of Common Stock (the "Shares") of Broadcom Corporation ("Broadcom"), as
follows:
1. The aggregate purchase price for the Shares is $1,050,000. I&M has
today delivered to Broadcom its check in the amount of $900,000. In payment of
the balance of $150,000, I&M will cancel outstanding fee and cost invoices to
Broadcom in like amount. Broadcom acknowledges and agrees that the foregoing
actions together constitute payment in full for the Shares.
2. Broadcom will promptly deliver to I&M a stock certificate showing
that 150,000 shares of Broadcom Common Stock have been duly issued and
registered this date in the name of "Irell & Xxxxxxx LLP." Broadcom will pay any
transfer taxes or fees and any other fees or costs associated with the issuance
of the Shares to I&M. The Shares will be duly authorized and issued, fully paid
and non-assessable.
3. I&M will hold the Shares and the proceeds of any sale thereof for its
own account free and clear of any restrictions by or agreements with Broadcom
other than this Share Agreement. The Shares will be freely transferable by I&M
subject only to any applicable restrictions imposed by federal or state
securities laws. I&M agrees to enter into a reasonable "lockup" agreement with
Broadcom's underwriters, for a period not to exceed 180 days and on terms
comparable to those entered into by senior management shareholders and other
investors in Broadcom, in connection with Broadcom's prospective initial public
offering ("IPO").
4. I&M will have no mandatory demand registration rights with respect to
the Shares but may at its option include all or part of the Shares in any future
primary or
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As of October 31, 1997
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secondary registered public offering of Broadcom Common Stock, at parity with
other participating Broadcom investors (subject to customary underwriter
cutbacks). Notwithstanding the foregoing, I&M acknowledges the Broadcom has
granted registration rights to certain of its existing shareholders, which
rights are senior to I&M's rights hereunder. I&M agrees that it will not require
registration of Shares to the extent that such action would prevent Broadcom
from honoring registration requests by holders of such senior registration
rights. If Shares are included in a registration, I&M will share fees and costs
of the registration (and any applicable underwriting commissions) at a per share
rate equal to the lowest per share amount paid by any other participating
shareholder.
5. I&M has a pre-existing business relationship with Broadcom and its
officers and directors and has the requisite knowledge and experience in
financial and business matters to assess the relative merits and inherent risk
of an investment in the Shares. The Shares are being acquired by I&M for
investment purposes and not with a view to any distribution in violation of
federal or applicable state securities laws.
ETHICAL CONSIDERATIONS
Rule 3-300 of the California Rules of Professional Conduct applies to
situations, like the one at hand, in which an attorney acquires an ownership
interest in a client. The rule requires that the terms of the transaction be
fair and reasonable to the client, be fully disclosed and transmitted in writing
to the client, and be understood by the client. It also requires that the client
be advised that it may seek the advice of an independent lawyer of the client's
choice and be given a reasonable opportunity to seek that advice. Finally, it
requires that the client consent to the transaction in writing. A copy of the
text of Rule 3-300 is attached to this letter.
One of the purposes of this letter, therefore, is to comply with the
requirements of Rule 3-300. Accordingly, before signing this agreement, please
review it carefully to make sure you fully understand its terms and are
confident that those terms are fair and reasonable. As we have previously
advised you orally and in writing, we suggest that Broadcom consult with
independent counsel to assist Broadcom in determining whether to accept the
terms of the purchase of the Shares. Broadcom acknowledges that it has been
afforded a reasonable opportunity to consult with independent counsel regarding
this transaction.
Heretofore Xxxxxx X. Xxxxxx, a partner of I&M, has acquired shares of
Broadcom's Series B and Series D Preferred Stock as well as certain other shares
of
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As of October 31, 1997
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Broadcom Common Stock (collectively, the "Existing Shares," and with the Shares,
the "I&M Shares"). A portion of the Existing Shares are held by Mr. Wolfen for
the benefit of other partners of I&M. By its execution below, Broadcom hereby
acknowledges the foregoing economic interests and confirms its consent to
acquisition of the Shares by I&M for the benefit of its partners and of the
Existing Shares by Mr. Wolfen for his benefit and that of the other partners of
I&M. Broadcom also acknowledges that Mr. Wolfen currently serves as a director
of Broadcom.
As we have previously advised you, the ownership interests in Broadcom
held by Mr. Wolfen and I&M create certain potential conflicts of interest.
Specifically, our interests as shareholders of Broadcom might be perceived as
affecting our ability to give impartial, disinterested legal advice. For
example, our advice regarding a given matter might be perceived as being colored
by our determination of the likely upside to equity and attendant risks. While
we would not accept ownership interests in Broadcom if we felt that, by doing
so, we could not continue to adequately represent Broadcom's interests, it is
possible that our economic interest in Broadcom will leave you uncomfortable
with our representation, possibly at an inopportune time. Moreover, we may reach
the conclusion that the existence of our economic interest makes it
inappropriate to advise Broadcom with respect to issues that might arise, thus
requiring it to retain different counsel, possibly at an inopportune moment, to
advise it on such matters. So that we may continue to represent you, we are also
asking Broadcom by your signature below to waive any conflict that has arisen in
the past or that might arise hereafter by virtue of the status of Mr. Wolfen,
I&M and/or the partners of I&M as the holders of the I&M Shares as well as any
equity securities or other ownership interests in Broadcom or any successor
entity that may be acquired upon conversion or exchange of any of the foregoing
or the exercise of any ancillary rights.
If, after careful consideration, you determine that this letter
accurately reflects your understanding of our agreement, please acknowledge your
approval and acceptance of these terms by signing and returning the enclosed
copy of this letter.
Warm regards.
Cordially,
IRELL & XXXXXXX LLP
By:______________________________
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As of October 31, 1997
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THE UNDERSIGNED HEREBY AGREES THAT THE TERMS AND CONDITIONS SET FORTH IN
THIS LETTER SHALL APPLY AS PROVIDED HEREIN TO THE PURCHASE, HOLDING AND
DISPOSITION OF THE SHARES BY IRELL & XXXXXXX LLP FOR THE BENEFIT OF ITS
PARTNERS, CONSENTS TO THE ACQUISITION OF THE I&M SHARES, AND WAIVES ANY CONFLICT
OF INTEREST THAT HAS ARISEN IN THE PAST OR THAT MIGHT ARISE HEREAFTER BY VIRTUE
OF THE REPRESENTATION OF BROADCOM BY IRELL & XXXXXXX LLP WHILE IRELL & XXXXXXX
LLP OR ITS PARTNERS HOLD ANY OWNERSHIP INTEREST IN BROADCOM.
BY SIGNING THIS AGREEMENT, AND AS FURTHER SET FORTH IN THE ENGAGEMENT
LETTER AGREEMENT AND ATTACHED STANDARD TERMS OF RETENTION BETWEEN THE PARTIES
DATED AS OF JANUARY 1, 1997, THE PARTIES AGREE TO BINDING ARBITRATION OF
DISPUTES, WHETHER AS TO FEES, QUALITY OF SERVICES RENDERED, THE ARBITRABILITY OF
THE DISPUTE, ANY MATTER RELATING TO THE SHARES, OR OTHERWISE, AND GIVE UP THEIR
RESPECTIVE RIGHTS TO A JURY OR COURT TRIAL, AND WAIVE THEIR RESPECTIVE RIGHTS TO
PROCEED UNDER THE ARBITRATION PROVISIONS OF THE STATE BAR ACT, CALIFORNIA
BUSINESS AND PROFESSIONS CODE XX.XX. 6200, ET SEQ. BROADCOM ACKNOWLEDGES THAT IT
HAS BEEN ADVISED BY IRELL & XXXXXXX LLP, AND HAS BEEN AFFORDED THE REASONABLE
OPPORTUNITY, TO HAVE THIS TRANSACTION AND THIS AGREEMENT REVIEWED BEFORE
EXECUTION BY INDEPENDENT COUNSEL ACTING ON ITS BEHALF.
BROADCOM CORPORATION,
a California corporation
By: ________________________________
Xxxxx X. Xxxxxxxx, Co-Chairman
and Chief Executive Officer
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California Rules of Professional Conduct
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RULE 3-300. AVOIDING INTERESTS ADVERSE TO A CLIENT
A member shall not enter into a business transaction with a client; or knowingly
acquire an ownership, possessory, security, or other pecuniary interest adverse
to a client, unless each of the following requirements has been satisfied:
(A) The transaction or acquisition and its terms are fair and
reasonable to the client and are fully disclosed and transmitted
in writing to the client in a manner which should reasonably have
been understood by the client; and
(B) The client is advised in writing that the client may seek the
advice of an independent lawyer of the client's choice and is
given a reasonable opportunity to seek that advice; and
(C) The client thereafter consents in writing to the terms of the
transaction or the terms of the acquisition.
