1
EXHIBIT 4.11
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "AGREEMENT") is dated as of
February 27, 1998 and entered into by each of the undersigned direct and
indirect Subsidiaries of ZILOG, INC., a Delaware corporation (each of such
Subsidiaries being a "PLEDGOR" and collectively "PLEDGORS"; provided, that after
the Closing Date, "Pledgors" shall be deemed to include any Additional Pledgors
(as hereinafter defined)), in favor of STATE STREET BANK AND TRUST COMPANY, a
chartered trust company, in its capacity as Trustee under the Indenture referred
to below (in such capacity herein called "SECURED PARTY") for its benefit and
for the benefit of the Holders.
PRELIMINARY STATEMENTS
A. Pledgors are the legal and beneficial owner of (i) the shares of
stock (the "PLEDGED SHARES") described in Part A of Schedule I annexed hereto
and issued by the corporations named therein and (ii) the indebtedness (the
"PLEDGED DEBT") described in Part B of said Schedule I and issued by the
obligors named therein.
B. Secured Party has entered into an Indenture dated as of February
27, 1998 (said Indenture, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "INDENTURE", the terms defined
therein and not otherwise defined herein being used herein as therein defined)
with Zilog, Inc., a Delaware corporation (the "Company") and Pledgors pursuant
to which the Company has issued 9 1/2% Senior Secured Notes Due 2005 in the
original principal amount of $280,000,000 (the "NOTES").
C. Pursuant to Article 11 of the Indenture, the Pledgors have
guarantied the prompt payment and performance when due of all obligations of
Company under the Indenture including the obligation of Company to make payments
thereunder in the event of early termination thereof.
D. It is a condition precedent to the initial purchase of the Notes
that Pledgors shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the initial Holders to purchase the Notes, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Pledgors hereby agree with Secured Party as follows:
1. PLEDGE OF SECURITY. Each Pledgor hereby pledges and assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
2
(a) the Pledged Shares owned by such Pledgor and the
certificates representing such Pledged Shares and any interest of such Pledgor
in the entries on the books of any financial intermediary pertaining to such
Pledged Shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged Shares;
provided, however, that to the extent that the issuer of any of the Pledged
Shares is a controlled foreign corporation (used hereinafter as such term is
defined in Section 957(a) (or a successor provision) of the Internal Revenue
Code), such Pledgor shall only be required to pledge Pledged Shares or,
certificates representing Pledged Shares of, and such interests pertaining to,
Pledged Shares of such issuer possessing up to but not exceeding 66-2/3% of the
voting power of all classes of capital stock entitled to vote of such issuer,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Pledged Shares;
(b) the Pledged Debt owned by such Pledgor and the
instruments evidencing such Pledged Debt, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Debt;
(c) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of any Pledged Shares from time to time acquired by such
Pledgor in any manner (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing such additional
shares (all such shares, securities, warrants, options, rights, certificates,
instruments and interests collectively being "ADDITIONAL PLEDGED SHARES"), and
all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Additional Pledged Shares;
provided, however, that to the extent that the issuer of any Additional Pledged
Shares is a controlled foreign corporation, such Pledgor shall only be required
to pledge Additional Pledged Shares or such issuer possessing up to but not
exceeding 66-2/3% of the voting power of all classes of capital stock entitled
to vote of such issuer, and all dividends, cash, warrants, rights, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Additional Pledged Shares;
(d) all additional indebtedness from time to time owed to
such Pledgor by any obligor on any Pledged Debt and the instruments evidencing
such indebtedness, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of such Pledgor (which shares shall be deemed to
be part of the Pledged Shares), the certificates or other instruments
representing such shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such shares (all
2
3
such shares, securities, warrants, options, rights, certificates, instruments
and interests collectively being "NEW PLEDGED SHARES"), and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such New Pledged Shares; provided, however, that in the event that
any such direct Subsidiary is a controlled foreign corporation, such Pledgor
shall only be required to pledge New Pledged Shares of such Subsidiary
possessing up to but not exceeding 66-2/3% of the voting power of all classes of
capital stock entitled to vote of such issuer, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such new Pledged Shares;
(f) all indebtedness from time to time owed to such Pledgor
by any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a direct or indirect Subsidiary of such Pledgor, and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes proceeds of any indemnity or guaranty payable to such Pledgor or
Secured Party from time to time with respect to any of the Pledged Collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Indenture and all extensions or
renewals thereof, whether for principal, interest (including interest that, but
for the filing of a petition in bankruptcy with respect to Company, would accrue
on such obligations, whether or not a claim is allowed against Company for such
interest in the related bankruptcy proceeding), fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Holder as
a preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor being the "SECURED OBLIGATIONS").
3. DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery or, as
3
4
applicable, shall be accompanied by the appropriate Pledgor's endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party. Upon the occurrence and
during the continuation of an Event of Default, Secured Party shall have the
right, without notice to Pledgors, to transfer to or to register in the name of
Secured Party or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 7(a). In addition,
Secured Party shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
4. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of
the Pledged Shares have been duly authorized and validly issued and are fully
paid and non-assessable. The execution and delivery of this Agreement and the
pledge of the Pledged Shares has been duly authorized by all necessary corporate
action. All of the Pledged Debt owned by such Pledgor has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares
owned by such Pledgor constitute the percentage of the issued and outstanding
shares of stock of each issuer thereof set forth on Schedule I annexed hereto,
and there are no outstanding warrants, options or other rights to purchase, or
other agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares. The Pledged Debt owned by such Pledgor constitutes all of the
issued and outstanding intercompany indebtedness evidenced by a promissory note
of the respective issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Such Pledgor is the
legal, record and beneficial owner of the Pledged Collateral owned by such
Pledgor free and clear of any Lien except for the security interest created by
this Agreement and Permitted Liens.
5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL; ETC.
Each Pledgor shall:
(a) not, except as expressly permitted by the Indenture, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, or (iii) permit any
issuer of Pledged Shares to merge or consolidate unless all the outstanding
capital stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, that if the surviving corporation or resulting
corporation upon any such merger or consolidation involving an issuer of Pledged
Shares is a controlled foreign corporation, then such Pledgor shall only be
required to pledge outstanding capital stock of such surviving or resulting
corporation possessing up to but not exceeding 66-2/3% of the
4
5
voting power of all classes of capital stock of such issuer entitled to vote;
provided, further, that in the event any Pledgor makes an Asset Sale permitted
by the Indenture and the assets subject to such Asset Sale are Pledged Shares,
Secured Party shall release the Pledged Shares that are the subject of such
Asset Sale to such Pledgor free and clear of the lien and security interest
under this Agreement concurrently with the consummation of such Asset Sale;
provided, further that, as a condition precedent to such release, the conditions
precedent to such release set forth in subsection 4.10 of the Indenture shall
have been satisfied;
(b) (i) cause each issuer of Pledged Shares owned by it not
to issue any stock or other securities in addition to or in substitution for the
Pledged Shares issued by such issuer, except to such Pledgor, (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of each issuer of
Pledged Shares, and (iii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of any Pledgor; provided, that notwithstanding anything
contained in this subdivision (b), such Pledgor shall only be required to pledge
the outstanding capital stock of a controlled foreign corporation possessing up
to but not exceeding 66-2/3% of the voting power of all classes of capital stock
of such controlled foreign corporation entitled to vote;
(c) (i) pledge hereunder, immediately upon their issuance,
any and all instruments or other evidences of additional indebtedness from time
to time owed to such Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to such Pledgor by any Person
that after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of any Pledgor;
(d) keep correct and accurate records of all Notes or
advances made by such Pledgor to Company or any Subsidiaries of Company which
shall be evidenced by an Intercompany Note and shall constitute Pledged Debt;
and
(e) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that such Pledgor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
entered or filed against Pledgor or any of the Pledged Collateral as a result of
the failure to make such payment.
6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Each Pledgor agrees that from time to time, at the
expense of such Pledgor, such Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, such Pledgor will:
5
6
(i) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
such Pledgor's title to or Secured Party's security interest in all or any part
of the Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining
any additional shares of stock or other securities required to be pledged
hereunder as provided in Section 5(b) or (c), promptly (and in any event within
five Business Days) deliver to Secured Party a Pledge Amendment, duly executed
by such Pledgor, in substantially the form of Schedule II annexed hereto (a
"PLEDGE AMENDMENT"), in respect of the additional Pledged Shares or Pledged Debt
to be pledged pursuant to this Agreement. Each Pledgor hereby authorizes Secured
Party to attach each Pledge Amendment to this Agreement and agrees that all
Pledged Shares or Pledged Debt listed on any Pledge Amendment delivered to
Secured Party shall for all purposes hereunder be considered Pledged Collateral;
provided that the failure of a Pledgor to execute a Pledge Amendment with
respect to any additional Pledged Shares or Pledged Debt pledged pursuant to
this Agreement shall not impair the security interest of Secured Party therein
or otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) PLEDGOR'S RIGHTS. So long as no Event of Default shall
have occurred and be continuing:
(i) Pledgors shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms of this
Agreement or the Indenture; provided, however, that no Pledgor shall exercise or
refrain from exercising any such right if Secured Party shall have notified such
Pledgor that, in Secured Party's judgment, such action would have a material
adverse effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that each Pledgor shall give Secured Party at least five
Business Days' prior written notice of the manner in which it intends to
exercise, or the reasons for refraining from exercising, any such right. It is
understood, however, that neither (1) the voting by a Pledgor of any Pledged
Shares for or a Pledgor's consent to the election of directors at a regularly
scheduled annual or other meeting of stockholders or with respect to incidental
matters at any such meeting nor (2) a Pledgor's consent to or approval of any
action otherwise permitted under this Agreement and the Indenture shall be
deemed inconsistent with the terms of this Agreement or the Indenture within the
meaning of this Section 7(a)(i), and no notice of any such voting or consent
need be given to Secured Party;
(ii) Pledgors shall be entitled to receive and
retain, and to utilize free and clear of the lien of this Agreement, any and all
dividends and interest paid in respect of the Pledged Collateral; provided,
however, that any and all
6
7
(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in connection with
a reduction of capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange
for any Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as, Pledged
Collateral and shall, if received by a Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of such
Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the
same form as so received (with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver
(or cause to be executed and delivered) to Pledgors all such proxies, dividend
payment orders and other instruments as Pledgors may from time to time
reasonably request for the purpose of enabling Pledgors to exercise the voting
and other consensual rights which they are entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest payments
which it is authorized to receive and retain pursuant to paragraph (ii) above.
(b) SECURED PARTY'S RIGHTS. Upon the occurrence and during
the continuation of an Event of Default:
(i) upon written notice from Secured Party to a
Pledgor, all rights of such Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section
7(a)(i) shall cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to exercise such voting
and other consensual rights;
(ii) all rights of a Pledgor to receive the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive and hold as Pledged Collateral such dividends and interest payments;
and
(iii) all dividends, principal and interest payments
which are received by a Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of such Pledgor and shall forthwith be paid
over to Secured Party as Pledged Collateral in the same form as so received
(with any necessary indorsements).
7
8
(c) IRREVOCABLE PROXY. In order to permit Secured Party to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), (i) each Pledgor shall promptly execute and deliver (or cause
to be executed and delivered) to Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request and (ii) without limiting the effect of the immediately
preceding clause (i), each Pledgor hereby grants to Secured Party an IRREVOCABLE
PROXY to vote the Pledged Shares and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Shares would be
entitled (including giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), upon the occurrence of an Event of Default and which
proxy shall only terminate upon the payment in full of the Secured Obligations.
8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Each Pledgor hereby
irrevocably appoints Secured Party as such Pledgor's attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such
Pledgor, Secured Party or otherwise, from time to time in Secured Party's
discretion to take any action and to execute any instrument that Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of such Pledgor;
(b) upon the occurrence and during the continuance of an
Event of Default to ask, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) upon the occurrence and during the continuance of an
Event of Default to receive, endorse and collect any instruments made payable to
such Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) upon the occurrence and during the continuance of an
Event of Default to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Pledged Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Pledged Collateral.
9. SECURED PARTY MAY PERFORM. If any Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by such Pledgor under Section 13(b).
8
9
10. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
11. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein, in the Indenture,
or otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Pledged Collateral), and Secured Party may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Secured Party may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the Pledged
Collateral. Secured Party or any Holder may be the purchaser of any or all of
the Pledged Collateral at any such sale and Secured Party, as agent for and
representative of Holders, shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale from
time to time by announcement at the
9
10
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each Pledgor hereby
waives any claims against Secured Party arising by reason of the fact that the
price at which any Pledged Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgors shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, Secured Party may be compelled, with respect to any sale of all or any
part of the Pledged Collateral conducted without prior registration or
qualification of such Pledged Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances, such Pledgor agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to engage in
public sales and no obligation to delay the sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Secured Party determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, each Pledgor
shall and shall cause each issuer of any Pledged Shares owned by such Pledgor to
be sold hereunder from time to time to furnish to Secured Party all such
information as Secured Party may request in order to determine the number of
shares and other instruments included in the Pledged Collateral which may be
sold by Secured Party in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as
the same are from time to time in effect.
12. APPLICATION OF PROCEEDS. All proceeds received by Secured Party
in respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral shall be applied as provided in subsection 4.10
of the Indenture.
13. INDEMNITY AND EXPENSES.
(a) Each Pledgor agrees to indemnify Secured Party and each
Holder from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including enforcement of this Agreement),
except to the extent such claims, losses or liabilities result
10
11
solely from Secured Party's or such Holder's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgors shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Pledged Collateral, (ii)
the exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by any Pledgor to perform or observe any of the provisions
hereof.
(c) The provisions of this Section 13 shall survive any
termination of this Agreement.
14. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, (b) be binding upon Pledgors, its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 2.06 of the Indenture, any Holder may assign or
otherwise transfer any Notes held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Holders herein or otherwise. Upon the payment in full of all Secured
Obligations, the security interest granted hereby shall terminate and all rights
to the Pledged Collateral shall revert to Pledgors. Upon any such termination
Secured Party will, at Pledgors' expense, execute and deliver to Pledgors such
documents as Pledgors shall reasonably request to evidence such termination and
Pledgors shall be entitled to the return, upon its request and at its expense,
against receipt and without recourse to Secured Party, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
15. SECURED PARTY AS TRUSTEE.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Holders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Pledged Collateral), solely in accordance with
this Agreement and the Indenture; provided that Secured Party, in accordance
with subsection 6.05 of the Indenture, shall exercise, or refrain from
exercising, any remedies provided for hereunder in accordance with the
instructions of the Holders of a majority in principal amount of the then
outstanding notes.
(b) Secured Party shall at all times be the same Person that
is Trustee under the Indenture. Written notice of resignation by Trustee
pursuant to subsection 7.08 of the Indenture shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Trustee pursuant
to subsection 7.08 of the Indenture shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Trustee pursuant to
subsection 7.08 of the Indenture shall also constitute appointment of a
successor Secured Party
11
12
under this Agreement. Upon the acceptance of any appointment as Trustee under
subsection 7.08 of the Indenture by a successor Trustee, that successor Trustee
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this Agreement shall
promptly (i) transfer to such successor Secured Party all sums, securities and
other items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute and
deliver to such successor Secured Party such amendments to financing statements,
and take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring or removed Secured Party shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Trustee's resignation or removal hereunder as Secured Party,
the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was Secured
Party hereunder.
16. AMENDMENTS; ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
any Pledgor therefrom, shall in any event be effective unless the same shall be
in writing and signed by Secured Party and, in the case of any such amendment or
modification, by any Pledgor; provided, that any Pledge Amendment in the form of
Schedule II annexed hereto shall be effective upon execution by any Pledgor and
Pledgors hereby waive any requirement of notice of or consent to any such Pledge
Amendment. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
17. NOTICES. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice delivered
to Secured Party.
18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
19. ADDITIONAL PLEDGORS. The initial Pledgors hereunder shall be
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, additional Subsidiaries
of Company may become parties hereto, as
12
13
additional Pledgors (each an "ADDITIONAL PLEDGOR"), by executing an
acknowledgment to this Agreement substantially in the form of Schedule III
annexed hereto. Upon delivery of any such counterpart to Secured Party, notice
of which is hereby waived by Pledgors, each such Additional Pledgor shall be a
Pledgor were an original signatory hereto. Each Pledgor agrees that its
obligations arising hereunder shall not be affected by or diminished by the
addition or release of any other Pledgor hereunder, nor by any election of
Secured Party not to cause any Subsidiary of Company to become an Additional
Pledgor hereunder. This Agreement shall be fully effective as to any Pledgor
that is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Pledgor hereunder.
20. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
21. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
22. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT
TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Indenture, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Indenture shall be applicable to this Agreement mutatis
mutandis.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of this page intentionally left blank]
13
14
IN WITNESS WHEREOF, each of the undersigned Pledgors and Secured Party
have caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
ZILOG EUROPE
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Its: Secretary
---------------------------------
Notice Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ZILOG TOA COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Its: Secretary
---------------------------------
Notice Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STATE STREET BANK AND TRUST COMPANY,
SECURED PARTY (IN ITS CAPACITY AS
TRUSTEE)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Notice Address: ▇▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
14