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EXHIBIT 4.10
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "AGREEMENT") is dated as of
February 27, 1998 and entered into by and between ZILOG, INC., a Delaware
corporation ("PLEDGOR"), and 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. Pledgor is 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 Pledgor and certain subsidiaries of Pledgor as Guarantors pursuant
to which Pledgor has issued 9 1/2% Senior Secured Notes Due 2005 in the original
principal amount of $280,000,000 (the "NOTES").
C. It is a condition precedent to the initial purchase of the
Notes that Pledgor 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,
Pledgor hereby agrees with Secured Party as follows:
1. PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of Pledgor in the entries on the books of
any financial intermediary pertaining to the 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 the 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), 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
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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 and the instruments evidencing the
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 the 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 the Pledged Shares from time to time acquired by
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, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any financial intermediary pertaining to
such additional shares (all such shares, certificates, 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, Pledgor shall
only be required to pledge Additional 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 Additional Pledged Shares;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the 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 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 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, 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,
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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 Pledgor by
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of 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 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 the Notes 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
Pledgor, would accrue on such obligations), 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 (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement (all such obligations of
Pledgor, together with the Underlying Debt, 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 applicable, shall be accompanied
by 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 continuance of an Event of
Default, Secured Party shall have the right, without notice to Pledgor, 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
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exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
4. REPRESENTATIONS AND WARRANTIES. 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 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
constitute all of the issued and outstanding shares of stock of each issuer
thereof, except as otherwise set forth in 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 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. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement and any Permitted
Liens.
5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL; ETC.
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 which is a controlled foreign corporation is a controlled foreign
corporation, then 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 voting power of all classes of capital stock of such
issuer entitled to vote; provided, further, that in the event 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 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;
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(b) (i) cause each issuer of Pledged Shares not to issue
any stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to 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 Pledgor; provided, that notwithstanding anything contained in this
subdivision (b), 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 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 Pledgor by any Person that
after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) keep correct and accurate records of all loans or
advances made by Pledgor to any of its Subsidiaries 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 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) Pledgor agrees that from time to time, at the expense
of Pledgor, 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, Pledgor
will: (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 Pledgor's title to or Secured Party's security interest in all or any
part of the Pledged Collateral.
(b) 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
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Amendment, duly executed by 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. 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 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) Pledgor 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 Pledgor shall not exercise
or refrain from exercising any such right if Secured Party shall have notified
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 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 Pledgor of any Pledged Shares for or
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) 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) Pledgor 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
(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,
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shall be, and shall forthwith be delivered to Secured Party to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
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 Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time to time
reasonably request for the purpose of enabling Pledgor to exercise the voting
and other consensual rights which it is 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
Pledgor, all rights of 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 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 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 Pledgor and shall forthwith be
paid over to Secured Party as Pledged Collateral in the same form as so received
(with any necessary indorsements).
(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) 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), 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
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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. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of 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 Pledgor;
(b) upon the occurrence and during the continuance of an
Event of Default, to ask, demand, collect, xxx 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 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 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 Pledgor under Section 13(b).
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
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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 Pledgor, and 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. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to 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 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. To
the fullest extent permitted by law, 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, Pledgor shall be
liable for the deficiency and the fees of any attorneys employed by Secured
Party to collect such deficiency.
(b) 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
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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. 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, 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, Pledgor shall
and shall cause each issuer of any Pledged Shares 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) Pledgor agrees to indemnify Secured Party 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, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgor shall have to 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 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 Pledgor, its
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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
Pledgor. Upon any such termination Secured Party will, at Pledgor's expense,
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination and Pledgor 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 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.
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16. AMENDMENTS; ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
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 Pledgor. 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 provided in
subsection 12.02 of the Indenture.
18. 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.
19. 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.
20. GOVERNING LAW; TERMS. 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.
21. 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.
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IN WITNESS WHEREOF, Pledgor 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, INC.
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------
Title: Vice President & Chief Financial
Officer
STATE STREET BANK AND TRUST COMPANY, SECURED
PARTY (IN ITS CAPACITY AS TRUSTEE)
By: /s/ XXXXXX XXXXXXXX
----------------------------------------
Title: Vice President
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