SUPPLEMENTAL PLEDGE AGREEMENT
THIS AGREEMENT is made as of the 21st day of January 2002 by and between
ALLIANCE SEMICONDUCTOR CORPORATION (the "Corporation"), a Delaware corporation,
ALLIANCE SEMICONDUCTOR (S.A.) (PTY) LTD (the "LLC"), a South African corporation
(collectively referred to as the "Borrower") both with offices at 0000 Xxxxxxxxx
Xxxxx, Xxxxx Xxxxx, XX 00000, and CHINATRUST COMMERCIAL BANK, a bank
incorporated under the laws of the Republic of China, licensed to operate the
banking business and having its principal place of business at 0 Xxxx Xxxx Xxxx,
Xxxxxx, Xxxxxx, R.O.C. ("Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank have previously entered into the Pledge
Agreement dated as of November 15, 2001 pursuant to the Credit Agreement dated
as of November 15, 2001; and
WHEREAS, the Borrower and the Bank (acting by and through its New York
branch) have now entered into an Amended and Restated Credit Agreement dated as
of January 21, 2002 pursuant to which the Borrower has agreed to extend Loans in
the aggregate principal amount of Forty Six Million United States Dollars
(US$46,000,000) (the "Credit Agreement") to the Borrower on the condition, among
other things, that the Borrower shall provide to the Bank and create a pledge of
additional unrestricted common shares of United Microelectronics Corp. ("UMC")
owned by the Borrower (the "Additional Collateral", the Additional Collateral
plus the Collateral under the Credit Agreement between the parties dated as of
November 15, 2001, which shall be referred to as the Original Collateral and
shall with the Additional Collateral be collectively referred to as the
"Collateral") as hereinafter specified.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to
have the same meaning when used in the plural and vice versa):
"Collateral Value" means total value of the Collateral calculated based on
the daily closing price per share of Collateral as quoted on the Taiwan Stock
Exchange, converted into United States Dollars at the Spot Rate.
"Secured Obligations" means any and all liabilities and obligations of the
Borrower under the Credit Agreement, including, without limitation, the
principal, interest, commissions, charges, fees and expenses payable under the
Credit Agreement.
"Spot Rate" means the amount of New Taiwan Dollars that may be purchased
with one United States Dollar, as reported in The Asian Wall Street Journal for
the date of such determination.
"Taiwan Business Day" means any day that is a trading day of the Taiwan
Stock Exchange.
"TSCDC" means Taiwan Securities Central Depositary Corporation.
"UMC" means United Microelectronics Corp., a corporation duly organized
and validly existing under the laws of the Republic of China and having its
principal place of business at 300 No.3, Li-hsin RD. II, Science-Based
Industrial Park, Hsinchu, Taiwan, R.O C.
2. Pledge. (a) To secure the due payment to the Bank of all amounts which
may now or hereafter from time to time be owing by Borrower to Bank, the Secured
Obligations and to induce Bank to extend credit to Borrower under the Agreement
or otherwise, for valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, Borrower hereby pledges, assigns and transfers to Bank,
and grants to Bank a continuing security interest in and to, all of the
Additional Collateral and Original Collateral, together with any other property
delivered to Bank hereunder and all additions thereto and substitutions therefor
and all cash proceeds thereof.
(b) The Borrower has previously created and registered a pledge over the
Original Collateral and will, on the date hereof, create and register a pledge
over the Additional Collateral through the book-entry system of TSCDC in favor
of the Bank in accordance with the book-entry rules of TSCDC. It is hereby
agreed by the parties hereto that the book entry regarding the pledge as
contemplated hereby made by TSCDC as aforesaid shall replace the endorsement and
delivery of physical share certificates evidencing the Additional Collateral.
(c) From time to time, the Borrower shall do such things and execute such
documents, at its cost and expense, as the Bank may request to effectuate and
maintain a valid first priority pledge and security interest in the Collateral,
including, without limitation, notifying and registering the same with UMC.
(d) Pursuant to this Agreement the Borrower is hereby pledging the
Additional Collateral so that the Collateral shall as required have a Collateral
Value of at least two hundred fifty percent (250%) of the Commitment (as defined
in the Credit Agreement) as of the time each loan is made to Borrower by the
Bank pursuant to the Credit Agreement. In the event the Bank determines and
notifies the Borrower that the Collateral Value at any time has fallen to two
hundred percent (200%) or less of the then total outstanding and unpaid
principal amount of the loans extended under the Credit Agreement (the
"Outstanding Amount"), as calculated and determined by the Bank, the Borrower
shall, within three (3) Taiwan Business Days following the date on which the
Bank so notifies the Borrower, provide additional shares of UMC owned by the
Borrower to make up the shortage so that the Collateral Value shall again be at
least two hundred fifty percent (250%) of the Outstanding Amount. If additional
shares of UMC are pledged, the Borrower shall create and register the pledge
over the additional shares in accordance with the terms of this Agreement by
delivery of such shares to TSCDC and the creation and pledge of the additional
shares through the book-entry system of TSCDC, or other mutually agreeable
method of pledging.
(e) As an alternative to pledging additional shares of UMC, the Borrower
may partially prepay the Outstanding Amount, subject to the terms of the Credit
Agreement, so as to reduce said amount to a level at which the Collateral Value
is again at least two hundred fifty percent (250%) of the Outstanding Amount.
(f) In the event the Collateral Value falls to or below one hundred eighty
percent (180%) of the Outstanding Amount (including the three (3) day period
provided for in Section 2(d) of this Agreement), as calculated and determined by
the Bank, the Bank may without notice to the Borrower dispose of the Collateral
to the extent necessary to restore the Collateral Value to at least two hundred
fifty percent (250%) of the Outstanding Amount.
(g) In the event the Borrower fails to provide additional shares of UMC to
restore the Collateral Value to at least two hundred fifty percent (250%) of the
Outstanding Amount or partially prepay the Outstanding Amount so that the
Collateral Value is again at least two hundred fifty percent (250%) of the
Outstanding Amount, the Bank shall have the rights set forth in Section 2(f) of
this Agreement.
(h) In the event that the Bank sells the Collateral (whether pursuant to
its rights under this Agreement or at the election of the Borrower to prepay or
repay the loans) the Bank shall not be deemed to have received the net funds
(that is, after payment of any transaction costs, taxes and other fees) until it
receives the funds at its New York Office (as defined in the Credit Agreement)
in United States dollars. The Bank shall not be responsible for any change in
the Spot Rate nor the time required to have the remittance from the Republic of
China to the United States approved by the Central Bank of China, however, the
Bank will use reasonable efforts to promptly obtain the approval of the Central
Bank of China.
3. Representations and Warranties. The Borrower hereby
represents and warrants as follows:
(a) The Borrower legally and beneficially owns the Collateral free and
clear of any lien, charge or encumbrance of any kind, other than the pledge
created under this Agreement.
(b) The execution, delivery and performance of this Agreement and the
pledge of the Collateral hereunder by the Borrower will not, to its knowledge,
contravene or violate any law, regulation, organizational documents of the
Borrower or any agreement to which it is a party or to which its property may be
subject.
(c) The pledge created hereunder constitutes a valid and perfected first
priority security interest over the Collateral, legally binding and enforceable
against the Borrower.
(d) To its knowledge, all governmental and other consents that are
required to have been obtained by the Borrower with respect to this Agreement
and the grant of the pledge and security interest have been obtained and are in
full force and effect and all conditions of any such consent have been complied
with.
(e) Borrower agrees to reimburse Bank, on demand, for any reasonable
amounts paid or advanced by Bank for the purpose of preserving the Collateral
for any part thereof and/or any liabilities or expenses incurred by Bank as the
transferee or holder of the Collateral.
4. Covenants.
(a) The Borrower agrees that without the Bank's prior written consent, it
shall not:
(i) sell, transfer, assign or otherwise dispose of or purport to
sell, transfer, assign or otherwise dispose of any of the Collateral; or
(ii) create or suffer to exist any mortgage, pledge, charge, lien or other
security interest over any of the Collateral.
(b) Bank shall be under no duty to: (i) collect or protect the Collateral
or any proceeds thereof or give any notice with respect thereto, except as
provided in Section 2(d); (ii) preserve the rights if any of Borrower with
respect to the Collateral against prior parties; (iii) preserve rights against
any parties to any instrument or document which may be part of the Collateral;
(iv) sell or otherwise realize the value of the Collateral; or (v) seek payment
from any particular source. Without limiting the generality of the foregoing,
Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the Collateral.
5. Dividends and Profits.
Profits, dividends and other distributions of income or capital in respect
of the Collateral distributed in stock of UMC shall be distributed to Borrower
provided that at such time the Collateral Value is equal to at least two hundred
fifty percent (250%) of the Outstanding Amount. In the event the Collateral
Value is not at least two hundred fifty percent (250%) of the Outstanding
Amount, the profits, dividends and other distributions of income or capital in
respect of the Collateral distributed in the form of shares of stock by UMC
shall become part of the Collateral, and the Borrower shall immediately create
and register such pledge over such additional shares of UMC through the
book-entry system of TSCDC, or other mutually agreeable method of pledging, such
additional shares shall thereafter be deemed Collateral.
6. Rights and Remedies - Default. Upon the occurrence of a Default (as
such term is defined in the Credit Agreement) or if the Borrower breaches any of
the provisions of this Agreement the Bank shall have all the rights and remedies
enumerated herein; that is the Bank shall immediately be entitled to enforce the
pledge under this Agreement and shall be entitled to sell, realize or dispose of
all or any of the Collateral in such manner and for such consideration as
permitted by law.
7. Continuing Security. Notwithstanding any intermediate prepayment or
satisfaction of the whole or any part of the loans made by the Bank to the
Borrower, the pledge created hereunder shall be a continuing security for the
discharge of the Secured Obligations of the Borrower to the Bank and shall also
cover all sums of money or obligations which shall from time to time be due to
the Bank from the Borrower under the Credit Agreement.
8. Release of Security. Upon the payment in full of the Borrower's Secured
Obligations under the Credit Agreement in accordance with the terms and
conditions thereof, the Bank shall, at the cost and expense of the Borrower,
release the Collateral to the Borrower and agrees to promptly execute and
deliver all such documents as are necessary to effect such release.
9. Amendments. This Agreement may be amended only by an
instrument in writing which is signed by the Bank and Borrower.
10. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Republic of China.
11. Submission to Jurisdiction. (a) BORROWER HEREBY IRREVOCABLY CONSENTS
THAT ANY LEGAL ACTION OR PROCEEDINGS AGAINST BORROWER OR ANY OF ITS PROPERTY
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS PLEDGE AGREEMENT MAY BE BROUGHT
IN THE TAIPEI DISTRICT COURT, AS BANK MAY ELECT, AND BY EXECUTION AND DELIVERY
OF THIS PLEDGE AGREEMENT, BORROWER HEREBY SUBMITS TO AND ACCEPTS WITH REGARD TO
ANY SUCH ACTION OR PROCEEDING, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF SUCH COURT.
(b) BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT IN THE TAIPEI DISTRICT COURT
AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH VENUE IS NOT A
CONVENIENT FORUM FOR ANY SUCH SUIT, ACTION OR PROCEEDING.
12. Waiver. The failure or delay of Bank to require performance by
Borrower of any provision of this Amended and Restated Pledge Agreement or any
document, instrument or agreement executed with this Amended and Restated Pledge
Agreement, or the failure of Bank to exercise any right, power or privilege
shall not affect its right to require performance of such provision unless and
until such performance has been waived by Bank in writing. Each and every right
granted to Bank hereunder or any other document or instrument delivered
hereunder or in connection herewith shall be cumulative and may be exercised
from time to time.
13. Notices. (a) Any notice hereunder shall be in writing and
shall be delivered or transmitted pursuant to Section 8.02 of the
Credit Agreement..
(b) In additional to notice pursuant to Section 13(a) the Bank shall give
notice to Xxxxx & XxXxxxxx, who it hereby designates as its agent for such
notice in Taiwan, Republic of China, at 00xx Xxxxx, 000 Xxx Xxx Xxxxx Xxxx,
Xxxxxx, Xxxxxx, by a notice registered and delivered by the Republic of China
post office.
14. Severability. If any term contained in this Agreement shall
be held by any court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect under any applicable law, the remaining
terms hereof shall not in any way be affected or impaired.
15. Binding Agreement; Assignment. This Amended and Restated Pledge
Agreement shall be binding upon Borrower, and Borrower's successors and assigns.
Borrower shall not assign or transfer any of its respective obligations
hereunder without the prior written consent of Bank. Bank may at any time assign
or transfer its interest herein and the transferee shall thereupon become vested
with all of the rights and powers given to Bank herein. Any attempted assignment
by Borrower in contravention of this Agreement shall be void and of no effect
whatsoever.
16. Further Assurances. Upon request by Bank and at Borrower's sole
expense, Borrower shall correct any defect or error that may be discovered in
this Agreement or any other document, instrument or agreement contemplated
herein or in the execution, acknowledgment or recording thereof. Upon request by
Bank, Borrower shall also promptly execute, acknowledge, deliver, record, file
and register any and do all such further acts, with respect to this Agreement or
any other document, instrument or agreement contemplated herein and all
continuations thereof, notices of assignment, transfers, certificates,
assurances and other installments as Bank may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this Agreement
or any other document, instrument or agreement contemplated herein, (ii) to
subject to valid and enforceable liens and security interests free and clear of
all defects and encumbrances any of the collateral covered or now or hereafter
intended to be covered by this Agreement or any other documents instrument or
agreement contemplated herein, (iii) to perfect and maintain the validity,
effectiveness and priority of this Agreement or any other document contemplated
herein and any liens and security interest intended to be created thereby, and
(iv) to better assure, assign, transfer, preserve, protect and confirm unto Bank
the rights granted or now or hereafter intended to be granted to Bank under this
Agreement or any document, instrument or agreement contemplated herein.
17. English Language.
(a) This Agreement is made in English only.
(b) No translation of this Agreement into Chinese or any other language
shall be of any force or effect and shall be for convenience only.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge Agreement
as of the date first above written.
Alliance Semiconductor Corporation
By: /s/ N. Xxxxxxx Xxxxx
-----------------------------------
Name: N. Xxxxxxx Xxxxx
Title: President and CEO
Alliance Semiconductor (S.A.) (Pty) Ltd
By: /s/ N. Xxxxxxx Xxxxx
-----------------------------------
Name: N. Xxxxxxx Xxxxx
Title: Director
Chinatrust Commercial Bank, Ltd., New York Branch
By: /s/ Xxxx Xxxx
-----------------------------------
Name: Xxxx Xxxx
Title: Executive Vice President and General Manager
