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EXHIBIT 10.26
PLEDGE AGREEMENT
THIS AGREEMENT is made on this 9th day of November 2000 by and between S3
Incorporated, a company incorporated in Delaware with its headquarters at 0000
Xxxxxxx Xxxxxxx Xxxx., Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("Pledgor"), and Chinatrust
Commercial Bank, a bank incorporated under the laws of the Republic of China
("ROC"), licensed to operate the banking business and having its principal place
of business at 0 Xxxx Xxxx Xxxx, Xxxxxx, Xxxxxx, R.O.C. ("Pledgee"), in its
capacity as the security agent acting for the interest of all banks ("Bank")
under the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Pledgee (acting by and through its New York branch) together with
the other banks named therein have entered into a Credit Agreement dated 9
November 2000 with the Pledgor under which the Banks have agreed to extend a
loan in the aggregate principal amount of Seven Million United States Dollars
(US$70,000,000) (the "Credit Agreement") to the Pledgor on the condition, among
other things, that the Pledgor shall provide to the Pledgee and create a pledge
thereon (i) on the date hereof, 85,000,000 unrestricted common shares of the
Company (as defined below) owned by the Pledgor (the "Shares") with a Collateral
Value equivalent to at least 200% of the loan amount on the Initial Drawdown
Date and (ii) from time to time pursuant to Section 5(b) or 5(c) hereof,
additional Shares owned by the Pledgor (all such Shares pledged by the Pledgor
to the Pledgee hereunder the "Pledged Shares"), in each case, as a continuing
security to the Pledgee securing the due and punctual payment and performance by
the Pledgor of its obligations and liabilities under the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. DEFINITIONS
In addition to the terms defined above and elsewhere herein as used in
this Agreement, the following terms shall have their respective meanings
as follows:
"Company" means United Microelectronics Corp., a corporation duly
organized
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and validly existing under the laws of the ROC and having its principal
place of business at 300 No.3, Li-hsin RD. II, Science-Based Industrial
Park, Hsinchu, Taiwan, R.O.C.
"Initial Drawdown Date" means 10 November 2000.
"Collateral Value" means total value of the Pledged Shares calculated
based on the closing price per Pledged Share as quoted on the Taiwan
Stock Exchange, converted into U.S. Dollars at the Spot Rate.
"Secured Obligations" means any and all liabilities and obligations of
the Pledgor 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.
2. INTERPRETATION
(a) Singular, Plural and Gender
Where applicable:
(i) words denoting the singular include the plural;
(ii) words denoting the plural include the singular; and
(iii) words denoting a gender include each gender.
(b) Headings
Headings in this Agreement are for convenience and identification of
articles only and do not affect interpretation.
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3. PLEDGE
(a) As a continuing security for the Secured Obligations, the Pledgor
hereby pledges in favor of the Pledgee all of its rights, title
and interests in and to (i) the Shares and (ii) any and all
additional Shares of the Company that may be provided and pledged
pursuant to Section 5(b) or 5(c) hereof, to constitute a valid
and perfected pledge over the Pledged Shares.
(b) The Pledgee will, on the date hereof, create and register a
pledge over the Shares through the book-entry system of TSCDC in
favor of the Pledgee in accordance with the book-entry rules of
TSCDC. It is hereby agreed upon 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 Shares.
(c) From time to time, the Pledgor shall do such things and execute
such documents as the Pledgee may further request to effectuate a
valid first priority pledge over the Pledged Shares, including,
without limitation, notifying and registering the same with the
Company.
4. REPRESENTATION AND WARRANTIES OF PLEDGOR
The Pledgor hereby represents and warrants as follows:
(a) the Pledgor legally and beneficially owns the Pledged Shares 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 by the
Pledgor will not contravene or violate any law, regulation,
constitutive documents or agreement to which the Pledgor is
subject or to which its property may be subject;
(c) the pledge created hereunder constitutes a valid and perfected
first priority security interest over the Pledged Shares, legally
binding and enforceable against the Pledgor; and
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(d) all governmental and other consents that are required to have
been obtained by the Pledgor 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.
5. UNDERTAKINGS
(a) The Pledgor undertakes that without the Pledgee'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 Pledged Shares; or
(ii) create or suffer to exist any mortgage, pledge, charge,
lien or other security interest over any of the Pledged
Shares.
(b) In the event the Pledgee determines and notifies the Pledgor that
the Collateral Value at any time falls to 175% of the then total
outstanding and unpaid principal amount of the loan extended
under the Credit Agreement (the "Outstanding Amount"), as
calculated and determined by the Pledgee in good faith, the
Pledgor shall, within three (3) Taiwan Business Day following the
date on which the Pledgee so notifies the Pledgor, provide
additional Shares owned by the Pledgor to make up the shortage so
that the Collateral Value shall reach 200% of the Outstanding
Amount. The Pledgor shall create and register a pledge over the
additional Shares being provided as Pledged Shares on such
delivery date through the book-entry system of TSCDC.
As an alternative, the Pledgor 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 200% of the Outstanding Amount.
(c) In the event the Collateral Value falls to or below 130% of the
Outstanding Amount, as calculated and determined by the Pledgee
in good faith, the Pledgor shall, within one (1) Taiwan Business
Day following the date on which the Collateral Value falls to or
below 130% of the Outstanding
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Amount, either provide additional Shares owned by the Pledgor to
make up the shortage or, alternatively, partially prepay the
Outstanding Amount so that the Collateral Value shall reach 200%
of the Outstanding Amount. The Pledgor shall create and register
a pledge over the additional Shares being provided as Pledged
Shares on such delivery date through the book-entry system of
TSCDC.
As an alternative, the Pledgor 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 200% of the Outstanding Amount.
(d) In the event the Pledgor fails to make up the shortage as
specified in Section 5(b) or 5(c), the Pledgee shall be entitled
to exercise its rights hereunder (including, without limitation,
the right to sell the Pledged Shares pursuant to the terms hereof
without notice.)
6. DIVIDENDS AND PROFITS
(a) Profits, dividends and other distributions of income or capital
in respect of the Pledged Shares distributed in cash by the
Company shall be paid to the Pledgee, unless the Pledgee agrees
otherwise.
(b) In the event the Collateral Value is less than 175% of the
Outstanding Amount, the profits, dividends and other
distributions of income or capital in respect of the Pledged
Shares distributed in the form of shares of stock by the Company
to the Pledgor shall become part of the Pledged Shares, and the
Pledgor shall immediately create and register such pledge over
such Pledged Shares through the book-entry system of TSCDC.
7. DEFAULT
The Pledgee shall immediately become entitled to enforce the pledge
under this Agreement and shall be entitled to sell, realize or dispose
of all or any of the Pledged Shares in such manner and for such
consideration as permitted by law if:
(a) the Pledgor commits any breach or makes any default in the
observance of any term, condition, undertaking or covenant contained
in this Agreement; or
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(b) an Event of Default (as defined in the Credit Agreement) shall occur
with respect to the Pledgor under the Credit Agreement.
8. VOTING RIGHTS
Upon the occurrence and during the continuance of an Event of Default
under the Credit Agreement, the Pledgee shall, to the fullest extent
permitted by law, be entitled to exercise all voting and other
shareholder's rights in respect of the Pledged Shares and the Pledgor
shall on demand execute and deliver to the Pledgee any document or
instrument required to authorize and empower the Pledgee to do so.
9. RELEASE OF SECURITY
Upon the payment in full in cash of the Pledgor's obligations and
liabilities under the Credit Agreement in accordance with the terms and
conditions thereof, the Pledgee will, at the cost and expense of the
Pledgor, release the Pledged Shares to the Pledgor and agrees to
promptly execute and deliver all such documents as are necessary to
effect such release.
10. CONTINUING SECURITY
Notwithstanding any intermediate payment or settlement of account or
satisfaction of the whole or any part of the moneys secured by the
pledge under this Agreement, the pledge created hereunder shall be a
continuing security for the discharge of the Secured Obligations and
shall extend to cover all or any sum or sums of money or obligations
which shall from time to time be payable to the Pledgee by the Pledgor
under the Credit Agreement.
11. NOTICES
(a) Any notice, demand or communication from one party to another
shall be made in writing and may be made by any authorized
officer from time to time of the party giving, making or sending
such notice, demand or communication. Any such notice, demand or
communication shall become effective upon receipt.
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(b) Notices, demands and communications shall be sent to the
following address of each party or any other address of such
party as notified pursuant hereto:
(i) To the Pledgor
Address: 0000 Xxxxxxx Xxxxxxx Xxxx., Xxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx, Vice President & Corporate Treasurer
Facsimile Number: 408/325-7877 or 408/000-0000
Tel Number: 408/000-0000 or 408/588-8000
Email: xxxx@x0.xxx
(ii) To the Pledgee
Address: 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, U.S.A.
Attn: Xxxxxxx X. Foo, Assistant Vice President & Lending Officer
Facsimile Number: (000) 000-0000
Tel Number: (000) 000-0000
Email: Xxxxxxx.xxx@xxxxxx.xxx
12. SEVERABILITY
If any one or more of the provisions of this Agreement or any part
thereof shall be declared or adjudged to be illegal, invalid or
unenforceable under any applicable law, such illegality, invalidity or
unenforceability shall not affect or invalidate any of the other
provisions of this Agreement.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the ROC.
14. JURISDICTION
In case of disputes arising from or in connection with this Agreement,
the parties hereto agree to submit to the non-exclusive jurisdiction of
the Taipei District Court.
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15. 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.
16. AMENDMENT
This Agreement may be amended only by written agreement signed by the
parties hereto.
17. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which together shall constitute one original instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date and year first written above.
Pledgee: Pledgor:
Chinatrust Commercial Bank S3 Incorporated
By /s/ Xxxxxxx X. Foo By /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Foo Name: Xxxxxx X. Xxxxxxxxxx
Title: Assistant Vice President Title: Vice President and
and Lending Officer Corporate Treasurer
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