SHARE PLEDGE
This Share Pledge dated as of March 11, 1998 made by PMC-SIERRA, INC. (the
"Corporation"), a corporation incorporated under the laws of Delaware, to and in
favour of CIBC INC. (the "Lender"), as lender under the Credit Agreement
hereinafter referred to.
WHEREAS:
A. The Corporation has entered into a credit agreement dated as of the date
hereof with the Lender (as such agreement may at any time or from time to time
be amended, supplemented or otherwise modified or restated, the "Credit
Agreement") and the Corporation has guaranteed by a guarantee dated as of the
date hereof all indebtedness, liabilities and obligations of PMC - Sierra Ltd.
("PMC") to Canadian Imperial Bank of Commerce ("CIBC") under a credit agreement
between PMC and CIBC dated as of the date hereof.
B. The Corporation is as at the date hereof the holder of all of the issued
and outstanding voting shares in the capital of PMC and has agreed to pledge in
favour of the Lender those shares described in Schedule A hereto (the shares in
Schedule A hereto are referred to, collectively, as the "Shares").
C. It is a condition of the advance of the said credit facilities by the
Lender to the Corporation that the Corporation execute and deliver this Share
Pledge together with the share certificates representing the Shares (the
"Certificates"), duly endorsed in blank for transfer, to and in favour of the
Lender as security for the payment and performance of all indebtedness,
liabilities and obligations of the Corporation to the Lender hereunder and under
the Credit Agreement as well as other dealings by which the Corporation may
become indebted or liable to the Lender in any manner whatsoever pursuant to the
Credit Agreement (the "Obligations").
NOW THEREFORE WITNESSETH that in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Corporation, the Corporation covenants, declares and agrees
as follows:
1. Definitions. All terms defined in the Credit Agreement and not otherwise
defined herein or in the recitals hereto shall have the respective meanings
attributed to them in the Credit Agreement.
2. Pledge of Shares. The Corporation hereby assigns, mortgages, charges,
hypothecates and pledges to and deposits with the Lender, and grants to the
Lender a security interest in, the Shares and the Certificates together with all
replacements thereof, substitutions therefor, accretions thereto, interest
thereon and proceeds thereof, including, without limitation, any dividends,
income or revenue therefrom (the whole being herein called the "Pledge"), to be
held by the Lender as general and continuing collateral security for the payment
and performance of the Obligations.
3. Representations and Warranties. The Corporation represents and warrants to
the Lender that: (i) the Shares are free and clear of all mortgages, charges,
security interests, Liens and other encumbrances; (ii) the Corporation is the
beneficial owner of the Shares; and (iii) the Corporation is entitled to grant
the assignment and charges as provided for herein.
4. Delivery of Certificates. The Certificates endorsed in blank for transfer
shall forthwith be delivered to and remain in the custody of the Lender or its
nominee. Upon an Event of Default or any other act which would permit the Lender
to demand payment of the Obligations, any or all Shares may, at the option of
the Lender, be registered in the name of the Lender or its nominee. The
Corporation covenants to deliver such stock powers and similar documents with
respect to the Shares as the Lender or its nominee may reasonably from time to
time request, satisfactory in form and substance to the Lender. If the charter
documents of PMC restrict the transfer of the Shares of such company, then the
Corporation shall also deliver to the Lender a resolution of the directors or
shareholders of such company consenting to the transfer(s) contemplated by this
Pledge.
5. Realization of the Shares. Upon the failure of the Corporation to pay or
perform any of the Obligations on demand or otherwise when due and payable or to
be performed, as the case may be or upon the occurrence of an Event of Default
or any other act which would permit the Lender to demand payment of the
Obligations, the Lender or its agent may realize upon or otherwise deal with or
dispose of the Shares by public or private sale, transfer or delivery or
exercise and enforce all rights and remedies of a holder of the Shares as if the
Lender were absolute owner thereof for such price in money or other
consideration and upon such terms and conditions as it deems best, the whole,
without notice to or control by the Corporation. Any such remedy may be
exercised separately or in combination and shall be in addition to and not in
substitution for any other rights the Lender may have, however created, provided
that the Lender shall not be bound to exercise any such right or remedy. The
Lender shall not be bound under any circumstances to realize upon the Shares and
neither the Lender nor its agents shall be responsible for any loss occasioned
by any sale or other dealing with the Shares permitted by and made in accordance
with law, or by the retention of or delay or failure to sell or otherwise deal
with or dispose of the Shares and the Lender is hereby released from all
responsibility for any depreciation in or loss in value which the Shares may
suffer.
6. Power of Attorney. From and after the date of an Event of Default or any
other act which would permit the Lender to demand payment of the Obligations,
the Corporation hereby authorizes and empowers the Lender or any officer thereof
as attorney for the Corporation to sign any transfer or other document necessary
to complete the transfer of any of the Shares. The Lender may grant time for
payment or any other indulgence, take and give up securities, and may compound
with, grant releases and discharges and otherwise deal with PMC and the
Corporation and with other persons and the Shares and Certificates as the Lender
may see fit without liability to the Corporation for any loss thereby occasioned
to the Corporation. So long as any amount remains unpaid in respect of the
Obligations after the occurrence of an Event of Default or any other act which
would permit the Lender to demand payment of the Obligations, the Corporation
hereby irrevocably appoints the Lender or any officer thereof as its attorney in
the name of the Corporation with full powers of substitution, but for the use
and benefit of the Lender, to do all such acts and take all such proceedings as
the Lender may from time to time think advisable to realize upon the Shares in
accordance with the terms hereof and to enforce the rights hereby assigned and
obtain possession of and realize upon the property hereby assigned.
7. Dealing with the Shares and the Lien hereof. The Lender shall not be
obliged to exhaust its resources against the Corporation, PMC or any other
person or persons or against any other security it may hold in respect of the
Obligations before the Lender may realize upon or otherwise deal with the Shares
or Certificates in such manner as the Lender may consider desirable. The Lender
may grant extensions or other indulgences, take and give up securities, accept
compositions, grant releases and discharges and otherwise deal with PMC and the
Corporation and with other parties, sureties or securities as it may see fit
without prejudice to the Obligations or the rights of the Lender in respect of
this Pledge.
8. Costs of Realization. All costs and charges incurred by or on behalf of the
Lender with reference to the Shares or the realization thereof (including all
reasonable legal fees and disbursements, on a solicitor and own client basis,
all court costs and expenses of taking possession of, protecting and realizing
upon the security constituted by the Shares and the costs and charges in
connection with realizing, collecting, selling, transferring, delivering or
obtaining payment of the Shares) shall be added to and form a part of the
Obligations and shall be a first charge upon the proceeds of any such
realization, collection, sale, transfer, delivery or obtaining of payment.
9. Application of Moneys. Any proceeds of the Shares may be held in lieu of
Shares realized upon and may, as and when the Lender sees fit, be applied or
appropriated as the Lender may elect on account of the Obligations and the
balance, if any, shall be paid to the Corporation or as a court of competent
jurisdiction may direct. If there shall be a deficiency, then, the Corporation
shall remain liable for such deficiency and shall pay the amount of such
deficiency to the Lender forthwith.
10. Share Rights. Until such time, if ever, as this Pledge shall be discharged
and the Shares and Certificates released to the Corporation, the Lender shall be
entitled to receive and enjoy all dividends or other distributions made on or in
respect of the Shares and to exercise all option, conversion, voting or other
like rights attaching thereto but shall not be bound or required to collect any
interest, dividends, income or revenue payable in respect of any of the Shares
or vote in respect of the Shares, and the Lender shall not be responsible for
any loss occasioned by the exercise of any such rights or by failure to exercise
same. Any interest, dividends, income or revenue payable in respect of the
Shares, if received by the Corporation, shall forthwith be paid to the Lender.
Notwithstanding the foregoing, so long as no Event of Default has occurred or
any other act which would permit the Lender to demand payment of the Obligations
has occurred, and subject to the terms of the Credit Agreement, the Corporation
shall be entitled to receive and enjoy all dividends or other distributions made
on or in respect of the shares and to vote or refrain from voting the Shares at
any meeting, whether special or general, at which the holder of the Shares is
entitled to vote and will be entitled to take part in or consent to or refrain
from taking part in or consenting to any corporate or shareholder's action which
the holder of the Shares is entitled to take part in or consent; provided that
the exercise of such right to vote or to take part in or consent to any such
corporate or shareholder's action would not result in a contravention of any
covenant or agreement of the Corporation to the Lender hereunder or to the
Lender under the Credit Agreement or under any other agreement evidencing or
securing any of the Obligations.
11. Share Alteration. In the event of any subdivision, consolidation, share
exchange, stock dividend, redivision, share issue or change in the capital of
PMC or other similar action during the period that this Pledge remains in effect
resulting in an increase in the number of voting shares held by any person, the
number of voting shares to be delivered by the Corporation to the Lender
pursuant to this Pledge shall be increased (the "Additional Shares") so that the
Lender will at all times have assigned, mortgaged, charged, hypothecated and
pledged hereunder, deposited with and a security interest in the lesser of (i)
65% (less any fractional values) of the issued and outstanding voting shares in
the capital of PMC and (ii) 100% of the issued and outstanding voting shares in
the capital of PMC held by the Corporation from time to time, and the
Corporation agrees to deliver such Additional Shares endorsed in blank for
transfer to the Lender and the Additional Shares shall form part of the Shares
and shall be subject to the charges and other provisions of this Pledge;
provided that the Corporation agrees at all times to maintain ownership of at
least 65% of the issued and outstanding voting shares in the capital of PMC from
time to time and a failure to maintain such level of ownership will be an Event
of Default (as such term is defined in the Credit Agreement).
12. Payment. Upon payment and performance of the Obligations, the Lender shall
release the Shares and the Certificates to the Corporation.
13. No Merger, etc. This Pledge shall not operate by way of merger of any of
the Obligations and no judgment recovered by the Lender shall operate by way of
merger of or in any way affect the security of the Shares and Certificates.
14. Supplemental Security. This Pledge and the Shares and Certificates are in
addition, without prejudice, and supplemental to and not in substitution for any
other security held or which may hereafter be held by the Lender.
15. Further Assurances. The Corporation shall from time to time, whether before
or after the Lender makes a demand for payment of the Obligations, do all such
acts and things and execute and deliver all such deeds, transfers, assignments
and instruments as the Lender may require for perfecting the security
constituted hereby or by the Shares, for facilitating the sale of or exercise by
the Lender of rights under the Shares in connection with any realization thereof
and for exercising all powers, authorities and discretions hereby conferred upon
the Lender.
16. Headings, etc. The division of this Pledge into sections and the insertion
of headings are for convenience of reference only and shall not affect the
interpretation hereof.
17. Governing Law. This Pledge shall be governed by and construed in accordance
with the laws of the Province of British Columbia and the laws of Canada
applicable therein and shall be treated in all respects as a British Columbia
contract (without reference to the choice of law rules). The Corporation
irrevocably submits to the courts of British Columbia in any action or
proceeding arising out of or relating to this Pledge, and irrevocably agrees
that all such actions and proceedings may be heard and determined in such
courts, and irrevocably waives, to the fullest extent possible, the defense of
an inconvenient forum.
18. Successors, etc. This Pledge shall enure to the benefit of the Lender and
its successors and assigns and shall be binding upon the Corporation and its
successors and permitted assigns. All rights of the Lender hereunder shall be
assignable in accordance with the terms of the Credit Agreement.
19. Severability. The invalidity or unenforceability of any provision of this
Pledge shall not affect the validity or enforceability of any other provision
hereof and any such invalid or unenforceable provision shall be deemed to be
severable from the other provisions hereof.
20. Notices. All notices, requests, demands, directions and communications
("notices") hereunder shall be sent by telex, telecopy or similar means of
recorded communication or hand delivery, and shall be effective when hand
delivered or, in the case of telex, telecopy or similar means of recorded
communication, when received. All notices shall be given to the parties hereto
at the addresses set out in the Credit Agreement, or otherwise in accordance
with any unrevoked written direction of a party as to a change of address.
21. Incorporation of Schedules. Schedule A hereto shall, for all purposes
hereof, form an integral part of this Pledge.
22. Conflict. In the event of a conflict or inconsistency between the
provisions of this Pledge and the provisions of the Credit Agreement, the
provisions of the Credit Agreement shall prevail.
23. Acknowledgement of Receipt/Waiver. The Corporation acknowledges receipt of
an executed copy of this Pledge. The Corporation waives, to the extent permitted
by law, the right to receive a copy of any financing statement, financing change
statement or verification statement registered with or issued by any personal
property registry or other governmental body or agency thereof in connection
with this Pledge.
IN WITNESS WHEREOF the Corporation has duly executed this Share Pledge and
affixed its corporate seal under the hands of its proper officers duly
authorized for the purpose thereof as of the date first above written.
PMC-SIERRA, INC.
Per: /s/ Xxxx X. Xxxxxxxx, VP Finance
--------------------------------
Authorized Signatory
Signed and authorized on: April 27/98
SCHEDULE A
CERTAIN VOTING SHARES OWNED BY THE CORPORATION
IN THE CAPITAL OF PMC-SIERRA LTD.
Description Certificate No. Number of Shares
----------- --------------- ----------------
Ordinary Shares 0-2 2,579,797
