EXHIBIT 99.2
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated April 22, 2002, made by SONICblue
Incorporated, a Delaware corporation (the "Pledgor"), in favor of the investors
listed on Schedule I attached hereto (individually, a "Investor" and
collectively, the "Investors").
W I T N E S S E T H:
WHEREAS, the Pledgor and the Investors have entered into a certain
Securities Purchase Agreement, dated as of April 21, 2002 (as amended or
otherwise modified from time to time, the "Purchase Agreement"), pursuant to
which the Pledgor is selling to the Investors an aggregate principal amount of
$75,000,000 of its 7 3/4% Secured Senior Subordinated Convertible Debentures due
2005 (the "Debentures") and Warrants (the "Warrants") to purchase an aggregate
of up to 7,500,000 shares of Common Stock of the Pledgor, par value $0.0001 per
share (the "Common Stock") (the transactions as contemplated by the Investment
Documents (as defined herein), the "Investment");
WHEREAS, it is a condition precedent to the closing of the Investment
that the Pledgor shall have executed and delivered to the Investors this pledge
and security agreement (as amended, modified or otherwise supplemented from time
to time, this "Agreement") to create a security interest, in favor of the
Investors not later than July 17, 2002 (the date of the creation of such
security interest being the "Pledge Date "), in the Collateral Shares;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Investors to consummate the Investment, the
Pledgor hereby agrees with the Investors as follows:
SECTION 1. Definitions.
(a) The location of certain defined terms used in this Agreement is
crossed-referenced in Appendix A attached hereto.
(b) In addition, the following terms shall have the respective meanings
indicated below, (such meanings to be applicable equally to both the singular
and plural forms of the terms defined):
"Bloomberg" means Bloomberg Financial Markets.
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in Taipei, Taiwan, R.O.C. are authorized or required by
law to remain closed.
"Collateral Agent" means Ramius Capital Group, L.L.C.
"Collateral Shares" means, collectively 21,426,586 UMC Shares owned by
the Pledgor subject to any adjustment for any stock split, stock dividend,
recapitalization, stock
combination or similar transaction after the date of this Agreement, and
including, with respect to each such Collateral Share, the right to receive, all
other dividends and distributions (whether in cash, securities or otherwise)
thereon and all other rights and interests currently existing with respect
thereto, or otherwise vested in or granted to the owner or holder of such
Collateral Shares from and after the date of this Agreement.
"Financial Assets", "Investment Property" and "Securities Entitlement"
have the meanings specified therefor in the UCC.
"Indenture" means that certain indenture, dated as of the date hereof
relating to the Debentures.
"Investment Documents" means the Purchase Agreement, the Registration
Rights Agreement, this Agreement, the Debentures, the Indenture, the Warrants,
the Option Agreement, each as amended from time to time, and any other
documents, agreements, instruments, certificates, UCC or other financing
statements and all other contracts in connection therewith.
"Investment Commission" means the Investment Commission of the Ministry
of Economic Affairs of the R.O.C.
"New Taiwan Dollars" and "NT$" means the lawful currency for the time
being of the R.O.C.
"Option Agreement" means that certain option agreement, by and among the
Pledgor and the Investors, dated as of the date hereof.
"Pledge Termination Date" means the date of satisfaction in full of the
Obligations.
"Principal Market" means, with respect to the UMC Shares, the Taiwan
Stock Exchange or, if the UMC Shares are not listed on the Taiwan Stock
Exchange, the principal securities exchange or market on which the UMC Shares
are listed or to which the UMC Shares are admitted to trading.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, by and among the Pledgor and the
Investors.
"Required Investors" means the Investors holding no less than 50% of the
outstanding principal amount of the Debentures then outstanding.
"R.O.C." means the Republic of China.
"UCC" means the Uniform Commercial Code in effect from time to time in
the State of New York.
"UMC" means United Microelectronics Corporation, a corporation duly
organized and validly existing under the laws of the R.O.C. and having its
principal place of business at 300 No. 3, Li-hsin RD. II, Science-Based
Industrial Park, Hsinchu, Taiwan, R.O.C.
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"UMC Shares" means the common shares, par value NT$10.00 per share, of
UMC.
"Unrestricted Shares" means securities that are not restricted in any
way with respect to disposition or transferability either by agreement, contract
or other arrangement or by the applicable law of the R.O.C. or any other
non-U.S. jurisdiction.
SECTION 2. Pledge and Grant of Security Interest.
(a) As collateral security for all of the Obligations (as defined in
Section 3 hereof), the Pledgor shall, on the Pledge Date, pledge and assign, and
grant a continuing first priority, valid and perfected security interest in, the
following (the "Collateral") in favor of the Investors and shall deliver such
Collateral to the Collateral Agent:
(i) the Collateral Shares, which the parties specifically
acknowledge and agree includes the certificates representing the
Collateral Shares, all options and other rights, contractual or otherwise,
in respect thereof (including, without limitation, any registration
rights) and all dividends, cash, securities, instruments and other
property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Collateral Shares
(including, without limitation, pursuant to any spin-off or rights
offering) from and after the date of this Agreement;
(ii) all cash and cash equivalents, Investment Property, Financial
Assets, capital stock or other equity interests, notes, debentures, bonds,
promissory notes or other evidences of indebtedness and all other
securities arising from or relating to the Collateral Shares or deposited
from time to time with the Collateral Agent from and after the date of
this Agreement;
(iii) all general intangibles arising from or relating to the
Collateral Shares;
(iv) all investment earnings and proceeds of any and all of the
foregoing; and
(v) all Securities Entitlements of the Pledgor in any and all of the
foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever such interest therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
SECTION 3. Security for Obligations. From and after the Pledge Date, the
security interest created hereby in the Collateral will constitute continuing
collateral security for (a) all of the obligations, whether now existing or
hereafter incurred, of the Pledgor to pay, as and when due and payable, all
amounts from time to time owing by it in respect of the Debentures or any other
Investment Document, whether for principal, interest, fees, expenses, penalties
or otherwise (including, without limitation, amounts that but for the operation
of Section 362(a) of Title 11 of the United States Code (the "U.S. Bankruptcy
Code") would
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become due) (the "Payment Obligations") and (b) the due performance and
observance by the Pledgor of all of its other obligations from time to time
existing under any Investment Document (collectively together with the Payment
Obligations, the "Obligations").
SECTION 4. Delivery of the Collateral.
(a) On or prior to the Pledge Date, the Pledgor shall cause the
Collateral Shares to become certificated in such denominations as specified by
the Required Investors prior to the Pledge Date. On the Pledge Date, the Pledgor
shall cause all certificates representing the Collateral Shares shall be duly
endorsed in pledge and in blank to facilitate (i) the removal of the pledge and
(ii) the title transfer under what is commonly referred to as a "triangle chop"
endorsement, and shall be delivered to the Collateral Agent, together with
evidence in form and substance satisfactory to the Collateral Agent of due
registration of the pledge created hereunder with UMC's transfer agent. On or
prior to the Pledge Date, if the Pledgor shall receive after the date hereof and
prior to the Pledge Date, by virtue of the Pledgor's being or having been an
owner of any Collateral, any (A) security, promissory note, chattel paper or
other instrument or any other Financial Asset or any other property, whether as
an addition to, substitution for, or in exchange for, any Collateral, or
otherwise, (B) option or right, whether as an addition to, substitution for, or
in exchange for, any Collateral, or otherwise, or (C) any dividends or
distributions, including, without limitation, (i) by way of a stock-split,
recapitalization or other similar event, (ii) dividends or other distributions
in connection with a partial or total liquidation or dissolution, (iii)
dividends payable in connection with a redemption of or exchange for any
Collateral or (iv) dividends payable in connection with a reduction of capital,
capital surplus or paid-in surplus, the Pledgor shall receive the same in trust
for the benefit of the Investors, shall segregate the same from the Pledgor's
other property and shall take all actions necessary to have the same pledged to
the Investors and to have all instruments related thereto delivered to the
Collateral Agent (in the case of any certificated security or promissory note,
chattel paper, instrument or Financial Asset, in the exact form received, to the
extent feasible, and, if not feasible, in as similar form as is possible, with
any necessary endorsements affixed thereon), as Collateral for the Obligations.
The Collateral Agent shall keep the Collateral segregated from its other
property and may set up one or more bank or security accounts, as it deems
appropriate, to maintain such segregation.
(b) From and after the Pledge Date, if the Pledgor shall receive, by
virtue of the Pledgor's being or having been an owner of any Collateral, any (A)
security, promissory note, chattel paper or other instrument or any other
Financial Asset or any other property, whether as an addition to, substitution
for, or in exchange for, any Collateral, or otherwise, (B) option or right,
whether as an addition to, substitution for, or in exchange for, any Collateral,
or otherwise, or (C) any dividends or distributions, including, without
limitation, (i) by way of a stock-split, recapitalization or other similar
event, (ii) dividends or other distributions in connection with a partial or
total liquidation or dissolution, (iii) dividends payable in connection with a
redemption of or exchange for any Collateral or (iv) dividends payable in
connection with a reduction of capital, capital surplus or paid-in surplus, the
Pledgor shall receive the same in trust for the benefit of the Investors, shall
segregate the same from the Pledgor's other property and shall take all actions
necessary to have the same pledged to the Investors and to have all instruments
related thereto delivered to the Collateral Agent (in the case of any
certificated security or promissory
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note, chattel paper, instrument or Financial Asset, in the exact form received,
to the extent feasible, and, if not feasible, in as similar form as is possible,
with any necessary endorsements affixed thereon), as Collateral for the
Obligations. The Collateral Agent shall keep the Collateral segregated from its
other property and may set up one or more bank or security accounts, as it deems
appropriate, to maintain such segregation.
(c) So long as no Default (as defined herein) shall have occurred and be
continuing, the Pledgor may exercise any and all voting rights pertaining to the
Collateral Shares in a manner not inconsistent with the terms of this Agreement.
SECTION 5. Extraordinary Event or Delisting Event; Further Assurances.
(a) Extraordinary Event or Delisting Event. In the event (i) of (A) any
merger, reorganization, consolidation or business combination of UMC into or
with any other corporation or entity as a result of which the UMC Shares are no
longer outstanding, (B) any sale, conveyance, mortgage, transfer, license,
pledge, lease, abandonment or other disposition or transfer of all or
substantially all of the assets of UMC; or (C) any liquidation, dissolution or
winding up of UMC or (ii) that the UMC Shares are no longer listed or publicly
trading on the Principal Market, the Pledgor shall immediately, but in any event
within ten (10) Business Days, notify the Investors in writing of such event.
(b) Further Assurances. The Pledgor at its own cost and expense shall
do, make, execute and deliver all such additional and further acts, documents,
assurances, certificates and instruments as may be necessary or that the
Required Investors may reasonably require to vest in and assure, convey, grant,
assign, transfer and confirm unto the Investors their respective rights now or
hereafter intended to be granted to the Investors under this Agreement or in any
of the Collateral (or any substitution thereof), including, without limitation,
(i) executing, delivering and, where appropriate, filing financing statements
and continuation statements under the applicable provisions of the R.O.C. law
and/or the UCC, (ii) take all actions reasonably necessary or advisable to vest
in and assure, convey, grant, assign, transfer and confirm unto the Investors
their respective rights to any Collateral arising after the Pledge Date. and
(iii) to the extent requested by the Required Investors, delivering a legal
opinion of Pledgor's Taiwan counsel to the effect that the actions taken
pursuant to this Section 5(b) have been properly taken pursuant to the laws of
the R.O.C., such legal opinion in form and substance reasonably satisfactory to
the Required Investors, having regard to custom and practice in rendering
opinions in the R.O.C..
SECTION 6. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) the Pledgor is and shall be at all times the legal and beneficial
owner of the Collateral, free and clear of any lien, security interest, pledge,
charge, option, right of first refusal, claim, mortgage, lease, easement or any
other encumbrance whatsoever (the "Liens"), except for the Liens created by this
Agreement and the other Investment Documents;
(b) on the date hereof, the Pledgor is the legal, beneficial and record
owner of at least 25,184,000 UMC Shares;
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(c) other than the lock-up required by applicable securities laws and
regulations of the R.O.C. as a result of the merger of United Semiconductor
Corporation and UMC, there are no lock-up agreements, pledge agreements,
registration rights agreements and other agreements in respect of or otherwise
affecting any of the UMC Shares held or beneficially owned by the Pledgor in
existence on the date hereof;
(d) on the Pledge Date and thereafter, the Collateral Shares shall be
Unrestricted Shares;
(e) the pledge created pursuant to this Agreement, upon satisfaction of
the conditions required to be taken pursuant to Section 4(a) above, will
constitute a valid and perfected first priority security interest over the
Collateral, legally binding and enforceable against the Pledgor and subject to
no prior Lien or to any agreement purporting to grant to any third party a Lien
thereon, and the Investors are entitled to all the rights, priorities and
benefits afforded by R.O.C. law, the UCC and any other relevant law as enacted
in any relevant jurisdiction to perfect the security interests in respect of
such Collateral;
(f) all governmental (R.O.C. and non-R.O.C.) and other consents,
approval or authorizations that are required to have been obtained by the
Pledgor with respect to this Agreement and the grant of this pledge and security
interest in the Collateral have been obtained and are, and will continue to be,
in full force and effect and all conditions of any such consent, approval or
authorization will have been complied with on or prior to the Pledge Date;
(g) the Pledgor is not required to obtain any governmental or other
consent or approval, including, without limitation, from any governmental
authority or entity in Taiwan in connection with the execution and delivery of
this Agreement or in connection with the creation of the security interest in
the Collateral created by this Agreement;
(h) the Pledgor's investment in the Collateral Shares has been approved
by the Investment Commission under the Statute for Investments by Foreign
Nationals ("SIFN") and the Collateral Shares are, and will at all times
throughout the term hereof remain, fully eligible for all benefits associated
with such approval; and
(i) to the extent that any of the Collateral Shares were received by the
Pledgor as a dividend on any UMC Shares, such Collateral Shares are not subject
to deferred dividend tax upon any future sale thereof.
SECTION 7. Covenants. So long as any of the Obligations shall remain
outstanding and so long as the Pledgor is not released from the obligations of
this Agreement pursuant to Section 12(c), unless the Required Investors shall
otherwise consent in writing:
(a) Transfers Restrictions. From and after the date hereof, other than
to the Investors pursuant to the Option Agreement, the Pledgor shall not sell,
transfer, assign or otherwise dispose of, or purport to sell, transfer, assign
or otherwise dispose of, any of the Collateral or any rights in or to acquire
the Collateral.
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(b) Liens and Other Restrictions. The Pledgor shall not create or suffer
to exist any (i) Lien upon or with respect to any of the Collateral except the
Liens created by this Agreement and the other Investment Documents or (ii)
restriction on the transferability of any of the Collateral, except for the
restrictions created by the Option Agreement (including, without limitation, any
market standoff or other "lock up" agreement).
(c) Attorney-in-fact; Control. The Pledgor hereby irrevocably appoints
(i) the Collateral Agent with respect to the Collateral, the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor, to take any action and to execute any instrument (at the cost and
expense of the Pledgor) that the Required Investors may deem advisable to
accomplish the purposes of this Agreement, including, without limitation, to
take any action set forth in Section 8 herein or to execute and file any
financing statements or continuation statement under R.O.C. law and the UCC, any
amendment thereto or other filing. The Pledgor hereby authorizes the Collateral
Agent to file, without the signature of the Pledgor, where permitted by law, one
or more financing statements or continuation statements, and amendments thereto,
relating to the Collateral. The Pledgor also hereby authorizes and agrees that
the Collateral Agent shall have "control" (as defined in Sections 9-104 and
9-106 of the UCC) over all Collateral with respect to which such "control" may
be obtained in accordance with Sections 9-104 and 9-106 of the UCC.
(d) Removal of Restrictions. On the Pledge Date, the Pledgor shall cause
all Collateral Shares to become Unrestricted Shares not containing any legend.
(e) Corporate Change. The Pledgor shall provide thirty (30) days advance
written notice to the Investors of any change in (i) its legal name, (ii) the
jurisdiction in which the Pledgor is organized or (ii) the form or type of
business entity by which it is organized.
(f) No Revocation of Approval. The Pledgor shall not take any actions
which could be expected to cause the approval of the Investment Commission under
the SIFN, with respect to the Pledgor's investment in the Collateral Shares, to
be suspended or revoked.
(g) SIFN Approval. The Pledgor shall take all actions reasonably
necessary to cause the Collateral Shares to remain fully eligible for all
benefits associated with SIFN approval set forth in Section 6(h).
(h) Notice Received from UMC. From and after the date hereof, Pledgor
shall promptly notify the Investors after the Pledgor receives any notice from
UMC that could reasonably be expected to affect the value of the Collateral
Shares, including, without limitation, a notice of corporate action or proposed
corporate action, and shall deliver a copy of such notice each of the Investors,
but in no event shall the Pledgor notify and deliver such notice to the
Investors later than ten (10) Business Days after it has received such notice.
SECTION 8. Remedies Upon Default. If any Event of Default (as defined in
the Indenture) shall have occurred and be continuing (a "Default"):
(a) The Required Investors, shall have the right immediately to (i)
serve notice on UMC and demand and collect directly from UMC any and all
dividends and
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distributions payable on the Collateral Shares (whether in cash, shares or
otherwise) and/or exercise any and all other rights then or thereafter vested,
granted or allowed with the owners of the Collateral to the greatest extent
permitted by applicable law, and (ii) dispose of the whole or any part of the
Collateral or any interest therein either at public auction or by private sale
in accordance with Article 14 of the Law of Application of the Book of
Obligations of the Civil Code of the R.O.C. or in any other manner as may then
be permitted by law (including, without limitation, pursuant to the UCC). At any
such sale, the Investors may bid for or purchase the whole or part of the
Collateral so sold without liability to account to the Pledgor with respect to
any subsequent income arising from either Investor's ownership and/or disposal
of any Collateral so purchased.
(b) The Pledgor hereby further expressly agrees and consents that, after
the occurrence of a Default, the Required Investors may, to the greatest extent
permitted by applicable law, dispose of the Collateral by private sale at the
then current market value thereof, as determined in good faith by the Investors.
The Pledgor agrees to provide all consents required therefor and to (i) fully
cooperate with the Investors and the party or parties which purchase the
Collateral (the "Purchaser") by executing all documents and filing all
applications necessary for the transfer of the Collateral and/or the
registration of the Purchaser as the owner of the Collateral, including all such
applications as may be required under the SIFN, and (ii) assume and fulfill any
and all obligations arising from or in connection with the transfer of ownership
of the Collateral Shares to the Purchaser. The amount of the Obligations then
outstanding shall be reduced by the proceeds of any sale or disposal of the
Collateral pursuant to subsection (a) above and this subsection (b).
(c) The Pledgor agrees to act in good faith and use its best efforts to
secure any requisite approvals of any regulatory agency having jurisdiction over
the Collateral, shall execute and deliver, or cause to be executed and
delivered, such agreements, documents, instruments and certificates, and shall
do or cause to be done any and all acts and things deemed necessary or
appropriate to give effect to such transfer in compliance with all applicable
securities and other laws.
(d) The Required Investors shall direct that any cash held by the
Collateral Agent or any Investor then or at any time thereafter may be applied
in the following manner:
(i) first, to pay any amounts payable to the Investors pursuant to
Section 8 of the Purchase Agreement;
(ii) second, to apply, in whole or in part by the Collateral Agent
on behalf of each Investor, against all or any part of the Obligations
then outstanding;
(iii) third, to pay any other amounts required by applicable law;
and
(iv) fourth, any surplus of such cash, if any, to be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(e) No failure or delay by the Investors to exercise any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of
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any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies provided by any Investment Document or by law. The rights of the
Investors and the Collateral Agent hereunder are not conditional or contingent
on any attempt by the Investors or the Collateral Agent to exercise any of their
rights under any other instrument or agreement against any party.
(f) The Pledgor expressly acknowledges and confirms that the Obligations
shall not be discharged or released unless and until satisfied in full in such
currency as provided for under the Investment Documents. The Pledgor shall take
all necessary actions to ensure that the proceeds arising from the Investor's
foreclosure of the pledges hereunder shall be converted into such currency as
the Required Investors shall require.
SECTION 9. Collateral Agent.
(a) Collateral Agent. The Collateral Agent shall act as the agent for
the Investors for the purposes specified herein, including enforcing the rights
and remedies of the Investors with respect to the Collateral and this Agreement
and performing such other administrative duties and obligations with respect to
the Collateral. The Collateral Agent shall have and may exercise such powers
hereunder as are specified by the terms herein, together with such powers as are
reasonably incidental thereto or as specifically delegated to the Collateral
Agent by the Required Investors.
(b) Discretionary Power. The Investors acknowledge that the right to
manage, perform and enforce the terms of this Agreement with respect to the
Collateral and to exercise and enforce all privileges and rights hereunder for
the benefit of the Investors shall be determined by the Required Investors,
according to their discretion and the exercise of their business judgment,
including, without limitation, the exclusive right to take or retake control or
possession of the Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, transfer or liquidate the Collateral.
(c) Express Trust. If any Investor shall have received any payment or
distribution out of any of the assets constituting a part of the Collateral from
any foreclosure, sale, liquidation or other disposition of, or realization upon,
the Collateral other than in accordance with Section 7, such Investor shall hold
such payment or distribution in trust as trustee of an express trust, for the
benefit of itself and the other Investors, shall not commingle such payment with
its other assets, and shall promptly take all actions necessary to cause such
payment to be shared in accordance with Section 7. As between the Pledgor and
the Investors, any Investor making a payment to the other Investor pursuant to
this Section 9(c) shall be deemed not to have received or realized on account of
the Obligations held by such Investor all or any portion of the amount so paid
over to the other Investors. If all or a portion of any amount paid by an
Investor to the other Investors pursuant to this Section 9(c) must thereafter be
repaid or restored (whether by court order or settlement of a claim), the
payment shall, to such extent, be rescinded and repaid, without interest.
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SECTION 10. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed, telecopied or delivered
pursuant to the terms of the Indenture.
SECTION 11. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor and the Required Investors,
and no waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor therefrom, shall be effective unless it is in writing
and signed by the Required Investors, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) This Agreement shall (i) remain in full force and effect until the
Pledge Termination Date; and (ii) be binding on the Pledgor and its successors
and assigns and shall inure, together with all rights and remedies of the
Investors hereunder, to the benefit of the Investors and their successors,
transferees and assigns. The Investors may assign or transfer, as collateral or
otherwise, any or all of its interest hereunder and under the other Investment
Documents. None of the rights or obligations of the Pledgor hereunder may be
assigned or otherwise transferred without the prior written consent of the
Required Investors.
(c) Upon the Pledge Termination Date, unless on or before such date a
Default shall have occurred, (i) this Agreement and the security interest
created hereby shall terminate and all rights to the Collateral shall revert to
the Pledgor, and (ii) the Required Investors shall instruct the Collateral Agent
to, upon the Pledgor's request and at the Pledgor's expense, (A) return to the
Pledgor such of the Collateral as shall not have been sold, transferred or
otherwise disposed of or applied pursuant to the terms hereof and (B) execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
(d) This Agreement may be executed in counterparts, each of which, when
so executed and delivered, shall be deemed to be an original and enforceable,
but all of which counterparts, taken together, shall constitute one and the same
instrument.
(e) In the event that any one or more of the provisions, paragraphs,
words, clauses, phrases or sentences contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision, paragraph, word, clause, phrase or sentence in every other respect
and of the other remaining provisions, paragraphs, words, clauses, phrases or
sentences hereof shall not be in any way impaired, it being intended that all
rights, powers and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law; provided that this paragraph shall not cause
this Agreement to differ materially from the intent of the parties as herein
expressed.
(f) The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
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(g) This Agreement supersedes all other prior oral or written agreements
between the Pledgor and each Investor, their affiliates and persons acting on
their behalf with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Pledgor nor any Investor
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended or waived other than by
an instrument in writing signed by the Pledgor and the Required Investors. No
such amendment shall be effective to the extent that it applies to less than all
of the Investors. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
(h) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
(i) Each Investor and each permitted assignee under the Investment
Documents shall have all rights and remedies set forth in the Investment
Documents and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
(j) This Agreement shall be governed by the laws of the R.O.C., and to
the extent not inconsistent therewith, the UCC, and any dispute relating to this
Agreement shall be submitted to the jurisdiction of the Taipei District Court;
provided, that such shall not in any way prevent any Investor from bringing any
action against the Pledgor or its assets in any other jurisdiction.
[REMAINDER OF PAGE IS BLANK]
11
IN WITNESS WHEREOF, the Pledgor has executed and delivered this
Agreement as of the date first above written.
SONICBLUE INCORPORATED
By: /s/ JOHN J. TODD
---------------------------------
Name: John J. Todd
-------------------------------
Title: Chief Operating Officer
------------------------------
Acknowledged and Consented to:
PORTSIDE GROWTH AND OPPORTUNITY FUND
By: /s/ JEFFREY M. SOLOMON
--------------------------------
Name: Jeffrey M. Solomon
---------------------------
Title: Managing Officer
--------------------------
SMITHFIELD FIDUCIARY LLC
By: /s/ ADAM J. CHILL
--------------------------------
Name: Adam J. Chill
---------------------------
Title: Authorized Signatory
--------------------------
CITADEL EQUITY FUND LTD.
By: /s/ KENNETH A. SIMPLER
--------------------------------
Name: Kenneth A. Simpler
---------------------------
Title: Vice President
--------------------------
SCHEDULE I
SCHEDULE OF INVESTORS
Investor Address
Investor Name and Facsimile Number
--------------------------------------- --------------------------------------
Portside Growth & Opportunity Fund, Ltd. c/o Ramius Capital Group, L.L.C.
666 Third Avenue, 26th Floor
New York, NY 10017
Attention: Jeffrey M. Solomon
Andrew Strober
Telephone: (212) 845-7917
Facsimile: (212) 845-7999
Smithfield Fiduciary LLC c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, NY 10019
Attention: Ari J. Storch
Adam J. Chill
Telephone: (212) 287-4720
Facsimile: (212) 751-0755
Citadel Equity Fund Ltd. c/o Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, Illinois 60606
Attention: Kenneth A. Simpler
Telephone: (312) 338-7801
Facsimile: (312) 338-0780
APPENDIX A
DEFINED TERMS
Page
----
Agreement....................................................................................1
Collateral...................................................................................3
Common Stock.................................................................................1
Debentures...................................................................................1
Default......................................................................................8
Investment...................................................................................1
Investor.....................................................................................1
Investors....................................................................................1
Liens........................................................................................6
Obligations..................................................................................4
Payment Obligations..........................................................................4
Pledge Date..................................................................................1
Pledgor......................................................................................1
Purchase Agreement...........................................................................1
Purchaser....................................................................................8
Warrants.....................................................................................1